Molycorp (MCP) Soars on $43.5 Million Profit

Molycorp (NYSE:MCP), which his attempting to position itself as the premier rare earths producer and supplier outside of China, generated a profit in the second quarter of $43.5 million, or 52 cents a share.

In the same quarter last year Molycorp lost $23.3 million, or 47 cents a share.

This easily beat the 39 cents a share analysts surveyed by FactSet were looking for. Revenue for the quarter jumped to 499.6 million, up from the slim $1.9 million in the same quarter in 2010.

Molycorp closed Thursday at $54.14, climbing $2.59, or 5.02 percent. In after hours trading the rose to $58.09, soaring another $3.95, or 7.30 percent.

The company has a market cap as of the Thursday close of $4.54 billion.

Molycorp (MCP) Crushed After Big Miss

Spin as the company likes, rare earth miner Molycorp (NYSE:MCP) missed big in their quarterly report last night, generating a profit of 1 cent (adjusted) when analysts from FactSet were looking for 7 cents a share.

After closing at $66.47, losing $5.13, or 7.16 percent for the day, Molycorp continued its freefall after hours, plunging another $3.82, or 5.75 percent, to $62.65.

Revenue rose to $26.3 million from $3 million from the same quarter last year. Analysts had projected $41.68 million in revenue for the quarter.

Analysts had projected 10 cents a share in earnings on revenue of $42 million. Its net loss did shrink to $909,000, or 3 cents a share, from a net loss of $7.7 million, or 16 cents a share, a year ago.

According to Molycorp, it realized an average sales price of $37.73 per kilogram during the quarter, compared to an average sales price of $34.02 per kilogram in the fourth quarter of 2010, and an average sales price of $7.13 per kilogram for the first quarter of 2010.

Molycorp estimates it will produce between 4,541 metric tons and 5,813 metric tons of rare earth oxides this year.

CEO Mark Smith spun it this way, “We were very pleased to see both sales volume and revenue increase for Molycorp in the first quarter of 2011, as this quarter is typically characterized by slow buying and depressed activity in China due to its New Year celebrations. In spite of this, and in spite of the natural catastrophes experienced by Japan in the first quarter, we continued to see strong global demand for our products. Market prices of REOs rose significantly in the first quarter, helping to boost our price realizations.”

“A very significant development in the first quarter is the fact that we saw domestic Chinese REO prices rising along with prices for Chinese rare earth exports,” Smith said. “This points to several trends that we have noted for some months now: growing demand by China’s burgeoning manufacturing sector for Chinese rare earths; continuing success in the Chinese government’s efforts to crack down on illegal mining and exports; greater industry consolidation forced by the Chinese government; continuing impact on production of new environmental regulations on Chinese producers; government-mandated production quotas; and a halt to the issuance of new licenses for domestic exploration,” added Smith.

Molycorp is dragging down the rare earths sector as a whole, with China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Rare Element Res Ltd (AMEX:REE) and Avalon Rare Metals (AMEX:AVL) all closing down on the day and in after hours trading.

Titanium Metals (TIE) (CNAM) (GMO) (REE) Close Mixed as Rare Earths Remain Tight

Rare earths miners have been jumping since the announcement by China it's going to cut back on exports in a major way. Some of them have been pulling back after the recent surge, as companies Titanium Metals (NYSE:TIE), China Armco Metals, Inc. (NASDAQ:CNAM), General Moly (AMEX:GMO) and Rare Element Resources Ltd (AMEX:REE) closed mixed Thursday.

The majority believe that rare earth supply will remain constrained for at least five years, even with the media hype of all the projects coming on line. Those proposed projects will take years to go through the process before production is ready to start.

Molycorp CEO, Mark Smith recently said that there will probably be two coming on stream within that five-year period. During that same time rare earths demand is estimated to double annually.

That means those companies that already have operations going should enjoy solid pricing power during that season.

As to the ignorant proposal by big-government politicians concerning the Rare Earth Supply-Chain Technology and Resources Transformation Act, the last thing we need is for the government to use yet another so-called crisis or "national security" issue to expand government in a useless manner as is now being attempted.

The markets should and will sort it out, as it has already began to do.

Rare Element Resources Ltd closed at $13.66, down $0.39, or 2.78 percent. General Moly closed at $5.24, falling $0.03, or 0.57 percent. China Armco Metals, Inc. ended the session at $2.32, gaining $0.24, or 11.53 percent. Titanium Metals closed the day at $18.75, rising $0.51, or 2.80 percent.

Molycorp (MCP) (SHZ) (REE) (XING) Close Mixed as Rare Earths Take Breather

Rare earths miners have been moving up quickly since the announcement by China it's going to cut back on exports significantly. Some have been pulling back after the recent surge, as companies China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Rare Element Resources Ltd (AMEX:REE), Qiao Xing Universal Resources, (Nasdaq:XING) and Molycorp, Inc (NYSE:MCP) closed mixed Wednesday.

