10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number 001-34827

Molycorp, Inc.

(Exact name of registrant as specified in its charter)

Delaware  (State or other jurisdiction of incorporation or organization)	27-2301797  (I.R.S. Employer Identification No.)
5619 Denver Tech Center Parkway, Suite 1000Greenwood Village, Colorado  (Address of principal executive offices)	80111  (Zip Code)

(303) 843-8040

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if asmaller reporting company) Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of August 3, 2012, the registrant had 110,078,757 shares of common stock, par value $0.001 per share, outstanding.

MOLYCORP, INC.

INDEX

	PAGE
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)	3
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)	5
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)	6
Condensed Consolidated Statements of Cash Flows (Unaudited)	7
Notes to Condensed Consolidated Financial Statements(Unaudited)	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk	65
Item 4. Controls and Procedures	66
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	66
Item 1A. Risk Factors	67
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3. Defaults Upon Senior Securities	67
Item 4. Mine Safety Disclosures	67
Item 5. Other Information	67
Item 6. Exhibits	68

2

MOLYCORP, INC.

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share and per share amounts)

	June 30, 2012		December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	369,262	$	418,855
Restricted cash	4,951		—
Trade accounts receivable, net (Note 4)	118,402		70,679
Inventory (Note 5)	319,872		111,943
Deferred charges (Note 15)	16,627		7,318
Deferred tax assets (Note 15)	9,179		—
Income tax receivable	28,648		10,514
Prepaid expenses and other current assets	46,038		19,735
Total current assets	912,979		639,044
Non-current assets:
Deposits (Note 6)	23,283		23,286
Property, plant and equipment, net (Note 7)	1,153,304		561,628
Inventory (Note 5)	10,445		4,362
Intangible assets, net (Note 9)	491,927		3,072
Investments (Note 10)	55,339		20,000
Deferred tax assets (Note 15)	1,704		—
Goodwill (Note 11)	505,003		3,432
Other non-current assets	5,244		301
Total non-current assets	2,246,249		616,081
Total assets	$	3,159,228	$	1,255,125

3

	June 30, 2012			December 31, 2011
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	287,928		$	161,587
Accrued expenses (Note 12)	56,605			12,898
Income tax payable	25,013			—
Deferred tax liabilities (Note 15)	692			1,356
Debt and capital lease obligations (Note 14)	263,569			1,516
Other current liabilities	3,807			1,266
Total current liabilities	637,614			178,623
Non-current liabilities:
Asset retirement obligation (Note 13)	20,162			15,145
Deferred tax liabilities (Note 15)	172,715			18,899
Debt and capital lease obligations (Note 14)	850,319			196,545
Derivative liability (Note 25)	9,148			—
Pension liabilities (Note 26)	2,835			—
Other non-current liabilities	3,404			683
Total non-current liabilities	1,058,583			231,272
Total liabilities	$	1,696,197		$	409,895
Commitments and contingencies (Note 19)
Stockholders’ equity:
Common stock, $0.001 par value; 350,000,000 shares authorized at June 30, 2012 (Note 16)	110			84
Preferred stock, $0.001 par value; 5,000,000 shares authorized at June 30, 2012 (Note 16)	2			2
Additional paid-in capital	1,518,347			838,547
Accumulated other comprehensive loss	(10,172		)	(8,481		)
(Deficit) retained earnings	(61,697		)	15,078
Total Molycorp stockholders’ equity	1,446,590			845,230
Noncontrolling interests	16,441			—
Total stockholders’ equity	1,463,031			845,230
Total liabilities and stockholders’ equity	$	3,159,228		$	1,255,125

See accompanying notes to the condensed consolidated financial statements.

4

MOLYCORP, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Sales	$	104,577		$	99,615		$	189,047		$	125,876
Costs of sales:
Costs excluding depreciation and amortization	(103,569		)	(40,348		)	(153,641		)	(55,069		)
Depreciation and amortization	(5,081		)	(2,575		)	(8,452		)	(4,531		)
Gross (loss) profit	(4,073		)	56,692			26,954			66,276
Operating expenses:
Selling, general and administrative	(23,070		)	(10,476		)	(47,253		)	(19,175		)
Corporate development	(14,925		)	(2,042		)	(18,305		)	(3,317		)
Depreciation, amortization and accretion	(2,279		)	(523		)	(2,637		)	(840		)
Research and development	(6,049		)	(1,753		)	(9,699		)	(3,017		)
Operating (loss) income	(50,396		)	41,898			(50,940		)	39,927
Other (expense) income:
Other (expense) income	(30,980		)	133			(37,558		)	(35		)
Foreign exchange (losses) gains, net	(2,789		)	42			(1,185		)	42
Interest (expense) income, net	(9,805		)	70			(9,720		)	210
	(43,574		)	245			(48,463		)	217
(Loss) income before income taxes and equity earnings	(93,970		)	42,143			(99,403		)	40,144
Income tax benefit	27,303			6,612			29,485			6,413
Equity in results of affiliates	(257		)	—			(484		)	—
Net (loss) income	(66,924		)	48,755			(70,402		)	46,557
Net income attributable to noncontrolling interest	(680		)	(968		)	(680		)	(968		)
Net (loss) income attributable to Molycorp stockholders	$	(67,604	)	$	47,787		$	(71,082	)	$	45,589
Net (loss) income	$	(66,924	)	$	48,755		$	(70,402	)	$	46,557
Other comprehensive income:
Foreign currency translation adjustments	(4,221		)	1,324			(1,691		)	1,324
Comprehensive (loss) income	$	(71,145	)	$	50,079		$	(72,093	)	$	47,881
Comprehensive (loss) income attributable to:
Molycorp stockholders	(70,465		)	48,980			(71,413		)	46,782
Noncontrolling interest	(680		)	1,099			(680		)	1,099
	$	(71,145	)	$	50,079		$	(72,093	)	$	47,881
Weighted average shares outstanding (Common shares)
Basic	99,175,285			83,847,119			93,090,872			83,054,811
Diluted	99,175,285			84,413,499			93,090,872			83,339,566
(Loss) income per share of common stock (Note 17):
Basic	$	(0.71	)	$	0.54		$	(0.82	)	$	0.50
Diluted	$	(0.71	)	$	0.53		$	(0.82	)	$	0.50

See accompanying notes to the condensed consolidated financial statements.

5

MOLYCORP, INC.

Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)

(In thousands, except share and per share amounts)

	Common Stock			Series A Mandatory Convertible Preferred Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Total Molycorp Stockholders' Equity			Non controlling interests		Total Stockholders' Equity
	Shares	$		Shares	$
Balance at December 31, 2011	83,896,043	$	84	2,070,000	$	2	$	838,547	$	(8,481	)	$	15,078		$	845,230		$	—	$	845,230
Stock-based compensation (Note 18)	—	—		—	—		2,484		—			—			2,484			—		2,484
Issuance of shares for investment from Molymet, net of stock issuance costs (Note 16)	12,500,000	12		—	—		390,081		—			—			390,093			—		390,093
Issuance of shares for interest in Molycorp Canada (Note 16)	13,545,426	14		—	—		284,130		—			—			284,144			15,761		299,905
Component of convertible debt (Note 14)	—	—		—	—		3,105		—			—			3,105			—		3,105
Net (loss) income	—	—		—	—		—		—			(71,082		)	(71,082		)	680		(70,402		)
Preferred dividends	—	—		—	—		—		—			(5,693		)	(5,693		)	—		(5,693		)
Other comprehensive loss	—	—		—	—		—		(1,691		)	—			(1,691		)	—		(1,691		)
Balance at June 30, 2012	109,941,469	$	110	2,070,000	$	2	$	1,518,347	$	(10,172	)	$	(61,697	)	$	1,446,590		$	16,441	$	1,463,031

See accompanying notes to the condensed consolidated financial statements.

6

MOLYCORP, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Six months ended
	June 30, 2012			June 30, 2011
Cash flows from operating activities:
Net (loss) income	$	(70,402	)	$	46,557
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion	11,188			5,895
Deferred income tax benefit	(12,131		)	(13,481		)
Inventory write-downs	26,106			1,585
Stock-based compensation expense	1,900			3,386
Foreign exchange losses, net	1,214			—
Allowance for doubtful accounts	2,500			—
Equity results of affiliates	484			—
Other operating adjustments and write-downs	(66		)	(113		)
Net change in operating assets and liabilities (Note 22)	(25,174		)	(12,471		)
Net cash (used in) provided by operating activities	(64,381		)	31,358
Cash flows from investing activities:
Cash paid in connection with acquisitions, net of cash acquired	(591,011		)	(20,021		)
Investment in joint venture	(14,805		)	—
Deposits	(488		)	10,700
Capital expenditures	(403,932		)	(79,291		)
Other investing activities	2			(33		)
Net cash used in investing activities	(1,010,234		)	(88,645		)
Cash flows provided by financing activities:
Capital contributions	390,225			—
Repayments of short-term borrowings—related party	—			(1,688		)
Repayments of debt	(2,188		)	(2,958		)
Net proceeds from sale of preferred stock	—			199,642
Net proceeds from sale of Senior Notes	635,373			—
Net proceeds from sale of Convertible Notes	—			223,100
Payments of preferred dividends	(5,693		)	(3,320		)
Proceeds from debt	9,745			6,288
Other financing activities	(2,394		)	(22		)
Net cash provided by financing activities	1,025,068			421,042
Effect of exchange rate changes on cash	(46		)	97
Net change in cash and cash equivalents	(49,593		)	363,852
Cash and cash equivalents at beginning of the period	418,855			316,430
Cash and cash equivalents at end of period	$	369,262		$	680,282

See accompanying notes to the condensed consolidated financial statements.

7

MOLYCORP, INC.

Notes to Condensed Consolidated Financial Statements

June 30, 2012

(Unaudited)

(1) Basis of Presentation

Molycorp, Inc. (“Molycorp” or the “Company”) is one of the world's leading rare earth products and rare metals companies. Molycorp owns: a world-class rare earth mine and processing facilities at Mountain Pass, California (the "Molycorp Mountain Pass facility"); Molycorp Silmet, one of the largest rare earth oxide ("REO") and rare metal producers in Europe; and the only producer of rare earth alloys in the United States. Following the acquisition of Neo Material Technologies, Inc. (formerly referred to as “Neo” and now “Molycorp Canada”) on June 11, 2012, Molycorp is currently a leading global producer of neodymium-iron-boron (“NdFeB”) magnetic powders (“Neo Powders”), which are used to manufacture bonded NdFeB permanent rare earth magnets, and a leading global manufacturer and distributor of rare earths and zirconium-based engineered materials and applications, and other rare metals and their compounds.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Regulation S-X promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”). While the December 31, 2011 balance sheet information was derived from the Company’s audited financial statements, for interim periods, GAAP and Regulation S-X do not require all information and related disclosures that are required in the annual financial statements, and all disclosures required by GAAP for annual financial statements have not been included. Therefore, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with Molycorp’s consolidated financial statements and related notes for the year ended December 31, 2011, included in Molycorp’s Form 10-K for the fiscal year ended December 31, 2011 filed on February 28, 2012.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, and which, in the opinion of management, are necessary for the fair presentation of Molycorp’s financial position, results of operations and cash flows at June 30, 2012, and for all periods presented. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The preparation of the financial statements, in accordance with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on the Company’s historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ significantly from these estimates under different assumptions and conditions. Significant estimates made by management in the accompanying financial statements include the collectability of accounts receivable, the recoverability of inventory, the useful lives and recoverability of long-lived assets such as property, plant and equipment, intangible assets and investments, capital leases, uncertain tax positions, the fair values of assets acquired and liabilities assumed, including business combinations, and the adequacy of the Company’s asset retirement obligations.

As a result of restarting mining operations at the Molycorp Mountain Pass facility in early 2012, and the substantial increase in revenue through the acquisition of Molycorp Canada in June 2012, Molycorp exited development stage status in the second quarter of 2012.

Certain prior period amounts have been reclassified to conform to the current period presentation.  Such reclassifications did not affect results of operations.

(2) Capital Requirements

Capital expenditures for the engineering, procurement and construction portion ("EPC") of the Company’s modernization and expansion efforts, including achieving an annual production capacity of 19,050 mt at the Molycorp Mountain Pass facility (“Project Phoenix Phase 1”), and the Company’s second phase capacity expansion plan (“Project Phoenix Phase 2”), currently are expected to total approximately $895.0 million. Capital expenditures for other current and planned 2012 capital projects related to operations at the Molycorp Mountain Pass facility, including post-EPC, start-up, commissioning and other costs, are expected to total approximately $138.0 million.

8

These estimates do not include certain other capitalizable costs such as preliminary engineering, insurance, permitting, contracting and other legal costs, post-construction and plant commissioning costs and capitalized interest. The Company is also incurring other administrative expenses related to the construction of Project Phoenix Phase 1 and Project Phoenix Phase 2, which are expected to total approximately $10.0 million to $15.0 million in the second half of 2012.

All amounts for future capital spending are estimates that are subject to change as the projects are further developed. Capital spending for the Molycorp Mountain Pass facility plant modernization and expansion project, including Project Phoenix Phase 1, Project Phoenix Phase 2 and the other capital projects, is expected to be approximately $289.0 million for the remainder of 2012, and approximately $25.0 million in 2013, each on an accrual basis. The Company is encountering cost pressures on its projects and has initiated measures to mitigate certain adverse cost trends. The Company may incur additional costs, which may be material, if its mitigation measures are not successful.

Anticipated capital expenditures at all other operating facilities of the Company are expected to be approximately $15.0 million for the remainder of 2012. See Note 7.

Other cash requirements may include payments in August 2012 to certain holders of Molycorp Canada's $230.0 million5% subordinated unsecured convertible debentures due December 2017 (the “Debentures”), in connection with the exercise of certain buyout and conversion rights triggered by the change of control provisions contained in the underlying indenture. The change of control provisions in the underlying indenture allow the holders of Debentures to elect to (a) have their Debentures purchased by Molycorp Canada at a price equal to 100% of the principal amount thereof plus accrued but unpaid interest up to, but not including, the purchase date, or (b) convert their Debentures into common shares of Molycorp Canada's predecessor company, including a number of additional “make-whole” shares. Holders of Debentures who elect to convert their Debentures will, in lieu of receiving shares of Molycorp Canada's predecessor company, have the right to make the same per share election for cash or share consideration that was offered to the shareholders of Molycorp Canada's predecessor company pursuant to the Arrangement Agreement as if such holders had converted their Debentures immediately prior to the closing under the Arrangement Agreement, all subject to the same proration mechanisms  found therein. Such holders will also be entitled to receive accrued but unpaid interest through the date of conversion. Holders who fail to make either of the above elections may retain their Debentures. The Company currently estimates that cash payments resulting from the exercise of buyout and conversion rights may total approximately $192.0 million to $230.0 million plus accrued interest from June 30, 2012.

Additionally, Molycorp will contribute, upon achievement of certain milestones and subject to the approval of Molycorp’s Board of Directors, Japanese Yen (JPY) 2.5 billion in cash (or approximately $31.4 million based on the JPY/ U.S. dollar exchange rate at June 30, 2012), in exchange for ordinary shares of Intermetallics Japan ("IMJ") over a period of twelve months. The actual remittance amounts will vary depending on the future exchange rate between the U.S. dollar and the Japanese Yen, and the achievement of certain milestones by the joint venture. The Company contributed $14.8 million to IMJ through June 30, 2012. See Note 10.

Molycorp expects to fund the remaining capital expenditures under Project Phoenix Phase 1, Project Phoenix Phase 2 and other capital expenditures related to operations at the Molycorp Mountain Pass and all other operating facilities, as well as working capital and other cash requirements, with its available cash balances of $369.3 million at June 30, 2012, anticipated future cash flow from operations and proceeds from other financing arrangements. The Company will need to secure additional financing for a substantial portion of its cash requirements for the remainder of 2012 and the first six months of 2013, including capital expenditures at its Mountain Pass facility and other capital projects, as well as other cash requirements, such as cash payments for the Debentures. The Company is in negotiations with various third-parties with respect to potential equipment leasing arrangements, asset-based revolving credit facilities and other financing arrangements, and is considering the issuance of equity and/or debt. The Company is also in negotiations with certain related persons for commercial transactions that would be provided at market terms and generate significant cash proceeds.

If the Company is unable to raise sufficient capital through the issuance of equity and/or debt, or other alternative sources of financing, management has the ability to exercise discretion over certain capital expenditures, which the Company estimates to total at least $75.0 million for the remainder of 2012. Such discretionary measures can be implemented without any material impact to the Company's current operations or production capacity under Project Phoenix Phase 1 or Phase 2.

There can be no assurance that the Company will be successful in raising additional capital in the future on commercially acceptable terms, or at all.

9

(3) Segment Information

As a result of the Molycorp Canada acquisition on June 11, 2012, management has temporarily organized the Company into four operating segments: Molycorp Mountain Pass; Molycorp Silmet; Molycorp Metals and Alloys (“MMA”); and Molycorp Canada. As the Company further integrates Molycorp Canada operations, management anticipates organizing the Company into different reportable segments in future periods.

Molycorp Mountain Pass owns and operates the Molycorp Mountain Pass facility. Molycorp Silmet, which was acquired on April 1, 2011, produces REO and rare metals at the Company's manufacturing facility located in Sillamäe, Estonia. MMA, which was acquired on April 15, 2011, manufactures neodymium and samarium magnet alloy and other specialty alloy products at the Company's facility in Tolleson, Arizona. Molycorp Canada manufactures Neo Powders, which are used to make bonded magnets for a variety of electronic and mechanical products such as micro motors, precision motors, sensors and other applications requiring high levels of magnetic strength, flexibility, small size and reduced weight. Molycorp Canada produces Neo Powders through its wholly owned manufacturing facilities in Tianjin, China and Korat, Thailand. Molycorp Canada also manufactures and distributes rare earths and zirconium-based engineered products, as well as other rare metals and their compounds. The rare earths and zirconium-based engineered products are primarily supplied to the automotive catalyst, electronics, ceramic and glass industries. Rare metals from the Molycorp Canada segment are primarily used in the wireless, light-emitting diode, flat panel display, turbine, solar and catalyst industries. Molycorp Canada produces rare earths and zirconium-based engineered products, and other rare metals and their compounds, through its joint ventures and at its majority owned manufacturing facilities in Jiangsu Province, China; Shandong Province, China; Stade, Germany; Sagard, Germany and Quapaw, Oklahoma, and its wholly owned manufacturing facilities in Peterborough, Ontario; Napanee, Ontario; Blanding, Utah and the Hyeongok Industrial Zone in South Korea.

The following tables provide operating and financial information of the four operating segments for the three months ended and at June 30, 2012, and for the six months ended June 30, 2012 (the information for Molycorp Canada is for the period from June 12, 2012 through June 30, 2012):

10

Three months ended and at June 30, 2012 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Molycorp Canada			Eliminations(a)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	16,533		$	31,541		$	12,870		$	43,633		$	—		$	—		$	104,577
Intersegment	400			712			—			14			(1,126		)	—			—
Total sales	16,933			32,253			12,870			43,647			(1,126		)	—			104,577
Cost of sales:
Costs excluding depreciation and amortization	(22,277		)	(37,947		)	(17,112		)	(37,703		)	11,470			—			(103,569		)
Depreciation and amortization	(2,229		)	(1,526		)	(79		)	(1,247		)	—			—			(5,081		)
Gross (loss) profit	(7,573		)	(7,220		)	(4,321		)	4,697			10,344			—			(4,073		)
Operating expenses:
Selling, general and administrative	(9,041		)	(1,510		)	(116		)	(1,737		)	—			(10,666		)	(23,070		)
Corporate development	—			—			—			—			—			(14,925		)	(14,925		)
Depreciation, amortization and accretion	(365		)	(77		)	—			(1,813		)	—			(24		)	(2,279		)
Research and development	(2,006		)	(359		)	—			(1,175		)	—			(2,509		)	(6,049		)
Operating (loss) income	(18,985		)	(9,166		)	(4,437		)	(28		)	10,344			(28,124		)	(50,396		)
Interest expense	—			(177		)	(175		)	(828		)	—			(8,625		)	(9,805		)
Other income (expense)	21			(2,385		)	8			(478		)	—			(30,935		)	(33,769		)
(Loss) income before income taxes and equity earnings (loss)	$	(18,964	)	$	(11,728	)	$	(4,604	)	$	(1,334	)	$	10,344		$	(67,684	)	$	(93,970	)
Equity (loss) earnings in results of affiliates	$	(15,754	)	$	—		$	—		$	309		$	15,754		$	(566	)	$	(257	)
Total assets	$	433,808		$	79,185		$	20,174		$	1,746,876		$	(80,988	)	$	960,173		$	3,159,228
Investment in equity method affiliates	$	14,011		$	—		$	—		$	19,053		$	—		$	—		$	33,064
Capital expenditures (c)	$	228,787		$	5,254		$	—		$	832		$	—		$	—		$	234,873

11

Six months ended June 30, 2012 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Molycorp Canada			Eliminations(a)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	61,011		$	52,577		$	31,826		$	43,633		$	—		$	—		$	189,047
Intersegment	2,232			3,922			—			14			(6,168		)	—			—
Total sales	63,243			56,499			31,826			43,647			(6,168		)	—			189,047
Cost of sales:
Costs excluding depreciation and amortization	(39,344		)	(71,205		)	(35,668		)	(37,703		)	30,279			—			(153,641		)
Depreciation and amortization	(4,008		)	(3,042		)	(155		)	(1,247		)	—			—			(8,452		)
Gross profit (loss)	19,891			(17,748		)	(3,997		)	4,697			24,111			—			26,954
Operating expenses:
Selling, general and administrative	(18,464		)	(3,048		)	(295		)	(1,737		)	—			(23,709		)	(47,253		)
Corporate development	—			—			—			—			—			(18,305		)	(18,305		)
Depreciation, amortization and accretion	(699		)	(77		)	—			(1,813		)	—			(48		)	(2,637		)
Research and development	(4,091		)	(438		)	—			(1,175		)	—			(3,995		)	(9,699		)
Operating (loss) income	(3,363		)	(21,311		)	(4,292		)	(28		)	24,111			(46,057		)	(50,940		)
Interest expense	—			(318		)	(452		)	(828		)	—			(8,122		)	(9,720		)
Other income (expense)	89			(762		)	5			(478		)	—			(37,597		)	(38,743		)
(Loss) income before income taxes and equity earnings (loss)	$	(3,274	)	$	(22,391	)	$	(4,739	)	$	(1,334	)	$	24,111		$	(91,776	)	$	(99,403	)
Equity (loss) earnings in results of affiliates	$	(26,898	)	$	—		$	—		$	309		$	26,898		$	(793	)	$	(484	)
Capital expenditures (c)	$	488,225		$	7,755		$	100		$	832		$	—		$	—		$	496,912

________________________

(a) The $80,988 of total assets elimination is comprised of $2,662 intercompany investments and $78,326 intercompany accounts receivable and profits in inventory. The cost of sales elimination amounts of $11,470 for three months ended June 30, 2012 and $30,279 for the six months ended June 30, 2012, include elimination of the intercompany gross profits as well as elimination of lower of cost or market adjustments related to the intercompany inventory.

