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The Many Benefits of Project Acceleration Posted on 10/22/2011 6:55:00 PM
First, this three-month project acceleration will increase our production of rare earth product in 2012 by approximately 3,500 metric tons, which makes good business and economic sense. The acceleration will likely deliver significant added revenue to the company and added value to shareholders in the near term, while simultaneously addressing our customers' immediate needs. Based on today's rare earth prices, this investment would be recouped by our company in a matter of only a few months.
Second is the de-risking value this acceleration will deliver to our project. A rare earth mine and processing facility is comprised of many different operations and plants that covert the ore we mine into separated rare earth products. These operations include crushing, milling, flotation, cracking, leaching, separation/extraction, tailings processing and storage, power and steam generation, and others. Our project acceleration and modified start-up sequence will allow us to significantly lower the risk of start-up problems as we ramp up to our full Phase 1 production run rate.
Third, let me point out another recent de-risking of our project: the recent renewal for three years of our labor contract agreement with the United Steelworkers who work at Mountain Pass. This agreement was achieved approximately six months ahead of the deadline. Getting this agreement signed and sealed will help both management and labor focus that much more intensely on the timely execution of an accelerated Project Phoenix. We look forward to continuing our productive and decades-long relationship with the Steelworkers.
Fourth, accelerating the project also will help us achieve our full Phase 2 production capacity of 40,000 metric tons per year sooner. We are now estimating that Mountain Pass will achieve mechanical completion of Phase 2 by the end of 2012 — a full six months earlier than originally planned.
In sum, this nearly $895 million construction project is one of the largest and most complex now being undertaken in the U.S. mining and chemical processing industries. Most projects of this size and scope have a difficult time keeping to original project schedules. I am extraordinarily proud of the fact our team at Molycorp has the expertise, capability, and dedication needed to accelerate our project deliverables this much earlier than our original plan.
Our investment in project acceleration will yield returns on multiple levels to our customers and our shareholders.
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