Molycorp Reports 1Q 2011 Results: 'Project Phoenix? on Time and on Budget; Volumes and Revenues Increase; Company′s 'Mine-to-Magnets? Forward Integration Strategy Accelerated by Acquisitions

Molycorp, Inc. (NYSE: MCP) today announced its financial and operating
performance for the first quarter of 2011.

Molycorp generated revenue of $26.3 million in 1Q 2011, an increase of
21% sequentially and 770% year over year. Sequential growth was balanced
between increased volumes and higher realized prices. Year-over-year
growth was driven by higher volume, substantially higher market prices
for rare earth oxides (REOs), and our expanded product suite, which is
commanding higher prices than the lanthanum products that comprised
essentially all of sales in 1Q 2010.

Net loss in 1Q 2011 narrowed to ($0.9 million) and net loss attributable
to common stockholders was ($2.2 million), or ($0.03) per share.
Excluding stock-based compensation expense, Molycorp generated adjusted
net income of $2.0 million and adjusted net income attributable to
common stockholders of $0.8 million, or $0.01 per share.

The Company sold 696 metric tons of REO products in the first quarter of
2011, a 9% sequential increase and 65% year-over-year increase. The
Company realized an average sales price of $37.73 per kilogram, compared
to an average sales price of $34.02 per kilogram in 4Q 2010, and an
average sales price of $7.13 per kilogram for 1Q 2010. Excluding sales
under a contract with a price cap currently in effect ? which covers one
product line and terminates prior to the commencement of run rate
production in 2012 at Molycorp′s new Mountain Pass processing facility ?
our average sales price during 1Q 2011 was $65.95 per kilogram. Market
prices for REOs continued to increase throughout April.

'We were very pleased to see both sales volume and revenue increase for
Molycorp in the first quarter of 2011, as this quarter is typically
characterized by slow buying and depressed activity in China due to its
New Year celebrations,? said Mark Smith, Molycorp President and Chief
Executive Officer. 'In spite of this, and in spite of the natural
catastrophes experienced by Japan in the first quarter, we continued to
see strong global demand for our products. Market prices of REOs rose
significantly in the first quarter, helping to boost our price
realizations.?

'A very significant development in the first quarter is the fact that we
saw domestic Chinese REO prices rising along with prices for Chinese
rare earth exports,? Smith said. 'This points to several trends that we
have noted for some months now: growing demand by China′s burgeoning
manufacturing sector for Chinese rare earths; continuing success in the
Chinese government′s efforts to crack down on illegal mining and
exports; greater industry consolidation forced by the Chinese
government; continuing impact on production of new environmental
regulations on Chinese producers; government-mandated production quotas;
and a halt to the issuance of new licenses for domestic exploration.?

'All of these trends underscore our long-held view that China will
continue to restrict rare earth exports to the rest of the world, and is
likely on a path to becoming a net rare earth importer in the next
several years,? Smith said.

'This is also why the two acquisitions we have made so far this year are
so important,? Smith added. 'They provide us with expertise, an
experienced workforce, and production capabilities in four of the five
production steps needed to deploy the world′s first fully integrated
mine-to-magnets supply chain outside of China. All that remains is for
Molycorp to integrate permanent rare earth magnet manufacturing
capabilities into our supply chain, and we are on track to do just that.?

First Quarter 2011 Financial Results

NOTE:Throughout this release, Molycorp′s adjusted, or
non-GAAP, financial performance is discussed.These measurements
reflect how the management and directors of Molycorp analyze the
business on a regular basis.The adjusted measurements segregate
certain non-cash items such as stock-based compensation and certain
special items.While management seeks to understand the business
from a cash flow perspective, these non-cash and other charges are
important to understanding the Company′s performance over the long term.Therefore, readers are highly encouraged to review the non-GAAP to
GAAP reconciliation supplied at the end of this release.

The table below sets forth approximate volume sold and revenue in the
first quarter.

Lanthanum product revenue in 1Q 2011 was primarily influenced by sales
of lanthanum oxide, which commands a higher price per kilogram than
Lanthanum concentrate. Sales of lanthanum products in 1Q 2010 were
mostly lanthanum concentrate. Ceric hydrate and didymium products
accounted for nearly half of sales in the first quarter of 2011,
compared to a negligible amount in the year-ago period. Our current
expanded product suite commanded higher prices than the lanthanum
products that comprised essentially all of sales in 1Q 2010.