(b) Includes expenses incurred by and capital invested in the sales office in Tokyo, Japan.

(c) On an accrual basis excluding capitalized interest.

Prior to the acquisition of Molycorp Canada on June 11, 2012, the Company was organized into three operating segments: Molycorp Mountain Pass, Molycorp Silmet and MMA. The following tables provide operating and financial information of the three segments for the three months ended and at June 30, 2011, and for the six months ended June 30, 2011. Some of the prior interim period captions and segments subtotals have been modified to conform to the current interim period presentation:

12

Three months ended and at June 30, 2011 (In thousands)	Molycorp     Mountain Pass			Molycorp Silmet			MMA			Eliminations(d)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	60,348		$	29,017		$	10,250		$	—					$	99,615
Intersegment	15,947			3,639			—			(19,586		)				—
Total sales	76,295			32,656			10,250			(19,586		)				99,615
Cost of sales:
Costs excluding depreciation and amortization	(19,493		)	(20,321		)	(10,935		)	10,401			—			(40,348		)
Depreciation and amortization	(2,216		)	(151		)	(208		)	—			—			(2,575		)
Gross profit (loss)	54,586			12,184			(893		)	(9,185		)	—			56,692
Operating expenses:
Selling, general and administrative	(1,518		)	(1,453		)	(112		)	—			(7,393		)	(10,476		)
Corporate development	—			—			—			—			(2,042		)	(2,042		)
Depreciation, amortization and accretion	(332		)	—			(191		)	—			—			(523		)
Research and development	(1,734		)	—			—			—			(19		)	(1,753		)
Operating income (loss)	51,002			10,731			(1,196		)	(9,185		)	(9,454		)	41,898
Other income (expense)	—			(61		)	2			—			304			245
Income before income taxes	$	51,002		$	10,670		$	(1,194	)	$	(9,185	)	$	(9,150	)	$	42,143
Total assets at June 30, 2011	$	399,908		$	152,984		$	29,705		$	(140,923	)	$	699,992		$	1,141,666
Capital expenditures (c)	$	70,142		$	2,231		$	—		$	—		$	—		$	72,373

(d) The total assets elimination of $140,923 is comprised of $114,000 of intercompany investments and $26,923 of intercompany accounts receivable and profits in inventory.

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Six months ended June 30, 2011 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Eliminations			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	86,609		$	29,017		$	10,250		$	—					$	125,876
Intersegment	15,947			3,639			—			(19,586		)				—
Total sales	102,556			32,656			10,250			(19,586		)				125,876
Cost of sales:
Costs excluding depreciation and amortization	(34,214		)	(20,321		)	(10,935		)	10,401			—			(55,069		)
Depreciation and amortization	(4,172		)	(151		)	(208		)	—			—			(4,531		)
Gross profit (loss)	64,170			12,184			(893		)	(9,185		)	—			66,276
Operating expenses:
Selling, general and administrative	(4,941		)	(1,453		)	(112		)	—			(12,669		)	(19,175		)
Corporate development	—			—			—			—			(3,317		)	(3,317		)
Depreciation, amortization and accretion	(649		)	—			(191		)	—			—			(840		)
Research and development	(3,000		)	—			—			—			(17		)	(3,017		)
Operating income (loss)	55,580			10,731			(1,196		)	(9,185		)	(16,003		)	39,927
Other income (expense)	$	(37	)	$	(61	)	$	2		$	—		$	313		$	217
Income before income taxes	$	55,543		$	10,670		$	(1,194	)	$	(9,185	)	$	(15,690	)	$	40,144
Capital expenditures (c)	$	111,966		$	2,231		$	—		$	—					$	113,497

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(4) Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company reviews the need for an allowance for doubtful accounts on a quarterly basis. At June 30, 2012 and December 31, 2011, the allowance for doubtful accounts was $2.5 million and $0, respectively.

(5) Inventory

At June 30, 2012 and December 31, 2011, inventory consisted of the following (in thousands):

	June 30, 2012		December 31, 2011
Current:
Concentrate stockpiles	$	1,341	$	3,704
Raw materials	103,554		44,770
Work in process	51,366		16,602
Finished goods	159,140		45,045
Materials and supplies	4,471		1,822
Total current	$	319,872	$	111,943
Long-term:
Concentrate stockpiles	$	2,112	$	1,144
Raw materials	8,329		3,186
Finished goods	4		32
Total long-term	$	10,445	$	4,362

Assessment of normal production levels

For the three months ended June 30, 2012 and 2011, Molycorp determined that $2.4 million and $0.9 million, respectively, of production costs would have been allocated to additional production, assuming Molycorp had been operating at normal production ranges. For the six months ended June 30, 2012 and 2011, the Company determined that $5.4 million and $3.5 million, respectively, of production costs would have been allocated to additional production, assuming Molycorp had been operating at normal production ranges. As a result, these costs were excluded from inventory and instead expensed during the applicable periods. The assessment of normal production levels is judgmental and is unique to each quarter.

Write-downs of inventory

For the three months ended June 30, 2012 and 2011, the Company recognized write-downs of $19.5 million, and $0, respectively, as a result of production or purchase costs in excess of net realizable value. For the six months ended June 30, 2012 and 2011, Molycorp recognized write-downs of $26.1 million, and $0.6 million, respectively, as a result of production or purchase costs in excess of net realizable value. In addition, the Company recognized write-downs of work-in-process and stockpile inventory totaling $0 and $1.0 million for the three months ended June 30, 2012 and 2011, respectively, based on adjustments to estimated REO quantities.

(6) Deposits

The Company had $23.3 million in deposits reported as non-current assets at June 30, 2012 and December 31, 2011, respectively. The deposits at June 30, 2012 consist of $20.6 million under an escrow arrangement for the Company’s facilities agreement with Kern River Gas Transmission Company ("Kern River"), $1.5 million related to the Company’s construction insurance program and $1.2 million comprised primarily of other deposit requirements.

(7) Property, Plant and Equipment, net

The Company capitalized $244.4 million and $73.0 million in plant modernization and other capital costs for the three months ended June 30, 2012 and 2011, respectively, and $510.2 million and $114.2 million for the six months ended June 30,

15

2012 and 2011, respectively. These amounts include capitalized interest of $9.5 million and $0.6 million for the three months ended June 30, 2012 and 2011, respectively, and $13.3 million and $0.7 million for the six months ended June 30, 2012 and 2011, respectively.

Capital expenditures under Project Phoenix Phase 1 and Project Phoenix Phase 2, and other capital projects related to operations at Molycorp Mountain Pass, totaled $226.0 million and $66.5 million for the three months ended June 30, 2012 and 2011, respectively, and $479.6 million and $106.0 million for the six months ended June 30, 2012 and 2011, respectively. These amounts are on an accrual basis and exclude capitalized interest.

At June 30, 2012 and December 31, 2011, property, plant and equipment consisted of the following (in thousands):

	June 30, 2012			December 31, 2011
Land	$	12,106		$	11,059
Land improvements	15,823			15,748
Buildings and improvements	54,740			23,677
Plant and equipment	126,907			68,441
Vehicles	1,978			1,235
Computer software	4,669			3,002
Furniture and fixtures	731			464
Construction in progress (a)	926,864			436,547
Capital Leases	15,658			—
Mineral properties	24,457			24,692
Property, plant and equipment at cost	1,183,933			584,865
Less accumulated depreciation	(30,629		)	(23,237		)
Property, plant and equipment, net	$	1,153,304		$	561,628

(a) Represents costs incurred for Project Phoenix Phase 1 and Project Phoenix Phase 2 and all other capital projects. See Note 2.

(8) Mineral Properties and Development Costs

Mineral properties and development costs, which are referred to collectively as mineral properties, include acquisition costs, drilling costs, and the cost of other development work, all of which are capitalized. The Company began depleting mineral properties in 2012 using the units of production method over estimated proven and probable reserves. For the three and six months ended June 30, 2012, the Company capitalized $61 thousand and $82 thousand, respectively, of depletion costs in work-in-process inventory related to the reserves that were mined and crushed during these periods.

(9) Intangible Assets

At June 30, 2012 and December 31, 2011, amortizable intangible assets consisted of the following (in thousands):

16

	June 30, 2012			December 31, 2011
Customer relationships	$	350,077		$	2,153
Rare earth quotas	80,300			—
Patents	39,753			—
Trade name	16,586			786
Land use rights	3,420			—
Other	4,890			516
Gross carrying amount	495,026			3,455
Less accumulated amortization	(3,099		)	(383		)
Net carrying amount	$	491,927		$	3,072

At June 30, 2012, the net carrying amounts of customer relationships, rare earth quotas, patents, trade name, and other intangible assets included preliminary estimates of $489.2 million as a result of the Molycorp Canada acquisition. The Company expects to complete the final determination of these estimates and related estimated lives for amortizable intangible assets no later than the second quarter of 2013.

(10) Investments

Boulder Wind Power, Inc.

On September 13, 2011, the Company invested $20.0 million into Boulder Wind Power, Inc. Series B convertible preferred stock, which is accounted for at cost. At June 30, 2012, the fair value of this investment was not estimated as there were no identified events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment.

Intermetallics Japan Joint Venture

On November 28, 2011, Molycorp, Daido Steel Co., Ltd. (“Daido”) and Mitsubishi Corporation (“Mitsubishi”) entered into a preliminary shareholders agreement for the purpose of establishing a new private company, IMJ, to manufacture sintered NdFeB permanent rare earth magnets. The capital contribution ratio of the newly formed company is 30.0% by Molycorp, 35.5% by Daido and 34.5% by Mitsubishi. According to the definitive shareholders agreement, which was signed in January 2012, Molycorp will contribute, upon achievement of certain milestones and subject to the approval of Molycorp’s Board of Directors, Japanese Yen (JPY) 2.5 billion in cash (or approximately $31.4 million based on the JPY/ U.S. dollar exchange rate at June 30, 2012), in exchange for ordinary shares of IMJ over a period of twelve months. The actual remittance amounts will vary depending on the future exchange rate between the U.S. dollar and the Japanese Yen, and the achievement of certain milestones by the joint venture. The Company contributed $14.8 million to IMJ through June 30, 2012.

Molycorp accounts for this investment under the equity method because it has the ability to exercise significant influence over the operating and financial policies of IMJ, as evidenced by Molycorp’s ownership share and its proportional voting rights and representation in the Board of Directors of IMJ. The condensed consolidated statement of operations and comprehensive income for the three and six months ended June 30, 2012 include a loss of $0.2 million and $0.6 million, respectively, associated with this equity method interest.

Ganzhou Keli Rare Earth New Material Co., Ltd.

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 25% ownership interest in Ganzhou Keli Rare Earth New Material Co., Ltd. (“Keli”), a company that converts REO into metals for use in Neo Powders. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $12.2 million. Molycorp accounts for this ownership interest under the equity method because it has the ability to exercise significant influence over the operating and financial policies of Keli, as evidenced by Molycorp’s ownership share and its proportional voting rights. The condensed consolidated statements of operations and comprehensive income include a gain of $0.3 million for the period from June 12, 2012 to June 30, 2012 associated with this equity method ownership interest.

17

Toda Magnequench Magnetic Materials Co. Ltd.

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 33% ownership interest in Toda Magnequench Magnetic Materials Co. Ltd. (“TMT”), a company that produces rare earth magnetic compounds with Neo Powders supplied by Magnequench (Tianjin) Company Limited in its normal course of business. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $1.6 million. Molycorp accounts for this ownership interest under the equity method because it has the ability to exercise significant influence over the operating and financial policies of TMT, as evidenced by Molycorp’s ownership share and its proportional voting rights.

Ingal Stade GmbH

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 50% ownership interest in Ingal Stade GmbH (“Ingal Stade”), a joint venture facility in Stade, Germany with 5N Plus that extracts gallium metal from alumina smelter bayer liquor. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $4.9 million. Molycorp accounts for this ownership interest under the equity method.

Atlantic Metals & Alloys, LLC

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 19.5% ownership interest in Atlantic Metals & Alloys,LLC, a company which provides refining services for residues and scrap of the rare and platinum group metals. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $1.4 million. Molycorp accounts for this ownership interest under the cost method. At June 30, 2012, the fair value of this investment was not estimated as there were no identified events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment.

Vive Crop Protection

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 7% ownership interest in Vive Crop Protection, a company that specializes in the formulation of active ingredients used in crop protection. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $0.9 million. Molycorp accounts for this ownership interest under the cost method. At June 30, 2012, the fair value of this investment was not estimated as there were no identified events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment.

(11) Acquisitions

On June 11, 2012, Molycorp completed the acquisition of all of the outstanding equity of Molycorp Canada's predecessor company pursuant to the terms of an arrangement agreement (the "Arrangement Agreement") for an aggregate purchase price of approximately $1.2 billion. Pursuant to the Arrangement Agreement, Molycorp Canada's former shareholders elected to receive: (a) cash consideration equal to Canadian dollars ("Cdn") $11.30 per share of Molycorp Canada's predecessor company's common stock; or (b) share consideration of 0.4242 shares of Molycorp common stock or 0.4242 shares (the "Exchangeable Shares") issued by MCP Exchangeco Inc., Molycorp's wholly owned Canadian subsidiary, which are exchangeable for shares of Molycorp's common stock on a one for one basis, per each share of Molycorp Canada's predecessor company's common stock; or (c) a combination of cash and shares of Molycorp common stock or Exchangeable Shares, all subject to the proration mechanics set forth in the Arrangement Agreement.

The consideration paid to Molycorp Canada's former shareholders was comprised of approximately $908.2 million in cash, exclusive of realized losses on the contingent forward contract to purchase Canadian dollars, accounted for as a separate transaction apart from the business combination, as further discussed in Note 25. Additionally, approximately 13.5 million shares of Molycorp common stock and 0.5 million Exchangeable Shares were issued and collectively valued at $284.1 million based on the closing price of the Company's common stock on the acquisition date in accordance with the relevant accounting guidance.

The following is a preliminary allocation of the Molycorp Canada purchase price (in thousands) and is based on management's preliminary estimates of the fair value of the tangible and intangible assets and liabilities of Molycorp Canada.

18

This valuation is subject to change as the Company obtains additional information on the assets acquired and liabilities assumed during the acquisition measurement period (up to one year from the acquisition date).

	June 11, 2012
Purchase consideration:
Cash consideration	$	908,181
Fair value of Molycorp common stock and Exchangeable Shares issued	284,144
Total purchase consideration	$	1,192,325
Estimated fair values of the assets and liabilities acquired:
Cash and cash equivalents	$	317,169
Accounts receivable	101,470
Inventory	250,989
Prepaid expenses and other current assets	26,893
Property, plant and equipment	70,391
Investments	21,019
Intangibles	491,786
Goodwill	501,571
Other non-current assets	22,859
Accounts payable and accrued expenses	(138,576		)
Debt - current	(255,056		)
Other current liabilities	(29,939		)
Deferred tax liabilities	(158,177		)
Long-term debt	(281		)
Other non-current liabilities	(14,032		)
Non-controlling interests	(15,761		)
Total purchase consideration	$	1,192,325

The fair value of the accounts receivable acquired includes trade receivables of $101.5 million, which are considered to be collectible at June 30, 2012.

Molycorp Canada's intangible assets subject to amortization relate to: a) customer relationships of $348.1 million with a weighted average useful life of approximately fifteen years; b) rare earth quotas of $80.3 million with a useful life of approximately eleven years; c) patents of $39.8 million with a weighted average useful life of approximately two years; d) trade name of $15.8 million with a useful life of approximately ten years; and e) other of $7.8 million with a weighted average useful life of approximately twelve years.

Goodwill associated with the Molycorp Canada acquisition arose primarily because of Molycorp Canada's proven leadership in the development, processing, and distribution of technically advanced rare earth products; greater exposure to the world’s largest and fastest-growing rare earths consuming market; deferred tax liabilities and expected synergies that do not qualify for separate recognition. The goodwill is not amortized and is not deductible for tax purposes.

The amounts of Molycorp Canada's sales, earnings and earnings per share included in the Company’s condensed consolidated statements of operations since the acquisition date, and the sales, earnings and earnings per share of the combined entity had the acquisition date been January 1, 2011, are as follows:

19

(In thousands, except per share amounts)	Sales		Net Income (Loss)			Net Income (Loss) Attributable To Molycorp			EPS Basic
Actual June 11, 2012 to June 30, 2012 (acquiree)	$	43,647	$	47		$	(633	)	$	(0.01	)
Unaudited pro forma April 1, 2012 to June 30, 2012 (combined entity)	$	260,542	$	(59,519	)	$	(62,114	)	$	(0.60	)
Unaudited pro forma January 1, 2012 to June 30, 2012 (combined entity)	$	523,865	$	(59,079	)	$	(63,466	)	$	(0.63	)
Unaudited pro forma April 1, 2011 to June 30, 2011 (combined entity)	$	315,758	$	83,642		$	78,354		$	0.69
Unaudited pro forma January 1, 2011 to June 30, 2011 (combined entity)	$	474,817	$	92,564		$	86,352		$	0.75

The unaudited pro forma amounts are not necessarily indicative of the operating results that would have occurred if the Molycorp Canada acquisition had taken place on January 1, 2011.

The unaudited pro forma sales, earnings and earnings per share of the combined entity above are adjusted a) to eliminate the effect of sales and costs that occurred previous to the business combination between the Company and Molycorp Canada; b) to reflect the net incremental depreciation and amortization expense as a result of the allocation of the purchase price to certain depreciable and amortizable assets with useful lives ranging from two to thirty years c) the tax effect of unaudited pro forma adjustments using the Molycorp federal, state and international statutory tax rates based on the applicable tax jurisdictions; and d) the estimated net increase of interest expense associated with the issuance the Senior Notes as part of the acquisition. The weighted average number of shares outstanding utilized in the EPS basic calculation have been adjusted to reflect the additional shares issued pursuant to the acquisition of Molycorp Canada and the related Molibdenos y Metales S.A. equity financing further discussed in Note 16. The unaudited pro forma earnings of the combined entity for the three and six months ended June 30, 2012, were also adjusted to exclude $103.9 million and $114.7 million, respectively, of non-recurring transaction costs, which resulted directly from the transaction. For the three and six months ended June 30, 2012, the Company recognized approximately $52.8 million and $61.6 million, respectively, of transaction costs in the condensed consolidated statements of operations and comprehensive income as follows:

(In thousands)	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Corporate development
Legal, accounting and advisory fees	$	14,043	$	16,074
Other expenses:
Contingent forward contract loss	$	30,770	$	37,589
Interest expense:
Bridge loan fee	$	7,937	$	7,937

Molycorp Silmet and MMA

The following table summarizes the purchase prices and opening balance sheets for the acquisition of 90.023% controlling interest in Molycorp Silmet on April 1, 2011 and of MMA on April 15, 2011 (in thousands):

20

Effective acquisition date for financial reporting purposes:	Molycorp Silmet April 1, 2011			MMA April 15, 2011
Purchase consideration:
Cash consideration	$	9,021		$	17,500
Fair value of Molycorp common stock issued	72,653			—
Total purchase consideration	$	81,674		$	17,500
Fair values of the assets and liabilities acquired:
Cash	$	105		$	6,395
Accounts receivable and other current assets	8,626			5,474
Inventory	37,404			11,327
Property, plant and equipment, net	63,393			4,512
Intangible assets subject to amortization	2,669			—
Goodwill	1,455			1,977
Liabilities	(19,974		)	(8,989		)
Deferred tax liabilities	—			(3,196		)
Long-term debt	(3,184		)	—
Noncontrolling interest	(8,820		)	—
Total purchase consideration	$	81,674		$	17,500

The fair value of the accounts receivable acquired includes trade receivables of $5.0 million for Molycorp Silmet and $4.9 million for MMA. These trade receivables were collected by December 31, 2011. Molycorp Silmet’s intangible assets subject to amortization relate primarily to customer relationships with a weighted average useful life of 15 years. Goodwill associated with the Molycorp Silmet acquisition arose primarily because of the acquired workforce. Goodwill associated with the MMA acquisition arose primarily because of the requirement to record a deferred tax liability for the difference between the assigned values and the tax basis of assets acquired and liabilities assumed at amounts that do not reflect fair value. The goodwill is not amortized and is not deductible for tax purposes. The fair value of the noncontrolling interest in Molycorp Silmet as of April 1, 2011 was valued using a combination of the market approach and income approach.

The pro forma sales, earnings and earnings per share of the Company had both acquisitions occurred on January 1, 2011, are as follows:

(In thousands, except per share amounts)	Sales		Net Income		Net Income Attributable To Molycorp		EPS Basic
Unaudited pro forma January 1, 2011 to June 30, 2011 (combined entity)	$	159,350	$	55,463	$	54,495	$	0.6

The unaudited pro forma amounts are not necessarily indicative of the operating results that would have occurred if these acquisitions had taken place on January 1, 2011.

The 2011 earnings of the combined entity were adjusted to exclude $19.6 million of intercompany sales and $1.8 million of non-recurring acquisition-related costs the Company incurred to acquire Molycorp Silmet and MMA, and to reverse $1.1 million of purchase price variance MMA capitalized during the first quarter of 2011.

