Good news—but it’s hard to tell how much that news is worth because so much is still at the “letter of intent” or “considering” stage.

Molycorp (MCP), the U.S. rare earth mining play that went public on July 29 with a first day closing price of $12.85, spelled out its progress in reopening its Mountain Pass mine and in expanding production there at December 1 and 2 presentations at conferences sponsored by Robert W. Baird and Gabelli & Co. Molycorp shares traded at $30.37 today, December 6.

The company now expects that the mine will be mechanically complete by July 2012 and will be producing at planned production rates by December 32, 2012. The mine has a current capacity of 3,000 tons of rare earth oxides a year and the company’s current expansion plans will take the capacity to 19,050 tons per year. The company estimates that it will be able to build out the mine to a capacity of 40,000 tons a year. Molycorp puts the life of the mine at 30 years

Molycorp told analysts that it has 19 letters of intent from customers that, in total, represent 138% of anticipated 2013 production volume. On November 5 Molycorp announced that it signed two contracts to supply rare earth minerals to W.R.Grace for a five-year period ending in 2015. (Grace has an option to extend the agreement to 2018.) The first contract, at least as described by the company, seems a bit vague: Molycorp will supply “a significant amount of its current Mountain Pass rate earth production through mid-2012” to Grace. The second contract, commits Molycorp to supply 75% of its lanthanum production to Grace through the end of the agreement—subject to completion of Molycorp’s new production facility at Mountain Pass. (Grace will use the lanthanum to manufacture cracking catalysts and additives that improve yields in petroleum refining.)

Molycorp has signed another letter of intent, this time on the production end. The company and Neo Material Technologies (Toronto: NEM) have agreed to a technology transfer agreement in which Neo will provide Molycorp with technical assistance in the production of rate earth metals, alloys, and magnets. Neo Material Technologies would also buy rate earth carbonates and oxides from Molycorp. The letter of intent is non-binding.

Most recently, on December 8, the Financial Times reported that Japan’s Sumitomo trading company is “considering investing” in Molycorp. The move would fit with the recent increased aggressiveness of Japanese companies looking to lock up sources of rare earth minerals after China imposed a short-lived but scary de facto export embargo on Japan’s technology companies. China now controls about 95% of the world’s rare earth production. In this case Sumitomo denied that talks have gone beyond tire kicking but another Japanese trading company, Mitsubishi, has signed a contract to buy rare earth minerals from Molycorp. (For more on another Japanese trading company and another rare earth mining company see my post https://jubakpicks.com/2010/12/06/add-this-one-to-the-watch-list-wait-for-the-dip-before-buying-rare-earth-miner-lynas/ )

The problem for investors with Molycorp, as with the Australian rare-earth mining company Lynas (LYC.AU) that I wrote about last week, is trying to value a real company, with real prospects, but where those prospects are still down the road apiece. Both Molycorp and Lynas trade with very similar market capitalizations of about $2.5 billion. I think in buying Molycorp you’re paying a significant premium for the company’s position as the only U.S-based, U.S.-traded rare earth mining company. On relative valuation, I prefer Lynas.

But at another, lower valuation Molycorp would certainly look more attractive.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did own shares of Lynas as of the end of the September quarter. For a full list of the stocks in the fund as of the end of the most recent quarter see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/