GAAP cost of goods sold in 1Q 2011 was $15.4 million, and approximated
adjusted cost of goods sold (adjusted cost of goods sold excludes $35
thousand of stock-based compensation). The adjusted cost of goods sold
in 1Q 2011 of $15.4 million compares to adjusted cost of goods sold of
$13.5 million in 4Q 2010 and $6.0 million in 1Q 2010. Cost of goods sold
consists of production costs and the cost of product that is purchased
and resold with no additional processing. The primary products purchased
this quarter were lanthanum oxide, cerium oxide, didymium metal and
praseodymium oxide.

Gross margin of 41.4% approximated adjusted gross margin for 1Q 2011 of
41.5%, which improved by 3.8 percentage points from the adjusted gross
margin of 37.7% in 4Q 2010. The increase in adjusted gross margin is
primarily attributable to continuing increases in the market prices for
REO. The adjusted gross margin percentage for Q4 2010 excluded a $3.1
million impairment charge related to our current mill and crusher
assets, due to the decision to replace rather than refurbish those
assets.

Selling, general, and administrative expense (excluding stock-based
compensation) for 1Q 2011 was $8.3 million, compared to $5.9 million in
4Q 2010 and $4.5 million in 1Q 2010. 1Q 2011 selling, general and
administrative expenses reflect increased staffing attributable to
construction, business development activities, as well as additional
legal, compliance and corporate governance expenses.

Net loss and adjusted net income for 1Q 2011 were ($0.9 million) and
$2.0 million, respectively, as compared to net loss and adjusted net
income of ($7.9 million) and $2.2 million, respectively, for 4Q 2010,
and a net loss of ($7.7 million) for 1Q 2010.

?We are pleased to again report improved financial results as we
capitalize on robust pricing conditions in our principal rare earth
markets,? commented Jim Allen, Molycorp′s Chief Financial Officer and
Treasurer. 'The Company generated cash flow from operations of $5.2
million in the first quarter, and we have now achieved a revenue run
rate of over $100 million per year.?

Acquisitions Advance 'Mine-to-Magnets? Forward Integration Strategy

On April 1, 2011, Molycorp completed the acquisition of a 90.023%
controlling stake in AS Silmet, in a transaction valued at approximately
$89 million. Molycorp acquired 80% of the outstanding shares of AS
Silmet from AS Silmet Grupp in exchange for 1,593,419 shares of Molycorp
common stock. AG Silmet Grupp retains a 9.977% ownership interest.
Molycorp acquired the other 10.023% from Treibacher Industrie AG for
approximately $9.0 million in cash.

Based in Sillamäe, Estonia, AS Silmet, now known as Molycorp Silmet AS,
is one of only two rare earth processing facilities in Europe. The plant
will focus on producing rare earth oxides, rare earth metals, and pure
niobium and tantalum metals. Initially, Molycorp Silmet AS will source
its feedstock equally from Molycorp′s Mountain Pass facility and from
external sources. The acquisition approximately doubles Molycorp′s REO
production capacity from 3,000 to 6,000 metric tons per year.

On April 15, 2011, Molycorp completed the acquisition of Arizona-based
Santoku America, Inc., for $17.5 million in cash. The new company is
known as Molycorp Metals and Alloys. The acquisition gives Molycorp
access to important intellectual property for manufacturing Neodymium
and Samarium magnet alloy products, as well as the capability to produce
Samarium metal. Santoku America′s parent company, Japan-based Santoku
Corporation, will continue to consult on the production of these
products, as well as market and distribute them on a non-exclusive basis.

'These acquisitions are expected to boost our 2011 production of
high-purity rare earth oxides, metals and alloys, all of which should be
accretive to 2011 sales and revenue,? said Jim Allen. 'They also give us
strategically important production capabilities in rare earth metals and
alloys, which moves us further down the value-added rare earth
manufacturing supply chain.?

