Teresa Matich reports that in the latest Molycorp news, a number of bidders have reportedly emerged for the company assets, including Australian lithium miner Galaxy Resources. People with knowledge of the matter, who asked not to be identified, told Bloomberg that other bidders include Aluminum Corp. of China (Chalco) and Shenghe Resources, a Chinese rare earths miner and processor. All have reportedly made bids well above the highest appraised value for Molycorp assets (about US$443 million).
That might seem strange to some market watchers, especially following reports that Molycorp received no offers for its assets back in December, ahead of its first-round bidding deadline. However, the same sources mentioned above told Bloomberg that overseas bidders could be expecting to gain value and cost savings from combining two similar businesses, and are thus willing to offer higher prices for Molycorp assets.
It is unclear why lithium-focused Galaxy would be interested in the rare earths miner. Currently, the company is focused on bringing its Mt Cattlin spodumene mine in Australia back into production by the end of Q1 2016. More importantly, it is worth noting that Galaxy Resources AU$170-million market cap falls well below the U.S.$400 million valuation for Molycorp assets.
In any case, the news appears to have helped the share prices of both Molycorp and Galaxy. The latter saw its share price rise 7.69%, to AU$0.14, on around twice its average daily trading volume, while Molycorp was up over 80%, or US$0.023, to US$0.0759 on four times its average trading volume.
Molycorp filed for Chapter 11 bankruptcy protection this past June and put its Mountain Pass operations in California on care and maintenance in August. For a brief period, there was a rumor that Australian rare earths producer Lynas might take over Molycorp, but there has been no news of a bid from Lynas so far.
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