Increase of 36 percent in reserves at Mountain Pass Mine

April 10, 2012

According to a new independent estimate, the proven and probable reserves of rare earths at Molycorp’s Mountain Pass Mine in California have increased by 36 percent, Molycorp announced.

The updated estimate is based on the SEC's rigorous "Industry Guide 7" definition of proven and probable mineral reserves and expands Molycorp's reserves to 20.3 Mt (18.4 million st) of rare earth ore, at an ore grade of 7.98 percent and a cut-off grade of 5 percent. This compares to a previous 2010 estimate of Molycorp's proven and probable reserves of 15 Mt (13.6 million st). Both independent analyses were done by SRK Consulting of Lakewood, CO, an industry mining consulting firm that specializes in such estimates.

SRK now estimates that the proven and probable component of Molycorp's ore body contains approximately 1.3 Mt (2.94 billion lbs) of contained rare earth oxide (REO) equivalent. This compares to the previous estimate of 1.02 Mt (2.24 billion lbs) of contained REO product.

"The SEC's Industry Guide 7 standard of measuring proven and probable reserves is the most rigorous standard in the industry, and the Mountain Pass ore body is one of the only rare earth deposits in the world that is measured by such a high standard," said Mark A. Smith, Molycorp's President and Chief Executive Officer. "I am pleased to see our world-class deposit continue to grow in size, and I believe that our ongoing exploratory drilling at Mountain Pass may show an even larger estimate of proven and probable reserves once that work is completed."

Smith added: "It is noteworthy that the cutoff grade of 5% used by SRK far exceeds the head-grades of most other known rare earth projects around the world, which underscores the unique richness of our ore body."

The updated estimate of Molycorp's reserves by SRK was based on an analysis of an updated mine plan that calculated material volumes, tonnes, in-situ grades, and concentrate tonnes. The SRK analysis took into account data from exploratory drilling conducted in 2010.

The SEC Guide 7 standard of measurement used by SRK measures proven and probable reserves. This standard differs from the NI-43-101 standard, used by virtually all other rare earth companies, in that the NI-43-101 standard measures a potential ore body in terms of "measured, indicated and inferred resources." Under SEC Guide 7, "inferred" material is treated as waste and is not included in the measurement of reserves, while NI-43-101 standard allows for the inclusion of inferred material as part of a potential resource. Inferrred resources is typically a much larger number in these estimates than measured and indicated resources.


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