SEC Completes its Investigation on MolyCorp, Finds Disclosures Accurate (MCP)
Rare-earth metal mining company MolyCorp Inc. (NYSE: MCP) said on Thursday that Securities and Exchange Commission (SEC) finished its investigation concerning an issue related to its public disclosure, adding that no enforcement action was recommended by the agency.
Following the announcement, shares rallied about 10.5% in afterhours trading.
The SEC initiated an investigation against the company last August as investors doubted accuracy of its disclosures.
Molycorp, which went public in August 2010, have persistently changed its quarterly disclosures, reflected by accompanying charts that specifies rare-earth metal’s pricing, volumes and other footnotes that explains company’s evolving pattern and activities—making financial statements slightly confusing for investors.
For instance, the Company recently acquired three rare-earth metal companies located in Canada (Neo Materials), Estonia and Arizona; as a result, analysis of financial statements became little difficult task for investors, leading to an SEC investigation.
Rare-earth metals, which are mainly produced in China, are crucial components for making high tech products such as hybrid vehicles, smartphones and tablets.
Just last month, Molycorp reported that fiscal first-quarter loss widened as sharp fall in rare-earth metal prices due to stagnated demand, over-supply and higher production costs put pressure on the bottom line.
Rare earth metal prices catapulted in 2010 and 2011 after the world’s largest producer China rasied export barriers, prompting global suppliers to explore new sources. However, China eventually relaxed export controls, resulting in sharp fall in prices.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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