Independent Firm Says Reserves of Molycorp Rare Earths California Mine Up 36%

A new estimate by an independent mining-industry consulting firm has elevated the proven and probable rare earths reserves at the Mountain Pass, California rare earths mine of American miner Molycorp Inc. to as much as 36 per cent.

The estimate, conducted by SRK Consulting of Lakewood, Colorado, said Molycorp Inc.'s proven and probable ore body component holds nearly 2.94 billion pounds or 1.3 million metric tonnes of covered rare earth oxide (REO) equivalent, compared to the previous 2012 estimate of 2.24 billion pounds of contained REO product, or 1.02 million metric tonnes.

Based on the "Industry Guide 7" definition of proven and probable mineral reserves guideline by the Securities and Exchange Commission, Molycorp Inc.'s rare earths reserves grew to 18.4 million short tonnes of rare earth ore, at an ore grade of 7.98 per cent and a cut-off grade of 5 per cent.

"I am pleased to see our world-class deposit continue to grow in size, and I believe that our ongoing exploratory drilling at Mountain Pass may show an even larger estimate of proven and probable reserves once that work is completed," Mark A. Smith, Molycorp's president and chief executive officer, said in a statement.

In January, the American rare earths producer announced it had entered into customer supply agreements representing 78 per cent of expected output from the Phase 1 expansion works at its Mountain Pass, California rare earth mine and oxide manufacturing facility.

"It is noteworthy that the cut-off grade of 5 per cent used by SRK far exceeds the head-grades of most other known rare earth projects around the world, which underscores the unique richness of our ore body," Mr Smith pointed out.

In March, Molycorp Inc. announced it intends to buy Canadian rare earth processor Neo Material Technologies Inc. for $1.3 billion in cash and stock to support its mine-to-magnet strategy, a scheme meant to capture the entire rare earths supply and manufacturing chain. The deal is expected to close in the second or third quarter of 2012.