Molycorp (NYSE:MCP), the only rare earth producer in the Western hemisphere, announced on Thursday that it plans to spend $114 million to accelerate by three months the start-up of its rare earth processing facility.
Molycorp's stock slid on Thursday after the news. After hitting a high of $40.45 on Wednesday, the stock dropped as low as $36.59 before recovering to close at just under $38.
The company's estimated 2012 production will rise by 3,500 metric tons to between 8,000 and 10,000 metric tons annually. The new spending will help the company achieve full phase one production of 19,050 metric tons per year of rare earth oxide equivalent three months earlier than previously planned.
In anticipation Molycorp will commence mining and stockpiling of fresh rare earth ore next week.
"We are accelerating our start-up because of robust rare earth oxide markets and very favorable project economics," said Smith in a statement.
"Every month that we accelerate our start-up provides that much more product to customers who need it now. This acceleration also expands the diversity of global supply, which is an increasingly urgent matter for rare earth consumers."
"By accelerating our start-up, we also further de-risk the overall project by allowing for a more orderly and sequential start up of the various circuits of this highly complex plant," Smith added.
Funds will come from current cash flow and existing cash balances.