Expectations are rare earth supply will remain tight for at least five years, even with the media hype of all the projects coming on line. Those will take years to go through the process before production begins.

According to Molycorp CEO, Mark Smith, there will probably be two coming on stream within that five-year period. At the same time rare earths demand is estimated to double annually.

That means those companies that already have operations online should enjoy significant pricing power during that time.

As to the foolish proposal by big-government politicians concerning the Rare Earth Supply-Chain Technology and Resources Transformation Act, the last thing we need is for the government to use yet another so-called crisis or "national security" issue to be used to expand government in a useless manner as is being attempted.

The markets should and will sort it out, as it has already began to do.

Molycorp, Inc. closed Wednesday at $71.47, falling $2.49, or 3.37 percent. Qiao Xing Universal Resources closed at $2.03, down $0.02, or 0.98 percent. Rare Element Resources Ltd ended the day at $14.05, dropping $0.07, or 0.50 percent. China Shen Zhou Mining & Resources, Inc. closed at $4.72, rising $0.12, or 2.61 percent.

Avalon (AVL) (GMO) (REMX) (OSN) Close Up on Rare Earths Demand

Rare earths miners have been moving up quickly since the announcement by China it's going to cut back on exports significantly. Some have been pulling back after the recent surge, although companies and ETFs like General Moly (AMEX:GMO), Avalon Rare Metals (AMEX:AVL), Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX) and Ossen Innovation Co., Ltd. (NYSE:OSN) closed up Wednesday.

Expectations are rare earth supply will remain tight for at least five years, even with the media hype of all the projects coming on line. Those will take years to go through the process before production begins.

According to Molycorp CEO, Mark Smith, there will probably be two coming on stream within that five-year period. At the same time rare earths demand is estimated to double annually.

That means those companies that already have operations online should enjoy significant pricing power during that time.

As to the foolish proposal by big-government politicians concerning the Rare Earth Supply-Chain Technology and Resources Transformation Act, the last thing we need is for the government to use yet another so-called crisis or "national security" issue to be used to expand government in a useless manner as is being attempted.

The markets should and will sort it out, as it has already began to do.

General Moly closed Wednesday at $5.27, gaining $0.18, or 3.54 percent. Avalon Rare Metals closed at $8.88, up $0.09, or 1.02 percent. Market Vectors Rare Earth/Strategic Metals ETF ended the day at $27.59, jumping $0.48, or 1.77 percent. Ossen Innovation Co., Ltd. closed at $3.32, rising $0.09, or 2.79 percent.

Molycorp (MCP) Acquires Santoku America

In a bid to become the major supplier of rare earths outside of China, Molycorp (NYSE:MCP) announced it will acquire Arizona-based Santoku America, Incorporated.

Santoku, which will operate as Molycorp subsidiary under the name Molycorp Metals and Alloys, is a maker a rare earth metals and alloys.

"This puts us in a unique position in that we will be making alloys as Molycorp on US soil," CEO Mark Smith said.

"We are watching what the Chinese are doing very, very carefully," Smith added. "They are moving downstream into these rare earth businesses as well. That's where the real competition will be. If we are not capable of competing beyond (rare earth) oxides, we will lose out in the long run."

Molycorp has been on an acquisition spree, and "Opportunities continue to be endless," Smith noted. "I want to continue to build this supply chain for mines to magnets.

"We will go as far down stream as we have to, to make sure we are a legitimate blue chip player in this industry."

Earlier in April Molycorp announced they were acquiring a controlling interest in AS Silmet, based in Europe, and one of only two rare earth firms operating in the region.

Molycorp paid $17.5 million Santoku America. Molycorp, which has soared over 500 percent over the last year, was trading at $75.19, gaining $0.97, or 1.31 percent, as of 12:51 PM EDT.

Molycorp (MCP) a Pretender or Contender?

All the hoopla surrounding rare earths after China said they're cutting back on exports brought attention to a vital, but little-known industry, which extremely important to devices like mobile phones. The biggest name emerging from the newly-found popularity is Molycorp (NYSE:MCP), which has become the face of the industry outside of China.

Molycorp announced recently it is acquiring AS Silmet to get a foothold in Europe, while it attempts to expand its U.S. domestic business.

Bizarrely, Colorado Congressman Mike Coffman has introduced the Rare Earth Supply-Chain Technology and Resource Transformation (RESTART) Act of 2011, in order to attempt to take advantage of the media-inspired fears that somehow the world is going to end if the government doesn't create a new department to face the "national security issue."

