The Next Rare Earth Era:Global Diversity in RE ManufacturingPresenter:	     Mark	  A.	  Smith,	  President	  and	  Chief	 ...
Safe Harbor Statements       	  This	  presenta9on	  contains	  forward-­‐looking	  statements	  that	  represent	  Molyco...
What We’ll Covern    Project Phoenix Updaten    Production Expansion Updaten    Financial Updaten    Molycorp’s Expand...
PROJECT PHOENIX    UPDATE                  4	  
Project Phoenix Updaten    “Project Phoenix” continues on time and on budgetn    KBR selected to build Chlor-Alkali faci...
Project Phoenix Update                         6	  
Project Phoenix UpdateFly-­‐By	  Video	  of	  Project	  Phoenix	  Construc9on	                                            ...
Project Phoenix UpdateMill	  Area	  South	  Grading	  for	  Crack	  Building	         Fine	  Ore	  Bin	  Pad	  Comple9on	 ...
Project Phoenix Update      CHP	  Construc9on	                     Pit	  Ac9vi9es	  Crushing	  Area	  Underdrain	         ...
Project Phoenix Update         Mill	  Area	  Center	                        Mill	  Area	  Fill	  P-­‐16	  Dam	  and	  Drai...
Project Phoenix UpdateAc9ve	  Mining	  Opera9ons	                                     11	  
Project Phoenix UpdatePaste	  Tailings	  Storage	  Facility	                                                  12	  
Key Project                                                 Phoenix Milestones           n  Continue construction of Moun...
PRODUCTION EXPANSION   UPDATE             14	  
The Products                                                                     We Will ProduceRARE EARTH MATERIALS (in v...
REO Production                                                                             Expansion ScheduleTotal REO Pro...
FINANCIAL UPDATE            17	  
Q2 2011                                         Financial Results§    Company achieved profitability with record net sale...
Molycorp’s Expanding      Horizons                       19	  
Our Mine-to-Magnets                                                               Supply Chain            On	  track	  to	...
Molycorp Mountain Pass                                                                                   n     59 years o...
Molycorp Sillamae■  Molycorp Sillamae (Molycorp Silmet AS)  is located in Sillamae, Estonia.■  One of the biggest rare met...
Molycorp Tollesonn  Molycorp Tolleson (Molycorp Metals and Alloys) is   located in Tolleson, Arizona, and has 26 employee...
Molycorp Japann  Molycorp is opening a new customer   service office in Tokyo, Japan in order   to better serve its custo...
The Role of  AdvancedTechnologies               25	  
Superior Technologies    Molycorp	  is	  leading	  the	  industry	  through	  crea2ve	  technologies	  that	  result	  in	...
Superior Technology and                                                                                                   ...
Toward A World-Class Rare Earth    Industry                   28	  
The New Rare Earth EraTo	  Be	  A	  Truly	  World-­‐Class	  Industry,	  We	  Must:	      1	     Provide customers with a d...
