Sumitomo to take $100 mln stake in Molycorp
sg.finance.yahoo.com
On Saturday 11 December 2010, 7:15
BOSTON (Reuters) - Japanese trading house Sumitomo Corp agreed to invest $130 million in U.S. rare-earth producer Molycorp Inc(NYSE:MCP) in exchange for a guaranteed seven-year supply of the minerals, which are used in products ranging from wind turbines to MP3 players.
Molycorp said Sumitomo agreed to buy $100 million of its common stock and provide $30 million in debt financing, to help fund its redevelopment of its Mountain Pass, California, mine and processing facility.
The news sent Molycorp shares up 3 percent to $31.70 in premarket trading. The company has a $2.55 billion market capitalization.
Molycorp, which went public in July at $14 per share, has seen its shares more than double in value since China slashed its export quotas on rare-earth elements.
"This financing will help to ensure that Molycorp will deploy its entire mine-to-magnets manufacturing supply chain on time and on budget," said Mark Smith, Molycorp chief executive officer. The company expects to spend about $500 million updating its mine, which was closed in 2002, at a time when rare earth prices were falling.
Japanese companies have been moving in recent months to secure reliable supplies of rare earths. Last month, Sojitz Corp reached a procurement deal with Australian miner Lynas Corp.
(Reporting by Scott Malone, editing by Gerald E. McCormick, Dave Zimmerman) |