It appears this is the environmentalists and progressives getting all worked up about this, as rare earths supply needed elements to build solar and electric cars, among other things. Rare earths also are invaluable to mobile phones, although when China threatened to pull back on shipments to Japan not too long ago, Japan said they would simply use different materials, showing this is another "crisis" being used to control the market and expand government.

As far as Molycorp within that scenario, there are major concerns even with the soaring price of rare earths on skyrocketing demand.

Most of that centers around its decision to reconstructing its mine, mill and other facilities at Mountain Pass, California.

Molycorp say they're looking at a period of about 2 years to complete the project, which will cost somewhere around $500 million.

Add to that the anti-business and mining climate you get with California, and you have a lot of potential problems arising and quite possibly delaying the project.

This will be a major part of the success or failure of Molycorp, and it will pressure margins and earnings with that much capex.

Molycorp closed Thursday at $68.45, gaining $6.39, or 10.30 percent.

Molycorp (MCP) (REE) (AVL) (SHZ) Soar on Disastrous Rare Earths Bill

Shares of rare earth companies like Rare Element Res Ltd (AMEX:REE), Molycorp, Inc (NYSE:MCP), Avalon Rare Metals (AMEX:AVL) and China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ) soared today on the misguided and foolish introduction of the so-called Rare Earth Supply-Chain Technology and Resource Transformation (RESTART) Act of 2011, by Colorado Congressman Mike Coffman.

The incredibly stupid bill would create another government department with the high cost that accompanies it, under the guise of the "dangerous" Chinese because they're not exporting as much of their rare earths as they have in the past.

Look at the destruction the government has already put on the people, as it refuses to cut back on unsustainable programs and spending which are bringing the country to the brink of destruction.

Some idiots are even spinning this as a national security threat, the usual ploy to expand government and the spending that ensues.

The idea that these companies need anything from the government is ridiculous. They're already moving to growing and expanding in response to the growing demand for rare earths.

What this is probably really all about is rare earths serve other government boondoggles like the so-called green energy areas like solar and electric cars, which will obviously be held back if there are shortages of supply.

Of course rare earths are important for legitimate industries like mobile phones; something there is real consumer demand for.

Molycorp closed at $68.45, gaining $6.39, or 10.30 percent. Rare Element Resources closed at $15.30, up $2.16, or 16.44 percent. Avalon closed the session at $9.52, rising $0.83, or 9.55 percent. China Shen Zhou Mining & Resources, Inc. closed at $5.40, up $0.67, or 14.16 percent.

Molycorp (MCP) (REE) (AVL) Soar on Rare Earths Bill

Shares of Molycorp (NYSE:MCP), Rare Element Resources Ltd. (AMEX:REE) and Avalon Rare Metals Inc. (AMEX:AVL) are skyrocketing today after a new bill was introduced by Colorado Congressman Mike Coffman which "seeks to curtail dangerous reliance on China for critical materials."

Coffman said, "Currently, the world is nearly 100 percent reliant on Chinese exports for these critical materials and China’s trade policies of restricting rare earth exports pose a serious threat to both the economic and national security of the United States."

The bill, H.R. 1388, the Rare Earths Supply-Chain Technology and Resources Transformation Act of 2011 (RESTART Act), would allegedly establish a domestic rare earth industry in the United States.

This is about as stupid as a bill as you could get, and irresponsible at best, as the last thing we need to create another government agency and increase the crony capitalism that has already poisoned the country.

It's not China that is dangerous, simply because they've developed their industry while the United States has caved to radical environmental groups, making it extremely difficult to do any type of mining in a profitable manner.

The market is already working these things out, and the creating of another government agency and expanding the government in the United States, which is already bankrupt, is a disastrous idea. That's what's dangerous here.

Major provisions of the bill include:

Directing appropriate federal agencies to expedite the permitting process in order to increase the exploration and development of domestic rare earth elements, without waiving environmental laws, and establishing a multi-agency Task Force to carry out this process;

Setting up a Defense Logistics Agency (DLA) rare earth inventory - where DLA enters into long-term supply contracts and then makes the supplies available for purchase to federal government contractors - to generate a domestic market and facilitate the domestic sourcing of rare earth alloys and magnets;

Making loans, backed by the federal government, available to start production should lending from the capital markets not be available;

Requiring the various cabinet Secretaries to appoint Executive Agents for rare earths;

Establishing a rare earth program at the U.S. Geological Survey.

This thing needs to immediately be killed. Companies are already expanding operations and making moves to expand operations in response to demand. We don't need a bigger government to interfere with the market. Period.

Molycorp was trading at $65.89, gaining $3.83, or 6.17 percent, as of 11:21 AM EDT. Rare Element was trading at $14.57, rising $1.43, or 10.88 percent. Avalon Rare Metals was trading at $9.12, up $0.43, or 4.95 percent.