Questions?             30	  
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The Next Rare Earth Era: Global Diversity in RE Manufacturing

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Molycorp President and CEO, Mr. Mark Smith presents the next era in rare earth, and provides update on Molycorp's Mountain Pass Mine at Metal Pages' Rare Earths Conference Beijing Sept 2011

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The Next Rare Earth Era: Global Diversity in RE Manufacturing

  1. 1. The Next Rare Earth Era:Global Diversity in RE ManufacturingPresenter:   Mark  A.  Smith,  President  and  Chief  Execu9ve  Officer,  Molycorp,  Inc.  Audience:   Metal-­‐Pages’  Rare  Earths  2011  Conference  Date:   Sept.  15,  2011  Loca2on:   Beijing,  China    
  2. 2. Safe Harbor Statements  This  presenta9on  contains  forward-­‐looking  statements  that  represent  Molycorp’s  beliefs,  projec9ons  and  predic9ons  about  future  events  or  Molycorp’s  future  performance.  Forward-­‐looking  statements  can  be  iden9fied  by  terminology  such  as  “may,”  “will,”  “would,”  “could,”  “should,”  “expect,”  “intend,”  “plan,”  “an9cipate,”  “believe,”  “es9mate,”  “predict,”  “poten9al,”  “con9nue”  or  the  nega9ve  of  these  terms  or  other  similar  expressions  or  phrases.    These  forward-­‐looking  statements  are  necessarily  subjec9ve  and  involve  known  and  unknown  risks,  uncertain9es  and  other  important  factors  that  could  cause  Molycorp’s  actual  results,  performance  or  achievements  or  industry  results  to  differ  materially  from  any  future  results,  performance  or  achievement  described  in  or  implied  by  such  statements.    Factors  that  may  cause  actual  results  to  differ  materially  from  expected  results  described  in  forward-­‐looking  statements  include,  but  are  not  limited  to:    Molycorps  ability  to  secure  sufficient  capital  to  implement  its  business  plans;  Molycorps  ability  to  complete  its  Phase  1  moderniza9on  and  expansion  efforts  and  Phase  2  capacity  expansion  efforts  and  reach  full  planned  produc9on  rates  for  REOs  and  other  planned  downstream  products;  the  final  costs  of  the  Phase  1  moderniza9on  and  expansion  plan  and  Phase  2  capacity  expansion,  which  may  differ  from  es9mated  costs;  uncertain9es  associated  with  Molycorps  reserve  es9mates  and  non-­‐reserve  deposit  informa9on;  uncertain9es  regarding  global  supply  and  demand  for  rare  earths  materials;  Molycorps  ability  to  successfully  integrate  recently  acquired  businesses;  Molycorp’s  ability  to  maintain  appropriate  rela9ons  with  unions  and  employees;  Molycorp’s  ability  to  successfully  implement  its  “mine-­‐to-­‐magnets”  strategy,  including  its  ability  to  reach  defini9ve  agreements  for  a  joint  venture  to  manufacture  neodymium-­‐iron-­‐boron  permanent  rare  earth  magnets;  environmental  laws,  regula9ons  and  permits  affec9ng  Molycorp’s  business,  directly  and  indirectly,  including,  among  others,  those  rela9ng  to  mine  reclama9on  and  restora9on,  climate  change,  emissions  to  the  air  and  water  and  human  exposure  to  hazardous  substances  used,  released  or  disposed  of  by  Molycorp;  and  uncertain9es  associated  with  unan9cipated  geological  condi9ons  related  to  mining.    For  more  informa9on  regarding  these  and  other  risks  and  uncertain9es  that  Molycorp  may  face,  see  the  sec9on  en9tled  “Risk  Factors”  in  Molycorps  Annual  Report  on  Form  10-­‐K  for  the  year  ended  December  31,  2010  and  other  reports  filed  with  the  SEC.  