Molycorp Reports First Quarter 2012 Results

Molycorp, Inc. (NYSE: MCP) ('Molycorp? or the 'Company?) today announced
financial and operating results for the first quarter 2012.

'The start of 2012 has been tremendously productive as we continue to
hit each of our major milestones on the path to completion of Project
Phoenix,? said Mark Smith, President and Chief Executive Officer. 'The
start up of our concentrate production circuit is a major accomplishment
for the Company. I could not be more proud of the effort the Molycorp
family has devoted to get to this point, especially in light of the more
than 2.3 million hours we have worked in the construction of Project
Phoenix without a lost time incident. As we continue to build out
Project Phoenix to its full Phase 1 and Phase 2 capacities, we remain on
track to establish one of the world′s premiere and fully integrated rare
earths and rare metals companies.?

Smith continued, 'We expanded our sales of XSORBX? during the quarter,
and we look forward to the opportunities and potential synergies that
will arise from our pending acquisition of Neo Material Technologies.'

QUARTERLY RESULTS

Quarterly net sales were $84.5 million, significantly higher than $26.3
million in the first quarter of 2011. Molycorp Silmet (Sillamäe,
Estonia) and Molycorp Metals & Alloys (Tolleson, Arizona) were acquired
during the second quarter of 2011, which contributed revenue during Q1
2012. Even though the first quarter is traditionally soft due to the
impact of the extended Chinese New Year holiday, we were able to achieve
significantly higher revenue this quarter versus the first quarter of
2011.

Gross profit was $31.0 million during the quarter, compared to gross
profit of $9.6 million during the prior year period. Gross margin of
36.7% increased 23 basis points from the prior year period.

Molycorp′s first quarter GAAP ?earnings attributable to common
stockholders was negative $6.3 million, or a loss of $0.07 per diluted
share. Adjusted earnings of $0.18 per diluted share reflects certain
non-cash, out-of-ordinary, and business expansion items as compared to
U.S. GAAP earnings per share (e.g. a one-time non-cash expense of $6.6
million related to a foreign currency forward contract, $6.6 million in
consolidated inventory write-downs, and $2.5 million related to bad debt
expense).

FIRST QUARTER 2012 MILESTONE ACHIEVEMENTS

Molycorp continued its steady progress in achieving a number of
strategic business and operational milestones during the year. To date
in 2012, Molycorp succeeded in the following:

• 
  Start-up of its new Mill, Flotation Separator, and Paste Tailings
  Facility at Mountain Pass, which completes the rare earth concentrate
  production circuit of Project Phoenix and initiates the production of
  rare earth concentrate via the following:
  
  
  • 
    Mining of fresh rare earth ore at a daily rate of 2,800 short
    tons, four days per week.
    
  • 
    Crushing and blending of fresh ore.
    
  • 
    Start up of milling and flotation of fresh ore to produce rare
    earth concentrate, to be followed by processing of mine tailings
    in its Paste Tailings Plant and permanent disposal of mine paste
    tailings in a fully permitted, on-site facility.
    
• 
  Expanded by 36% its proven and probable reserves of rare earth
  minerals at Mountain Pass. The independent analysis used the SEC
  'Industry Guide 7? methodology and confirmed 18.4 million short tons
  of rare earth ore at an average ore grade of 7.98%.
  
• 
  Signed a three-year take-or-pay agreement for the annual sale of 100
  mt of proprietary XSORBX? water purification products into the
  recreational water markets. This single agreement will increase
  Molycorp′s 2012 XSORBX? sales by 81% as compared to all XSORBX? sales
  completed during 2011.
  
• 
  Announced an agreement to acquire Neo Material Technologies. The
  transaction, which is proceeding on schedule and is expected to close
  as planned in Q2/Q3 of this year, subject to the satisfaction of
  certain closing conditions, will create the world′s most integrated
  rare earth producer, combining a world-class rare earth resource with
  the world′s leading producer of value-added rare earth products.
  
• 
  Completed the $390 million capital investment from Molymet.
  

2012 OUTLOOK

As of May 10, 2012, the Company is re-affirming its annual production of
REO equivalent products to be in a range of 8,000 mt to 10,000 mt for
the full year across all of its facilities. The Company continues to
believe it is well positioned for year-over-year sales growth, given
existing customer orders and a growing pipeline of global business
opportunities.

