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Chemical and Industrial Engineer from Purdue University. Has worked as a business consultant, and investment advisor, and at a multinational oil company.
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  • #7 - The Top 10 REEsons To Buy Molycorp
    7. Time to Market


    From the 1/24/11 MCP Form S-1 page 6:

    "We recommenced mining operations in December 2010 and are preparing to recommence milling operations, which we expect to occur in the first quarter of 2012. Recommencement of mining and milling operations is coincident with our initial modernization and expansion plan, which will give us the capacity to efficiently produce at a rate of approximately 19,050 mt of REO per year by the end of 2012. Additionally, upon the completion of our capacity expansion plan, we expect to have the ability to produce up to approximately 40,000 mt of REO per year by the end of 2013."


    The future is always vague and unknown. The shorter the time frame that we try to predict the more accurate we will be. Of all the new REE projects being planned only Lynas and Molycorp expect to be producing product in the next 15 months. Most of the other REE projects are 4-5 years out. Molycorp has already navigated a significant number of hurdles and the majority of the needed completion and construction steps are in their control. Many of these other companies projects have significant hurdles that are not in their control and the long time to market could produce many unseen changes.

    Tags: MCP
    Feb 03 10:23 AM | Link | Comment!
  • #8 - The Top 10 REEsons To Buy Molycorp
    8. Pending Short Squeeze (writen before Wed run up)
    On 1-14-2011 MCP had 11.2% of the float sold short.
    Currently almost no brokerages can find shares to allow short sales.
    While REE stock prices have been falling this month the average Rare earth oxide price is up 11.9% since the middle of January.


    Since multiple brokerages do not have share available to short the short interest must have grown since the middle of January. The stock price has also continued to fall during this time which is another indicator of increased short sales. Basically the entire float that is in public hands has already been shorted in anticipation of the initial lockup expiration. So at some point this will be bought back and assume normal shorting levels. Once Molycorp gets some positive news, recalculated earnings assumptions, additional China restrictions, or supply chain deals, then the fundamentals will be in place for an enormous short squeeze. Even the short interest to be reported in mid February that will reveal today's actual levels may be enough to spark the squeeze as traders not even in the stock today could jump in recognizing the situation.
    Any shares that come on the market due to the original unlock expiration may also add to the short pool. This could put additional pressure on the stock until fundamentals generate the next positive news story.

    Tags: MCP
    Feb 02 11:20 PM | Link | Comment!
  • #9 - The Top 10 REEsons To Buy Molycorp
    9. Undefined Reserves - MCP may have more HREE's than known


    From the 1/24/11 MCP Form S-1 page 4

    "Our reserves are bastnasite, but there are also known monazite occurrences on our property that we are currently examining."


    Molycorp took the time to put this in their report for a reason. When you look back at past Molycorp published information they have had many instances of forecasting future happenings. They mentioned looking into doubling plant capacity months before it happened. Then MCP told the market again that they were going to bring it up at their next board meeting. They have also mentioned to the market interest in some of the supply and JV deals that they performed well before the deals actually happened. 

    Their statement may be translated to be that they have monazite on their property and believe that it could be of commercial significance. Their statement that they are currently examining it probably means that they are performing core samples and testing to determine the reserve quantity. Let the shorts beware if it turns out that Molycorp has HREE's now and the market does not need to wait 4-5 years for other HREE mines to come online.

    Tags: MCP
    Feb 02 2:58 PM | Link | 1 Comment
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