Why Molycorp Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of rare-earth miner Molycorp climbed 10% today after it announced that its chloralkali plant at Mountain Pass, California, is now mechanically complete and that full-scale commissioning operations have commenced.

So what: The stock has slumped this year on concerns over the plant's progress, as well as general weakness in rare earth prices, but today's announcement reignites some optimism over Molycorp's production growth going forward. Additionally, the chloralkali plant is expected to help management achieve its cash production cost targets, helping ease some investor worry over the company's mounting losses.

Now what: Molycorp expects to enter into production in the fourth quarter of 2013. "These are the last major construction activities of Project Phoenix, the rebuild of Mountain Pass," said CEO Constantine Karayannopoulos. "Bringing these units online will help us focus on increasing production while continuing to reduce our production costs." So while Molycorp is certainly still too speculative for average investors, today's good news, coupled with the stock's still-depressed price, might provide resource-savvy Fools with an attractive risk/reward trade-off.

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The article Why Molycorp Shares Popped originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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