Avalon Rare Metals (AVL) Updates Nechalacho Project

Avalon Rare Metals (AMEX:AVL) has released a report on its progress at its Nechalacho, including rare earths niobium, tantalum, and zirconium products from those minerals.

TORONTO, ONTARIO--(Marketwire - 04/05/11) - Avalon Rare Metals Inc. (TSX:AVL)(AMEX:AVL) ("Avalon" or the "Company") is pleased to provide an update its progress on the Nechalacho deposit, Northwest Territories, Canada.

METALLURGICAL TESTWORK

Avalon is continuing to conduct metallurgical testwork toward proving its proposed process for concentration of the Nechalacho ore minerals. This process is designed to produce rare earths, niobium (Nb), tantalum (Ta), and zirconium (Zr) products from those minerals.

The process begins with froth flotation in a Flotation Plant to concentrate the ore minerals. This is followed by a leaching process to chemically break down the ore minerals in a Hydrometallurgical Plant which brings the rare earths and by-product rare metals into solution. The final stage will be rare earth separation in a Separation Plant to produce refined individual rare earth oxides.

Overall, the various metallurgical test programs to prove these processes are progressing steadily and close to original projected timelines, except that the hydrometallurgical pilot plant work is now forecast to take up to four months longer to complete than originally estimated, in order to achieve the highest level of confidence in the process design. The forecast completion date for the Bankable Feasibility Study (BFS) in mid 2012 could be delayed until the fourth quarter of 2012 if the time estimate to complete the hydrometallurgical pilot plant is accurate. Commented President Don Bubar, "We have been pleased with the progress achieved to date on our metallurgical test program and are now implementing measures to ensure that the hydrometallurgical pilot plant work does not significantly delay the completion of the bankable feasibility study."

The additional time and complexity of the hydrometallurgical pilot plant work, in addition to more updated cost information for other areas of the BFS, have resulted in an increase in the BFS budget to $54 million, which is comprised of direct costs of $46 million and administrative and overhead costs of $8 million. This compares to the previous budget of $47 million, which was comprised of $40 million in direct costs and $7 million in administrative and overhead costs. Approximately $11 million of the BFS budget has been spent to date.

MINERALOGICAL STUDIES

Understanding the mineralogy is an important step to both developing and improving metallurgical processes. To this end, Avalon has carried out multiple mineralogical studies at SGS Minerals Services, Lakefield, ON ("SGS"), Xstrata Process Support, Sudbury, ON ("XPS") and McGill University, Montreal, QC. The results to date have indicated that the light rare earths (LREE) in the Nechalacho deposit are contained in four minerals: allanite, monazite, bastnaesite and synchisite, and the heavy rare earths (HREE) are present in two minerals: fergusonite and zircon, the latter also being host to zirconium (Zr). niobium (Nb) and tantalum (Ta) are present in fergusonite and columbite(1). Mineralogical studies continue in all three research centres.

FLOTATION PROCESS

Extensive flotation tests, including many locked cycle tests, have been undertaken since 2008 at SGS and the basics of the process for concentration of the valuable minerals have been defined. The tests have utilized a number of representative composite samples of both the Basal and Upper Zones and from various geographic areas within the Nechalacho deposit.

The flotation process comprises crushing and grinding to a grain size of less than 38 Mm (microns), leading to de-sliming to remove particles less than 8 microns, then the removal of barren magnetite through magnetic separation. The feed then passes through Rougher and Cleaner flotation stages, followed by gravity concentration, where the valuable minerals are separated from waste minerals.

This process has been refined through bench-scale testing, including locked cycle tests at SGS. Tests have been repeated and confirmed at XPS.

Subsequent to the completion of the bench-scale testing, Avalon commissioned XPS to conduct two mini-pilot plant ("MPP") tests. The MPP facility allows testing of flotation schemes at sample rates of about 8 kg/hour or, for a five day campaign, about one tonne, thus simulating an industrial scale plant. The utilization of a sample of about 1 tonne in weight means sufficient sample material can be readily obtained from diamond drill core sample material. Two such composite samples from Basal Zone have been tested to date.

The MPP runs comprised initial crushing of the sample at XPS in Sudbury with the next step being carried out at Process Research Ortech in Mississauga, Ontario, where the sample was ground to less than 38 microns, de-slimed and the magnetic fraction removed. The prepared sample was then trucked to Sudbury on a daily basis for the remaining flotation processing. The MPP was a continuous operation from flotation feed conditioning through to concentrate with the prepared feed delivered in time to maintain continuous operation.