Molycorp Silmet

On April 1, 2011, Molycorp acquired 80% of the outstanding shares of Molycorp Silmet from AS Silmet Grupp in exchange for 1,593,419 shares of Molycorp common stock contractually valued at $80.0 million based on the average closing price of the Company’s common stock as reported by The New York Stock Exchange for the 20 consecutive trading days immediately preceding April 1, 2011, the acquisition date.

Generally, the acquisition-date fair value of shares of common stock transferred by the acquirer is the closing price of that stock on the same date adjusted by a discount that a market participant would require as a result of any restrictions on the sale or transferability of the stock. The fair value of common stock of $72.7 million disclosed in the table above is based on the closing price of the Company’s common stock on the acquisition date, net of an estimated discount of 23% that a market

21

participant would require given that issuance of the shares of common stock Molycorp transferred in consideration to AS Silmet Grupp was not registered under the Securities Act of 1933 and such shares were subject to certain lock-up provisions, which limited AS Silmet Grupp’s ability to sell these shares. AS Silmet Grupp retained a 9.977% ownership interest in Molycorp Silmet on the acquisition date; Molycorp acquired the other 10.023% from Treibacher Industrie AG for $9.0 million in cash also on April 1, 2011.

On October 24, 2011, the Company acquired the remaining 9.977% ownership interest in Molycorp Silmet for $10.0 million in cash, which resulted in an adjustment to Additional Paid-In Capital of $0.4 million for the difference between the consideration paid and the carrying value of the noncontrolling interest at October 24, 2011.

The Molycorp Silmet acquisition provides Molycorp with a European base of operations and increases the Company’s yearly REO production capacity by approximately 3,000 mt. Molycorp Silmet sources a portion of rare earth feed stocks for production of its products primarily from the Molycorp Mountain Pass facility. The main focus of Molycorp Silmet is on the production of REO and metals, including didymium metal, a critical component in the manufacture of NdFeB permanent rare earth magnets. Molycorp Silmet’s manufacturing operation is located in Sillamäe, Estonia.

MMA

On April 15, 2011, Molycorp completed the acquisition from Santoku Corporation (“Santoku”) of all the issued and outstanding shares of capital stock of Santoku America, Inc., which is now known as MMA, an Arizona based corporation, in an all-cash transaction for $17.5 million. The acquisition provides Molycorp with access to certain intellectual properties relative to the development, processing and manufacturing of neodymium and samarium magnet alloy products. As part of the stock purchase agreement, Santoku will provide consulting services to Molycorp for the purpose of maintaining and enhancing the quality of MMA’s products. Molycorp and Santoku also entered into five-year marketing and distribution agreements for the sale and distribution of neodymium and samarium magnet alloy products produced by each party. Additionally, the parties entered into a rare earth products purchase and supply agreement through which MMA will supply Santoku with certain rare earth alloys for a two-year period at prices equal to the feedstock cost plus the applicable product premium as such terms are defined in the agreement.

(12) Accrued Expenses

Accrued expenses at June 30, 2012 and December 31, 2011 consisted of the following (in thousands):

	June 30, 2012		December 31, 2011
Defined contribution plan	$	1,312	$	1,088
Professional fees	14,242		—
Accrued payroll and related benefits	10,570		3,024
Sales and use tax	6,671		1,367
Bonus accrual	2,426		4,845
Interest payable	6,992		345
Advance from customer	5,120		—
Other accrued expenses	9,272		2,229
Total accrued expenses	$	56,605	$	12,898

(13) Asset Retirement Obligation

The following table presents the activity in the Company’s asset retirement obligation for the six months ended June 30, 2012, and for the year ended December 31, 2011 (in thousands):

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	Six Months Ended June 30, 2012			Year Ended December 31, 2011
Balance at beginning of period	$	15,541		$	12,471
Obligations settled	(500		)	(1,030		)
Accretion expense	495			955
Revisions in estimated cash flows	8,433			2,508
Gain on settlement	—			637
Balance at end of period	$	23,969		$	15,541

The balance above for the six months ended June 30, 2012 includes a short-term portion of $3.8 million, which is recorded under other current liabilities. The Company is required to provide the applicable governmental agencies with financial assurances relating to its closure and reclamation obligations. At June 30, 2012, the Company had financial assurance requirements of $28.8 million, which were satisfied with surety bonds placed with California state and regional agencies.

(14) Debt and Capital Lease Obligations

On May 25, 2012, Molycorp issued $650.0 million aggregate principal amount of the senior secured notes due 2020 ("Senior Notes") in an offering exempt from the registration requirements of the Securities Act of 1933. The Senior Notes will bear interest at the rate of 10% per year payable on June 1 and December 1 of each year beginning on December 1, 2012. At any time and from time to time prior to June 1, 2016, the Company may redeem any of the Senior Notes at a price equal to 100% of the principal amount thereof plus an applicable make-whole premium and accrued and unpaid interest. At any time and from time to time from and after June 1, 2016, Molycorp may redeem the Senior Notes, in whole or in part, at a redemption price for the Senior Notes plus accrued and unpaid interest, initially at 105% of the principal amount thereof, but gradually declining to 100% of the principal amount thereof. In addition, at any time and from time to time prior to June 1, 2015, the Company may redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of one or more permitted sales of Molycorp’s capital stock at a redemption price (expressed as a percentage of principal amount) of 110% plus accrued and unpaid interest. Upon the occurrence of a change of control, Molycorp will be required to offer to repurchase all of the Senior Notes. The Senior Notes are senior secured obligations of Molycorp and are guaranteed by certain of Molycorp’s domestic subsidiaries ("Guarantors"). A substantial portion of the net proceeds from the offering of the Senior Notes were used to fund the cash consideration the Company paid for Molycorp Canada. The remainder of the net proceeds from the issuance of the Senior Notes will be used for general corporate purposes. The Company, the Guarantors and the initial purchasers of the Senior Notes agreed to file an exchange offer registration statement with the Securities and Exchange Commission ("SEC") within 180 days of the May 25, 2012 issuance date, and use their respective commercially reasonable efforts to have it declared effective at the earliest possible time and in any event within 270 days following the issuance date.

As a result of the Molycorp Canada acquisition, the Company assumed $230.0 million principal amount of the Debentures with a par value of $1,000 per Debenture and maturing on December 31, 2017. The Debentures carry a 5% coupon and are convertible at $13.80 per share of Molycorp Canada's predecessor company. As required under the change in control provisions of the Debentures, holders of the Debentures have the option to either require the Company to repurchase the Debentures at par plus accrued interest, convert the Debentures to shares of Molycorp common stock, or hold the Debentures to maturity. The Debenture holders that convert will receive, at their election, the same cash and/or share consideration that was paid to Molycorp Canada's former shareholders in connection with the acquisition of Molycorp Canada, subject to the same pro-ration calculation, as if such holders had converted immediately prior to the acquisition. The Debenture holders must exercise their options under the change in control provisions, if at all, on or before August 11, 2012. The Company separately accounts for the liability and equity components of the Debentures to reflect the issuer's economic interest cost. The equity component of the Debentures is included in the additional paid-in capital section of the condensed consolidated statement of stockholders' equity at June 30, 2012, and the value of the equity component is treated as original issue discount for purposes of accounting for the debt component of the Debentures. At June 30, 2012, Molycorp recognized a liability component related to the Debentures of approximately $230.2 million, which includes a small accretion of the original issue discount for the 19 days following the acquisition of Molycorp Canada, and an equity component of $3.1 million. Total interest cost related to the Debentures for the period from June 12, 2012 to June 30, 2012 was $0.6 million.

Additional short-term indebtedness was assumed as part of the acquisition of Molycorp Canada totaling $31.7 million, which relates to various bank loans maturing between July 2012 and December 2012 with a weighted average interest rate of

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approximately 4.2%.

On September 1, 2010, Molycorp and Kern River entered into a firm Transportation Service Agreement ("TSA") under which Kern River agreed to construct and operate facilities necessary to provide natural gas transportation services to the Molycorp Mountain Pass facility. Under the terms of the TSA, Molycorp agreed to pay Kern River for the cost attributable to the design, permitting, and construction of the delivery facilities through a transportation service charge of approximately $0.4 million per month for ten years. This charge includes reimbursement to Kern River for construction of the delivery facilities and installation, as well as reimbursement and compensation for transportation services. The term of the TSA started on June 1, 2012, the date on which Kern River deemed the TSA facilities ready to provide service. The Company accounted for the TSA as a capital lease under the relevant accounting guidance.

The following tables provide a summary of the current and non-current portions of the debt outstanding at June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012
	Current		Non-Current
Senior Notes 10.00%, net of discount, due June 2020	$	—	$	635,498
Convertible Notes 3.25%, net of discount, due June 2016	—		194,720
Debentures 5.00%, net of discount	230,227		—
Bank loans with a weighted average rate of 4.07% due July 2012 - September 2017	33,009		4,777
Total debt	263,236		834,995
Capital lease obligations	333		15,324
Total debt and capital lease obligations	$	263,569	$	850,319

	December 31, 2011
	Current		Non-Current
Convertible Notes 3.25%, net of discount, due June 2016	$	—	$	190,877
Bank loans 2.69% - 3.88% due February 2012 - September 2017	1,516		5,668
Total debt	$	1,516	$	196,545

Scheduled minimum debt repayments are $261.6 million for the remainder of 2012, $1.6 million in 2013, $1.4 million in 2014, $1.3 million in 2015, $230.7 million in 2016, $0.3 million in 2017 and $650.0 million thereafter.

(15) Income Taxes

At June 30, 2012, the Company’s net loss of $70.4 million included $11.3 million in acquisition related expense, which is a permanent difference between its loss for financial reporting and tax purposes. Molycorp had net deferred income tax liabilities of $162.5 million at June 30, 2012 primarily related to the purchase accounting adjustment associated with the Molycorp Canada acquisition.

At June 30, 2012, Molycorp determined that it, more likely than not, will realize its deferred tax assets and concluded that no valuation allowance is required. In making this determination, management analyzed, among other things, the Company’s recent history of earnings and cash flows, forecasts of future earnings, and the nature and timing of future deductions and benefits represented by the deferred tax assets and liabilities.

The Company has undistributed earnings for several foreign subsidiaries at June 30, 2012, for which deferred taxes have not been provided. Such earnings are considered indefinitely invested in the foreign subsidiaries. If such earnings were repatriated, additional tax expense may result, although the calculation of such additional taxes is not practicable.

The net tax effect of the elimination in consolidation of intercompany balances and transactions resulted in a deferred charge and income tax payable of $16.6 million at June 30, 2012.

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(16) Stockholders’ Equity

At June 30, 2012 and December 31, 2011, the Company had 109,941,469 and 83,896,043 shares of common stock outstanding, respectively, and 2,070,000 shares of 5.50% Series A Mandatory Convertible Preferred Stock (“Convertible Preferred Stock”) outstanding.

As a result of the acquisition of Molycorp Canada on June 11, 2012, Molycorp and MCP Exchangeco Inc. issued an aggregate of 13,545,426 shares of common stock and 507,203 Exchangeable Shares in consideration for that portion of the purchase price Molycorp paid to Molycorp Canada’s former shareholders who elected to receive shares of Molycorp common stock in addition to or in lieu of cash on the acquisition date. The $284.1 million fair value recorded in additional paid-in capital related to the issuance of acquisition consideration was based on the closing price of the Company’s common stock on June 11, 2012.

On March 8, 2012, Molibdenos y Metales S.A. (“Molymet”), the world’s largest processor of molybdenum and rhenium, headquartered in Santiago, Chile, purchased 12,500,000 shares of the Company’s common stock for $390.1 million, net of stock issuance costs of $0.1 million, at a purchase price of $31.218 per share, which price was determined based on the average daily volume weighted average price of the Company’s common stock on The New York Stock Exchange for the 20 consecutive trading days immediately preceding the date of the agreement, plus a 10% premium. Pursuant to this investment, Molymet acquired the right to nominate a member of the Company’s Board of Directors for so long as Molymet owns a certain percentage of the Company’s common stock.

In May and February of 2012, the Company declared a cash dividend of $1.375 per share on the Convertible Preferred Stock, respectively. $2.8 million of the aggregate dividend was paid on June 1, 2012 to holders of record at the close of business on May 15, 2012, and $2.8 million was paid on March 1, 2012 to holders of record at the close of business on February 15, 2012.

(17) (Loss) Earnings per Share

For the three and six months ended June 30, 2012 and 2011, respectively, the paid dividends on the Convertible Preferred Stock were subtracted from net (loss) income attributable to Molycorp stockholders for the purpose of computing the basic and diluted earnings per share.

(In thousands, except share and per share amounts)	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011
Net (loss) income attributable to Molycorp stockholders	$	(67,604	)	$	47,787
Dividends on Convertible Preferred Stock	(2,846		)	(2,846		)
(Loss) income attributable to common stockholders	(70,450		)	44,941
Weighted average common shares outstanding—basic	99,175,285			83,847,119
Basic (loss) earnings per share	$	(0.71	)	$	0.54
Weighted average common shares outstanding—diluted	99,175,285			84,413,499
Diluted (loss) earnings per share	$	(0.71	)	$	0.53

(In thousands, except share and per share amounts)	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
Net (loss) income attributable to Molycorp stockholders	$	(71,082	)	$	45,589
Dividends on Convertible Preferred Stock	(5,693		)	(4,269		)
(Loss) income attributable to common stockholders	(76,775		)	41,320
Weighted average common shares outstanding—basic	93,090,872			83,054,811
Basic (loss) earnings per share	$	(0.82	)	$	0.50
Weighted average common shares outstanding—diluted	93,090,872			83,339,566
Diluted (loss) earnings per share	$	(0.82	)	$	0.50

Diluted earnings per share reflect the dilutive impact of potential common stock and unvested restricted shares of

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common stock in the weighted average number of common shares outstanding during the period, if dilutive. For this purpose, the “treasury stock method” and “if-converted method,” as applicable, are used.

Under the treasury stock method, assumed proceeds upon the exercise of stock options are considered to be used to purchase common stock at the average market price of the shares during the period. Also under the treasury stock method, fixed awards and nonvested shares, such as restricted stock units, are deemed options for purposes of computing diluted earnings per share. At June 30, 2012 and 2011, all potential common stock under the treasury stock method were antidilutive in nature; consequently, the Company did not have any adjustments between earnings per share and diluted earnings per share related to stock options and restricted stock units.

In applying the if-converted method, conversion is not assumed for purposes of computing diluted earnings per share if the effect would be antidilutive. Convertible preferred stock (such as the Convertible Preferred Stock) is antidilutive whenever the amount of the dividend declared in or accumulated for the current period per common share obtainable on conversion, including the deemed dividend in the period from a beneficial conversion feature, exceeds basic earnings per share. The Convertible Preferred Stock was antidilutive at June 30, 2012 and 2011. Also, under the if-converted method, convertible debt (such as the Convertible Notes and the Debentures) is antidilutive whenever its interest per common share obtainable on conversion, including any deemed interest from a beneficial conversion feature and nondiscretionary adjustments, net of tax, exceeds basic earnings per share. At June 30, 2012, the Convertible Notes and the Debentures, and the Convertible Notes at June 30, 2011, were antidilutive.

(18) Stock-Based Compensation

During the first two quarters of 2012, the Company granted performance-based restricted stock units ("PBRSUs") and restricted stock units (“RSUs”) to its executive officers, to certain other employees and to some non-employee directors of the Company under the 2010 Equity and Performance Incentive Plan. The RSUs vest on the third anniversary of the grant date. The grant-date fair value of RSUs is determined using the Company’s common stock price on the date of grant and is recognized as stock-based compensation expense on a straight-line basis over the three-year vesting period for the awards that are expected to vest. The PBRSUs vest with respect to between 0% and 150% of the PBRSUs granted to an individual on the basis of the achievement of certain management objectives measured by specified levels of total shareholder return relative to a defined index group over the performance period from January 1, 2012 through December 31, 2014, or upon the occurrence of certain change of control or termination events. The grant-date fair value of PBRSUs is determined using a lattice approach that incorporates a Monte Carlo simulation model. The compensation cost associated with the PBRSUs is recognized straight-line over the performance period for the awards that are expected to vest, even if the market conditions are never satisfied.

During the second quarter of 2012, the Company issued 483 PBRSUs to certain employees, and a total of 22,659 RSUs to certain employees and non-employee directors of the Company.

In the first quarter of 2012, the Company granted 45,553 PBRSUs, in aggregate, to its executive officers and certain other employees, and a total of 188,844 RSUs to certain employees and non-employee directors of the Company.

Some of the RSUs granted to the non-employee directors, in both the first and second quarter of 2012, relate to the grantees' election to convert a portion of their quarterly cash retainer into RSUs. These converted RSUs are fully vested because they relate to services already rendered by the non-employee directors. The same non-employee directors who elected to convert their cash retainer into RSUs, received additional RSUs as matching contributions by the Company equal to 25% of the converted units. The matching RSUs vest on the third anniversary of the grant date.

Included in the RSUs issued during the first quarter of 2012, are also grants related to the election by certain executive officers and other employees of the Company to convert a portion of their 2011 annual cash bonuses into RSUs. These RSUs are fully vested because they relate to services already rendered by the grantees. The conversion of the 2011 annual bonuses into RSUs resulted into an increase in Additional Paid-In Capital of $0.6 million in the first quarter of 2012. The same named executive officers and other employees received additional RSUs as matching contribution by the Company equal to 25% of the converted RSUs. The matching RSUs vest on the third anniversary of the grant date.

The following tables summarize the activity related to stock-based awards during the first and second quarter of 2012:

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PBRSUs	Number of Shares	Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	—	—
Granted	46,036	$	30.30
Forfeited	—	—
Vested	—	—
Unvested at June 30, 2012	46,036	$	30.33

RSUs	Number of Shares		Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	78,544		$	56.55
Granted	211,503		$	25.81
Forfeited	—		—
Vested*	(22,180	)	$	28.44
Unvested at June 30, 2012	267,867		$	34.72

* Represents deferral and conversion of a portion of fees payable to certain non-employee directors of the Company, and deferral and conversion of a portion of the 2011 annual cash bonuses paid to certain executive officers and other employees of the Company.

RSAs	Number of Shares		Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	48,924		$	40.20
Granted	—		—
Forfeited	(238	)	$	48.87
Vested	—		—
Unvested at June 30, 2012	48,686		$	40.15

The following tables summarize the activity related to stock options during the first two quarters of 2012:

	June 30, 2012
Stock Options	Number of Shares	Weighted Average Exercise Price
Outstanding at January 1, 2012	52,819	$	48.87
Granted	—	—
Exercised	—	—
Forfeited and expired	—	—
Outstanding at June 30, 2012	52,819	$	48.87
Options exercisable at June 30, 2012	17,606	$	48.87

The stock-based compensation associated with all equity awards was $1.1 million and $1.9 million for the three months and six months ended June 30, 2012, respectively, and $0.5 million and $3.4 million for the three months and six months ended June 30, 2011, respectively.

(19) Commitments and Contingencies

(a) Future Operating Lease Commitments

The Company has certain operating leases for office space, trailers and certain equipment. Remaining annual

27

minimum payments under these leases at June 30, 2012 were as follows:

(In thousands)	Total		Less Than 1 Year		1 - 3 Years		4 - 5 Years		More Than 5 Years
Operating lease obligations	$	10,297	$	2,198	$	5,556	$	1,188	$	1,355

(b) Purchase Commitments

In connection with the Molycorp Mountain Pass facility modernization and expansion and future operations, the Company entered into contractual commitments for the purchase of materials and services from various vendors. As a result of the Molycorp Canada acquisition, the Company assumed other purchase obligations totaling $8.5 million at June 30, 2012, which are expected to be settled between 2012 and 2013. Future payments for all purchase commitments at June 30, 2012 were as follows:

(In thousands)	Total		Less Than 1 Year		1 - 3 Years		4 - 5 Years		More Than 5 Years
Purchase obligations and other commitment	$	326,114	$	322,800	$	1,749	$	538	$	1,027

(c) Potential Environmental Obligations

As part of its ongoing remediation efforts at the Molycorp Mountain Pass facility, the Company identified liner defects in three of the onsite evaporation ponds in 2011. These defects led to minor groundwater contamination issues that are limited to a small area directly underneath the evaporation ponds. In order to remediate this issue, the Company will replace the primary lining system and might have to install a groundwater recovery system. The Company estimated the cost of these items at between $2.4 million and $4.6 million, which will be treated as capital expenditures and are included in the purchase obligations table above. The Company is in the process of finalizing the remediation plans with the Regional Water Quality Control Board.

(d) Labor Contract

Certain Molycorp Mountain Pass facility employees are covered by a collective bargaining agreement with the United Steelworkers of America that expires on March 15, 2015. At June 30, 2012, 206 employees, or approximately 60% of the Company’s workforce at the Molycorp Mountain Pass facility, were covered by this collective bargaining agreement.

At June 30, 2012, 176 employees, or approximately 30% of the workforce at the Company’s Molycorp Silmet facility, were unionized employees. The contract with the labor union in Estonia was renewed in February 2012.

(e) Reclamation Surety Bonds

At June 30, 2012, Molycorp had placed $28.8 million of surety bonds with California state and regional agencies to secure its Mountain Pass facility closure and reclamation obligations.

(f) Purported Class Action and Derivative Lawsuits

In February 2012, a purported class action lawsuit captioned, Angelo Albano, Individually and on Behalf of All Others Similarly Situated v. Molycorp, Inc., et al., was filed against the Company and certain of its executive officers in the U.S. District Court for the District of Colorado. This federal court action alleges, among other things, that the Company and those officers violated Section 10(b) of the Securities Exchange Act of 1934 in connection with statements relating to its third quarter fiscal 2011 financial results and fourth quarter 2011 production guidance that the Company had filed with or furnished to the SEC, or otherwise made available to the public. The plaintiffs are seeking unspecified damages and other relief. The Company believes the allegations are without merit and that it has valid defenses to such allegations. The Company intends to defend this action vigorously. The Company is unable to provide meaningful quantification of how the final resolution of these claims may

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impact its future consolidated financial position or results of operations.

