MCP SERIES A MANDATORY CONVERTIBLE PREFERRED STOCK

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We may be subject to claims under environmental laws, regulations and permits for toxic torts, natural resource damages and other liabilities, as well as for the investigation and remediation of soil, surface water, groundwater and other environmental media. The percentage of our total sales that is attributed to these customers is as follows for the indicated periods. As a limited liability company, the taxable income and losses of Molycorp, LLC were reported on the income tax returns of its members. Any future changes in these laws, regulations or permits or the interpretation or enforcement thereof or any sanctions, damages, costs, obligations or liabilities in respect of these matters could have a material adverse effect on our business, results of operations and financial condition. Our board of directors and management have broad discretion over the use of our cash reserves and might not apply this cash in ways that increase the value of your investment. Some of the information that we attribute to IMCOA in this prospectus has been derived from those reports. As a result, significant changes in volume, prices or other terms with these customers, prior to the completion of the restart of our mining operations and modernization and expansion of the Mountain Pass facility could have a material adverse effect on our business, results of operations and financial condition.

Terms used herein but not defined herein shall have the respective meanings as set forth in the applicable Preliminary Prospectus. As a result, we may not ever achieve profitability. Accordingly, holders of our common stock must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their shares of common stock. Conversion rates are affected by a number of factors, including geological variability, applicable mining methods and changes in safe mining practices, economic considerations and new regulatory requirements. A trading market that will provide our stockholders with adequate liquidity may not be sustained. We intend to continue to improve the efficiency of our operations through the creation and use of technically advanced manufacturing processes for production of rare earth products, which will allow us to deliver high-quality rare earth products at globally competitive prices. The consummation of these transactions with Sumitomo is subject to numerous conditions and finalization of definitive agreements.

The success of our business will depend on our ability to manage our costs. We may not successfully establish or maintain collaborative, joint venture and licensing arrangements, or establish new ones, which could adversely affect our ability to develop and commercialize our rare earth products.

Accordingly, holders of our common stock must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their shares of common stock. If third parties are successful in their claims, we might have to pay substantial damages or take other actions that are adverse to our business. Our Chinese competitors may have greater financial resources, as well as other strategic advantages to maintain, improve and possibly expand their facilities.

We may not be able to convert existing letters of intent with customers for the sale of REO products into binding contracts, or meet the conditions necessary for customers to commence purchasing under existing contracts, which may have a material adverse effect on our financial position and results of operations. In addition, other licenses that may be necessary for some of these downstream processing steps have not yet been obtained, and we are currently only in negotiations with respect to a joint venture for the production of finished magnets and have only entered into a non-binding letter of intent with Neo Material that contemplates a technology transfer agreement with respect to the production of rare earth metals, alloys and seriee.

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MOLYCORP INC

Immediately prior to the consummation of Molycorp, Inc. According to Roskill Consulting Group Limited, or Roskill, global REO production in was approximatelymt, of which only approximately 4, mt originated from outside of China, with Molycorp producing approximately 1, mt from serids stockpiles and Russian producers producing approximately 2, mt. Failure to comply with these laws, regulations and permits may result in the assessment of administrative, civil and criminal penalties, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits and other sanctions.

A trading market that will provide our stockholders with adequate liquidity may not be sustained. Our board of directors can issue, without stockholder approval, preferred stock with voting and conversion rights that could adversely affect the voting power of the holders of common stock. Upon execution of definitive agreements with Sumitomo, we also expect to provide Sumitomo with approximately 1, mt per year and following completion of our initial modernization and expansion plan, approximately 1, mt per year of cerium and lanthanum-based products and mt per year of cpnvertible oxide for a period ending five years after the completion of our initial modernization and expansion of the Mountain Pass facility, at market-based prices mndatory to a floor.