Any  forward-­‐looking  statement  contained  in  this  presenta9on,  or  the  Annual  Report  on  Form  10-­‐K,  reflects  Molycorp’s  current  views  with  respect  to  future  events  and  Molycorp  assumes  no  obliga9on  to  publicly  update  or  revise  these  forward-­‐looking  statements  for  any  reason,  or  to  update  the  reasons  actual  results  could  differ  materially  from  those  an9cipated  in  these  forward-­‐looking  statements,  even  if  new  informa9on  becomes  available  in  the  future,  except  as  otherwise  required  by  applicable  law.    This  presenta9on  also  contains  sta9s9cal  data  and  es9mates  obtained  by  Molycorp  from  industry  publica9ons  and  reports  generated  by  third  par9es.  Although  Molycorp  believes  that  the  publica9ons  and  reports  are  reliable,  it  has  not  independently  verified  such  data.    THIS  PRESENTATION  MAY  USE  THE  TERM  “RESOURCES”  TO  DESCRIBE  THOSE  QUANTITIES  OF  REE’S  THAT  ARE  POTENTIALLY  RECOVERABLE  FROM  ACCUMULATIONS  YET  TO  BE  DISCOVERED.  BECAUSE  OF  THE  UNCERTAINTY  OF  COMMERCIALITY  AND  LACK  OF  SUFFICIENT  EXPLORATION  DRILLING,  THE  RESOURCES  CANNOT  BE  CLASSIFIED  AS  RESERVES.    INVESTORS  ARE  ADVISED  THAT  THE  SEC  DOES  NOT  RECOGNIZE  RESOURCES.  ONLY  PROBABLE  AND  POSSIBLE  RESERVES  MAY  BE  DISCLOSED  TO  INVESTORS  IN  AN  SEC  FILING.      RESOURCES  HAVE  A  GREAT  AMOUNT  OF  UNCERTAINTY  AS  TO  THEIR  EXISTENCE.  THERE  IS  NO  CERTAINTY  THAT  ANY  PORTION  OF  THE  RESOURCES  WILL  BE  DISCOVERED  AND,  IF  DISCOVERED,  WHETHER  THEY  COULD  BE  DEVELOPED  LEGALLY  AND  ECONOMICALLY.  THEREFORE,  INVESTORS  ARE  CAUTIONED  NOT  TO  ASSUME  THAT  ALL  OR  ANY  PART  OF  MOLYCORP’S  RESOURCES  EXIST,  OR  THAT  THEY  CAN  BE  DEVELOPED  LEGALLY  AND  ECONOMICALLY.  ACCORDINGLY,  INFORMATION  CONCERNING  DESCRIPTIONS  OF  RESOURCES  CONTAINED  IN  THIS  PRESENTATION  IS  NOT  COMPARABLE  TO  INFORMATION  INCLUDED  IN  SEC  FILINGS.     2  
  3. 3. What We’ll Covern  Project Phoenix Updaten  Production Expansion Updaten  Financial Updaten  Molycorp’s Expanding Horizonsn  Toward A World-Class Rare Earth Industry 3  
  4. 4. PROJECT PHOENIX UPDATE 4  
  5. 5. Project Phoenix Updaten  “Project Phoenix” continues on time and on budgetn  KBR selected to build Chlor-Alkali facilityn  Structural steel erection now underwayn  CHP equipment deliveries ahead of schedulen  Foundation construction started on Milln  Receiving major equipment deliveries for Mill and Paste Plantn  Project is fully funded 5  
  6. 6. Project Phoenix Update 6  
  7. 7. Project Phoenix UpdateFly-­‐By  Video  of  Project  Phoenix  Construc9on   7  
  8. 8. Project Phoenix UpdateMill  Area  South  Grading  for  Crack  Building   Fine  Ore  Bin  Pad  Comple9on   CHP  Construc9on   CHP  Construc9on   8  
  9. 9. Project Phoenix Update CHP  Construc9on   Pit  Ac9vi9es  Crushing  Area  Underdrain   Mill  Area  North   9  
  10. 10. Project Phoenix Update Mill  Area  Center   Mill  Area  Fill  P-­‐16  Dam  and  Drain  Work   Fill  at  Top  of  P-­‐16   10  
  11. 11. Project Phoenix UpdateAc9ve  Mining  Opera9ons   11  
  12. 12. Project Phoenix UpdatePaste  Tailings  Storage  Facility   12  
  13. 13. Key Project Phoenix Milestones n  Continue construction of Mountain Pass modernization (Phase 1) n  Finish capital raising efforts so that Phase 1 and Phase 2 are fully funded2011   n  Complete engineering around Phase 2 expansion for up to 40,000 mt n  Convert 50% or more of the Phase 1 LOI product volume into final contracts n  Be mechanically complete on Phase 1 by July 20122012   n  Have 100% of Phase 1 planned production volume contracted n  Start production and be running at full planned Phase 1 production rates by year-end 2012 n  Be mechanically complete on Phase 2 expansion by mid 20132013   n  Start full run-rate Phase 2 production by late 2013 n  Sell production from Phase 2 based on customer demand 13  
  14. 14. PRODUCTION EXPANSION UPDATE 14  