Seven stockholder derivative lawsuits have been filed in three different jurisdictions purportedly on behalf of Molycorp, Inc., against certain of its directors, certain of its officers, and certain of its private equity investors. These cases have been filed in the Delaware Court of Chancery, the U.S. District Court in Colorado, and the District Court in Arapahoe County, Colorado. They are captioned: Gaines v. Smith et al., Case No. 7282 (Del. Ch. Feb. 12, 2012); Paskowitz v. Smith et al., Case No. 7319 (Del. Ch. Mar. 9, 2012); Wilson v. Smith et al., No. 7395-VCN (Del. Ch. April 4, 2012); Wells v. Smith et al., No. 1:12-cv-00447-WJM (D. Colo. Feb. 21, 2012); Swaggerty v. Smith et al., No. 12-cv-00589-CMA-KLM (D. Colo. Mar. 7, 2012); Clem v. Smith et al., No. 12 CV 392 (Arapahoe Cnty., Colo. Feb. 24, 2012); and Nationwide Consulting, Inc. v. Smith et al., No. 12 CV 448 (Arapahoe Cnty., Colo. Mar. 5, 2012). The Clem and Nationwide cases, which were previously consolidated under the caption Clem v. Smith et al., No. 12 CV 392 (Arapahoe Cnty., Colo.), have been voluntarily dismissed without prejudice. The Wells and Swaggerty cases have both been dismissed without prejudice in favor of the lawsuits proceeding in the Delaware Court of Chancery. As a result, plaintiffs in the Wells and Swaggerty cases filed notices of appeal before the 10th Circuit.

The derivative complaints challenge among other things certain sales of stock by officers, directors and private equity firms, and certain Molycorp corporate acquisitions during 2011. The complaints assert causes of action for: (1) alleged breaches of fiduciary duty, including the duties of loyalty and due care; (2) alleged unjust enrichment; (3) alleged waste of corporate assets; and (4) alleged “abuse of control.” On behalf of Molycorp, the plaintiffs in the derivative actions seek, among other things, monetary damages, restitution, an accounting, and certain changes to corporate governance procedures.

The defendants have filed a motion in each case seeking to consolidate the derivative actions in one jurisdiction, and have expressed a preference for the Delaware Court of Chancery.

(20) Concentrations

(a) Limited Number of Products

Molycorp Mountain Pass

Percentages of Molycorp Mountain Pass’ sales by product, net of intercompany transactions, that accounted for more than 10% of consolidated sales for the three and six months ended June 30, 2012 and 2011, respectively, were approximately as follows:

	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Lanthanum products	7	%	15	%
Didymium, Neodymium and Praseodymium products	8	%	16	%

	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011
Lanthanum products	15	%	27	%
Cerium products	23	%	25	%
Didymium, Neodymium and Praseodymium products	21	%	20	%

Molycorp Silmet

The majority of sales from the Molycorp Silmet facility during the three and six months ended June 30, 2012, and for the period from April 1, 2011 (the acquisition date) to June 30, 2011, net of intercompany sales, consisted of cerium, neodymium and praseodymium rare earth products, and two rare metal products, tantalum and niobium.

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MMA

The MMA facility sold primarily NdFeB alloys and samarium-cobalt alloys during the three and six months ended June 30, 2012, and for the period from April 15, 2011 (the acquisition date) to June 30, 2011. MMA’s sales of NdFeB alloys were approximately 60% and 74% of consolidated sales for the three and six months ended June 30, 2012, respectively, and approximately 61% of consolidated sales for the period from April 15, 2011 to June 30, 2011.

Molycorp Canada

Molycorp Canada sold Neo Powders, rare earths and zirconium based engineered materials and other rare metals for the period from June 12, 2012 to June 30, 2012. Molycorp Canada's sales of Neo Powders, rare earth and other rare metals were approximately 43% and 23% of consolidated sales for the three and six months ended June 30, 2012, respectively.

(b) Limited Number of Customers

Molycorp Mountain Pass

For the six months ended June 30, 2012, Molycorp Mountain Pass’ sales to two of its customers in excess of 10% of consolidated sales were $22.7 million and $24.4 million, respectively.

For the quarter ended June 30, 2011, Molycorp Mountain Pass’ sales to two of its customers in excess of 10% of consolidated sales were $18.6 million, and $18.3 million, respectively. For the six months ended June 30, 2011, Molycorp Mountain Pass’ sales to two of its customers in excess of 10% of consolidated sales were $26.4 million and $24.1 million, respectively.

Molycorp Mountain Pass’ sales to three of its customers, net of intercompany sales, represented in total approximately 84% and 85% of Molycorp Mountain Pass’ sales for the three and six months ended June 30, 2012, respectively.

For the three and six months ended June 30, 2011, Molycorp Mountain Pass’ sales to two of its customers, net of intercompany sales, represented in total approximately 61% and 58% of Molycorp Mountain Pass’ sales, respectively.

Molycorp Silmet

Sales to four of Molycorp Silmet’s customers during the three and six months ended June 30, 2012, were approximately 55% and 56% of Molycorp Silmet’s sales, respectively.

For the period from April 1, 2011 to June 30, 2011, sales to three of Molycorp Silmet’s customers were approximately 59% of Molycorp Silmet’s sales.

MMA

MMA’s sales to one of its customers for the three and six months ended June 30, 2012, were $9.2 million and $24.7 million, respectively, or approximately 9% and 13% of the Company’s consolidated sales, respectively, and approximately 71% and 78% of MMA’s sales for that period, respectively.

MMA’s sales to one of its customers for the period from April 15, 2011 to June 30, 2011, were $7.3 million, or approximately 7% of the Company’s consolidated sales, and approximately 71% of MMA’s sales.

(21) Related-Party Transactions

Transactions with Traxys North America LLC

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The Company made principal payments of $0.9 million and $3.1 million for the six month period ended June 30, 2012 and for the year ended December 31, 2011, respectively, under the inventory financing arrangement with Traxys North America LLC (“Traxys and affiliates”), a subsidiary of one of the Company’s stockholders, Traxys S.a.r.l. The outstanding amounts payable to Traxys and affiliates under this arrangement were $0 and $0.9 million reported under Other current liabilities on the condensed consolidated balance sheet at June 30, 2012 and December 31, 2011, respectively. Molycorp also had outstanding amounts payable to Traxys and affiliates under the same arrangement of $0 and $2.8 million reported in Trade accounts payable at June 30, 2012 and December 31, 2011, respectively, associated with product purchased from Traxys and affiliates in 2011. For the three and six months ended June 30, 2011, the Company made purchases of lanthanum oxide from Traxys and affiliates in the amount of $1.9 million and $6.2 million, respectively.

The Company and Traxys and affiliates also jointly market and sell certain lanthanum oxide, cerium oxide, misch metal and erbium oxide products. Per the terms of this other arrangement, the Company and Traxys and affiliates split gross margin equally once all costs associated with the sale are recovered by both parties. Additionally, the Company had an outstanding related party receivable from Traxys and affiliates in the amount of $0.1 million and $0.2 million at June 30, 2012 and December 31, 2011, respectively.

At June 30, 2012 and December 31, 2011, Molycorp had also a balance receivable from Traxys and affiliates of $0.1 million and $2.1 million, respectively, related to sales of tantalum metal to Traxys and affiliates of $3.2 million in 2011.

Transactions with Neo Material Technologies Inc.

During the three and six months ended June 30, 2012, but prior to June 11, 2012, Molycorp sold neodymium/ praseodymium oxides to Neo Material Technologies, Inc. for $4.3 million. Additionally, during the three and six months ended June 30, 2012, but prior to June 11, 2012, the Company sold heavy rare earths to Neo Material Technologies, Inc. for $1.6 million. There were no sales between the companies in the comparative 2011 periods. The related intercompany accounts receivable and payable were eliminated in consolidation.

Transactions with equity method investees: TMT, Keli and Ingal Stade

The Company supplies Neo Powders to TMT to produce rare earth magnetic compounds. Molycorp then purchases these compounds back from TMT in its normal course of business. Additionally, Keli processes rare earth oxides into metals for inclusion in the Neo Powders.

For the period from June 12, 2012 to June 30, 2012, the Company purchased $0.5 million worth of compounds from TMT, and purchased metals and received services from Keli amounting to $5.3 million.

Ingal Stade sells gallium to the Company's facilities located in Ontario, Canada and to some of its facilities in the United States. For the period from June 12, 2012 to June 30, 2012, the Company purchased $0.5 million of gallium metal from Ingal Stade.

(22) Net Change in Operating Assets and Liabilities

Net change in operating assets and liabilities, net of the effects of acquisitions and dispositions, consists of the following:

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	Six Months Ended
(In thousands)	June 30, 2012			June 30, 2011
Decrease (increase) in operating assets:
Accounts receivable	$	58,705		$	(20,711	)
Inventory	14,126			(12,593		)
Prepaid expenses and other assets	(8,875		)	(417		)
Increase (decrease) in operating liabilities:
Accounts payable	(29,116		)	14,194
Income tax payable	(17,405		)	—
Interest payable	(5,143		)
Asset retirement obligation	—			(339		)
Accrued expenses	(37,466		)	7,395
	$	(25,174	)	$	(12,471	)

(23) Supplemental Cash Flow Information

	Six Months Ended
(In thousands)	June 30, 2012		June 30, 2011
Non-cash financing activities and investing activities:
Change in accrued capital expenditures	$	93,446	$	34,540

(24) Research and Development

The Company invests significant resources to improve the efficiency of its REO processing operations, the development of new applications for individual rare earth elements and exploratory drilling. These costs consist primarily of salaries, outside labor, material and equipment.

(25) Derivative Instruments

The Company accounts for derivative instruments using the fair value method. GAAP provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

As a result of the Molycorp Canada acquisition, the Company assumed a liability associated with the put option issued to holders of the noncontrolling interest of Buss & Buss, a business acquired by Molycorp Canada's predecessor company. The Buss & Buss put option is related to a share purchase agreement (“SPA”) between NMT Holding GmbH, a German subsidiary of the Company, and the shareholders of Buss & Buss entered into May 27, 2010 by Molycorp Canada's predecessor company. The SPA includes a call and a put option on shares of the remaining shareholder and his legal successors. If the call option is exercised by the Company, a premium is added to the consideration to purchase the underlying shares in Buss & Buss. If the put option is exercised by the remaining shareholder of Buss & Buss or his legal successors, a discount will reduce the cost basis of the securities sold to the Company. The Company did not apply hedge accounting to this derivative. The put option had a fair value of $9.1 million at June 30, 2012, recorded as Derivative liability in the condensed consolidated balance sheets. The change in fair value of the put option resulted in an unrealized loss of $0.1 million for the period from June 12, 2012 to June 30, 2012, which was recognized in Interest expense in the condensed consolidated statements of operations and comprehensive income.

The technique Molycorp used to fair value this derivative is the income approach based on a discounted cash flow model. With the exception of the risk free interest rate, the inputs used to fair value this put option are based on unobservable Level 3 inputs based on management's assumptions. Any reasonably foreseeable changes in assumed levels of unobservable inputs used to fair value this put option would not be expected to have a material impact on the Company's financial position or

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results of operations.

On March 28, 2012, the Company entered into a contingent forward contract to purchase Canadian dollars with a notional amount of Cdn$870.0 million to manage the foreign currency exposure with respect to its planned acquisition of Molycorp Canada. The Company did not apply hedge accounting to this contingent forward contract. Upon settlement of this derivative on June 11, 2012 (Molycorp Canada acquisition date), the Company recognized a loss of $37.5 million in Other expense. Of this loss $6.7 million was recognized during the three months ended March 31, 2012, and the remainder during the second quarter of 2012.

(26) Pension

In accordance with the terms of the Arrangement Agreement, Molycorp maintained the terms of the benefit plan for Molycorp Canada’s current and former employees. Molycorp Canada's predecessor company had a defined benefit pension plan (“Pension Plan”), which covered all hourly employees employed as of September 30, 1995, and all hourly employees subsequently hired by Molycorp Canada's predecessor company up to 2003 at its former U.S. manufacturing facility in Anderson, Indiana. A December 31 measurement date is used for the Pension Plan. Molycorp paid $0.1 million as of June 30, 2012 of the estimated total contributions to the Pension Plan for 2012 of $0.2 million.

Molycorp also maintained the terms of Molycorp Canada postretirement medical and life insurance benefits plan for certain employees from the Anderson, Indiana manufacturing facility. The measurement date for this postretirement benefit plan (“PBP”) is December 31.

The actuarial valuation for funding purposes of the Pension Plan and PBP is January 1 of each year. The components of the net periodic pension expense for the period from June 12, 2012 to June 30, 2012 for the Pension Plan and PBP are set forth below (in thousands):

Pension Plan and PBP	For the period from June 12, 2012 to June 30, 2012
Components of net periodic benefit cost:
Service Cost	$	—
Interest cost	18
Expected return on assets	(14		)
Amortization of transition obligation/(asset)	—
Amortization of prior service cost	—
Amortization of actuarial loss	12
Net periodic benefit cost	$	16

(27) Recent Accounting Pronouncements

In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. ASU 2011-12 defers the requirement that companies present reclassification adjustments for each component of Accumulated Other Comprehensive Income (“AOCI”) in both net income and other comprehensive income on the face of the financial statements. Companies will continue to be required to present amounts reclassified out of AOCI on the face of the financial statements or disclose those amounts in the notes to the financial statements. During the deferral period, there is no requirement to separately present or disclose the reclassification adjustments into net income. For the period ended June 30, 2012, the Company did not have any reclassification adjustments for components of AOCI.

In September 2011, the Financial Accounting Standard Board (FASB) issued ASU 2011-08, Testing Goodwill for Impairment. Under this updated guidance, an entity will have the option to first assess qualitatively whether it is necessary to perform the current two-step goodwill impairment test. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is necessary. The update does not change how an entity performs the two-step

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impairment test under the current guidance. This ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not expect the adoption of this updated guidance to have a significant impact on its financial statements.

(28) Subsequent Events

Preferred stock dividend

In August 2012, the Company declared a cash dividend of $1.375 per share on the Convertible Preferred Stock to be paid on September 1, 2012 to holders of record at the close of business on August 15, 2012.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Molycorp,” “we,” “our” or “us” refer to Molycorp, Inc. and its consolidated subsidiaries. As used herein, a ton is equal to 2,000 pounds, the term “mt” means a metric tonne (equal to 2,205 pounds), and the term “Rest of World” means the entire world except China. For definitions of certain rare earth-related and mining terms, see “Glossary of Selected Mining Terms.”

This Quarterly Report on Form 10-Q contains forward-looking statements that represent our beliefs, projections and predictions about future events or our future performance. You can identify forward-looking statements by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements.

Risk factors and uncertainties that may cause actual results to differ materially from expected results include, among others: the need to secure additional capital to implement our business plans, and our ability to successfully secure any such capital; our ability to complete our planned capital projects, such as our modernization and expansion efforts, including achieving an annual production capacity of 19,050 mt at our Mountain Pass, California rare earth mine and processing facility, or the Molycorp Mountain Pass facility, which we refer to as Project Phoenix Phase 1, and our second phase capacity expansion plan, which we refer to as Project Phoenix Phase 2, and reach full planned production rates for rare earth oxides, or REO, and other planned downstream products, in each case within the projected time frame; the success of our cost mitigation efforts in connection with Project Phoenix, which if unsuccessful, might cause our costs to exceed budget; the final costs of our planned capital projects, such as Project Phoenix Phase 1, including the accelerated start-up of the Molycorp Mountain Pass facility, and Project Phoenix Phase 2, which may differ from estimated costs; our ability to successfully integrate Neo Material Technologies, Inc. (now Molycorp Canada), with our operations; our ability to achieve fully the strategic and financial objectives related to the acquisition of Molycorp Canada, including the acquisition's impact on our financial condition and results of operations; and unexpected costs or liabilities that may arise from the acquisition, ownership or operation of Molycorp Canada. Also as a result of the Molycorp Canada acquisition, our business performance may be materially affected by a number of other factors and uncertainties including, but not limited to: the rate of exchange of the U.S. dollar to the Canadian dollar, the Japanese yen, and the Chinese Renminbi; new products pricing; the competitive environment for these new products; unexpected actions of domestic and foreign governments; and various events which could disrupt operations, including natural events and other risks. Other risk factors and uncertainties that may cause actual results to differ materially from expected results include: uncertainties associated with our reserve estimates and non-reserve deposit information, including estimated mine life and annual production; uncertainties related to feasibility studies that provide estimates of expected or anticipated costs, expenditures and economic returns, REO prices, production costs and other expenses for operations, which are subject to fluctuation; uncertainties regarding global supply and demand for rare earths materials; uncertainties regarding the results of our exploratory drilling programs; our ability to enter into additional definitive agreements with our customers and our ability to maintain customer relationships; our sintered neodymium-iron-boron, or NdFeB, rare earth magnet joint venture's ability to successfully manufacture magnets within its expected timeframe; our ability to successfully integrate other acquired businesses; our ability to maintain appropriate relations with unions and employees; our ability to successfully implement our “mine-to-magnets” strategy; environmental laws, regulations and permits affecting our business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by us; uncertainties associated with unanticipated geological conditions related to mining; and those risks discussed and referenced in the section entitled “Risk Factors” described in our Annual Report on Form 10-K for the year ended December 31, 2011.

Any forward-looking statement you read in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speak only as to the date when made. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law.

The following discussion and analysis should be read in conjunction with our June 30, 2012 unaudited condensed consolidated financial statements and related notes included herein. This Quarterly Report on Form 10-Q also contains statistical data and estimates we obtained from industry publications and reports generated by third parties. Although we

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believe that the publications and reports are reliable, we have not independently verified their data.

Overview

We are one of the world's leading rare earth products and rare metals companies that combines a world-class rare earth resource at Mountain Pass, California, with world-leading ultra-high-purity rare earth and rare metal materials processing capabilities. We are vertically integrated across the global rare earth mine-to-magnetics supply chain and we produce custom engineered materials from 15 different rare earths, with purity levels of up to 6N (99.9999%), and from five other metals (niobium, tantalum, gallium, indium and rhenium) at purity levels of up to 8N (99.999999%).

Rare earth products are critical inputs in many existing and emerging applications including: clean energy technologies, such as hybrid and electric vehicles and wind power turbines; multiple high-tech uses, including mobile devices, fiber optics, lasers and hard disk drives; critical defense applications, such as guidance and control systems and global positioning systems; and advanced water treatment technology for use in industrial, military and outdoor recreation applications. Global demand for rare earth elements, or REEs, is projected by industry analysts to steadily increase both due to continuing growth in existing applications and increased innovation and development of new end uses. We have made significant investments, and expect to continue to invest, in developing technologically advanced applications and proprietary applications for individual REEs.    

The foundation for our “mine-to-magnets” strategy is our Molycorp Mountain Pass facility. Our Molycorp Mountain Pass facility is the largest, most fully developed rare earth mine outside of China and has been producing rare earth products for approximately 60 years. Upon completion of Project Phoenix Phase 1, which we anticipate to occur in the fourth quarter of 2012, we expect our Molycorp Mountain Pass facility to have production cash costs lower than those publicly reported for China by government officials and those reported for other non-Chinese rare earth projects. We are targeting a full planned production rate of approximately 19,050 mt of REO per year by the fourth quarter of 2012, an annual production capacity of 40,000 mt of REO by the end of 2012 and, if customer demand and end-market conditions warrant, a full planned production rate of 40,000 mt of REO per year as early as mid-2013.

We also own several of the leading rare earth processing facilities in the world. Our Molycorp Silmet facility, located in Sillamäe, Estonia, is one of the largest REO and rare metals producers in Europe. Our Molycorp Metals & Alloys, or MMA, facility, located in Tolleson, Arizona, is the only producer of neodymium and samarium magnet alloy and other specialty alloy products in the United States. We also have created a joint venture with Daido Steel Co., Ltd., or Daido, and Mitsubishi Corporation, or Mitsubishi, in the form of a private company, Intermetallics Japan, or IMJ, to manufacture sintered NdFeB permanent rare earth magnets.

As a result of the Molycorp Canada acquisition in June 2012, we became a leading global producer, processor and developer of NdFeB magnetic powders, or Neo Powders, rare earths and zirconium based engineered materials and applications and other rare metals and their compounds. These innovative products are essential in many of today's high-technology products.

Neo Powders are used in the production of high performance, bonded NdFeB permanent magnets, which are found in micro motors, precision motors, sensors and other applications requiring high levels of magnetic strength, flexibility, small size and reduced weight. Molycorp Canada is the only legal supplier of Neo Powders for bonded magnets manufactured or sold in the United States.

Our Molycorp Canada division also manufactures a product line of oxides and salts of REEs, including cerium, lanthanum, neodymium, yttrium and yttrium europium coprecipitates, dysprosium and terbium, among others, and zirconium based engineered materials and salts, as well as a line of mixed rare earth/zirconium oxides. Rare earths and zirconium applications include catalytic converters, computers, television display panels, optical lenses, mobile phones and electronic chips. Additionally, Molycorp Canada produces, reclaims, refines and markets high value niche metals and their compounds including gallium, indium and rhenium used in wireless, light emitting diode, or LED, flat panel display, turbine, solar and catalyst applications.

Our Molycorp Canada segment operates joint ventures and majority owned manufacturing facilities in Jiangsu Province, China; Shandong Province, China; Stade, Germany; Sagard, Germany; and Quapaw, Oklahoma. Molycorp Canada also operates wholly owned manufacturing facilities in Peterborough, Ontario; Napanee, Ontario; Blanding, Utah; the Hyeongok Industrial Zone in South Korea; Tianjin, China; and Korat, Thailand. Additionally, Molycorp Canada conducts ongoing research and product development through laboratories in Singapore and Abingdon, United Kingdom.

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Our combined workforce of approximately 2,600 employees includes scientists, engineers, chemists, technologists and highly skilled workers in 27 locations across 11 countries.

Material Changes in Results of Operations

The comparability of our operating results during 2012 and 2011 is significantly affected by the Molycorp Canada acquisition on June 11, 2012. This Quarterly Report on Form 10-Q only includes the results of Molycorp Canada for the nineteen days subsequent to the acquisition. As such, we are treating Molycorp Canada as one reporting segment for this report only, in addition to the traditional Molycorp operating segments: Molycorp Mountain Pass, Molycorp Silmet and MMA. However, as we further integrate Molycorp Canada operations, we anticipate organizing our business into different reportable segments in future periods.

