Monday, April 4, 2011

Molycorp (MCP) Soars Over 11 Percent on AS Silmet Acquisition

In a move which will double the rare earth production of the company, Molycorp (NYSE:MCP) announced it has acquiring a control stake in AS Silmet, a company based in Estonia, for $89 million.

Once the deal closed, AS Silment will become the first rare earth producer in Europe not dependent on China for raw materials, as it will source rare-earth feed from Molycorp's facility in California.

Rare earth companies outside of China have been pushing to increase production after China announced was cutting back on exports of the minerals, which are used in numerous electronic products.

"This acquisition provides Molycorp with a European base of operations as well as a larger global customer base, greater rare earth production capacity, and an expanded product line," Molycorp's CEO Mark Smith said in a statement.

Molycorp will now double current production of 3,000 tons of rare earths a year to 6,000 tons.

Molycorp was trading at $65.80, gaining $6.55, or 11.05 percent, as of 1:10 PM EDT.

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