The MPP demonstrated that recovery targets outlined previously by Avalon should be achievable. In addition the results of the MPP tests provide important information for further enhancement of the flotation scheme. As a result, further bench-scale testing is underway at both XPS and SGS focused on specific aspects of the flotation process. Some of the tests will examine changes in reagent schemes. In addition, a pilot-scale multi-gravity separator that promises enhanced gravity separation of finely ground feed is being evaluated for use in future MPP tests and the larger scale flotation pilot plant.

The MPP testwork is an interim step designed to identify key design criteria for the larger scale flotation pilot plant trial and economize on the cost and the size of the bulk sample required for the large scale trial. Additional MPP testwork is planned for completion by the end of the June, 2011.

LARGE SCALE FLOTATION PILOT PLANT

Avalon is planning to run a larger scale flotation pilot plant trial, processing between 20 and 30 tonnes of ore, late in the third quarter or early in the fourth quarter of 2011. The timing of this is partially dependent on the availability of equipment and personnel at SGS. The objectives of the larger scale test are:


-- Provide adequate mineral concentrate for hydrometallurgical pilot testing.-- Confirm the flotation scheme on a larger scale for the BFS.
Since June, 2010, the Company's drilling program has included one drill rig equipped to recover large diameter PQ core. This core weighs in excess of 15 kg per metre, and consequently the Company's geologists estimate that sufficient mineralized core will have been acquired by the end of this winter drill program to provide the bulk sample for the large scale pilot plant trial.

HYDROMETALLURGICAL PROCESS DEVELOPMENT

Avalon has previously disclosed the outline of its planned hydrometallurgical process to extract the rare earths and other valuable rare metals from the Basal Zone ore minerals (News Releases 10-05, March 29, 2010 and 10-09, June 21, 2010). The purpose of the hydrometallurgical plant is to decompose or "crack" the ore minerals, bring the metals into solution and separate the rare earths from the Zr, Nb and Ta. The mixed rare earths concentrate would then be further processed in a Separation Plant, as announced in the Company's News Release 10-24 dated October 21, 2010.

To achieve the hydrometallurgical processing in the most efficient and economical way, Avalon has developed a two stage process to crack the ore minerals. The first step is heating the sample to 200 degrees C with sulphuric acid ("Acid Bake") which breaks down most of the LREE minerals and fergusonite. Through this stage of the process, the LREE and about half the HREE can be brought into solution. This process has now been successfully demonstrated at the bench-scale numerous times at SGS. On-going work is concentrating on refining the details of the process and the optimum process for separating the rare earth elements from impurities such as iron.

The Acid Bake has been shown to solubilize about 80% of the light rare earths and about 40-50% of the heavy rare earths along with very limited quantities of Zr, Nb and Ta. The residue from this process contains the remaining 20% of the light rare earths, 50-60% of the heavy rare earths and the bulk of the Zr, Nb and Ta. This residue is largely comprised of zircon (zirconium silicate) and columbite (niobium and tantalum mineral) along with any silicate gangue minerals that have not broken down during the acid bake process.

The residue, containing the zircon, is then broken down in caustic decomposition which involves sodium hydroxide at about 600 degrees C ("Caustic Crack"). This is a common process for producing zirconium chemicals from zircon, such as zirconium oxychloride ("ZoC"), and utilized presently in China and other countries for this purpose. The difference in this case is that the process will yield heavy rare earths, Nb and Ta, as well as Zr. The Caustic Crack process has also been successfully demonstrated at the bench scale numerous times at SGS.

The hydrometallurgical process steps following the Caustic Crack step are being investigated at present, to determine the optimum process for separating the rare earths from Zr, and from Nb and Ta. This will likely involve a combination of precipitation and solvent extraction.

The products from the Acid Bake and Caustic Crack will comprise:


-- A mixed light and heavy rare earth precipitate as hydrated oxides or carbonates-- A mixed heavy rare earth precipitate as hydrated oxides or carbonates-- ZoC or other zirconium product-- Nb and Ta precipitates
The two rare earth products would be shipped to the Separation Plant to be separated into individual rare earth oxide products.

HYDROMETALLURGICAL PILOT PLANT

After the hydrometallurgical process is fully defined at the bench scale, pilot plant testing will be required. In order to secure access to the SGS facilities later this fall, a contract was signed with SGS for the design and operation of a hydrometallurgical pilot plant. The estimated cost for this work is $7.5 million, approximately $5.5 million higher than originally forecast by Avalon last year before the full scope of work was known.

Since the prefeasibility study was completed last year, it has become evident that this work will take longer than anticipated to complete to the high level of confidence required for a bankable feasibility study. The extra time and complexity of the process will result in considerable additional costs but will also ensure a more robust process is developed and reduced operational risk in the future. The whole operation is expected to take about 40 weeks to complete, finishing by mid-2012.