  15. 15. The Products We Will ProduceRARE EARTH MATERIALS (in various forms including concentrates, oxides, carbonates, and/or metals) Lanthanum   Samarium   Terbium   Cerium   Dysprosium   Gadolinium   Praseodymium   Europium   Ymrium   Neodymium   Scandium  (metal)  RARE METALS (oxides, metals) Tantalum   Niobium  ALLOYS Neodymium-­‐Iron-­‐Boron   Nickel-­‐Ymrium   Nickel-­‐Gadolinium   Samarium-­‐Cobalt   Niobium-­‐Nickel   Superalloys   Lanthanum-­‐Nickel   Iron-­‐Ymrium    OTHER PRODUCTS Aluminum-­‐calcium  flux   Ammonium  Bifluoride   Graphite  scrap     15  
  16. 16. REO Production Expansion ScheduleTotal REO Production Capacity(REO equivalent in metric tons / year) Expected  produc2on  breakdown  by  REO    45,00040,000 NdPr 40,000 16% Lanthanum35,000 oxide Other 28% 1%30,00025,000 Other20,000 Lanthanum products 19,050 (High purity15,000 oxides and Cerium non- metals) metal 5%10,000 50% 5,000 4,941- 3,000 5,881 0 Current   Phase  1     Phase  2   Comple9on   Comple9on   (2012)   (2013)   16  
  17. 17. FINANCIAL UPDATE 17  
  18. 18. Q2 2011 Financial Results§  Company achieved profitability with record net sales of $99.6 million in Q2 2011 (more than twice Q1 revenue).§  Q2 2011 sales volume of rare earth oxide (REO) equivalent rose 58% over Q1 2011 and 314% year-over-year, including rare earth alloy sales.n  57% gross margin, up approximately 20 percentage points versus Q1 2011n  Net income attributable to common shareholders –  $43.5 million or $0.52 per share 18  
  19. 19. Molycorp’s Expanding Horizons 19  
  20. 20. Our Mine-to-Magnets Supply Chain On  track  to  be  the  world’s  most  integrated   producers  of  rare  earth  products:    Rare  Earth   Oxides   Metals   Alloys   Magnets  Extrac9on   Molycorp  Mountain  Pass   Poten9al  JV     Molycorp  Sillamae   Partners   Molycorp  Tolleson   20  
  21. 21. Molycorp Mountain Pass n  59 years of operating history n  Current government permits allow operations through 2040 n  Mining operations re-started in Dec. 2010 n  Construction of new processing facility underway n  Plan provides for fully installed infrastructure n  Water n  Electricity n  Natural gas pipeline n  Easy access to Interstates, rail head, and California seaports Reserves  &  Resources   n  Facility is ISO 9000 and ISO 14000 certifiedCategory REO% k tons REO (Mlbs) n  205 Molycorp employees at Mountain PassSEC Guide 7: Proven and Probable 8.24 13,588 2,210 (815 employees company wide)NI 43-101: Measured & Indicated 6.68 24,341 3,251 n  ~ 425 additional contract workers now engaged in construction at Mountain Pass for ProjectNI 43-101: Inferred 6.32 10,446 1,320 Phoenix.NI 43-101 Totals 34,787 4,571Source: SRK report dated April 2010Note: See disclaimer for information on reserves and resources 21  
  22. 22. Molycorp Sillamae■  Molycorp Sillamae (Molycorp Silmet AS) is located in Sillamae, Estonia.■  One of the biggest rare metal and rare earth metal producers in Europe; about 550 employees.■  Manufacturing facilities do rare earth metals separation, rare metals production, and other metallurgical operations.■  Annual production ranges up to 3,000 mt of rare earth products and 700 mt of rare metal products (niobium and tantalum).■  Produces products for customers in Asia, Europe, CIS countries, and North and South America. 22  
  23. 23. Molycorp Tollesonn  Molycorp Tolleson (Molycorp Metals and Alloys) is located in Tolleson, Arizona, and has 26 employees.n  It currently produces neodymium-iron-boron (NdFeB) and Samarium Cobalt (SmCo) alloys, which are used to produce permanent rare earth magnets.n  It also produces additional custom-made alloys and high-purity rare earth metals in various forms (e.g., machined parts, foils, ingots, etc.).n  This facility has been producing rare earth products for more than 30 years and has developed patented mold technology and proprietary melting, casting, and solidification techniques.n  It has developed a unique safety process that has resulted in 14 years without a lost time accident, a safety excellence award from a large insurance carrier, and ISO certification since 1995. 23  
