Molycorp Minerals – Most Useful Issues Via The Authoritative Evaluation
Molycorp Minerals Background & Fast Facts Molycorp minerals has the distinct benefit of trading on the New York Stock Exchange. This is atypical, as the bulk of all rare earth companies are on either the Australian or Canadian exchanges. While these companies are foreign exchanges can be purchased in most cases using the Pink Sheets, not many investors are terribly familiar with trading Pink Sheet proxies of foreign-traded companies. So, easy access to a rare earth metals play on the NYSE makes Molycorp an instant hit in that regard. In short, there are basically no competitors. Whether due to ease of access for many American investors, or other factors, the share price of Molycorp minerals has skyrocketed during the rare earth wake-up call the world has undergone. At this point, Molycorp has a market cap of literally billions of dollars. This seems a bit high, in light of a number of factors. After all, the entire rare earths industry is valued at a total that the value of Molycorp is approaching. Just one of the problems with this, of course, is that Molycorp doesn’t even produce anything at the moment. To the extent that the market has “price in†to the company volumes of future production and earnings, the share price has moved way too far, too fast. This type of valuation leaves the company set to trade flat for some time, if not pull back hard due to enlightened profit-taking. To look closely at the facts, we can see why it’s safe to say Molycorp minerals may be a bit overpriced at the moment. The mine in Mountain Pass, California is old, as is the plant. It needs to be re-opened, if not somewhat re-built. The infrastructure is from the 1970s. So, at present, all it can do is sell stockpile ore from a decade ago. But that revenue doesn’t justify a market cap of billions and billions of dollars, when active companies can be bought for the same share price that actually are generating that level of revenue. That’s not to say that money can’t be made. The price may go higher before correcting and heading lower. Or it may just sit flat for a while. The issue is not whether or not money might be made on the trading the company. The issue is whether or not it’s worth the risk. Molycorp Minerals – The American Company Going Global One thing Molycorp minerals has done to broaden the scope of its operations is to go global. It’s still a concentrated rare earth play. However, it’s taken a massive stake in a rare earth elements plant in Estonia. The company purchased a 90% stake in the Silmet facility for almost ninety million dollars. The plant reconciles well with the deposits at Mountain Pass, California, as it is basilcally set up for processing the light rare earth elements, which is what Molycorp minerals is largely sitting on at Mountain Pass. The Silmet plant gives the company something that is up and running right now, in real time. The fair-sized plant handles approximately 3,000 tons a year of Russian ore. The strategic benefit to Molycorp minerals is that it takes some of the heat off as it navigates the shark-infested waters of pacifying California authorities in ramping up the Mountain Pass operation, since California is not exactly the most user friendly locale.