Preparation for the hydrometallurgical pilot plant work is commencing immediately with the design of the system and bench scale tests. Initiatives to accelerate the acquisition of sufficient concentrate are underway along with sourcing of the required equipment. It is also now clear that the hydrometallurgical pilot will require up to 4 tonnes of mineral concentrate feed.

SEPARATION PLANT

As described in the Company's News Release 10-23 dated October 13, 2010, following the prefeasibility study, Avalon commissioned a scoping study on the costs associated with building a Separation Plant in North America, to produce individual rare earth oxides and carbonates including the heavy rare earths. No such plant, with sufficient capacity to handle the large volume of heavy rare earth rich mixed rare earth oxide concentrates contemplated from Nechalacho, presently exists outside China.

The scoping study revealed that costs are highly sensitive to plant location as the delivered cost of the chemical reagents required for the separation process represents the majority of the operating costs. Subsequently, the Company has evaluated potential locations for this plant in North America and has identified a number of sites that meet the key criteria.

The Company intends to select a plant location within the next few months and is now in discussions with a number of engineering companies about carrying out a prefeasibility study on the separation plant. It is expected that this contract will be awarded and work initiated shortly after the plant site is determined.

UPDATE ON OTHER PROJECT ACTIVITIES

The 2011 winter drilling program commenced in January and 34 holes totaling 8291 metres have now been completed with 17 of these holes recovering the larger PQ core. An additional 10 short holes were drilled for purely geotechnical purposes. The smaller drill, equipped to recover HQ core, has been drilling holes to define additional Indicated Mineral Resources in the West Long Lake area, where previous drilling has identified a high grade sub-zone within the Basal Zone. Initial assay results from this drilling should be available in early May.

Simultaneously, the larger rig (equipped for PQ core) has been completing 50 metre spaced holes in areas of thicker Basal Zone intercepts in order to generate a bulk sample for metallurgical testwork, as well as upgrading Inferred resources to the Indicated level of confidence. Results from this drilling will be slower to arrive due to a lengthy sample preparation procedure designed to maximize the amount of sample available for future metallurgical testing.

A program of geotechnical drilling is commencing using the smaller drill, to test ground conditions in the proposed tailings area where berms would be required. This drilling is proceeding ahead of schedule and will finish within a few days when the drill will return to resource drilling. The larger drill will continue acquiring metallurgical sample until Spring break-up in May.

Avalon continues to hold discussions with potential customers for its rare earth products. Many industrial consumers in the US, Japan and Korea are very concerned about the future availability of heavy rare earths and neodymium. Some of these consumers have expressed interest in partnering with the Company in the development of the project and discussions in this regard are on-going.

On the permitting process, the Company received the final Terms of Reference ("TOR") for the environmental impact assessment from the Mackenzie Valley Environmental Impact Review Board ("MVEIRB") on February 15, 2011. Since then Avalon, along with EBA Engineering Consultants Ltd, have been working diligently on the Developers Assessment Report ("DAR"), commonly known as an Environmental Impact Statement utilizing the TOR as its foundation. Avalon anticipates the completion of the DAR by the end of April, 2011. Upon submittal of the DAR to MVEIRB, a work schedule will be developed by MVEIRB outlining the expected timeline for completion of the Environmental Assessment process.

Community engagement efforts continue with all of the Company's aboriginal partners in the Northwest Territories. Avalon has entered into Negotiation Agreements with the Yellowknives Dene First Nation and the Deninu K'ue First Nation and is presently working toward concluding a similar agreement with the Lutsel K'e Dene First Nation.

QUALIFIED PERSONS

The Company's Vice-President, Exploration, William Mercer, Ph.D., P.Geo. (Ont), P. Geol (NWT) is providing overall direction on the project. The qualified persons for the purposes of this news release are Dezhi Qi, P. Eng (Alberta), William Mercer and Donald Bubar, P. Geo., President.

About Avalon Rare Metals Inc. (TSX:AVL - News)(AMEX:AVL - News)

Avalon Rare Metals Inc. is a mineral exploration and development company focused on rare metals deposits in Canada. Its flagship project, the 100%-owned Nechalacho Deposit, Thor Lake, NWT, is emerging as one of the largest undeveloped rare earth elements resources in the world. Its exceptional enrichment in the more valuable 'heavy' rare earth elements, which are key to enabling advances in clean technology and other growing high-tech applications, is one of the few potential sources of these critical elements outside of China, currently the source of 95% of world supply. Avalon is well funded, has no debt and its work programs are progressing steadily. Social responsibility and environmental stewardship are corporate cornerstones. Avalon's performance on community engagement in the north earned it the 2010 PDAC Environmental and Social Responsibility Award.

Shares Outstanding: 93,618,265. Cash Resources: $34 million.