Project Phoenix Milestone Achievements

In the first quarter of 2011, and into the second quarter of 2011, the
Company achieved all scheduled milestones in its development plan, in
addition to several others:

• 
  Construction of the Company′s new, state-of-the-art rare earth
  processing facility at Mountain Pass, California ? known as 'Project
  Phoenix? ? is progressing on time and on budget, and all project
  milestones were met in the first quarter of 2011. Recent milestones,
  year to date, include the following:
  
  
  • 
    Securing an air quality permit from the Air Quality Management
    District for our Combined Heat and Power facility;
    
  • 
    Construction launched in all project areas;
    
  • 
    Major equipment on order as scheduled; and;
    
  • 
    Initial building permits in place.
    
• 
  The Board of Directors approved the execution of Phase 2 of its
  modernization and expansion plan. Upon the anticipated completion of
  Phase 2 in 2013, the Company expects to be able to produce up to
  approximately 40,000 metric tons of REO per year.
  
• 
  Molycorp raised net proceeds of $199.6 million in a public offering of
  Series A Mandatory Convertible Preferred Stock.
  
• 
  The Company was invited by the U.S. Department of Energy (DOE) to
  advance to the second round of consideration for a federal loan
  guarantee administered by DOE under Title XVII of the Energy Policy
  Act of 2005. The DOE is currently conducting a due diligence review
  and has provided the Company with a preliminary term sheet.
  

Liquidity and Capital Expenditures

Our estimated capital expenditures of $781 million encompass the cost of
restarting mining operations, the modernization and expansion of our
Mountain Pass facility, and the addition of rare earth metal and alloy
production capabilities. Capital expenditures for the project totaled
$39.6 million for the three months ended March 31, 2011 and $71.8
million to date.

The Company plans to finance its remaining capital expenditure plan with
its available cash balances of approximately $492.5 million as of March
31, 2011, and $130 million of proceeds from the issuance to Sumitomo of
equity and debt, if that deal is consummated. We expect additional
financing from anticipated revenue from operations, and some combination
of traditional debt financing, project financing and/or government
programs.

During 1Q 2011, Molycorp completed a public offering of its 5.50% Series
A Mandatory Convertible Preferred Stock, issuing 2,070,000 shares for
$100.00 per share. Net proceeds of the offering were $199.6 million.
Each share of Series A Mandatory Convertible Preferred Stock will
automatically convert on March 1, 2014 into between 1.6667 and 2.0000
shares of common stock.

On May 4, 2011, the Company declared a cash dividend of $1.604 per share
on the Series A Mandatory Convertible Preferred Stock. The dividend will
be paid on June 1, 2011 for holders of record at the close of business
on May 15, 2011. The Company elected to pay the $3.3 million dividend in
cash given its current cash balance, its anticipated revenue and
earnings, and its confidence in continued robust conditions in the rare
earth market.

The Company believes that revenue for the balance of the year will be
sufficient to fund operating activities, which include corporate
selling, general and administrative expense.

Business Outlook

Independent forecasts¹ estimate that global rare earth demand
is expected to grow from 125,000 metric tons in 2010 to 185,000 metric
tons in 2015, and to 280,000 metric tons in 2020.

For the remainder of 2011 and for the foreseeable future, the Company
anticipates that the Chinese government will follow through on its
announced intent to continue to limit the quantity of rare earth oxides
available outside of China. Independent estimates of China′s full-year
2011 rare earth export quotas predict that these will be set by China′s
government below 30,000 metric tons, which compares to a total global
demand outside of China of between 55,000 to 60,000 metric tons. This
trend should create opportunities for the Company to increase sales
volumes and improve pricing terms for its products.

The recent earthquake and tsunami in Japan may have a short-term
negative impact on market demand in the second and third quarters. The
Company expects that demand should fully recover by the fourth quarter.

Forward-Looking Production Guidance

The Company is providing the following guidance in terms of ranges for
expected production of rare earth products at its three production
facilities for the remainder of 2011.

_____________________

¹ Industrial Minerals Company of Australia Pty Ltd, May 2011.

Investor Conference Call

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 (888) 428-9507 and reference
confirmation number 6752539. Those calling from outside the U.S. should
dial +1 (719) 457-2704 and use the same confirmation number. A telephone
replay will be available approximately two hours after the call
concludes through Tuesday, May 24, 2011 by dialing +1 (877) 870-5176
from the U.S., or +1 (858) 384-5517 from international locations, and
entering passcode: 6752539.