Recent Developments

Issuance of 10% Senior Secured Notes due 2020

On May 25, 2012, we issued $650.0 million aggregate principal amount of 10% Senior Secured Notes, or Senior Notes, due June 1, 2020 in an offering exempt from the registration requirements of the Securities Act of 1933. The Senior Notes will bear interest at the rate of 10% per year payable on June 1 and December 1 of each year beginning on December 1, 2012. Prior to June 1, 2016, we may redeem any of the Senior Notes at a price equal to 100% of the principal amount thereof plus an applicable make-whole premium and accrued and unpaid interest. After May 31, 2016, we may redeem the Senior Notes, in whole or in part, at a redemption price for the Senior Notes plus accrued and unpaid interest, initially at 105% of the principal amount thereof, but declining gradually to 100% of the principal amount thereof. In addition, prior to June 1, 2015, we may redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of one or more permitted sales of our capital stock at a redemption price (expressed as a percentage of principal amount) of 110% plus accrued and unpaid interest. Upon the occurrence of a change of control, we will be required to offer to repurchase all of the Senior Notes. The Senior Notes are senior secured obligations of our company and are guaranteed by certain of our domestic subsidiaries. A substantial portion of the net proceeds from the offering of the Senior Notes were used to fund the cash consideration we paid for Molycorp Canada. The remainder of the net proceeds from the issuance of the Senior Notes will be used for general corporate purposes.

Acquisition of Neo Material Technologies Inc. (Molycorp Canada)

On June 11, 2012, we completed the acquisition of all of the outstanding equity of Molycorp Canada's predecessor company pursuant to the terms of an arrangement agreement, which we refer to as the Arrangement Agreement, for an aggregate purchase price of approximately $1.2 billion. Pursuant to the Arrangement Agreement, Molycorp Canada's former shareholders elected to receive: a) cash consideration equal to Cdn $11.30 per share of the predecessor company's common stock; b) share consideration of 0.4242 shares of Molycorp common stock or 0.4242 shares, which we refer to as the Exchangeable Shares, issued by MCP Exchangeco Inc., our wholly-owned Canadian subsidiary, which are exchangeable for shares of our common stock on a one for one basis, per each share of the predecessor company's common stock; or c) a combination of cash and shares of Molycorp common stock or Exchangeable Shares, all subject to the proration mechanics set forth in the Arrangement Agreement. The consideration paid to Molycorp Canada's former shareholders was comprised of approximately $908.2 million in cash, exclusive of realized losses on the contingent forward contract to purchase Canadian dollars, accounted for a separate transaction apart from the business combination. Additionally, approximately 13.5 million shares of Molycorp common stock and 0.5 million Exchangeable Shares were issued and collectively valued at $284.1 million based on the closing price of the Company's common stock on the acquisition date in accordance with the relevant accounting guidance.

Modernization and Expansion of our Molycorp Mountain Pass Facility

Project Phoenix remains on track to begin producing at our Phase 1 annual rate of 19,050 mt of REO by the fourth quarter of 2012. Additionally, we are on track to achieve an annual production capacity of 40,000 mt of REO by the end of 2012 and, if customer demand and end-market conditions warrant, a full planned production rate of 40,000 mt of REO per year as early as mid-2013. Recently, Project Phoenix construction advanced to the point where the “concentrate production circuit” became operational. This means that we are now producing bastnasite concentrate at our Mountain Pass facility with new processes and in new facilities as part of Project Phoenix, including the following:

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Mining of approximately 2,500 metric tons of fresh ore per day, 4 days/week;

Crushing / Blending;

First Stage Crack Facility;

Mill & Flotation Circuit;

Paste Tailings Facility; and

Paste Tailings Permanent Disposal Facility.

We expect the consummation of the IMJ joint venture described above, in conjunction with our modernization plans at our Molycorp Mountain Pass facility, the strategic acquisitions of Molycorp Silmet, MMA and Molycorp Canada, to provide us with the capability to mine, process, separate and alloy individual REEs and manufacture them into NdFeB magnets. This downstream integration, which we refer to as our “mine-to-magnets” strategy, would make us the only fully integrated global producer of NdFeB magnets. In addition to the foregoing, we continue to explore additional joint ventures or other arrangements with third parties for the production of NdFeB alloys and/or magnets.

Factors Affecting our Results of Operations

Sales

The quantities we sell are affected by the production capabilities of our rare earth products and rare metals processing facilities, and by a combination of global and regional supply and demand factors, including the production level of certain industries relying on rare earth products, such as the automotive and electronics industries, China REEs export quotas and regulations, prices of REEs, and the demand and sophistication of downstream applications with rare earths content. Sales of our products are also subject to seasonal decreases in the first quarter of each year as companies react to the Chinese New Year holiday shutdown.

Cost of Sales

Our cost of sales includes the processing costs and the cost of certain raw materials we purchased from outside vendors, which we allocated to the products we produced at our operating facilities. In addition, our cost of sales reflects the cost allocated to the inventory we acquired as part of various business acquisitions. Because many of our costs are fixed, as our production increases or decreases, our average cost per metric ton produced decreases or increases, respectively. Primary production costs include direct labor and benefits, chemicals, natural gas, depreciation and amortization, electricity, maintenance, operating supplies, and other plant overhead expenses. Our cost of sales may also reflect the write-down of inventory based on current prices for our products, which could materially affect our consolidated net results of operations.

Our most significant variable costs are chemicals, raw materials and electricity. In the future, we intend to produce more of our chemicals for our Molycorp Mountain Pass facility at an on-site plant, which we expect will reduce our variable chemical costs in that facility. We have built a combined heat and power facility, or CHP facility, to provide power to our Molycorp Mountain Pass facility. As a result of the imminent start-up of the CHP facility, natural gas will substantially replace third party electricity costs and will help us bring our power costs down significantly.

We expect our labor and benefits costs to increase through at least 2012 due to the addition of personnel and contractors required to implement Project Phoenix Phase 1 and Project Phoenix Phase 2. In addition to volume fluctuations, our variable costs, such as electricity, operating supplies and chemicals, are influenced by general economic conditions that are beyond our control. Other events outside our control, such as power outages, have in the past interrupted our operations and increased our total production costs, and we may experience similar events in the future.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses consist primarily of personnel and related costs, including stock-based compensation, legal, accounting and other professional fees, occupancy costs and information technology costs. We continue to experience increased selling, general and administrative expenses as we expand our business, including our recent acquisition of Molycorp Canada, operate as a publicly traded company and construct our new facilities at Mountain Pass.

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Corporate Development

Our corporate development expenses consist of travel costs, legal and advisory fees that we incur in connection with business acquisitions and other business development activities we pursue as part of our “mine-to-magnets” strategy.

Research and Development

We incur expenses to improve the efficiency of our REO processing operations, develop new applications for individual REEs, research value added rare metals applications and perform exploratory drilling. These expenses, which we anticipate to continue to increase, consist primarily of salaries, outside labor, material and equipment. The acquisition of Molycorp Canada will further bolster our research and development, or R&D, activities with the addition of labs in Singapore and the United Kingdom and process development capabilities at most of the production facilities.

Interest Expenses

We are incurring significantly higher interest expenses as a result of issuing the Senior Notes to partially finance the Molycorp Canada acquisition.

Income Taxes

We are a Subchapter C corporation and, therefore, are subject to federal and state income taxes on our taxable income. We account for income taxes in accordance with Accounting Standard Codification 740, Income Taxes. This guidance requires the recognition of deferred tax assets and liabilities for the tax effect of temporary differences between the financial statement and tax basis of recorded assets and liabilities at enacted statutory tax rates. This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The recoverability of deferred tax assets is based on both our historical and anticipated earnings levels and is reviewed each reporting period to determine if any additional valuation allowance is necessary when it is more likely than not that amounts will not be recovered. We have concluded that no valuation allowance was required as of June 30, 2012, and a $3.9 million valuation allowance was required as of June 30, 2011.

We review our deferred tax assets and liabilities each reporting period using the enacted tax rate expected to apply to taxable income for the period in which the deferred tax asset or liability is expected to be realized. The statutory income tax rates that are applied to our current and deferred income tax calculations are significantly impacted by the jurisdictions in which we do business. Changes in jurisdiction income tax rates and apportionment laws will result in changes in the calculation of our current and deferred income taxes. The effects of any changes are recorded in the period of enactment and can increase or decrease the net deferred tax assets and liabilities on the balance sheet.

Environmental

Our operations are subject to numerous and detailed federal, state and local environmental laws, regulations and permits, including those pertaining to employee health and safety, environmental permitting and licensing, air quality standards, greenhouse gases, or GHG, emissions, water usage and pollution, waste management, plant and wildlife protection, handling and disposal of radioactive substances, remediation of soil and groundwater contamination, land use, reclamation and restoration of properties, the discharge of materials into the environment and groundwater quality and availability.

We retain, both within Molycorp and outside Molycorp, the services of reclamation and environmental, health and safety, or EHS, professionals to review our operations and assist with environmental compliance, including with respect to product management, solid and hazardous waste management and disposal, water and air quality, asbestos abatement, drinking water quality, reclamation requirements, radiation control and other EHS issues.

We have spent, and anticipate that we will continue to spend, financial and managerial resources to comply with environmental requirements. For example, we have acquired enough air emission offset credits for both Project Phoenix Phase 1 and Project Phoenix Phase 2. In addition, at our Molycorp Mountain Pass facility during the second quarter of 2012 and 2011, we incurred operating expenses of approximately $2.6 million and $1.0 million, respectively, associated with environmental compliance requirements.

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The costs we anticipate to incur as part of our on-going remediation, which is expected to continue throughout our Molycorp Mountain Pass facility's operating, closure and post-closure periods, are included as part of our asset retirement obligations. See Asset Retirement Obligation in the Notes to the Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.

As part of our ongoing remediation efforts at the Molycorp Mountain Pass facility, we identified liner defects in three of the onsite evaporation ponds earlier in 2011. This led to minor groundwater contamination issues that are limited to a small area directly underneath the evaporation ponds. In order to remediate this issue, we will replace the primary lining system and might have to install a groundwater recovery system. We estimate the cost of these items to range between $2.4 million and $4.6 million, which will be treated as capital expenditures in 2012. The evaporation ponds in which the lining tears have been detected were substantially drained in 2011 to allow the repair of the lining defects, and the related costs were recorded as of December 31, 2011.

We estimate that we will incur approximately $17.0 million for wastewater transportation and disposal costs in 2012, primarily for the removal and disposal of any wastewater generated in excess of the existing evaporation capability of all ponds at the Molycorp Mountain Pass facility, until all facilities currently under construction as part of Project Phoenix Phase 1 and Phase 2 are operational and properly coordinated. We have already incurred $9.8 million of these costs though June 30, 2012.

We cannot predict the impact of new or changed laws, regulations or permit requirements, including the matters discussed below, or changes in the way such laws, regulations or permit requirements are enforced, interpreted or administered. Environmental laws and regulations are complex, change frequently and have tended to become more stringent over time. It is possible that greater than anticipated environmental expenditures will be required in 2012 or in the future, including expenditures as a result of our acquisitions of MMA, Molycorp Silmet and Molycorp Canada. We expect continued government and public emphasis on environmental issues will result in increased future investment for environmental controls at our operations. Additionally, with increased attention paid to emissions of GHGs, including carbon dioxide, current and future regulations are expected to affect our operations. We will continue to monitor developments in these various programs and assess their potential impacts on our operations.

Violations of environmental laws, regulations and permits can result in substantial penalties, court orders to install pollution control equipment, civil and criminal sanctions, permit revocations, facility shutdowns and other sanctions. In addition, environmental laws and regulations may impose joint and several liability, without regard to fault, for costs relating to environmental contamination at our facilities or from wastes disposed of at third-party waste facilities. The proposed expansion of our operations is also conditioned upon securing the necessary environmental and other permits and approvals. In certain cases, as a condition to procuring such permits and approvals, we are required to comply with financial assurance requirements. The purpose of these requirements is to assure the government that sufficient company funds will be available for the ultimate closure, post-closure care and/or reclamation at our facilities. We typically obtain bonds as financial assurance for these obligations and, as of June 30, 2012, we had placed a total of $28.8 million of surety bonds with California state and regional agencies. These bonds require annual payment and renewal. In the second quarter of each year, we are required to provide the State of California with an updated estimate of the costs associated with the mine reclamation. This estimate is reviewed and approved by the State of California, after which we are responsible for making any necessary changes to surety bonds placed with the State of California.

As a result of new construction activity at the Molycorp Mountain Pass facility associated with our modernization and expansion project, additional lands have been disturbed since the last mine reclamation cost estimate in 2010, resulting in an increase in the mine reclamation obligation from $3.3 million to $4.1 million. The additional $0.8 million surety amount was placed with the County of San Bernardino and the State of California during the quarter. The EPA has announced its intention to establish a new financial assurance program for hardrock mining, extraction and processing facilities under the Federal Comprehensive Environmental Response Compensation and Liability Act or the “Superfund” law, which may require us to establish additional bonds or other sureties. We cannot predict the effect of any such requirements on our operations at this time.

Molycorp Canada is subject both to Chinese national and local environmental protection regulations, which currently impose a graduated schedule of fees for the discharge of waste substances, require the payment of fines for discharges exceeding the standards, and provide for the closure of any facility that fails to comply with orders requiring it to cease or remedy certain activities causing environmental damage. The Chinese joint ventures, Jiangyin Jia Hua Advanced Material Resources Co., Ltd. ,or JAMR, and Zibo Jia Hua Advanced Material Resources Co., Ltd., or ZAMR, produce waste water from their solvent extraction processes. In the case of JAMR, its expansion in 1995 included an upgrading of its waste water processing and treatment procedures, as a result of which its waste water passes all environmental requirements. JAMR pays an

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agreed fee once a year for the discharge of waste waters. In the case of ZAMR, the plant was designed to make use of waste water discharge facilities of an adjacent petrochemical complex, which has a variable monthly charge based on usage. ZAMR is also obliged to pay a monthly environmental administration fee to the municipal government of Linzi. Waste water has met the requirements set by local authorities for all environmental standards. However, there is no assurance that Chinese national or local authorities will not impose additional regulations which would require additional expenditures that may have a material adverse effect on the profitability of the joint ventures.

As part of the recycling of gallium, indium, and rhenium scrap into saleable metal, a significant degree of waste material is generated during the leaching and ion exchange barren process. Molycorp Canada has adequate procedures in place to ensure that waste generated from these processes are appropriately contained and disposed of in a safe and responsible manner. The Canadian operations in Ontario are subject to provincial regulation under the Ontario Ministry of Environment and must periodically submit documentation to validate the waste disposal process throughout the year.

Selected Financial Data - Consolidated Sales

Three Months Ended June 30, 2012 and 2011

The following is a summary of consolidated sales by significant product and product categories, net of intercompany transactions, for the three months ended June 30, 2012 and 2011, in thousands:

	Three Months Ended June 30,
	2012		2011
Rare earth products	$	53,683	$	75,590
Rare metals	$	17,470	$	13,525
Rare earth alloy products	$	8,984	$	7,182
Neo Powders	$	18,662	$	—
Other non-rare earth products	$	5,778	$	3,318

Our consolidated sales increased 5% for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. This increase is explained primarily by the following factors:

We sold 1,169 mt of rare earth products at an average price of $45.92 per kilogram as compared to sales of 973 mt at an average price of $77.60 per kilogram during the corresponding period in 2011. Decreases in sales were due to lower market prices for all rare earth groups. Included in the 1,169 mt of rare earth sold is 210 mt resulting from the Molycorp Canada acquisition during the period from June 12, 2012 to June 30, 2012.

Sales of rare metals for the three months ended June 30, 2012, including the rare metals sold during the period from June 11, 2012 to June 30, 2012 as a result of the Molycorp Canada acquisition, were 93 mt at an average price of $187.85 per kilogram. This compares to sales of 79 mt at an average price of $171.20 per kilogram in the second quarter of 2011. This change is attributable primarily to high volumes by the Molycorp Silmet segment due to a full quarter in 2012 as compared to 2011 and the addition of the Molycorp Canada segment.

We sold 62 mt of rare earth alloys, which included 25 mt of REO, at an average price of $359.36 per REO kilogram in the second quarter of 2012, as compared to 105 mt of rare earth alloys, with a 43 mt of REO content, at an average price of $167.02 per REO kilogram, in the corresponding period of 2011.

For the period from June 11, 2012 to June 30, 2012, as a result of the Molycorp Canada acquisition we also increased our product mix with sales of 368 mt of Neo Powders at an average selling price of $50.71 per kilogram.

Other rare earth products consist of dysprosium, europium, gadolinium, samarium, terbium, yttrium, yttrium-europium co-precipitates and rare earth fluorides. Rare metals consist of niobium, tantalum, gallium, indium and rhenium. Other non-rare earth products include zirconium oxides and salts, mixed rare earth/zirconium oxides, specialty alloys, small metals and metal.

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Six Months Ended June 30, 2012 and 2011

The following is a summary of consolidated sales by significant product and product categories, net of intercompany transactions, for the six months ended June 30, 2012 and 2011, in thousands:

	Six Months Ended June 30,
	2012		2011
Rare earth products	$	105,287	$	101,851
Rare metals	$	31,186	$	13,525
Rare earth alloy products	$	25,712	$	7,182
Neo Powders	$	18,662	$	—
Other non-rare earth products	$	8,200	$	3,318

Our consolidated sales increased 50% for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011. This increase is explained primarily by the following factors:

We sold 1,849 mt of rare earth products at an average price of $56.94 per kilogram as compared to sales of 1,669 mt at an average price of $60.97 per kilogram during the corresponding period in 2011. Decreases in sales were due to lower market prices for all rare earth product groups. Included in the 1,849 mt of rare earth sold is 210 mt rare earth products during the period from June 12, 2012 to June 30, 2012 as a result of the Molycorp Canada acquisition.

Sales of rare metals for the six months ended June 30, 2012, including the rare metals sold during the period from June 11, 2012 to June 30, 2012 as a result of the Molycorp Canada acquisition, were 168 mt at an average price of $189.33 per kilogram. This compares to sales of 79 mt at an average price of $171.20 per kilogram for the period from April 1, 2011 to June 30, 2011 as a result of the Molycorp Silmet acquisition. This change is attributable primarily to high volumes by the Molycorp Silmet segment due to a full year in 2012 as compared to a partial quarter in 2011, and the addition of the Molycorp Canada segment.

We sold 158 mt of rare earth alloys, which included 64 mt of REO, at an average price of $403.63 per kilogram in the six months ended June 30, 2012, as compared to 105 mt of rare earth alloys, with a 43 mt of REO content, at an average price of $167.02 per kilogram, for the period from April 15, 2011 to June 30, 2011 as a result of the MMA acquisition. This change is attributable primarily to high volumes by the Molycorp Tolleson segment due to a full year in 2012 as compared to a partial quarter in 2011, and the addition of the Molycorp Canada segment.

For the period from June 11, 2012 to June 30, 2012, as a result of the Molycorp Canada acquisition we also increased our product mix with sales of 368 mt of Neo Powders at an average selling price of $50.71 per kilogram.

Discussion and Analysis of our Operating Segments

The following analysis presents sales and cost of sales on a gross basis (i.e., before intercompany eliminations). We believe this presentation provides a better understanding of the performance of each operating segment in terms of production volumes and costs.

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Three Months Ended June 30, 2012 and 2011

Three months ended and at June 30, 2012 (In thousands)	Molycorp Mountain Pass		Molycorp Silmet		MMA		Molycorp Canada		Eliminations(a)		Corporate and other(b)		Total Molycorp, Inc.
Sales:
External	16,533		31,541		12,870		43,633		—		—		104,577
Intersegment	400		712		—		14		(1,126	)	—		—
Total sales	16,933		32,253		12,870		43,647		(1,126	)	—		104,577
Cost of sales:
Costs excluding depreciation and amortization	(22,277	)	(37,947	)	(17,112	)	(37,703	)	11,470		—		(103,569	)
Depreciation and amortization	(2,229	)	(1,526	)	(79	)	(1,247	)	—		—		(5,081	)
Gross profit	(7,573	)	(7,220	)	(4,321	)	4,697		10,344		—		(4,073	)
Operating expenses:
Selling, general and administrative	(9,041	)	(1,510	)	(116	)	(1,737	)	—		(10,666	)	(23,070	)
Corporate development	—		—		—		—		—		(14,925	)	(14,925	)
Depreciation, amortization and accretion	(365	)	(77	)	—		(1,813	)	—		(24	)	(2,279	)
Research and development	(2,006	)	(359	)	—		(1,175	)	—		(2,509	)	(6,049	)
Operating (loss) income	(18,985	)	(9,166	)	(4,437	)	(28	)	10,344		(28,124	)	(50,396	)
Interest expense	—		(177	)	(175	)	(828	)	—		(8,625	)	(9,805	)
Other income (expense)	21		(2,385	)	8		(478	)	—		(30,935	)	(33,769	)
(Loss) income before income taxes and equity earnings (loss)	(18,964	)	(11,728	)	(4,604	)	(1,334	)	10,344		(67,684	)	(93,970	)
Equity (loss) earnings in results of affiliates	(15,754	)	—		—		309		15,754		(566	)	(257	)
Total assets	433,808		79,185		20,174		1,746,876		(80,988	)	960,174		3,159,229
Investment in equity method affiliates	14,011		—		—		19,053		—		—		33,064
Capital expenditures (c)	228,787		5,254		—		832		—		—		234,873

(a) The $80,988 of total assets elimination is comprised of $2,662 intercompany investments and $78,326 intercompany accounts receivable and profits in inventory. The cost of sales elimination amount of $11,470 includes elimination of the intercompany gross profits as well as elimination of lower of cost or market adjustments related to the intercompany inventory.

(b) Includes expenses incurred by and capital invested in the sales office in Tokyo, Japan.

(c) On an accrual basis excluding capitalized interest.