To find out more about Avalon Rare Metals Inc., please visit our website at www.avalonraremetals.com. For questions and feedback, please e-mail the Company at ir@avalonraremetals.com or phone Donald S. Bubar, President and CEO, at 416-364-4938.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Statements that are not historical fact are forward-looking statements that involve risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in the forward-looking statements. Readers can identify forward-looking statements by the use of words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof.

All forward-looking statements contained herein reflect management's plans, estimates, projections and views only as of the date hereof. Such forward-looking statements include, among other things, statements regarding targets, estimates and/or assumptions in respect of resources and potential reserves, and are or may be based on assumptions and/or estimates related to future economic, market and other conditions. Many factors could cause the Company's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others: the estimation or realization of mineral resources; recovery rates and production costs of the rare metals; the timing and amount of estimated future production; requirements for additional capital; future prices of rare metals and minerals; market demand for rare metals and minerals; the reliability of plant operations at production scale; energy costs; availability of required skilled labour, contractors and other human resources; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities; currency exchange rate fluctuations; title disputes or claims limitations on insurance coverage and the timing and possible outcome of pending litigation; and the other factors described in the Company's annual Management's Discussion and Analysis and Annual Information Form filed with the applicable securities regulatory authorities in Canada and available at www.sedar.com.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. Most of such factors are beyond the Company's control.

The forward-looking statements contained herein are qualified in their entirety by this cautionary statement. Readers should not place undue reliance on the forward-looking statements. The forward-looking statements contained herein are presented for the purpose of assisting investors in understanding the Company's plans and expectations regarding operations and performance and may not be appropriate for other purposes.

(1)Total Rare Earth Oxides (TREO) refers to the elements lanthanum to lutetium, plus yttrium, expressed as oxides. Heavy Rare Earth Oxides (HREO) refers to the elements europium to lutetium, plus yttrium, expressed as oxides. Light rare earths (LREO) refers to the elements lanthanum to samarium, expressed as oxides. LREE refer to the light rare earths and HREE as the heavy rare earths as elements. See Avalon's website for conversion factors from elements to oxides.

Contact:
Contacts:Avalon Rare Metals Inc.Donald S. BubarPresident and CEO416-364-4938ir@avalonraremetals.comwww.avalonraremetals.com

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.

Rare Earths (REE) (MCP) (GMO) (AVL) Down on Large China Discovery

Rare earths companies outside of China, like Rare Element Res Ltd (AMEX:REE), Molycorp, Inc (NYSE:MCP), General Moly (AMEX:GMO) and Avalon Rare Metals (AMEX:AVL) are all trading down today on news of a huge rare earths discovery in China, which could end up boosting supply while pushing down prices.

Of particular not was a huge deposit of Scandium, one of 17 rare earths, and which is used in the building of a variety of high-tech products. Estimates are there are over 70 tons of scandium in the deposit.

Also part of the discovery was 130,000 tons of lead and zinc, 3,000 tons of cadmium, and 800 tons of silver. In addition, there were significant deposits of rhenium, stannum and gallium found.

This actually boosted share of Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX), as well as Chinese rare earths companies like China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ) and Qiao Xing Universal Resources (Nasdaq:XING).

China Taxing Rare Earth (SHZ) (XING) Minerals

The cost of producing rare earths in China will go up on April 1, as according to the Ministry of Finance and the State Administration of Taxation, cited by Xinhua, they are going to start taxing the minerals.

Xinhua said the tax start off at $9.1 a ton for light rare earths and about $4.55 a ton for medium and heavy rare earths.

Since China announced it was cutting back on rare earth exports, prices have soared from $14,405 a ton to $109,036 a ton.

Public Chinese companies specifically affected by this include Qiao Xing Universal Resources, Inc. (Nasdaq: XING) and China Shen Zhou Mining & Resources, Inc. (AMEX: SHZ).

Publicly traded rare earth competitors outside of China are Molycorp Inc. (NYSE: MCP), Rare Element Resources (AMEX: REE), and Avalon Rare Metals (AMEX: AVL).

Molycorp (MCP) (REE) (AVL) Soaring on Rare Earths Price Surge

Since China announced it's going to limit the amount of rare earths it's going to export, shares of miners like Molycorp Inc. (NYSE:MCP), Rare Elements (AMEX:REE) and Avalon Rare Metals (AMEX:AVL) have been skyrocketing as the price on the 17 metals rise.

In February alone the price of rare earths rose by $34,000 to hit $100,000 a ton; almost 9 times what it was last year at that time.

Interestingly, a lot of investors haven't gravitate toward rare earths miners, as the trading volume has remained below its historical average.

The price of the minerals have risen close to $10,000 a month since China announced the export restrictions, where prices per ton were at $14,405.

According to data from China's Customs office, the price per ton of rare earths in February reached $109.036.