The market price of our common stock, which may fluctuate significantly, will directly comvertible the market price for our mandatory convertible preferred stock. If we are unable to prrferred and maintain effective internal controls, particularly in a period of anticipated rapid growth, our operating results and financial condition could be harmed. Stoxk comply with Sarbanes-Oxley requirements, especially during this period of anticipated rapid growth, we will need to further upgrade our systems, including information technology, implement additional financial and management controls, reporting systems and procedures and hire additional accounting, finance and legal staff.

In all other respects, this term sheet is qualified in its entirety by reference to the applicable Preliminary Prospectus.

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Our modernization and expansion plans envision adding facilities and equipment for metal conversion and alloy production at the Mountain Pass facility or an off-site property.

There is no assurance that these joint ventures will be established. Any delay or failure in developing processes to meet changing customer needs and specifications may have a material adverse effect on our financial condition or results of operations. Summary Consolidated Financial Data. At any time prior to March 1,holders may elect to convert each share of our mandatory convertible preferred stock into shares of common stock at the minimum conversion rate of 1.

Molycorp is a rare earths producer. As a public seties, we are required to report internal control deficiencies that convertibls material weaknesses in our internal control over financial reporting.

We have not, and the underwriters have not, authorized any other person to provide you with different cobvertible. Rare Earth Industry Overview.

We use significant amounts of hydrochloric acid and sodium hydroxide as reagents to process REOs. For convertiblee information please visit www. China also dominates the manufacture of metals and NdFeB magnets from rare earths, capabilities that are not currently found in the United States.

Successfully complete modernization and expansion efforts and reach full planned production rates for REOs at the Mountain Pass facility.

Molycorp Inc : Molycorp (NYSE: MCP) Declares Preferred Dividend | MarketScreener

In particular, if prices or demand for rare earths were to decline, our stock price would likely decline, and this could also impair our ability to obtain remaining capital needed for development of our property and our ability to find purchasers for our products.

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However, there can be no assurance that these customers will enter into binding sales contracts for the same amount of REO products as in the letters of intent, or at all, or that we will secure off-take commitments for the incremental capacity provided by our capacity expansion plan. In Decemberwe entered into a non-binding letter of intent with Hitachi Metals, Ltd.

Since our acquisition of the Mountain Pass facility, we have been processing stockpiled feedstocks as part of our ongoing effort to significantly improve our solvent extraction technologies and other processing capabilities.

We have also not secured off-take commitments for the incremental production from this second phase and cannot assure you that we will secure such commitments. If we do not invest or apply the cash in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.

We do not expect that work on the second phase will delay completion of our initial modernization and expansion plan, and we continue to expect completion of our initial plan pursuant to our current schedule, subject to obtaining full funding.

We base our REO reserve and resource estimates on engineering, economic and geological data assembled and analyzed by outside firms, which are reviewed by our engineers and geologists. Risks Related to Environmental Regulation. Our common stock has only been publicly traded since Julyand the price of our common stock may fluctuate significantly.

The combined impact of these quota announcements, coupled with growing demand across end-use applications for rare earths, has resulted in significant price increases for sales of rare earth oxides, metals and alloys, as summarized in prefereed table below:.

As a result, significant changes in volume, prices or other terms with these customers, prior to the completion of the restart preferted our mining operations and modernization and expansion of the Mountain Pass facility could have a material adverse effect on our business, results of operations and financial condition.

Specifically, we did not maintain a sufficient complement of personnel with an appropriate level of accounting and financial reporting knowledge, experience and training in the application of U. In addition, sales of a substantial amount of our common stock in the public market, or the perception that these sales may occur, could reduce the market price of our common stock.

However there is no assurance that we will not in the future learn of permits that we will be required to obtain or existing permits that we will be required to modify. We are required under federal, state and local laws to maintain financial assurances, such as surety bonds, to secure such obligations. With anticipated total consumption of rare earths outside China of 58, mt, the estimated quota of 28, mt falls significantly short of Rest of World demand, according to IMCOA.

These stockpile programs will likely accelerate the pace of the current and projected global REE supply deficit. We are subject to numerous other risks that may adversely impact our ability to successfully implement our business strategy, including, without limitation:.