Your Cheat Sheet to the Molycorp Executive Conference Call

On Thursday, Molycorp, Inc. (NYSE:MCP) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what executives shared with analysts and investors.

Cerium & Significance

Anthony Young – Dahlman Rose: On the XSORBX, you kind of touched upon this. I just wanted to make sure I understand this correctly. The additional 100 tons that you guys are selling, is that to new customer or is that the customers from last year that are stepping up and taking more material?

Mark A. Smith – President and CEO: That is a customer from last year that tested our product, is very happy with it and is now taking significantly more product in over a three-year period.

A Closer Look: Molycorp Earnings Cheat Sheet>>

Anthony Young – Dahlman Rose: Then as far as those XSORBX sales are concerned, is that going to go in the cerium sort of line item when you guys were reporting numbers. Is that what that shakes out to be, the cerium products, or is it in the…?

Mark A. Smith – President and CEO: XSORBX will be placed in cerium category where we have…

James S. Allen – CFO and Treasurer: Yeah. It will probably be – eventually we are going to separate it out Anthony, because we do expect it to be significant. So, I would expect we’ll show that separately.

Anthony Young – Dahlman Rose: Just as far as the CapEx goes, you are breaking out a little bit differently with the Mountain Pass or the other CapEx and $105 million there that you guys have. What – not obviously specifically, but sort of just generalizations like what are those items are that’s being spent on?

Mark A. Smith – President and CEO: I’ll give you a couple of examples of those projects, Anthony. It’s kind of the differentiation, I guess for the most part, EPC versus non-EPC, but we have to – in order to get the pit operational, we had to do a certain amount of stripping. So we had stripping costs associated there when we start up the solvent extraction units as part of the Project Phoenix, we will have chemical fill costs that we have to experience. So, those are the types of things that are included under that figure. I think the interesting part of that is that about $50 million of that has already been spent, and we cover those additional operational projects, our capital projects under our annual operating plan. So, those have been paid for in prior years, this year and probably some next year, but it’s spread out over a period of time.

Pricing & Regulations

Colin Rusch – ThinkEquity: Can you talk a little bit about your XSORBX pricing strategy as you take these customers from test volumes into larger volumes. Can you talk about what’s happening with pricing, and then also if you could talk about the number of customers that you have testing the product right now?

Mark A. Smith – President and CEO: Thanks Colin, good to hear from you again. The pricing strategy is fairly simple. What we do is we take a look at the competition, the water treatment products out there that XSORBX has to compete with, and we calculate an equivalent efficacy and then we back calculate what the equivalent cerium price would be, so that we can measure it on a basis that we’re more used to. What we find is that we have got five or six different categories of water purification that we’re going to be using XSORBX in. The uses of those materials and efficacy comparisons will result in prices that can range from, anywhere from an equivalent cerium oxide price of $11 a kilogram all the way up to about $95 a kilogram. Obviously, our goal as a Company is to push as much of the use of XSORBX to the higher end of that number.

Colin Rusch – ThinkEquity: Then can you talk about the regulatory inspections. Are the lulls that you are experiencing, kind of within the expected range for the Mountain Pass projects?

Mark A. Smith – President and CEO: I don’t know if I would call it expected. I think it has been pretty intense as of late, but I will also say that our Company has worked through all of those inspection issues. We don’t discourage inspections, we think a certain set of eyes is a good thing to have out at the site to continue to enhance our safety culture and we think that it does ultimately make for a safer facility. But these inspections are intense. They do result in significant disruptions in your operations and the inspections in the first quarter were significant enough for us to note them in our first quarter call today because it did have an impact on our production.

Colin Rusch – ThinkEquity: Do you have any visibility to end of these things and what the implications might be? I mean, I trust that your history would decide May give you some comfort with some of the folks that are involved with the introduction?

Mark A. Smith – President and CEO: No doubt about it. When we were in a lower state of operations, we didn’t really receive a whole lot of regulatory inspections to speak of. Now that we are operating at a much higher level and we have overrated 1850 people on site as part of both our current operations and the project, it necessarily commands a higher attention from the regulatory agencies. But I do think that as we see the construction site of this wind down and we get into a more normal operating mode, you’ll just see the regular regulatory inspection level where they are active but they’re not as intense as they have been in the first quarter.

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