Prior to the acquisition of Molycorp Canada on June 11, 2012, our business was organized into three operating segments: Molycorp Mountain Pass, Molycorp Silmet and MMA. The following tables provide operating and financial information of these three segments for the three months ended and as at June 30, 2011. Some of the prior interim period captions and segments subtotals have been modified to conform to the current interim period presentation:

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Three months ended and at June 30, 2011 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Eliminations(d)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	60,348		$	29,017		$	10,250		$	—					$	99,615
Intersegment	15,947			3,639			—			(19,586		)				—
Total sales	76,295			32,656			10,250			(19,586		)				99,615
Cost of sales:
Costs excluding depreciation and amortization	(19,493		)	(20,321		)	(10,935		)	10,401			—			(40,348		)
Depreciation and amortization	(2,216		)	(151		)	(208		)	—			—			(2,575		)
Gross profit	54,586			12,184			(893		)	(9,185		)	—			56,692
Operating expenses:
Selling, general and administrative	(1,518		)	(1,453		)	(112		)	—			(7,393		)	(10,476		)
Corporate development	—			—			—			—			(2,042		)	(2,042		)
Depreciation, amortization and accretion	(332		)	—			(191		)	—			—			(523		)
Research and development	(1,734		)	—			—			—			(19		)	(1,753		)
Operating income (loss)	51,002			10,731			(1,196		)	(9,185		)	(9,454		)	41,898
Other income (expense)	—			(61		)	2			—			304			245
Income before income taxes	$	51,002		$	10,670		$	(1,194	)	$	(9,185	)	$	(9,150	)	$	42,143
Total assets at June 30, 2011	$	399,908		$	152,984		$	29,705		$	(140,923	)	$	699,992		$	1,141,666
Capital expenditures (c)	$	70,142		$	2,231		$	—		$	—		$	—		$	72,373

(d) The total assets elimination of $140,923 is comprised of $114,000 of intercompany investments and $26,923 of intercompany accounts receivable and profits in inventory.

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Sales

Molycorp Mountain Pass

Molycorp Mountain Pass' sales were $16.9 million and $76.3 million for the three months ended June 30, 2012 and 2011, respectively. In the second quarter of 2012, Molycorp Mountain Pass sold 525 mt of products on a REO equivalent basis at an average sales price of $32.25 per kilogram compared to sales of 988 mt of products on the same basis at an average sales price of $77.22 per kilogram for the corresponding period in 2011. We expect our cerium, lanthanum, neodymium and praseodymium products to represent the majority of our sales until Project Phoenix Phase 1 has been completed and commercialized. The following is a summary of sales at Molycorp Mountain Pass by product for the three months ended June 30, 2012 and 2011, in thousands.

Molycorp Mountain Pass	Three Months Ended June 30,
	2012		2011
Lanthanum products	$	7,950	$	15,850
Cerium products	$	560	$	33,799
Neodymium/Praseodymium products	$	7,993	$	25,161
Other rare earth products	$	430	$	1,485

Other rare earth products consist of yttrium, misch metal, erbium, and other heavy rare earth products.

Molycorp Silmet

Sales from our Molycorp Silmet facility were $32.3 million and $32.7 million for the three months ended June 30, 2012 and 2011, respectively. In the second quarter of 2012, Molycorp Silmet sold 482 mt of REO equivalent products at an average sales price of approximately $33.27 per kilogram, and 86 mt of rare metals at an average sales price of approximately $166.72 per kilogram. During the corresponding period in 2011, Molycorp Silmet sold 504 mt of REO equivalent products at an average sales price of approximately $37.46 per kilogram, and 79 mt of rare metals at an average sales price of approximately $171.20 per kilogram. The following is a summary of sales by product at Molycorp Silmet for the three months ended June 30, 2012 and 2011, in thousands.

Molycorp Silmet	Three Months Ended June 30,
	2012		2011
Rare earth products:
Lanthanum products	$	2,011	$	4,204
Cerium products	$	10,336	$	9,063
Neodymium/Praseodymium products	$	3,688	$	5,614
Rare metals:
Tantalum	$	6,263	$	6,370
Niobium	$	8,075	$	7,155
Other products	$	1,880	$	250

Other products consist of rare earth fluorides, samarium, europium, gadolinium and nitric fertilizer.

MMA

For the three months ended June 30, 2012, MMA sold rare earth alloys, custom and specialty alloys, high purity rare earth metals, and resale of other non-REO material totaling approximately 211 mt, which contained an equivalent of 25 mt of REO, for a total of $12.9 million. For the period from April 15, 2011 (the acquisition date) through June 30, 2011, MMA sold rare earth alloys, custom and specialty alloys, high purity rare earth metals, and resale of other non-REO material totaling approximately 200 mt, which contained an equivalent of 43 mt of REO, for a total of $10.3 million. As part of the acquisition of MMA, we entered into a rare earth products purchase and supply agreement with Santoku Corporation, or Santoku, through which MMA will supply Santoku with certain rare earth alloys for a two-year period at prices equal to the feedstock cost plus the applicable product premium as such terms are defined in the purchase and supply agreement. Sales to Santoku under the

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terms of this agreement were $9.1 million in the second quarter of 2012, and comprised 71% of total MMA sales. For the period from April 15, 2011 through June 30, 2011, sales to Santoku were $7.3 million and comprised 71% of total MMA sales. The following is a summary of sales by product at MMA for the three months ended June 30, 2012 and for the period from April 15, 2011 to June 30, 2011, in thousands.

MMA	Three Months Ended June 30, 2012		Period from April 15, 2011 to June 30, 2011
Rare earth alloys:
Neodymium alloys	$	7,702	$	6,212
Samarium alloys	$	1,282	$	970
Other products	$	3,886	$	3,068

Other products include specialty alloys, small metals, metal foils and the resale of certain other materials.

Molycorp Canada

Molycorp Canada sales for the period from June 12, 2012 to June 30, 2012 were $43.6 million. Molycorp Canada sold 210 mt of rare earth products at an average sales price of approximately $104.00 per kilogram, 8 mt of rare metals at an average sales price of approximately $391.50 per kilogram, and 368 mt of Neo Powders at an average sales price of approximately $50.71 per kilogram. The following is a summary of sales by product categories at Molycorp Canada for the period from June 12, 2012 to June 30, 2012, in thousands.

Molycorp Canada	For the period from June 12, 2012 to June 30, 2012
Rare earth products	$	21,853
Rare metals	$	3,132
Neo Powders	$	18,662

Cost of Sales

Molycorp Mountain Pass

Molycorp Mountain Pass' cost of sales was $24.5 million and $21.7 million for the three months ended June 30, 2012 and 2011, respectively. The higher costs in the second quarter of 2012, as compared to the second quarter in 2011, were primarily due to increased production costs. In addition, we recognized a $0 and $1.0 million write-down of work in process inventory based on estimated REO quantities, and a $9.4 million and $0 million write-down due to production costs in excess of net realizable value for the three months ended June 30, 2012 and 2011, respectively. The weighted average cost of sales on a REO basis at Molycorp Mountain Pass was approximately $28.90 per kilogram in the second quarter of 2012, as compared to approximately $21.97 per kilogram in the corresponding period in 2011. The weighted average cost of sales per kilogram excludes costs recognized for the write-down due to production costs in excess of net realizable value.

Total production costs charged to inventory were $17.6 million and $12.3 million for the three months ended June 30, 2012 and 2011, respectively. Inventory purchases and tolling costs were $1.1 million and $5.9 million in the second quarter of 2012 and 2011, respectively. The primary products we purchased during those periods were lanthanum oxide, cerium oxide, cerium carbonate, neodymium oxide, didymium metal and praseodymium oxide.

The following is a summary of rare earth products produced at the Molycorp Mountain Pass facility for the three months ended June 30, 2012 and 2011, in metric tons.

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Molycorp Mountain Pass	Three Months Ended June 30,
	2012	2011
Lanthanum products	207	346
Cerium products	332	348
Neodymium/Praseodymium products	132	121

Production costs charged to inventory were higher during the second quarter of 2012 as compared to the corresponding period in 2011 due to a larger labor workforce, higher chemical, and domestic and hazard waste disposal costs. We expensed $2.4 million and $0.9 million in the second quarter of 2012 and 2011, respectively, of production-related costs that would have otherwise been charged to inventory if we maintained normal production levels during these periods. We expect to attain increased production levels throughout 2012.

Chemical costs allocated to production were $5.2 million and $3.1 million for the three months ended June 30, 2012 and 2011, respectively. Chemical costs in the second quarter of 2012 were higher as compared to the second quarter of 2011 due to a general increase in prices for chemicals.

Labor costs, including related employee benefits, allocated to production were $6.2 million and $3.7 million for the three months ended June 30, 2012 and 2011, respectively. As of June 30, 2012, we had a total of 343 employees at the Molycorp Mountain Pass facility, as compared to 170 employees as of June 30, 2011, which led to higher wage and employee-related benefit expenses. Higher labor costs were also due to the annual wage increase required under our union contract, which took effect in January 2012.

Maintenance costs, including maintenance labor and supplies, were $2.1 million and $0.7 million in the second quarter of 2012 and 2011, respectively. Utility charges, which primarily include electricity, were $1.2 million and $0.8 million for the three months ended June 30, 2012 and 2011, respectively.

Other costs allocated to production, including depreciation, were $6.0 million and $7.1 million for the three months ended June 30, 2012 and 2011, respectively. These costs were lower in the second quarter of 2012 due to a decline in contracted service costs.

Molycorp Silmet

Molycorp Silmet's cost of sales was $39.5 million and $20.5 million for the three months ended June 30, 2012 and 2011, respectively. The higher costs in the second quarter of 2012, as compared to the second quarter in 2011, were primarily due to increased sales and inventory write-downs. In addition, we recognized a $9.7 million write-down due to production costs in excess of net realizable value for the three months ended June 30, 2012. The weighted average cost of sales on a REO basis was approximately $33.07 per kilogram in the second quarter of 2012, as compared to approximately $39.74 per kilogram in the corresponding period in 2011. The weighted average cost of sales per kilogram excludes costs recognized for the write-down due to production costs in excess of net realizable value.

Total production costs charged to inventory were $2.8 million and $2.4 million for the three months ended June 30, 2012 and 2011, respectively. Inventory purchases were $14.3 million and $37.6 million in the second quarter of 2012 and 2011, respectively. The primary products we purchased at Molycorp Silmet during those periods were primarily mixed and rare earth carbonates and raw material related to rare metal products.

The following table provides volumes of rare earth products, rare metals and other products Molycorp Silmet produced during the second quarter of 2012 and 2011, in metric tons.

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Molycorp Silmet	Three Months Ended June 30,
	2012	2011
Rare earth products:
Lanthanum products	96	211
Cerium products	276	116
Neodymium/Praseodymium products	63	81
Other products	5	26
Rare metals:
Tantalum	30	30
Niobium	151	137
Other products	174	185

Labor costs, including related employee benefits, allocated to production were $0.5 million and $0.4 million for the three months ended June 30, 2012 and 2011, respectively. Chemical costs allocated to production were $0.6 million and $0.6 million for the three months ended June 30, 2012 and 2011, respectively. Utility charges, which primarily include electricity, were $0.6 million and $0.5 million for the three months ended June 30, 2012 and 2011, respectively. Other costs allocated to production, including depreciation, were $1.1 million and $0.9 million for the three months ended June 30, 2012 and 2011, respectively.

MMA

MMA's cost of sales was $17.2 million and $11.1 million for the three months ended June 30, 2012 and for the period from April 15, 2011 (the acquisition date) to June 30, 2011, respectively. The weighted average cost of sales was approximately $61.27 per kilogram in the second quarter of 2012, as compared to approximately $55.72 for the period from April 15, 2011 to June 30, 2011, respectively. In addition, we recognized a $4.3 million write-down due to production costs in excess of net realizable value for the three months ended June 30, 2012. The weighted average cost of sales per kilogram excludes costs recognized for the write-down due to production costs in excess of net realizable value.

Total costs allocated to production were $6.5 million and $7.0 million for the three months ended June 30, 2012 and 2011, respectively, which includes labor, materials, depreciation and energy costs. Inventory purchases were $1.4 million and $5.4 million in the second quarter of 2012 and 2011, respectively. The primary products we purchased at MMA during those periods were dysprosium and didymium metal.

The following table provides volumes of rare earth alloys and other products MMA produced during the second quarter of 2012 and for the period from April 15, 2011 to June 30, 2011, in metric tons.

MMA	Three Months Ended June 30, 2012	Period from April 15, 2011 to June 30, 2011
Rare earth alloys:
Neodymium alloys	28	86
Samarium alloys	35	27
Other products	6	23

The total Molycorp Tolleson production of 69 mt and 136 mt for the three months ended June 30, 2012 and 2011 included approximately 25 mt and 66 mt of REO equivalent products during those respective periods. Costs allocated to production were lower during the second quarter of 2012 as compared to the period from April 15, 2011 to June 30, 2011 due to fewer production runs.

Molycorp Canada

Cost of sales for Molycorp Canada was $39.0 million for the nineteen day period ending June 30, 2012. For Molycorp

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Canada, the majority of costs are represented by the purchase of raw materials. Rare earth carbonate to feed ZAMR, rare earth clay to feed JAMR and neodymium are the most significant raw materials for the Neo Powders. The reported costs include the negative impact of a $8.4 million cost of sales adjustment relating to inventory re-valuation at the time of our acquisition of Molycorp Canada. The re-valuation was consistent with the relevant accounting guidance for business combinations.

Selling, General and Administrative Expenses

Molycorp Mountain Pass

Selling, general and administrative expenses at Molycorp Mountain Pass, including stock-based compensation, were $9.0 million and $1.5 million for three months ended June 30, 2012 and 2011, respectively. These expenses also include personnel and related costs, accounting and other professional fees, information technology costs and start-up costs associated with the construction of our new facilities.

Molycorp Silmet

Selling, general and administrative expenses at Molycorp Silmet, including stock-based compensation, were $1.5 million and $1.5 million for three months ended June 30, 2012 and 2011, respectively. Our selling, general and administrative expenses at Molycorp Silmet consist primarily of personnel and related costs, accounting and other professional fees, occupancy costs and information technology costs.

MMA

Selling, general and administrative expenses at MMA, including stock-based compensation, were $0.1 million and $0.1 million for three months ended June 30, 2012 and for the period from April 15, 2011 to June 30, 2011, respectively. Our selling, general and administrative expenses at MMA consist primarily of professional fees and information technology costs.

Molycorp Canada

Selling, general and administrative expenses for Molycorp Canada was $1.7 million for the nineteen day period ending June 30, 2012, and consisted primarily of personnel and related costs, legal, accounting and other professional fees, occupancy costs and information technology costs.

Corporate Development

Corporate development expenses were $14.9 million and $2.0 million for the three months ended June 30, 2012 and 2011, respectively. This significant increase is primarily attributable to the costs we incurred in connection with the Molycorp Canada acquisition in June 2012.

Depreciation, Amortization and Accretion

We also experienced a large increase in depreciation, amortization and accretion expenses during the second quarter of 2012, as compared to the corresponding period in 2011, mainly due to the addition of approximately $492.0 million in amortizable intangible assets acquired in connection with the Molycorp Canada acquisition.

Research and Development

Consolidated research and development expenses were $6.0 million for the second quarter of 2012, as compared to $1.8 million in the corresponding period in 2011. The period over period increase is attributable primarily to our efforts to improve the efficiency of our REO processing operations, to develop new applications for individual REEs, research value added rare metals applications, and perform exploratory drilling. These expenses, which we anticipate to continue to increase, consist primarily of salaries, outside labor, material and equipment.

Interest Expenses

The larger interest expenses we incurred in the second quarter of 2012, as compared to the second quarter of 2011, related primarily to the payment of a commitment fee of approximately $7.9 million for a bridge loan we secured with a financial institution prior to the issuance of the Senior Notes in May 2012. Interest expenses were nominal in 2011 and were grouped with other expenses.

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Other Expenses

Other expenses increased by approximately $34.0 million in the three months ended June 30, 2012 from the corresponding period in 2011, primarily as a result of a loss recognized upon settlement of a contingent forward contract we entered into to purchase Canadian dollars with a notional amount of Cdn$870.0 million to manage the foreign currency exposure with respect to our acquisition of Molycorp Canada.

Capital Expenditures

Our consolidated capital expenditures, on an accrual basis and excluding capitalized interest, totaled $234.9 million and $72.4 million for the three months ended June 30, 2012 and 2011, respectively. The majority of these capitalized costs relate to Project Phoenix Phase 1 and Project Phoenix Phase 2 at our Molycorp Mountain Pass facility.

Related Party Transactions

We made principal payments of $0 and $0.9 million for the three months ended June 30, 2012 and 2011, respectively, under the inventory financing arrangement with Traxys North America LLC, which we refer to as Traxys and affiliates, a subsidiary of one of our stockholders, Traxys S.a.r.l.

We and Traxys and affiliates jointly market and sell certain lanthanum oxide, cerium oxide, misch metal and erbium oxide products. Per the terms of this other arrangement, we and Traxys and affiliates split gross margin equally once all costs associated with the sale are recovered by both parties.

During three months ended June 30, 2012, but prior to June 11, 2012, we sold neodymium/ praseodymium oxides to Neo Material Technologies Inc. (the predecessor company of Molycorp Canada) for $4.3 million.

For the period from June 12, 2012 to June 30, 2012, we purchased $0.5 million worth of compounds from TMT (an equity method investee acquired as part of Molycorp Canada), and purchased metals and received services from Keli (an equity method investee acquired as part of Molycorp Canada) amounting to $5.3 million.

For the period from June 12, 2012 to June 30, 2012, we purchased $0.5 million of gallium metal from Ingal Stade (an equity method investee acquired as part of Molycorp Canada).

Foreign currency transaction gains

Net foreign currency transaction losses were $2.8 million and $0 during the three months ended June 30, 2012 and 2011, respectively. These losses relate primarily to the revaluation in Euro of U.S. dollar monetary balances owed by Molycorp Silmet. During the three months ended June 30, 2012, the U.S. dollar appreciated against the Euro by approximately 6%.

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Six Months Ended June 30, 2012 and 2011

Six months ended June 30, 2012 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Molycorp Canada			Eliminations(a)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	61,011		$	52,577		$	31,826		$	43,633		$	—		$	—		$	189,047
Intersegment	2,232			3,922			—			14			(6,168		)	—			—
Total sales	63,243			56,499			31,826			43,647			(6,168		)	—			189,047
Cost of sales:
Costs excluding depreciation and amortization	(39,344		)	(71,205		)	(35,668		)	(37,703		)	30,279			—			(153,641		)
Depreciation and amortization	(4,008		)	(3,042		)	(155		)	(1,247		)	—			—			(8,452		)
Gross profit	19,891			(17,748		)	(3,997		)	4,697			24,111			—			26,954
Operating expenses:
Selling, general and administrative	(18,464		)	(3,048		)	(295		)	(1,737		)	—			(23,709		)	(47,253		)
Corporate development	—			—			—			—			—			(18,305		)	(18,305		)
Depreciation, amortization and accretion	(699		)	(77		)	—			(1,813		)	—			(48		)	(2,637		)
Research and development	(4,091		)	(438		)	—			(1,175		)	—			(3,995		)	(9,699		)
Operating (loss) income	(3,363		)	(21,311		)	(4,292		)	(28		)	24,111			(46,057		)	(50,940		)
Interest expense	—			(318		)	(452		)	(828		)	—			(8,122		)	(9,720		)
Other income (expense)	89			(762		)	5			(478		)	—			(37,597		)	(38,743		)
(Loss) income before income taxes and equity earnings (loss)	$	(3,274	)	$	(22,391	)	$	(4,739	)	$	(1,334	)	$	24,111		$	(91,776	)	$	(99,403	)
Equity (loss) earnings in results of affiliates	$	(26,898	)	$	—		$	—		$	309		$	26,898		$	(793	)	$	(484	)
Capital expenditures (c)	$	488,225		$	7,755		$	100		$	832		$	—		$	—		$	496,912

(a) The cost of sales elimination amount of $30,279 includes elimination of the intercompany gross profits as well as elimination of lower of cost or market adjustments related to the intercompany inventory.

(b) Includes expenses incurred by and capital invested in the sales office in Tokyo, Japan.

(c) On an accrual basis excluding capitalized interest.

Prior to the acquisition of Molycorp Canada on June 11, 2012, our business was organized into three operating segments: Molycorp Mountain Pass, Molycorp Silmet and MMA. The following tables provide operating and financial information of these three segments for the six months ended June 30, 2011. Some of the prior interim period captions and segments subtotals have been modified to conform to the current interim period presentation:

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Six months ended June 30, 2011 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Eliminations			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	86,609		$	29,017		$	10,250		$	—					$	125,876
Intersegment	15,947			3,639			—			(19,586		)				—
Total sales	102,556			32,656			10,250			(19,586		)				125,876
Cost of sales:
Costs excluding depreciation and amortization	(34,214		)	(20,321		)	(10,935		)	10,401			—			(55,069		)
Depreciation and amortization	(4,172		)	(151		)	(208		)	—			—			(4,531		)
Gross profit	64,170			12,184			(893		)	(9,185		)	—			66,276
Operating expenses:
Selling, general and administrative	(4,941		)	(1,453		)	(112		)	—			(12,669		)	(19,175		)
Corporate development	—			—			—			—			(3,317		)	(3,317		)
Depreciation, amortization and accretion	(649		)	—			(191		)	—			—			(840		)
Research and development	(3,000		)	—			—			—			(17		)	(3,017		)
Operating income (loss)	55,580			10,731			(1,196		)	(9,185		)	(16,003		)	39,927
Other income (expense)	$	(37	)	$	(61	)	$	2		$	—		$	313		$	217
Income before income taxes	$	55,543		$	10,670		$	(1,194	)	$	(9,185	)	$	(15,690	)	$	40,144
Capital expenditures (c)	$	111,966		$	2,231		$	—		$	—					$	113,497

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Sales

Molycorp Mountain Pass

Molycorp Mountain Pass' sales were $63.2 million and $102.6 million for the six months ended June 30, 2012 and 2011, respectively. Decreases in sales during the six months ended June 30, 2012 were primarily due to fewer sales of feedstock to Molycorp Silmet in 2012 compared to 2011. In total, for the six months ended June 30, 2012, Molycorp Mountain Pass sold 1,197 mt of products on a REO equivalent basis at an average sales price of $52.83 per kilogram, as compared to sales of 1,684 mt of products on the same basis at an average sales price of $60.90 per kilogram for the corresponding period in 2011. We anticipate cerium, lanthanum, neodymium and praseodymium products to make up a significant percentage of our total sales until we complete Project Phoenix Phase 1. The following is a summary of sales at Molycorp Mountain Pass by product for the six months ended June 30, 2012 and 2011, in thousands.