Molycorp was trading at $48.52, gaining $3.84, or 8.59 percent, as of 11:34 AM EDT. Rare Elements was at $11.59, up $1.21, or 11.66 percent. Avalon was trading at $7.21, up $0.47, or 6.97 percent.

Molycorp (MCP) Shares Up on Earnings Results

Earnings for rare earth miner Molycorp (NYSE:MCP) exceeded expectations, driving the shares of the company up in after hours trading.

Particularly noted was the increase in sales of rare earth oxide, which was up by over 20 percent from the prior quarter.

Molycorp generated earnings of 3 cents a share on revenue of $21.7 million in the quarter, beating estimates of a 7 cent loss on $13.5 million in revenue.

CEO Mark Smith said, “This integrated rare earth supply chain is expected to position Molycorp to operate as one of the world’s lowest-cost producers and to capture new markets created by rising rare earth demand and China’s continuing restriction of rare earth exports.”

Smith also said he doesn't see China changing its decision to lower the exports of rare earth elements any time soon.

Molycorp closed Wednesday at $48.62, losing $1.15, or 2.31 percent. After hours they were trading at $50.35, up $1.73 or 3.56 percent.

Teck Resources (TCK) Sells Stake in Carrapateena for $134 Million

Teck Resources (NYSE:TCK) announced it'll be selling its 34 percent stake the Carrapateena deposit, located in Australia, for $134 million. The stake is being acquired by an affiliate of OZ Minerals Ltd.

Carrapateena is among the largest undeveloped copper and gold deposits in Australia.

There is an estimated 4.4 million tons of copper, 6 million ounces of gold, and 225 million pounds of uranium, along with some rare earths and haematite iron ore in the resource.

BHP Billiton (NYSE:BHP) has its Dam mine in the same geological structure as Carrapateena is located in.

Australia's privately held RMG Services has a 58 percent stake in the project.

Teck could also receive up to $25 million in the deal based on certain production milestones. They've spend about $30.3 million exploring the site over the last six years.

The deal should close in the second quarter.

Teck Resources closed in New York Tuesday at $54.23, gaining $0.21, or 0.39 percent.

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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Rare Element (REE), Molycorp (MCP), China Shen Zhou (SHZ), Avalon (AVL) Mixed on China Rare Earths Strategy

The announcement by China that it's going to consolidate its rare earths sector has companies such as Rare Element Resources Ltd. (NYSE:REE), Avalon Rare Metals (NYSE:AVL), Molycorp (NYSE:MCP) and China Shen Zhou (NYSE:SHZ) mixed in response to the news.

A statement from an executive meeting of the State Council said, "China should accelerate industrial upgrading and technological innovation to protect the environment and save resources."

To attain those goals, China said they'll "maintain rational production and inventory control, make better use of domestic and overseas markets and resources, and have active international cooperation for a healthy and sustainable development."

Xinhua added, "authorities would carry out special campaigns to crack down on illegal mining activities to maintain order in production, further consolidate the industry and promote technological innovation, said the document."

Rare earths producers outside China are working feverishly to boost or enter into production phases in response to China's recent announcement they're cutting back on rare earths exports by about 35 percent.

Some of that is complicated by what rare earths are in the projects each company owns. Some are more profitable than others, serving various markets.

Molycorp's (NYSE:MCP) Lock-Up Expiration Releasing 53 Million Shares for Sale

Molycorp (NYSE:MCP) will soon be releasing another 53 million plus shares into the market, as their IPO lock-up expiration is set to expire on January 25, 2010.

After the shares are released for sale it's probably the company will take a short-term hit on their price as at this time they have approximately 82.3 million shares outstanding.

Molycorp was fortunate in the timing of their IPO, as not long after China announced a 35 percent cut in rare earths exports, which drove up the share price of Molycorp, and brought it to the attention of investors.

The company has pulled back since then, but they still have a window of opportunity over the next couple of years as rare earths should rise in price on tight demand, as China holds rare earths close to their chest.

Since their 2010 IPO in June, shares of Molycorp have skyrocketed 210 percent.

Molycorp closed Friday at $42.99, down $2.60, or 5.70 percent.

Molycorp's (NYSE:MCP) PT Boosted by Dahlman Rose

The recent announcement by China concerning cutting back exports of rare earths shook up the industry, with Molycorp (NYSE:MCP) attracting significant amount of the focus.

Dahlman Rose is impressed with the potential of Molycorp in light of the China export quota cuts, and increased their price target on them in a big way, boosting it from $49 to $85. Dahlman said they believe the price will be supported by the actions of the Chinese.

Dahlman maintains a "Buy" rating on Molycorp, which was trading at $57.06, up $7.16, or 14.35 percent, as of 11:58 AM EST.