Shares of Molycorp Inc MCP.N soared more than 30 percent on Friday, a day after the rare earths producer reported a narrower-than-expected loss for the first quarter.
Byron Capital Markets analyst Jon Hykawy said he believes the market reaction was driven largely by confirmation that the overhaul at Molycorp's Mountain Pass mine is still on schedule.
"It's really just the reassurance that they're on track, and they're probably not going to have to go back to the equity markets," said Hykawy.
The Mountain Pass expansion and modernization, which Molycorp calls "Project Phoenix," should boost volumes and cut costs at the California site, its flagship mine.
A new processing plant is expected to hit full production by mid-year, and a nearby recycling facility that should help cut costs is due to start operating later in the year.
A more favorable product mix drove the beat, although results were hurt somewhat by lower rare earth oxide prices, Cowen Securities analyst Adam Graf wrote in a note to clients: "Costs remain the focus as rare earth prices continue to soften."
Excluding extraordinary items, the adjusted loss was 15 cents a share. Analysts, on average, had been expecting a loss of 27 cents a share, according to Thomson Reuters I/B/E/S.
Rare earths are used to make high-tech products like smartphones, hybrid vehicles and automotive catalysts, but in recent quarters weak prices and high production costs have made mining and processing the metals and oxides a tough business.
Molycorp's shares rose 31.3 percent to close at $7.34 on Friday on the New York Stock Exchange, touching their highest point since February 8, but were still down more than 20 percent this year to date.
(Reporting by Allison Martell in Toronto; editing by Nick Zieminski and Matthew Lewis)