Molycorp Mountain Pass	Six Months Ended June 30,
	2012		2011
Lanthanum products	$	28,564	$	27,316
Cerium products	$	2,567	$	42,852
Neodymium/Praseodymium products	$	31,573	$	29,923
Other rare earth products	$	539	$	2,465

Other rare earth products consist of yttrium, misch metal, erbium, and other heavy rare earth products.

Molycorp Silmet

Sales from our Molycorp Silmet facility were $56.5 million and $32.7 million for the six months ended June 30, 2012 and for the period from April 1, 2011 (the acquisition date) to June 30, 2011, respectively. In the second half of 2012, Molycorp Silmet sold 759 mt of REO equivalent products at an average sales price of approximately $34.11 per kilogram, and 161 mt of rare metals at an average sales price of approximately $174.24 per kilogram. For the period from April 1, 2011 to June 30, 2011, Molycorp Silmet sold 504 mt of REO equivalent products at an average sales price of approximately $37.46 per kilogram, and 79 mt of rare metals at an average sales price of approximately $171.20 per kilogram. The following is a summary of sales by product at Molycorp Silmet for the six months ended June 30, 2012 and the period from April 1, 2011 to June 30, 2011, in thousands.

Molycorp Silmet	Six Months Ended June 30, 2012		Period from April 1, 2011 to June 30, 2011
Rare earth products:
Lanthanum products	$	3,504	$	4,204
Cerium products	$	13,247	$	9,063
Neodymium/Praseodymium products	$	9,141	$	5,614
Rare metals:
Tantalum	$	13,443	$	6,370
Niobium	$	14,611	$	7,155
Other products	$	2,553	$	250

Other products consist of rare earth fluorides, samarium, europium, gadolinium and nitric fertilizer.

MMA

For the six months ended June 30, 2012, MMA sold rare earth alloys, custom and specialty alloys, high purity rare earth metals, and resale of other non-REO material totaling approximately 379 mt, which contained an equivalent of 65 mt of REO, for a total of $31.8 million. For the period from April 15, 2011 (the acquisition date) through June 30, 2011, MMA sold rare earth alloys, custom and specialty alloys, high purity rare earth metals, and resale of other non-REO material totaling approximately 200 mt, which contained an equivalent of 43 mt of REO, for a total of $10.3 million. As part of the acquisition of MMA, we entered into a rare earth products purchase and supply agreement with Santoku Corporation, or Santoku, through

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which MMA will supply Santoku with certain rare earth alloys for a two-year period at prices equal to the feedstock cost plus the applicable product premium as such terms are defined in the purchase and supply agreement. Sales to Santoku under the terms of this agreement were $24.7 million in the second half of 2012, and comprised 78% of total MMA sales. For the period from April 15, 2011 through June 30, 2011, sales to Santoku were $7.3 million and comprised 71% of total MMA sales. The following is a summary of sales by product at MMA for the six months ended June 30, 2012 and the period from April 15, 2011 through June 30, 2011, in thousands.

MMA	Six Months Ended June 30, 2012		Period from April 15, 2011 to June 30, 2011
Rare earth alloys:
Neodymium alloys	$	23,432	$	6,212
Samarium alloys	$	2,280	$	970
Other products	$	6,114	$	3,068

Other products include specialty alloys, small metals, metal foils and the resale of certain other materials.

Molycorp Canada

Molycorp Canada sales for the period from June 12, 2012 to June 30, 2012 were $43.6 million. Molycorp Canada sold 210 mt of rare earth products at an average sales price of approximately $104.00 per kilogram, 8 mt of rare metals at an average sales price of approximately $391.50 per kilogram, and 368 mt of Neo Powders at an average sales price of approximately $50.71 per kilogram. The following is a summary of sales by product categories at Molycorp Canada for the period from June 12, 2012 to June 30, 2012, in thousands.

Molycorp Canada	For the period from June 12, 2012 to June 30, 2012
Rare earth products	$	21,853
Rare metals	$	3,132
Neo Powders	$	18,662

Cost of Sales

Molycorp Mountain Pass

Molycorp Mountain Pass' cost of sales was $43.4 million and $38.4 million for the six months ended June 30, 2012 and 2011, respectively. The higher costs in the six months ended June 30, 2012, as compared to the six months ended June 30, 2011, were primarily due to increased production costs. In addition, we recognized a $0 and $1.0 million write-down of work in process inventory based on estimated REO quantities, and a $9.7 million and $0.6 million write-down due to production costs in excess of net realizable value for the six months ended June 30, 2012 and 2011, respectively. The weighted average cost of sales on a REO basis at Molycorp Mountain Pass was approximately $28.14 per kilogram in the first half of 2012, as compared to approximately $22.42 per kilogram in the corresponding period in 2011. The weighted average cost of sales per kilogram excludes costs recognized for the write-down due to production costs in excess of net realizable value.

Total production costs charged to inventory were $33.0 million and $20.2 million for the six months ended June 30, 2012 and 2011, respectively. Inventory purchases and tolling costs were $4.4 million and $11.6 million in the first half of 2012 and 2011, respectively. The primary products we purchased during those periods were lanthanum oxide, cerium oxide, cerium carbonate, neodymium oxide, didymium metal and praseodymium oxide.

The following is a summary of rare earth products produced at the Molycorp Mountain Pass facility for the six months ended June 30, 2012 and 2011, in metric tons.

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Molycorp Mountain Pass	Six Months Ended June 30,
	2012	2011
Lanthanum products	458	607
Cerium products	616	518
Neodymium/Praseodymium products	212	189

Production costs charged to inventory were higher during the first half of 2012 as compared to the corresponding period in 2011 due to a larger labor workforce, higher chemical, and domestic and hazard waste disposal costs. We expensed $5.4 million and $3.5 million in the six months ended June 30, 2012 and 2011, respectively, of production-related costs that would have otherwise been charged to inventory if we maintained normal production levels during these periods. We expect to attain increased production levels throughout 2012.

Chemical costs allocated to production were $9.1 million and $5.4 million for the six months ended June 30, 2012 and 2011, respectively. Chemical costs in the first six months of 2012 were higher as compared to the first six months of 2011 due to a general increase in prices for chemicals.

Labor costs, including related employee benefits, allocated to production were $12.0 million and $6.5 million for the six months ended June 30, 2012 and 2011, respectively. As of June 30, 2012, we had a total of 343 employees at the Molycorp Mountain Pass facility, as compared to 170 employees as of June 30, 2011, which led to higher wage and employee-related benefit expenses. Higher labor costs were also due to the annual wage increase required under our union contract, which took effect in January 2012.

Maintenance costs, including maintenance labor and supplies, were $4.0 million and $1.4 million in the first half of 2012 and 2011, respectively. Utility charges, which primarily include electricity, were $2.1 million and $1.6 million for the six months ended June 30, 2012 and 2011, respectively.

Other costs allocated to production, including depreciation, were $12.4 million and $11.8 million for the six months ended June 30, 2012 and 2011, respectively. These costs were higher in the first half of 2012 due to increases in waste disposal costs and depreciation expenses as more fixed assets have been placed into service during the 2012 period.

Molycorp Silmet

Molycorp Silmet's cost of sales was $74.2 million and $20.5 million for the six months ended June 30, 2012 and for the period from April 1, 2011 (the acquisition date) to June 30, 2011, respectively. In addition, we recognized a $22.5 million write-down due to production costs in excess of net realizable value for the six months ended June 30, 2012. The weighted average cost of sales on a REO basis was approximately $34.05 per kilogram in the first half of 2012, as compared to approximately $39.74 per kilogram in the period from April 1, 2011 to June 30, 2011. This decrease is attributable primarily to lower raw material costs during the second quarter. The weighted average cost of sales per kilogram excludes costs recognized for the write-down due to production costs in excess of net realizable value.

Total production costs charged to inventory were $5.6 million and $2.4 million for the six months ended June 30, 2012 and the period from April 1, 2011 to June 30, 2011, respectively. Inventory purchases were $30.7 million and $37.6 million in the six months ended June 30, 2012 and in the period from April 1, 2011 to June 30, 2011, respectively. The primary products we purchased at Molycorp Silmet during those periods were primarily mixed and rare earth carbonates and raw material related to rare metal products.

The following table provides volumes of rare earth products, rare metals and other products Molycorp Silmet produced during the six months ended June 30, 2012 and in the period from April 1, 2011 to June 30, 2011, in metric tons.

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Molycorp Silmet	Six Months Ended June 30, 2012	Period from April 1, 2011 to June 30, 2011
Rare earth products:
Lanthanum products	222	211
Cerium products	467	116
Neodymium/Praseodymium products	138	81
Other products	12	26
Rare metals:
Tantalum	70	30
Niobium	282	137
Other products	354	185

Labor costs, including related employee benefits, allocated to production were $1.0 million and $0.4 million for the six months ended June 30, 2012 and from April 1, 2011 to June 30, 2011, respectively.

Chemical costs allocated to production were $1.1 million and $0.6 million for the six months ended June 30, 2012 and from April 1, 2011 to June 30, 2011, respectively.

Utility charges, which primarily include electricity, were $1.2 million and $0.5 million for the six months ended June 30, 2012 and from April 1, 2011 to June 30, 2011, respectively.

Other costs allocated to production, including depreciation, were $2.3 million and $0.9 million for the six months ended June 30, 2012 and from April 1, 2011 to June 30, 2011, respectively.

MMA

MMA's cost of sales was $35.8 million and $11.1 million for the six months ended June 30, 2012 and for the period from April 15, 2011 (the acquisition date) to June 30, 2011, respectively. We recognized a $4.5 million write-down due to production costs in excess of net realizable value for the six months ended June 30, 2012. The weighted average cost of sales was approximately $82.76 per kilogram in the first half of 2012, as compared to approximately $55.72 per kilogram for the period from April 15, 2011 to June 30, 2011, respectively. The weighted average cost of sales per kilogram excludes costs recognized for the write-down due to production costs in excess of net realizable value.

Total allocated costs to production were $22.5 million and $7.0 million for the six months ended June 30, 2012 and the period from April 15, 2011 to June 30, 2011, respectively, which includes labor, materials, depreciation and energy costs.. Inventory purchases were $8.6 million and $5.4 million in the first six months of 2012 and from April 15, 2011 to June 30, 2011, respectively. The primary products we purchased at MMA during those periods were dysprosium and didymium metal.

The following table provides volumes of rare earth alloys and other products MMA produced in the six months ended June 30, 2012, and for the period from April 15, 2011 to June 30, 2011, in metric tons.

MMA	Six Months Ended June 30, 2012	Period from April 15, 2011 to June 30, 2011
Rare earth alloys:
Neodymium alloys	112	86
Samarium alloys	60	27
Other products	15	23

The total Molycorp Tolleson production of 187 mt and 136 mt for the three months ended June 30, 2012 and 2011 included approximately 65 mt and 66 mt of REO equivalent products during those respective periods.

Costs allocated to production were higher during 2012 as compared to the period from April 15, 2011 to June 30, 2011

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due to one full year of production in 2012 compared to a partial year of production in 2011.

Molycorp Canada

Cost of sales for Molycorp Canada was $39.0 million for the nineteen day period ending June 30, 2012. For Molycorp Canada the majority of costs are represented by the purchase of raw materials. Rare earth carbonate and rare earth clay is used as feed for ZAMR and JAMR respectively. Neodymium is the most significant raw material used in the production of Neo Powders. The reported costs include the negative impact of a $8.4 million cost of sales adjustment relating to inventory re-valuation at the time of the acquisition. The re-valuation was consistent with the relevant accounting guidance for business combinations.

Selling, General and Administrative Expenses

Molycorp Mountain Pass

Selling, general and administrative expenses at Molycorp Mountain Pass, including stock-based compensation, were $18.5 million and $5.0 million for six months ended June 30, 2012 and 2011, respectively. These expenses also include personnel and related costs, accounting and other professional fees, information technology costs and start-up costs associated with the construction of our new facilities.

Molycorp Silmet

Selling, general and administrative expenses at Molycorp Silmet, including stock-based compensation, were $3.0 million and $1.5 million for six months ended June 30, 2012 and the period from April 1, 2011 to June 30, 2011, respectively. Our selling, general and administrative expenses at Molycorp Silmet consist primarily of personnel and related costs, such as legal, accounting and other professional fees, occupancy costs and information technology costs.

MMA

Selling, general and administrative expenses at MMA, including stock-based compensation, were $0.3 million and $0.1 million for six months ended June 30, 2012 and for the period from April 15, 2011 to June 30, 2011, respectively. Our selling, general and administrative expenses at MMA consist primarily of professional fees and information technology costs.

Molycorp Canada

Selling, general and administrative expenses for Molycorp Canada was $1.7 million for the nineteen day period ending June 30, 2012, and consisted primarily of personnel and related costs, legal, accounting and other professional fees, occupancy costs and information technology costs.

Corporate Development

Corporate development expenses were $18.3 million and $3.3 million for the six months ended June 30, 2012 and 2011, respectively. This significant increase is primarily attributable to the costs we incurred in connection with the Molycorp Canada acquisition in June 2012.

Depreciation, Amortization and Accretion

We also experienced a large increase in depreciation, amortization and accretion expenses during the first half of 2012, as compared to the corresponding period in 2011, mainly due to the addition of approximately $492.0 million in amortizable intangible assets acquired in connection with the Molycorp Canada acquisition.

Research and Development

Consolidated research and development expenses were $9.7 million for the six months ended June 30, 2012 as compared to $3.0 million in the corresponding period in 2011. The period over period increase is attributable primarily to our efforts to improve the efficiency of our REO processing operations, to develop new applications for individual REEs, research value added rare metals applications, and perform exploratory drilling. These expenses, which we anticipate to continue to increase, consist primarily of salaries, outside labor, material and equipment.

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Interest Expenses

We incurred larger interest expenses during the six months ended June 30, 2012, as compared to the second half of 2011, as a result of a commitment fee of approximately $7.9 million we paid for a bridge loan we secured with a financial institution prior to the issuance of the Senior Notes in May 2012. Interest expenses were nominal in 2011 and were grouped with other expenses.

Other Expenses

Other expenses increased by approximately $39.0 million during the six months ended June 30, 2012 from the corresponding period in 2011, primarily as a result of a loss recognized upon settlement of a contingent forward contract we entered into to purchase Canadian dollars with a notional amount of Cdn$870.0 million to manage the foreign currency exposure with respect to our acquisition of Molycorp Canada.

Capital Expenditures

Our consolidated capital expenditures, on an accrual basis and excluding capitalized interest, totaled $496.9 million and $113.5 million for the six months ended June 30, 2012 and 2011, respectively. The majority of these capitalized costs relate to Project Phoenix Phase 1 and Project Phoenix Phase 2 at our Molycorp Mountain Pass facility.

Related Party Transactions

We made principal payments of $0.9 million and $1.7 million for the six month period ended June 30, 2012 and 2011, respectively, under the inventory financing arrangement with Traxys and affiliates.

During the six months ended June 30, 2012, but prior to June 12, 2012, we sold neodymium/ praseodymium oxides to Neo Material Technologies Inc. for $4.3 million.

Foreign currency transaction gains

Net foreign currency transaction losses were $1.2 million and $0 during the six months ended June 30, 2012 and 2011, respectively. These losses relate primarily to the Euro revaluation of U.S. dollar monetary balances owed by Molycorp Silmet. During the six months ended June 30, 2012, the U.S. dollar appreciated against the Euro by approximately 3%.

Outlook for the Remainder of 2012

We anticipate China-based producers and suppliers will continue to limit the quantity of REO available outside of China for the remainder of 2012. On several occasions, the Chinese government has recently called for greater use of rare earths for China's own domestic manufacturing as it aims to boost the use of rare earths in high-end manufacturing. During the second quarter of 2012, prices for most of our products have stabilized or declined at a much slower pace than earlier in the year. We believe this trend may continue in the third and fourth quarters of 2012, although there can be no assurance. We will continue to progressively expand our products and markets through the remainder of 2012, including market penetrations of our XSORBX® technology into the water treatment industry. Additionally, we will continue to supply Molycorp Silmet and MMA with rare earth feedstocks, and our Molycorp Mountain Pass facility will increase shipments of certain REO to Molycorp Canada's facilities in Asia for use in value added and downstream rare earth applications. However, the volume of rare earth products we are able to produce at our Molycorp Mountain Pass facility will remain limited by the capability of our existing production facilities while ramping up to Project Phoenix Phase 1 production capacity. We expect our REO production in 2012 to be between 8,000 mt and 10,000 mt across our facilities at Molycorp Mountain Pass, Molycorp Silmet and MMA. We believe that our consolidated sales in 2012 will be sufficient to fund our normal operating activities throughout the year, including consolidated selling, general and administrative expenses. Based on our ongoing monitoring of the rare earth industry and our business, we expect that our cash flow from operations for the remainder of 2012 will likely be less than we expected. Accordingly, we will need to secure additional financing for a substantial portion of our cash requirements for the remainder of 2012 and the first six months of 2013, including capital expenditures at our Mountain Pass facility and other capital projects, as well as other cash requirements, such as cash payments for the Debentures.

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Capital Investments

We are incurring significant capital expenditures under our plans to modernize and expand our Molycorp Mountain Pass facility, as well as consistent expenditures to replace assets necessary to sustain safe and reliable production. Most of the facilities and equipment acquired in connection with the acquisition of the Molycorp Mountain Pass facility are at least 20 years

old. We are executing an accelerated modernization plan that includes the refurbishment of the Molycorp Mountain Pass mine and related processing facilities through 2012 in order to increase our REO production. We implemented a plan to accelerate Project Phoenix Phase 1 start-up to take advantage of favorable project economics at a time when the REO markets were robust. This acceleration, if successful, will help to improve the diversity of global supply, which continues to be an urgent matter for rare earth consumers. By accelerating Project Phoenix Phase 1 start-up, we also expect to reduce the overall project risk by allowing for a more orderly and sequential startup of the various circuits and facilities of this complex project. Our capital expenditures for the engineering, procurement and construction, or EPC, portion of Project Phoenix Phase 1 and Project Phoenix Phase 2 currently are expected to total approximately $895.0 million.

Capital expenditures for other current and planned 2012 capital projects related to operations at Molycorp Mountain Pass, including post-EPC, start-up, commissioning and other costs, are expected to total approximately $138.0 million.

These estimates do not include certain other capitalizable costs such as preliminary engineering, insurance, permitting, contracting and other legal costs, post-production and plant commissioning costs and capitalized interest. We are also incurring other administrative expenses related to the construction of Project Phoenix Phase 1 and Project Phoenix Phase 2, which are expected to total approximately $10.0 million to $15.0 million in the second half of 2012.

All amounts for future capital spending are estimates that are subject to change as the projects are further developed. Capital spending for our Molycorp Mountain Pass facility plant modernization and expansion project, including Project Phoenix Phase 1, Project Phoenix Phase 2 and the other capital projects, is expected to be approximately $289.0 million for the remainder of 2012, and approximately $25.0 million in 2013, each on an accrual basis. We are encountering cost pressures on our projects and have initiated measures to mitigate certain adverse cost trends. We may incur additional costs, which may be material, if our mitigation measures are not successful.

We expect to incur capital expenditures of approximately $15.0 million for the remainder of 2012 at all our other operating facilities.

Liquidity and Capital Resources

Generally, we expect to fund operating expenses, working capital, capital expenditures and any other cash requirements from cash flow from operations and debt and equity financing. Other cash requirements may include payments in August 2012 to holders of Molycorp Canada's $230.0 million5% subordinated unsecured convertible debentures due December 2017, or Debentures, in accordance with the change of control provisions contained in the underlying indenture. We currently estimate that cash payments resulting from the elections made by the Debentures holders under such change in control provision may total approximately $192.0 million to $230.0 million plus accrued interest from June 30, 2012. Other cash requirements may also include an additional contribution of approximately $16.6 million to IMJ though January 2013. The actual remittance amounts to IMJ will vary depending on the future exchange rate between the U.S. dollar and the Japanese Yen and the achievement of certain milestones by the joint venture.

We expect to fund the remaining capital expenditures under Project Phoenix Phase 1, Project Phoenix Phase 2 and other capital expenditures related to operations at Molycorp Mountain Pass and all other operating facilities, as well as working capital and other cash requirements, with our available cash balances of $369.3 million at June 30, 2012, anticipated future cash flow from operations and proceeds from other financing arrangements. Based on our ongoing monitoring of the rare earth industry and our business, we expect that our cash flow from operations for the remainder of 2012 will likely be less than we expected. Accordingly, we will need to secure additional financing for a substantial portion of our cash requirements for the remainder of 2012 and the first six months of 2013, including capital expenditures at our Mountain Pass facility and other capital projects, as well as other cash requirements, such as cash payments for the Debentures. We are in negotiations with various third-parties with respect to potential equipment leasing arrangements, asset-based revolving credit facilities and other financing arrangements, and are considering the issuance of equity and/or debt. We are also in negotiations with certain related persons for commercial transactions that would be provided at market terms and generate significant cash proceeds.

If we are unable to raise sufficient capital through the issuance of equity and/or debt, or other alternative sources of financing, we have the ability to exercise discretion over certain capital expenditures, which we estimate to total at least $75.0 million for the remainder of 2012. Such discretionary measures can be implemented without any material impact to our current

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operations or production capacity under Project Phoenix Phase 1 or Phase 2.

There can be no assurance that we will be successful in raising additional capital in the future on commercially acceptable terms, or at all.

