Wednesday, February 23, 2011

Goldman (GS), Chevron (CVX) Sell Molycorp MCP) too Soon

Goldman (NYSE:GS) are Chevron (NYSE:CVX) surely privately kicking themselves for not holding on to rare earths producer Molycorp (NYSE:MCP), which has quickly soared to a market cap of $3.75 billion.

In late 2008, an investment group led by two private-equity firms, Resource Capital Funds and Pegasus Capital Advisors, commodities trader Traxys Group and Goldman Sachs paid $80 million to purchase a long-forgotten unit of Chevron called Molycorp.

Early last year, Goldman sold its shares to the other investors. Goldman's timing couldn't have been worse. Just four months later, in July of last year, Molycorp went public in what became the most successful initial public offering of 2010. The company's shares soared above $45 Tuesday from $14, valuing Molycorp at nearly $4 billion.

Molycorp shares rose 94 cents, or 2.1%, to close at $45.57 Tuesday after J.P. Morgan Chase raised its rating and price target, citing the company's intention to double rare-earth production by 2014, though Molycorp isn't expected to begin producing until 2012.

The company recently sold $180 million of convertible preferred shares to help finance work on the mine.





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