There will also be a simultaneous live audio webcast available on the
Investor Relations section of the Company's website at www.molycorp.com.
The webcast will be archived on the website for 60 days.

About Molycorp

Colorado-based Molycorp, Inc. is the only REO producer in the Western
Hemisphere and currently produces more than 3,000 metric tons of
commercial rare earth materials per year. In addition to its flagship
rare earth mine and processing facility at Mountain Pass, California,
Molycorp also owns a controlling interest in the Estonia-based Molycorp
Silmet AS, which has a production capacity of 3,000 metric tons of rare
earth products and 700 metric tons of rare metal products annually and
is one of the largest rare metal and rare earth metal producers in
Europe. Additionally, Molycorp owns and operates Arizona-based Molycorp
Metals and Alloys, one of the leading producers of high-purity rare
earth alloys and metals outside of China. Following the execution of
Molycorp's 'mine-to-magnets' strategy and the expected 2012 completion
of Phase 1 of its modernization and expansion efforts at its Mountain
Pass, California processing facility, the Company expects to produce at
a rate of approximately 19,050 metric tons of REO equivalent per year
from Mountain Pass. The Company expects to achieve an annual production
capacity at Mountain Pass by the end of 2013 of approximately 40,000
metric tons of REO equivalent per year after the completion of Phase 2
of its modernization and expansion efforts. Molycorp intends to provide
to the market a range of rare earth products, including high-purity
oxides, metals, alloys, and permanent magnets. The Company currently
sells products to customers in Europe, North and South America, Asia,
Russia, and other previous Soviet Union countries.

Supplemental Information ? Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in
accordance with U.S. generally accepted accounting principles (GAAP),
Molycorp also discloses the total and per share amounts of adjusted net
income (loss) before income tax, as well as adjusted cost of goods sold
and gross margin percentage. These non-GAAP measures are provided for
additional information only and they should not be considered in
isolation or as a substitute for any financial measures under GAAP.
Other companies may define similar measures differently.

Adjusted net income (loss), including the related per share amount, and
adjusted gross margin percentage are determined by adjusting the
corresponding GAAP measure for certain significant non-cash or special
items. Molycorp′s management believes the use of these non-GAAP measures
provides investors and analysts with useful additional information for
the analysis of the Company′s fundamental operations on a recurring
basis.

Safe Harbor Statement Regarding Forward-Looking Statements

This release contains forward-looking statements that represent our
beliefs, projections and predictions about future events or our 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 our 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: our ability to secure sufficient capital to implement our
business plans, including our ability to enter into definitive
agreements for the transactions contemplated with Sumitomo and to obtain
financing through the U.S. Department of Energy; our ability to complete
our modernization and expansion efforts and reach full planned
production rates for rare earth oxides and other planned downstream
products; our ability to successfully integrate the acquisitions of
Molycorp Silmet AS and Molycorp Metals and Alloys; uncertainties
associated with our reserve estimates and non-reserve deposit
information; uncertainties regarding global supply and demand for rare
earth materials; our ability to maintain appropriate relations with
unions and employees; our ability to successfully implement our
'mine-to-magnets? strategy; commercial acceptance of our new products,
such as XSORBX?, environmental laws, regulations and permits affecting
our 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 us; uncertainties associated with
unanticipated geological conditions related to mining; actions by the
Chinese government with respect to rare earth exports; and those risks
discussed and referenced in the section entitled 'Risk Factors?
described in Part II, Item 1A of our most recent Quarterly Report on
Form 10-Q.

Any forward-looking statement you read in this release reflects our
current views with respect to future events and is subject to these and
other risks, uncertainties and assumptions relating to our 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. We assume 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.

This release also contains statistical data and estimates we obtained
from industry publications and reports generated by third parties.
Although we believe that the publications and reports are reliable, we
have not independently verified their data.

Molycorp, Inc.:

Jim Allen, +1 303-843-8058

Chief
Financial Officer

James.Allen@Molycorp.com

or

Investor
Relations:

ICR, LLC

Gary T. Dvorchak, CFA, +1
310-954-1123

Senior Vice President

Gary.Dvorchak@icrinc.com