NEW YORK Mark A. Smith, president and chief executive officer of Molycorp Inc., has resigned from the rare earths producer.
The Greenwood Village, Colo.-based company has appointed Constantine Karayannopoulos as interim president and chief executive officer as it begins a search for a replacement.
"We are confident we can find a permanent chief executive officer with the expertise and credibility to maximize our great potential," the company said.
In a research note, analysts at Baltimore-based Stifel, Nicolaus & Co. Inc. tied Smiths departure to the Aug. 2 disclosure that the company needed additional funds to complete its Mountain Pass Mine in California and the Nov. 8 disclosure that it was experiencing cost overruns due to faulty engineering work, in addition to a Securities and Exchange Commission (SEC) investigation into the accuracy of company disclosures.
A company spokesman denied that Smiths departure was linked to the SEC investigation. "The boards decision to replace Mr. Smith had absolutely nothing to do with the pending SEC inquiry," he told AMM in an e-mail.
Smith could not be reached for comment.
Molycorp also faces a class-action lawsuit accusing it of violating the Securities Exchange Act of 1934, according to the companys third-quarter 10-Q statement. "Misleading statements about the capability of the companys Mountain Pass mining operation and (its) earnings caused Molycorp common stock to trade at artificially inflated prices," the suit, filed in U.S. District Court in Colorado, alleges.
"The company believes the allegations are without merit and that it has valid defenses to such allegations," Molycorp said in the 10-Q filing.
The companys stock price has plummeted this year, with shares ending Wednesday at $10.99 apiece on the New York Stock Exchange compared with $25.12 on the first trading day of the year.
Karayannopoulos previously was president and chief executive officer of Neo Material Technologies Inc., a Canadian rare earths processor Molycorp bought earlier this year for Canadian $1.3 billion (amm.com, June 13).