Molycorp (OTCMKTS:MCPIQ) may not be producing rare earths at its Mountain Pass facility in California anymore, but the US rare earths company is still making headlines.
People with knowledge of the matter — who asked not to be identified — told Bloomberg that other bidders include Aluminum Corp. of China (Chalco) (NYSE:ACH) and Shenghe Resources, a Chinese rare earths miner and processor. All have reportedly made bids well above the highest appraised value for Molycorp’s assets (about US$443 million).
That might seem strange to some market watchers, especially following reports that Molycorp received no offers for its assets back in December, ahead of its first-round bidding deadline. However, the same sources mentioned above told Bloomberg that overseas bidders could be expecting to gain value and cost savings from combining two similar businesses, and are thus willing to offer higher prices for Molycorp’s assets.
Get Our Expert Guide to Rare Earth Investing FREE!
Download this FREE Special Report, Rare Earth News and Rare Earth Metals Prices: What you Need to Know.
It is unclear why lithium-focused Galaxy would be interested in the rare earths miner. Currently, the company is focused on bringing its Mt Cattlin spodumene mine in Australia back into production by the end of Q1 2016. More importantly, it’s worth noting that Galaxy Resources’ AU$170-million market cap falls well below the ~US$400 million valuation for Molycorp’s assets.
In any case, the news appears to have helped the share prices of both Molycorp and Galaxy. The latter saw its share price rise 7.69 percent, to AU$0.14, on around twice its average daily trading volume, while Molycorp was up over 80 percent, or US$0.023, to US$0.0759 on four times its average trading volume.
Molycorp filed for Chapter 11 bankruptcy protection this past June and put its Mountain Pass operations in California on care and maintenance in August. For a brief period, there was a rumor that Australian rare earths producer Lynas (ASX:LYC) might take over Molycorp, but there has been no news of a bid from Lynas so far.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
The post Molycorp News: Shares Gain Over 80 Percent on News of Asset Bids appeared first on Investing News Network.