  24. 24. Molycorp Japann  Molycorp is opening a new customer service office in Tokyo, Japan in order to better serve its customers there and to build new relationships in the worlds largest rare earth consuming nation outside of China.n  The office will be located in the Tokyo Club Building (shown at left), 9th Floor, 3-2-6, Kasumigaseki, Chiyoda-ku, Tokyo.n  The office will be led by Yoshimasa Nomiyama, Molycorps Japan Country Manager. Previously, Nomiyama served as the Japan Country Manager for FMCs Lithium Division. 24  
  25. 25. The Role of AdvancedTechnologies 25  
  26. 26. Superior Technologies Molycorp  is  leading  the  industry  through  crea2ve  technologies  that  result  in   increased  efficiency,  lower  produc2on  costs,  and  lower  environmental  impact   Decreased  Technology  Innova2ons   Benefit   Costs   Energy  efficiency  increases    On-­‐site  natural  gas  combined  heat  and  power   &  emissions  reduc2ons✓✓✓✓   ✓ Same  amount  of  product  Higher  RE  recovery  and  process  efficiency     using  half  the  ore     ✓ Decreased  produc2on  cost,    Recycling  of  chemical  reagents   reduces  environmental  footprint   ✓ Decreased  produc2on  cost,  Significant  reduc2on  in  reagent  use   reduces  environmental  footprint   ✓ Recycle  chemical  reagents,  reduce  Near-­‐zero  wastewater  discharge   produc2on  costs   ✓ Decreased  costs,  reduces    Drama2c  reduc2on  in  fresh  water  needs   environmental  footprint   ✓ 26  
  27. 27. Superior Technology and Commercial Advantage Current Average Rare Earth Oxide Production Cost (per kg) Cost-­‐advantaged  processing  drives   significant  commercial  advantage:  $12.00 n  High-­‐power  quality  and  efficient  onsite  natural  gas   co-­‐genera9on  $10.00 $10.11 n  On-­‐site  reagent  produc9on  and  acid  recycling   n  Process  technology  breakthroughs     $8.00 n  Infrastructure   $7.00 (12/2010) $6.00 Compe2tors  face  increasing  costs:   $5.64 $5.58 (3/2010) n  Chinese  focus  on  reducing  environmental   $4.00 degrada9on  has  increased  cost  structure   n  In  December  2010,  Lynas  revised  upward  its   $2.00 $2.77 es9mated  costs  for  the  Mt.  Weld  project  4   n  In  March  2011,  Lynas  revised  upward  again  its   es9mated  costs  for  the  Mt.  Weld  project  5   $0.00 1   4,5   n  Molycorp  maintains  its  cost  structure  as  the   China   2,3   lowest  in  the  world  and  may  benefit  from   1  Based  on  SRK  produc9on  costs  as  of  April  28,  2010   synergies  in  the  Phase  2  expansion  process   2    IMCOA   3    Wang  Guozhen,  the  former  VP  of  China  Nonferrous  Engineering  and  Research  Ins9tute,  indicated  that  China’s  produc9on  costs  may  double  as  a  result  of  ongoing  environmental  reforms.     Base  cost  numbers  were  not  quan9fied.  (Metal-­‐Pages.com,  Jan.  7,  2011)   4  Based  on  Lynas  presenta9on  as  of  12/7/2010   5    Lynas  statement  as  reported  in  Metal-­‐Pages.com,  March  23,  2011.   27  
  28. 28. Toward A World-Class Rare Earth Industry 28  
  29. 29. The New Rare Earth EraTo  Be  A  Truly  World-­‐Class  Industry,  We  Must:   1   Provide customers with a diversity of global supply 2   Work together to advance technologies that reduce our environmental footprint 3   Increase transparency and advance forecasting of supply and demand projections 4   Maintain an unassailable integrity in our business ethics 5   Focus on customers who need our materials for manufacturing, rather than speculators 29  
  30. 30. Questions? 30  

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