As indicated in the previous quarter′s financial results call, the
Company conducted and completed an extensive formal review of the
Project Phoenix capital expenditure budget. The result of that analysis
showed that the Company anticipates no material changes to its Project
Phoenix EPC (engineering, procurement and construction) capital budget
of $895 million, assuming that the measures it has implemented to
mitigate certain adverse cost trends are successful and there are no
unanticipated project close out events. Certain additional capital
expenditures for other capital projects related to operations at
Mountain Pass are expected to total approximately $105 million. These
Mountain Pass operations capital projects are covered in the Company′s
annual operating plans. To date, $673.5 million has been spent toward
Project Phoenix and these other operations-related capital projects. The
Company continues to generate positive cash flow from operations,
maintain sufficient working capital to execute on its stated strategy,
and its balance sheet remains strong.

The Company also is reiterating its prior guidance related to cost of
goods sold (COGS) related to Project Phoenix ramping, as well as its
stated higher production costs on a consolidated basis. These
incremental costs are expected to normalize moving into 2013 as the
Company reaches its Phase 1 and Phase 2 production levels.

Commenting on recent market conditions, Smith said: 'It appears the
highly volatile pricing environment we experienced in 2011 has
moderated, and that is a very positive development for our business.
Customer orders are steadily picking up across the industry and pricing
has not only stabilized but has increased in some products. We continue
to strengthen the reliability of our overall supply chain through
Project Phoenix, and we are positioned to broaden and expand that supply
chain through our proposed acquisition of Neo Materials. While this year
remains a year of transition, we are confident that we are on target to
build one of the world's leading, fully integrated rare earths and rare
metals companies.?

Smith added: 'Successful execution of our stated strategy should lead to
meaningful growth and profitability in the years ahead, and we remain
fully committed to enhancing long-term sustainable value for our
customers, partners, employees and our shareholders.'

CONFERENCE CALL TODAY AT 4:30 P.M. EASTERN

Molycorp will conduct a conference call today to discuss these results
at 4:30 p.m. EDT, hosted by Mark Smith, Chief Executive Officer, and Jim
Allen, Chief Financial Officer. Investors interested in participating in
the live call from the U.S. should dial +1 (866) 362-4829 and reference
passcode number 71439698. Those calling from outside the U.S. should
dial +1 (617) 597-5346 and use the same confirmation number. A telephone
replay will be available approximately two hours after the call
concludes through May 17, 2012 by dialing +1 (888) 286-8010 from the
U.S., or +1 (617) 801-6888 from international locations, and entering
passcode: 78258730.

There will also be a simultaneous live audio webcast available on the
Investor Relations section of the Company's website at The webcast will be archived on the website for 90 days.

FINANCIAL STATEMENTS AND SUPPLEMENTARY TABLES

TABLE 1: BALANCE SHEET

TABLE 2: INCOME STATEMENT

TABLE 3: STATEMENT OF CASH FLOWS

TABLE 4: SEGMENT INFORMATION

TABLE 5: EARNINGS PER SHARE

TABLE 6: PRODUCT REVENUE, VOLUME, ASPS

TABLE 7: NON-GAAP ADJUSTED NET INCOME RECONCILIATION

NON-GAAP ADJUSTED NET INCOME

Adjusted EPS is a non-GAAP measure that excludes certain non-cash items
and other out-of-ordinary operational and business expansion items. The
Company′s management believes adjusting out these items, including but
not limited to purchase accounting adjustments, stock-based
compensation, out-of-ordinary expenses/income and other miscellaneous
charges is useful to investors because it provides an overall
understanding of the Company′s historical financial performance and
future prospects. Management believes adjusted EPS is an indication of
the Company′s base-line performance. Exclusion of these items permits
evaluation and comparison of results for the Company′s core business
operations, and it is on this basis that management internally assesses
the Company′s performance.

TABLE 8: NON-GAAP GROSS SALES

NON-GAAP GROSS SALES

Gross sales is a non-GAAP measure that is included to provide additional
detail on segment operations and vertical integration strategy. The
Company′s management believes this presentation provides a better
understanding of the performance of each operating segment in terms of
production volumes, inventory allocation, and costs.

