Shares of Molycorp Squeezed Higher
Shares of Molycorp (NYSE: MCP), a leading rare earths and rare metals company, soared on Monday amid positive speculation about the company's future mining operations.
The company produces magnetic materials and custom engineered products from the rare earth metals gallium, indium, rhenium, tantalum, and niobium; as well as the transition metals yttrium and zirconium. Molycorp's rare earth mining and magnetics operations are vertically consolidated across 26 locations and 11 countries, with its primary resource located in Mountain Pass, California.
In recent weeks, several of the company's board members, as well as mining company Molibdenos Y Metales S.A., have continued to make large purchases of the company's stock, with Molibdenos now holding about a 12.4 percent stake.
Molycorp's facility at Mountain Pass is expected to reach its volume target of 19,050 metric tons by the end of 2012's fourth quarter.
Last month, Mark Smith, President and CEO of Molycorp, expressed optimism for the company's future as they continued to sell off high volumes of their stockpiled resources to customers. Smith went on to add that growing concern about mining operations in China has been lessened by the Chinese government's increasing focus on environmental regulation to curb illegal mining.
Laurence Balter, an analyst with Oracle Investment Research, told Benzinga that Molycorp was trading up because of a short squeeze -- traders with short positions on the stock were buying shares to close their positions. Balter cited China's crackdown on illegal mining and Molycorp's break above its 20- and 50-day moving averages.
Shares of Molycorp traded up more than 16 percent on Monday, near $10.40.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.