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Dec 12 (Reuters) - The change in leadership at Molycorp Inc is a step in the right direction as it comes at a time when the rare earth miner is battling falling prices and is being investigated by U.S. regulators over the accuracy of its disclosures, analysts said.
Shares of Molycorp, one of the few rare earth producers outside of China, fell as much as 7 percent before recouping most of those losses. They were down 1.3 percent at $11.18 at midday on the New York Stock Exchange.
J.P. Morgan analyst Michael Gambardella said the management change at the company was a positive, given the concerns with the senior management's credibility, especially following the SEC investigation.
Molycorp said on Tuesday CEO Mark Smith had resigned. It named Constantine Karayannopoulos, the vice chairman of its board, as the interim CEO. The company did not give a reason for the departure of Smith, its CEO of four years.
Dahlman Rose analyst Adam Graf linked Smith's resignation to the company's poor performance in the recent past.
"We believe Mr Smith's departure is tied to Molycorp's recent weaker-than-expected performance, driven in part by falling REO price, but also by disappointing operating results, unexpected additional capital expenditures and aggressive acquisitions," Graf said in a note to clients.
The company, which mines, processes and sells rare earths, reported a third-quarter loss in November as lower rare earth prices and higher production costs weighed.
"While headwinds remain, we see this industry veteran appointment as a step in the right direction," Piper Jaffray analyst Jagadish Iyer said.
The mining industry has been through top management shuffles in recent times with companies such as Barrick Gold Corp , Kinross Gold Corp and Newmont Mining Corp losing their CEOs.
"We view his (Karayannopoulos') experience in downstream rare earth operations and industry relationships as valuable qualities in leading the company during the transition period, and believe Molycorp will not be in a rush to find a permanent replacement," said analyst Paul Forward of Stifel Nicolaus. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Saumyadeb Chakrabarty)