Molycorp and Sumitomo Agree to USD$130 Million Equity and Debt Investment in Molycorp in Exchange for Rare Earth Supply Agreement

Molycorp, Inc. (NYSE: MCP) today announced that it has entered into a
Memorandum of Understanding (MOU) 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.

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.

About Molycorp

Colorado-based Molycorp, Inc. is the only rare earth oxide, or REO,
producer in the Western Hemisphere and currently produces approximately
3,000 metric tons of commercial rare earth materials per year. Following
the execution of Molycorp's 'mine-to-magnets' strategy and the expected
completion of its modernization and expansion efforts at its Mountain
Pass, California processing facility by the end of 2012, Molycorp
expects to produce at a rate of approximately 20,000 metric tons of REO
equivalent per year and intends to offer a range of rare earth products,
including high-purity oxides, metals, alloys, and permanent magnets.

This press release contains forward-looking statements that represent
Molycorp′s ('Company?) beliefs, projections and predictions about future
events or its future performance. You can identify forward-looking
statements 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 the
Company′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 Company′s ability to enter into definitive agreements for the
transactions contemplated by the Memorandum of Understanding, including
within the anticipated timeframe; the Company′s ability to secure
sufficient capital to implement its business plans; the Company′s
ability to complete its modernization and expansion efforts and reach
full planned production rates for REOs and other planned downstream
products; uncertainties associated with the Company′s reserve estimates
and non-reserve deposit information; uncertainties regarding global
supply and demand for rare earth materials; the Company′s ability to
maintain appropriate relations with unions and employees; the Company′s
ability to successfully implement its 'mine-to-magnets' strategy;
environmental laws, regulations and permits affecting the Company′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 the Company; uncertainties associated with
unanticipated geological conditions related to mining; and other risks
discussed in the Company′s filings with the U.S. Securities and Exchange
Commission, including the Company′s Quarterly Report on Form 10-Q for
the period ended September 30, 2010, which filings are available from
the SEC.

Any forward-looking statement you read in this press release reflects
the Company′s current views with respect to future events and is subject
to these and other risks, uncertainties and assumptions relating to the
Company′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. The Company
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.

Molycorp Company Contact:

Jim Sims

Director of Public
Affairs

1 (303) 843-8067

Jim.Sims@Molycorp.com

or

Molycorp
Investor Relations:

ICR, Inc.

Gary T. Dvorchak, CFA ICR,
LLC

Senior Vice President

1 310-954-1123

Gary.Dvorchak@icrinc.com