morongobill's  Instablog

Good morning gentleman,

Just a quick letter here from a long time admirer of your company and potential stock purchaser. In addition, I also write this little blog that this open letter to you is being posted at.

For the last couple of weeks or so, rumors have been swirling all around the investment and mining communities and blogosphere that Molycorp is in danger of being taken over by
others- from manufacturing concerns looking for a sure supply of the rare earths that they need, to private equity firms possibly looking to Bain the company, parting it out after the takeover.

There are others writing about this possibility that are more knowledgeable in these areas, I defer to their judgment on this matter.

Recently, I wrote a couple of posts advising you to firm up the long term leadership for Molycorp by signing Mr. Karayannopoulos up for the far future with a new contract. I stand by that little piece of advice.

Now I would like to give you some more unsolicited advice. Please take it in the spirit that it is offered.

Several reports have mentioned that your firm is missing heavy rare earth elements at your
Mountain Pass property. Some even opine that this lack could directly have an effect in a
possible future takeover battle, should someone decide to mount an attempt based upon your current and near term stock valuation.

I have also thought the same thing and have finally decided to reach out to you and offer what I feel might be a step in the right direction; a strategic move by you which will pay off long term though perhaps not offering much help at this very instance when rumors
appear to seem to be coalescing into a good chance of gaining some substance in the form of an acquisition campaign.

Right across the valley from your Mountain Pass property, about 16 miles via good roads, lies a historic mining district in the state of Nevada- a state that welcomes your industry. In that area are thousands of acres of government land whose leases are 100% controlled by
a Canadian firm, Elissa Resources, run by Paul McKenzie. This land has had the first round of drilling surveys done and it appears to have a treasure trove of heavy rare earth elements, all to be had right next door to you.

From my conversation with that company via a high placed source recently, they may or may not do the second round of exploratory drilling and surveys in 2013. Who knows the reason for the delay: waiting for ore prices to go up, hanging onto the cash on hand, etc. I do know this based on their previous actions- they will get the money to do this via stock offering which will have the effect of diluting the previous shares out there.

This is where you step in.

I suggest that in the same manner that Toyotsu inked the deal too help Matamec Explorations as was reported today, that Molycorp step in and offer funding for the second round of drilling, along with making a commitment to either buy out the company upon receipt of a good drilling report or contract to do the mining and processing of the ore with royalties paid to Elissa and the shareholders.

It seems to me that a deal such as this one would be the last missing piece of the puzzle that
Molycorp has been putting together, and acquisition of the Thor REE play and its' potential treasure chest of heavy rare earth elements could be just what the doctor ordered for Molycorp to further cement its' hold on the market begun with its' "mine to magnets" program.

Thank you for listening to my thoughts and best wishes in the struggles to come.

Please note that this blogger may or may not acquire a stock position in MCP, ELSR, ELI or any other stock, and all opinions expressed are just that, his opinions, worth as much or as less as any other talking head's. This blogger is not a registered financial analyst or broker, and has no intention of becoming one in the future, nor is he a mining expert or claim to have any expertise in the area.

William McDonald