ABOUT MOLYCORP

With offices in the U.S., Europe, and Japan, Molycorp, Inc. is one of
the world's leading rare earths and rare metals companies. Fully
integrated across the rare earth mine-to-magnets supply chain, it
currently produces rare earth oxides at its flagship rare earth mine and
processing facility at Mountain Pass, California, as well as rare earth
metals, rare earth alloys, and the rare metals niobium and tantalum.
Through its joint venture with Daido Steel and Mitsubishi Corporation,
Molycorp expects to begin manufacturing next-generation, sintered
neodymium-iron-boron (NdFeB) permanent rare earth magnets in 2013. The
rare earths and rare metals that Molycorp produces are critical inputs
in existing and emerging applications including: clean energy
technologies, such as hybrid and electric vehicles and wind power
turbines; multiple high-tech uses, including fiber optics, lasers and
hard disk drives; numerous defense applications, such as guidance and
control systems and global positioning systems; advanced water treatment
technology for use in industrial, military and outdoor recreation
applications; and other technologies. For more information please visit

SAFE HARBOR STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements that represent
Molycorp′s beliefs, projections and predictions about future events or
Molycorp′s future performance, including those regarding the proposed
acquisition of Neo Materials. Forward-looking statements can be
identified by terminology such as 'may,? 'will,? 'would,? 'could,?
'should,? 'expect,? 'intend,? 'plan,? 'anticipate,? 'believe,?
'estimate,? 'predict,? 'potential,? 'continue? or the negative of these
terms or other similar expressions or phrases. These forward-looking
statements are necessarily subjective and involve known and unknown
risks, uncertainties 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: the time required to consummate the proposed acquisition of
Neo Material; the satisfaction or waiver of conditions in the
arrangement agreement related to the proposed acquisition of Neo
Material; any material adverse changes in the affairs of Neo Material;
the ability to obtain required shareholder, regulatory, court or other
third-party approvals and consents and otherwise consummate the proposed
acquisition of Neo Material; Molycorp′s ability to achieve the strategic
and other objectives related to the proposed acquisition, including any
expected synergies; Molycorp′s ability to successfully integrate Neo
Material and achieve the expected results of the acquisition; Molycorp′s
ability to successfully obtain permanent financing to replace the bridge
financing in connection with the acquisition of Neo Material; Molycorp′s
ability to secure additional capital to implement its business plans;
Molycorp′s ability to complete its initial modernization and expansion
efforts, including the accelerated start-up of the Mountain Pass
facility, which management refers to as Project Phoenix Phase 1, and the
second phase capacity expansion plan, which management refer to as
Project Phoenix Phase 2, and reach full planned production rates for
REOs and other planned downstream products, in each case within the
projected timeframe; the success of Molycorp′s cost mitigation efforts
in connection with Project Phoenix, which, if unsuccessful, might cause
its costs to exceed budget; the final costs of the Project Phoenix Phase
1, including with accelerated start-up of the Mountain Pass facility,
and Project Phoenix Phase 2, which may differ from estimated costs;
uncertainties regarding global supply and demand for rare earths
materials; Molycorp′s ability to successfully integrate recently
acquired businesses; uncertainties associated with Molycorp′s reserve
estimates and non-reserve deposit information, including estimated mine
life and annual production; uncertainties related to feasibility studies
that provide estimates of expected or anticipated costs, expenditures
and economic returns; and REO prices, production costs and other
expenses for operations, which are subject to fluctuation; Molycorp′s
ability to maintain appropriate relations with unions and employees;
Molycorp′s ability to successfully implement its 'mine-to-magnets?
strategy; environmental laws, regulations and permits affecting
Molycorp′s business, directly and indirectly, including, among others,
those relating to mine reclamation and restoration, climate change,
emissions to the air and water and human exposure to hazardous
substances used, released or disposed of by Molycorp; and uncertainties
associated with unanticipated geological conditions related to mining.

For more information regarding these and other risks and uncertainties
that Molycorp may face, see the section entitled 'Risk Factors? of the
Company′s Annual Report on Form 10-K for the year ended December 31,
2011 and of the Company′s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2011. Any forward-looking statement
contained in this press release or the Annual Report on Form 10-K or the
Quarterly Report on Form 10-Q reflects Molycorp′s current views with
respect to future events and is subject to these and other risks,
uncertainties and assumptions relating to Molycorp′s operations,
operating results, growth strategy and liquidity. You should not place
undue reliance on these forward-looking statements because such
statements speak only as to the date when made. Molycorp assumes no
obligation to publicly update or revise these forward-looking statements
for any reason, or to update the reasons actual results could differ
materially from those anticipated in these forward-looking statements,
even if new information becomes available in the future, except as
otherwise required by applicable law.