Dec 13 2010
Molycorp, Inc. (NYSE: MCP) today announced that it has entered into a Memorandum of Understanding with Sumitomo Corporation pursuant to which Sumitomo will assemble an equity and debt financing package in the aggregate amount of $130 million for Molycorp's use in completing its rare earth "Mine-to-Magnets" manufacturing supply chain.
In exchange, Molycorp will provide Sumitomo with substantial quantities of several rare earth products over the next seven years.
“We are very pleased to have entered into the Memorandum of Understanding with Sumitomo”
Pursuant to the transactions contemplated by the MOU, Sumitomo will purchase $100 million of Molycorp common stock and provide Molycorp $30 million in debt financing at a low interest rate. Sumitomo is seeking financial support from the Japan Oil, Gas and Metals National Corporation (JOGMEC), a Japanese government entity, in connection with this effort. The transactions contemplated by the MOU are subject to finalization of definitive agreements and the financing transactions are expected to close in February 2011.
Molycorp is expected to provide Sumitomo with approximately 2,500 metric tons per year of cerium- and lanthanum-based products and 250 metric tons of didymium oxide (a combination of neodymium and praseodymium) per year from its current production facility at Mountain Pass, California. Following completion of its new, state-of-the-art rare earth processing facility at Mountain Pass, Molycorp will provide to Sumitomo for an additional five years approximately 3,000 metric tons of cerium- and lanthanum-based products per year and 250 metric tons of didymium oxide per year.
"We are very pleased to have entered into the Memorandum of Understanding with Sumitomo," said Mark Smith, Molycorp's Chief Executive Officer. "This financing will help to ensure that Molycorp will deploy its entire mine-to-magnets manufacturing supply chain on time and on budget."
"The Memorandum of Understanding underscores our high level of confidence in Molycorp's ability to execute its 'mine-to-magnets' business strategy and to provide competitive and stable sources of high-quality rare earth products for many years to come," said Rei Ito, General Manager of Sumitomo's Inorganic Chemicals & Industrial Minerals Department.
Source: Molycorp, Inc.