March 9, 2011 / 9:18 PM / 9 years ago

UPDATE 2-Molycorp sees rare earth prices remaining high

* Reports net loss of $7.9 mln vs. year-ago $9.1 mln loss

* Sees China keeping tight rein on rare earth exports

* Shares up 4.7 percent (Adds CEO comment, comparison with estimates, background)

BOSTON, March 9 (Reuters) - Molycorp Inc MCP.N, the largest U.S. producer of rare-earth metals, posted a narrower net loss and said it expects prices of its materials to remain high as China continues to restrict exports.

Its shares rose almost 5 percent in postmarket trading on the news.

Molycorp is one of a handful of Western rare earth suppliers that have been scrambling to boost production to plug a supply gap created last year when No. 1 producer China sharply cut back its exports of the metals, used in products ranging from laptop computers to hybrid-electric cars.

Chief Executive Mark Smith said he expected demand for rare earths outside China to continue to outpace supply as the world’s largest producer sharply curtails its exports.

“We do not think the trend in tightening of Chinese supplies to the rest of the world will change,” Smith told investors on a conference call on Wednesday. “We think rare earth market conditions in 2011 will be even tighter than they were in 2010.”

Molycorp reported a fourth quarter net loss of $7.9 million, or 10 cents per share, compared with a year-ago loss of $9.1 million, or 22 cents per share. Revenue was $21.7 million, well above the $2.2 million reported a year earlier.

Factoring out one-time items, the loss came to 6 cents per share, better than the loss of 7 cents per share analysts had expected, according to Thomson Reuters I/B/E/S.

Its average selling prices were seven times higher in the quarter than their prior-year level. That phenomenon has also boosted the fortunes of fellow rare earth companies Lynas Corp (LYC.AX) of Australia and Great Western Minerals Group GWG.V of Canada.

The company is in the process of restarting a mine in Mountain Pass, California, that was idled in the mid-1990s when prices of the minerals were very low. It aims to produce 40,000 metric tons per year of the materials by 2013.

It needs to raise another $120 million to fund the rest of its planned expansion, executives said.

Molycorp shares rose to $50.86 in postmarket trading, after closing at $48.62 — down 2.3 percent — on the New York Stock Exchange. (Reporting by Scott Malone; Editing by Bernard Orr, Phil Berlowitz)

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