UPDATE 1-Molycorp leadership change step in right direction, say analysts
(Adds more analyst comments, updates shares)
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 weak prices and is being investigated by U.S. regulators over the accuracy of its disclosures, analysts said.
Molycorp shares, however, fell as much as 7 percent to $10.52 as concerns remained over rising rare earth supplies and depressed demand. They later recouped most of those losses.
"That was a knee-jerk reaction from yesterday's close," Dahlman Rose analyst Adam Graf said.
Molycorp and Australia's Lynas Corp, some of the few rare earth producers outside of China, are ramping up production even as prices have dropped sharply since early 2011, dragging shares of other producers as well.
"We remain very concerned about what will happen as new supplies from Molycorp and Lynas totaling 57k tonnes hit up against a ROW (rest of the world) demand estimated at 40k tonnes in 2011 ...," J.P. Morgan analyst Michael Gambardella said in a note to clients.
He said the management change at the company was a positive, given the concerns with the senior management's credibility, especially following the investigation by the U.S. Securities and Exchange Commission.
Molycorp said on Tuesday CEO Mark Smith had resigned. It named Constantine Karayannopoulos, the vice chairman of its board, as interim CEO. The company did not give a reason for the departure of Smith, its CEO of four years.
Graf linked Smith's resignation to the company's poor performance in the recent past. Continued...