Cash Used in Operating Activities

Net cash used in operating activities was $64.4 million during the six months ended June 30, 2012, as compared to a positive cash flow from operations of $31.4 million for the same period in 2011. This change was primarily driven by lower sales combined with a significant increase in operating expenses, including corporate development costs associated with the Molycorp Canada acquisition.

Investing Activities

Net cash used in investing activities increased to $1.0 billion in the first half of 2012 as compared to $88.6 million in the first half of 2011. This increase was due primarily to our acquisition of Molycorp Canada, higher capital expenditures as part our modernization and expansion plan at Molycorp Mountain Pass and our contributions to IMJ.

Financing Activities

Net cash provided from financing activities increased from $421.0 million in the first six months of 2011 to $1.0 billion during the six months ended June 30, 2012, due to the issuance of the $650.0 million Senior Notes, the Molymet's $390.2 million investment in our common shares, partially offset by the $5.7 million preferred dividend that we paid through June 1, 2012 and $2.2 million of other debt repayments.

Liquidity of Operating Subsidiaries

Our total $369.3 million of cash and cash equivalents at June 30, 2012 is comprised of: 1) $67.0 million held by Molycorp Minerals, LLC; 2) $1.1 million held by Molycorp Silmet; 3) $7.8 million held by MMA; 4) $293.2 million held by Molycorp Canada; and 5) $0.2 million held by the sales office in Tokyo, Japan. In addition to cash and cash equivalents, the primary sources of liquidity of our operating subsidiaries are cash provided by operations and, in the case of Molycorp Silmet and Molycorp Canada, borrowing under certain bank loans. From time to time, the sources of liquidity for Molycorp Silmet, MMA and Molycorp Canada may be supplemented by short-term loans from Molycorp Minerals, LLC.

At June 30, 2012, Molycorp Minerals, LLC advanced funds, in the form of interest bearing unsecured promissory notes, to Molycorp Silmet for $17.4 million and to MMA for $6.0 million, including accrued interest. Our operating subsidiaries' liquidity generally is used to fund their working capital requirements, capital expenditures and third-party debt service requirements.

Contractual Obligations

At June 30, 2012, we had the following contractual obligations, in thousands:

	Payments Due by Period
Contractual Obligations	Total		Less Than 1 Year		1 - 3 Years		4 - 5 Years		More Than 5 Years
	(In thousands)
Operating lease obligations(1)	$	10,297	$	2,198	$	5,556	$	1,188	$	1,355
Purchase obligations and other commitments(2)	326,114		322,800		1,749		538		1,027
Employee obligations(3)	1,360		1,360		—		—		—
Asset retirement obligations(4)	36,733		1,853		9,720		568		24,592
Debt and capital lease obligations, excluding interest(5)	1,194,670		266,489		249,015		10,851		668,315
Total	$	1,569,174	$	594,700	$	266,040	$	13,145	$	695,289

(1) Represents all operating lease payments for office space, land and office equipment.

(2) Represents contractual commitments for the purchase of materials and services from vendors. Amount includes

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$2.4 million of potential environmental obligations related to defects in pond liners, and $8.0 million in acquisition related commitments.

(3) Represents primarily payments due to employees for awards under our annual incentive plan.

(4) Under applicable environmental laws and regulations, we are subject to reclamation and remediation obligations resulting from our operations. The amounts presented above represent our estimated future undiscounted cash flows required to satisfy the obligations currently known to us.

(5) Includes $230.0 million aggregate principal amount of Debentures. As required under the change in control provisions of the Debentures, holders of the Debentures have the option to either require the Company to repurchase the Debentures at par plus accrued interest, convert the Debentures to shares of Molycorp common stock, or hold the Debentures to maturity. The Debenture holders must exercise their options under the change in control provisions, if at all, on or before August 11, 2012.

Off-Balance Sheet Arrangements

As of June 30, 2012, our only off-balance sheet arrangements are the operating leases and purchase obligations included in the contractual obligations table above.

Recent Accounting Pronouncements

In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. ASU 2011-12 defers the requirement that companies present reclassification adjustments for each component of Accumulated Other Comprehensive Income, or AOCI, in both net income and other comprehensive income on the face of the financial statements. Companies will continue to be required to present amounts reclassified out of AOCI on the face of the financial statements or disclose those amounts in the notes to the financial statements. During the deferral period, there is no requirement to separately present or disclose the reclassification adjustments into net income. For the three and six month periods ended June 30, 2012, we did not have any reclassification adjustments for components of AOCI.

In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment. Under this updated guidance, an entity will have the option to first assess qualitatively whether it is necessary to perform the current two-step goodwill impairment test. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is necessary. The update does not change how an entity performs the two-step impairment test under the current guidance. This ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. We do not expect the adoption of this updated guidance to have a significant impact on our financial statements.

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GLOSSARY OF SELECTED REEs, RARE METALS AND MINING TERMS

The following is a glossary of selected REEs, rare metals and mining terms used in this quarterly report on Form 10-Q that may be technical in nature:

Assay	The analysis of the proportions of metals in ore, or the testing of an ore or mineral for composition, purity, weight, or other properties of commercial interest.
Bastnasite	Bastnasite is a mixed-lanthanide fluoro-carbonate mineral (Ln F CO3) that currently provides the bulk of the world's supply of the light REEs. Bastnasite and monazite are the two most common sources of cerium and other REEs. Bastnasite is found in carbonatites, igneous carbonate rocks that melt at unusually low temperatures.
Bonded magnet	Bonded neodymium-magnets are prepared by melt spinning a thin ribbon of the Nd-Fe-B alloy. The ribbon contains randomly oriented Nd2Fe14B nano-scale grains. This ribbon is then pulverized into particles, mixed with a polymer and either compression or injection molded into bonded magnets. Bonded magnets offer less flux than sintered magnets, but can be net-shape formed into intricately shaped parts and do not suffer significant eddy current losses.
Cerium	Cerium (Ce) is a soft, silvery, ductile metal which easily oxidizes in air. Cerium is the most abundant of the REEs, and is found in a number of minerals, including monazite and bastnasite. Cerium has two relatively stable oxidation states, enabling both the storage of oxygen and its widespread use in catalytic converters. Cerium is also widely used in glass polish.
Concentrate	A mineral processing product that generally describes the material that is produced after crushing and grinding ore, effecting significant separation of gangue (waste) minerals from the desired metal and/or metal minerals, and discarding the waste minerals. The resulting “concentrate” of minerals typically has an order of magnitude higher content of minerals than the beginning ore material.
Cut-off grade	The lowest grade of mineralized material that qualifies as ore in a given deposit. The grade above which minerals are considered economically mineable considering the following parameters: estimates over the relevant period of mining costs, ore treatment costs, general and administrative costs, refining costs, royalty expenses, by-product credits, process and refining recovery rates and price.
Didymium	Didymium is a natural and unseparated combination of neodymium and praseodymium, which is approximately 75% neodymium and 25% praseodymium, depending on the ore.
Dysprosium	A few percent of Dysprosium (Dy) is often added to high power neodymium iron boron magnets to increase their resistance to demagnetization. A minor use of dysprosium is in the magnetostrictive alloy, based on DyTbFe called terfenol-D.
Europium	Europium (Eu) is desirable due to its photon emission. Excitation of the europium atom, by absorption of electrons or by UV radiation, results in changes in energy levels that create a visible emission. Almost all practical uses of europium utilize this luminescent behavior.
Gadolinium	Gadolinium (Gd) absorbs neutrons and therefore is used for shielding and controlling neutron radiography and in nuclear reactors. Because of its paramagnetic properties, solutions of organic gadolinium complexes and gadolinium compounds are popular intravenous contrast enhancing agents for medical Magnetic Resonance Imaging contrast agents in (MRI). Gadolinium is sometimes added to samarium cobalt magnets to make their magnetic properties less temperature dependent.
Gallium	Elemental gallium is not found in nature, but it is easily obtained by smelting. Very pure gallium metal has a brilliant silvery color and its solid metal fractures conchoidally like glass. Almost all gallium is used for microelectronics.
Grade	The average REE content, as determined by assay of a metric ton of ore.
Indium	A rare, very soft, malleable and easily fusible post-transition metal that is chemically similar to gallium and thallium, and shows intermediate properties between these two. Indium's current primary application is to form transparent electrodes from indium tin oxide (ITO) in liquid crystal displays and touchscreens, and this use largely determines its global mining production. It is widely used in thin-films to form lubricated layers. It is also used for making particularly low melting point alloys, and is a component in some lead-free solders.
Lanthanum	Lanthanum (La) is the first member of the Lanthanide series. Lanthanum is a strategically important rare earth element due to its use in fluid bed cracking catalysts, FCCs, which are used in the production of transportation and aircraft fuel. Lanthanum is also used in fuel cells and batteries.
Mill	A processing plant that produces a concentrate of the valuable minerals contained in an ore.
Mineralization	The process or processes by which a mineral or minerals are introduced into a rock, resulting in a valuable or potentially valuable deposit.

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Monazite	Monazite is a reddish-brown phosphate mineral. Monazite minerals are typically accompanied by concentrations of uranium and thorium. This has historically limited the processing of monazite, however this mineral is becoming more attractive because it typically has elevated concentrations of mid-to heavy rare earths.
Niobium	Niobium is a rare, soft, grey, ductile transition metal found in the minerals pyrochlore, the main commercial source for niobium, and columbite. Niobium is used mostly in alloys, the largest part in special steel such as that used in gas pipelines. Although alloys contain only a maximum of 0.1%, that small percentage of niobium improves the strength of the steel. The temperature stability of niobium-containing superalloys is important for its use in jet and rocket engines. Niobium is used in various superconducting materials.
Neodymium	Neodymium (Nd) has two major uses. It is key constituent of NdFeB permanent magnets and it is an additive to capacitor dielectrics. NdFeB magnets maximize the power/weight ratio, and are found in a large variety of motors, generators, sensors and hard disk drives. Capacitors containing neodymium are found in cellular telephones, computers and nearly all other electronic devices. A minor application of neodymium is in lasers.
Ore	That part of a mineral deposit which could be economically and legally extracted or produced at the time of reserve determination.
Overburden	In surface mining, overburden is the material that overlays an ore deposit. Overburden is removed prior to mining.
Praseodymium	Praseodymium (Pr) comprises about 4% of the lanthanide content of bastnasite and has a few specific applications, based mainly on its optical properties. It is a common coloring pigment, and is used in photographic filters, airport signal lenses, and welder's glasses. Because it chemically and magnetically is so similar to its neighbors neodymium and lanthanum, it is typically found in small amounts in applications where neodymium and lanthanum are popular, such as NdFeB magnets and catalysts. These latter applications are actually the largest uses for praseodymium because the magnet and catalyst markets are so large. Thus praseodymium plays an important role, in extending the availability of the more popular neodymium and lanthanum.
Probable reserves	Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
Proven reserves	Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established.
Recovery	The percentage of contained metal actually extracted from ore in the course of processing such ore.
Reserves	That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Same definition as 'ore'
Rhenium	It is a silvery-white, heavy, third-row transition metal. With an estimated average concentration of 1 part per billion (ppb), rhenium is one of the rarest elements in the Earth's crust. The free element has the third-highest melting point and highest boiling point of any element. Rhenium resembles manganese chemically and is obtained as a by-product of molybdenum and copper ore's extraction and refinement. Nickel-based superalloys of rhenium are used in the combustion chambers, turbine blades, and exhaust nozzles of jet engines. These alloys contain up to 6% rhenium, making jet engine construction the largest single use for the element, with the chemical industry's catalytic uses being next-most important.
Samarium	Samarium (Sm) is predominantly used to produce samarium cobalt magnets. Although these magnets are slightly less powerful than NdFeB magnets at room temperature, samarium cobalt magnets can be used over a wider range of temperatures and are less susceptible to corrosion.
Sintered magnet	Sintered neodymium-magnets are prepared by the raw materials being melted in a furnace, cast into a mold and cooled to form ingots. The ingots are pulverized and milled to tiny particles. This undergoes a process of liquid-phase sintering whereby the powder is magnetically aligned into dense blocks which are then heat-treated, cut to shape, surface treated and magnetized.
Tantalum	Tantalum is a rare, hard, blue-gray, lustrous transition metal that is highly corrosion resistant. It is part of the refractory metals group, which are widely used as minor component in alloys. The chemical inertness of tantalum makes it a valuable substance for laboratory equipment and a substitute for platinum, but its main use today is in tantalum capacitors in electronic equipment such as mobile phones, DVD players, video game systems and computers.
Terbium	Terbium (Tb) is used primarily as a phosphor, either in fluorescent lamps or x-ray screens. It can replace dysprosium in NdFeB magnets but usually does not because of its cost. A minor use of terbium is in the magnetostrictive alloy, based on DyTbFe called terfenol-D.

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Yttrium	Yttrium (Y), although not a lanthanide series element, is often considered to be a rare earth element and its behavior is similar to heavy rare earth elements. It is predominantly utilized in lighting applications and ceramics. Other uses include resonators, lasers, microwave communication devices and other electronic devices.
Zirconium oxide	A white amorphous powder that is insoluble in water and highly refractory, used as a pigment for paints, a catalyst, and an abrasive.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our operations may be impacted by commodity prices, geographic concentration, changes in interest rates and foreign currency exchange rates.

Commodity Price Risk

Our current principal product mix, including cerium, lanthanum, neodymium, praseodymium, yttrium, europium, dysprosium, terbium, zirconium oxides, gallium, indium, rhenium, tantalum and niobium are commodities but are not traded on any commodity exchange. As such, direct hedging of the prices for future production cannot be undertaken. A portion of our current business is conducted in the spot market; therefore, prices can vary with the transaction and individual bids received. Our products are primarily marketed to manufacturers as component materials. Prices will vary based on the demand for the end products being produced with the mineral resources we mine and process.

Our sales and profitability are determined principally by the price of the rare earth products, rare metals and magnet alloys that we produce and, to a lesser extent by the price of natural gas and other supplies used in the production process. The prices of our rare earth products are influenced by the price and demand of the end products that our products support, including automotive, electronics and clean energy technologies. A significant decrease in the global demand for these products may have a material adverse effect on our business. We currently have no significant hedging contracts for revenues and costs in place and intend to consider hedging strategies in the future.

Our costs and capital investments are subject to market movements in other commodities such as natural gas and chemicals. We may enter into derivative contracts for a portion of the expected usage of these products, but we do not currently have any derivative contracts on these commodities and we do not currently anticipate entering into derivative agreements on commodities.

Interest Rate Risk

Our exposure to the interest rate risk as a result of the variable interest debt, which totaled $37.8 million at June 30, 2012, would result in approximately $0.4 million increase/decrease in interest rate expense for every 100 basis point increase/decrease in the underlying interest rate. We are not significantly impacted by variations in interest rates at this time. Our exposure to interest rate risk would increase if, for example, we obtain and utilize additional debt facilities in the future.

Foreign Currency Risk

We are exposed to fluctuations of the U.S. dollar (our reporting currency) against the functional currencies of our foreign subsidiaries, including the Euro, the Canadian dollar, the Chinese Renminbi and the Japanese Yen, when we translate our foreign subsidiaries' financial statements into U.S. dollars for inclusion in our consolidated financial statements. Cumulative translation adjustments are recorded in accumulated other comprehensive income (loss) as a separate component of equity. Any increase (decrease) in the value of the U.S. dollar against those foreign currencies results in unrealized foreign currency translation losses (gains) with respect to assets acquired in, liabilities assumed from, intercompany balances with and results of operations from our foreign subsidiaries. Therefore, we may experience a negative impact on our comprehensive income (loss) and stockholders' equity with respect to our holdings in those subsidiaries as a result of foreign currency translation. We generally do not hedge against the risk that we may incur non-cash losses upon the translation of the financial statements of our foreign subsidiaries into U.S. dollars.

We are also exposed to fluctuations of the U.S. dollar against the Japanese Yen as it pertains to our investment in IMJ. We will contribute, upon achievement of certain milestones and subject to our Board of Directors' approval, Japanese Yen, or JPY, 2.5 billion in cash, or approximately $31.4 million based on the JPY/ U.S. dollar exchange rate as of June 30, 2012, in exchange of ordinary shares of the joint venture over a period of twelve months, which started in January 2012. The actual remittance amounts will vary depending on the future exchange rate between the U.S. dollar and the Japanese Yen, and the achievement of certain milestones by the joint venture.

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ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, or the Exchange Act, the Company's management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the Company's “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this report. Based on its evaluation, the Company's management, including the Chief Executive Officer and the Chief Financial Officer, have concluded that the Company's disclosure controls and procedures are effective as of June 30, 2012, so to provide reasonable assurance that material information required to be disclosed in reports the Company files or submits under the Exchange Act is made known to them timely.

We acquired Molycorp Canada in the second quarter of 2012. As such, the scope of our assessment of the effectiveness of internal control over financial reporting does not include Molycorp Canada. This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of acquisition.

Changes in internal control over financial reporting

There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become subject to various legal proceedings that are incidental to the ordinary conduct of our business.

In February 2012, a purported class action lawsuit captioned, Angelo Albano, Individually and on Behalf of All Others Similarly Situated v. Molycorp, Inc., et al., was filed against us and certain of our executive officers in the U.S. District Court for the District of Colorado. This federal court action alleges, among other things, that we and those officers violated Section 10(b) of the Securities Exchange Act of 1934 in connection with statements relating to our third quarter fiscal 2011 financial results and fourth quarter 2011 production guidance that we had filed with or furnished to the SEC, or otherwise made available to the public. The plaintiffs are seeking unspecified damages and other relief. We believe the allegations are without merit and that we have valid defenses to such allegations. We intend to defend this action vigorously. We are unable to provide meaningful quantification of how the final resolution of these claims may impact our future consolidated financial position or results of operations.

Seven stockholder derivative lawsuits have been filed in three different jurisdictions purportedly on behalf of Molycorp, Inc., against certain of its directors, certain of its officers, and certain of its private equity investors. These cases have been filed in the Delaware Court of Chancery, the U.S. District Court in Colorado, and the District Court in Arapahoe County, Colorado. They are captioned: Gaines v. Smith et al., Case No. 7282 (Del. Ch. Feb. 12, 2012); Paskowitz v. Smith et al., Case No. 7319 (Del. Ch. Mar. 9, 2012); Wilson v. Smith et al., No. 7395-VCN (Del. Ch. April 4, 2012); Wells v. Smith et al., No. 1:12-cv-00447-WJM (D. Colo. Feb. 21, 2012); Swaggerty v. Smith et al., No. 12-cv-00589-CMA-KLM (D. Colo. Mar. 7, 2012); Clem v. Smith et al., No. 12 CV 392 (Arapahoe Cnty., Colo. Feb. 24, 2012); and Nationwide Consulting, Inc. v. Smith et al., No. 12 CV 448 (Arapahoe Cnty., Colo. Mar. 5, 2012). The Clem and Nationwide cases, which were previously consolidated under the caption Clem v. Smith et al., No. 12 CV 392 (Arapahoe Cnty., Colo.), have been voluntarily dismissed without prejudice. The Wells and Swaggerty cases have both been dismissed without prejudice in favor of the lawsuits proceeding in the Delaware Court of Chancery. As a result, plaintiffs in the Wells and Swaggerty cases filed notices of appeal before the 10th Circuit.

The derivative complaints challenge among other things certain sales of stock by officers, directors and private equity firms, and certain Molycorp corporate acquisitions during 2011. The complaints assert causes of action for: (1) alleged breaches of fiduciary duty, including the duties of loyalty and due care; (2) alleged unjust enrichment; (3) alleged waste of corporate

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assets; and (4) alleged “abuse of control.” On behalf of Molycorp, the plaintiffs in the derivative actions seek, among other things, monetary damages, restitution, an accounting, and certain changes to corporate governance procedures.

The Defendants have filed a motion in each case seeking to consolidate the derivative actions in one jurisdiction, and have expressed a preference for the Delaware Court of Chancery.

ITEM 1A. RISK FACTORS.

Our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as filed with the SEC on February 28, 2012, includes a detailed discussion of our risk factors. The information presented below updates these risks and should be read in conjunction with the risk factors and information disclosed in that Form 10-K.

We are dependent upon information technology systems, which are subject to disruption, damage, failure and risks associated with implementation and integration.

We are increasingly dependent upon information technology systems in the conduct of our operations. Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber attacks, natural disasters and defects in design. Damage, disruption, or failure of one or more information technology systems may result in interruptions to our operations. Various measures have been implemented to manage the risks related to our information technology systems, but our business, financial position or results of operations could be adversely impacted by such interruptions.

We could also be adversely affected by system or network disruptions if new or upgraded information technology systems are defective, not installed properly or not properly integrated into our operations. We have begun the implementation of new enterprise software that we will use for our marketing, sales, manufacturing, logistics, customer service and accounting functions. If we are not able to successfully implement our new enterprise software in a timely manner across our operating segments, including our international operations, such failure could have a material adverse effect on our business, financial position and results of operations and could adversely impact the effectiveness of our internal controls over financial reporting.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95.1 to this Quarterly Report on Form 10-Q.

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS.

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of Molycorp, Inc., as amended.
3.2	Bylaws of Molycorp, Inc., amended as of August 3, 2010 (incorporated by reference to Exhibit 3.2 to Molycorp, Inc.’s Current Report on Form 8-K (File No. 001-34827) filed with the Securities and Exchange Commission on August 6, 2010
4.1	Indenture, dated May 25, 2012, among Molycorp, Inc., the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (including the Form of 10% Senior Secured Note due 2020) (incorporated by reference to Exhibit 4.1 to Molycorp, Inc's Current Report on Form 8-K (File No. 001-34827) filed with the Securities and Exchange Commission on May 30, 2012)
4.2	Indenture, dated June 2, 2011, between Neo Material Technologies Inc. and Computershare Trust Company of Canada, as trustee (including the Form of Convertible Debentures)
4.3	Indenture, dated June 11, 2012, between Molycorp, Inc. and Computershare Trust Company of Canada
10.1	Registration Rights Agreement, dated May 25, 2012, among Molycorp, Inc., the Guarantors (as defined therein) and Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC, as representatives of the initial purchasers of the Notes (incorporated by reference to Exhibit 10.1 to Molycorp, Inc's Current Report on Form 8-K (File No. 001-34827) filed with the Securities and Exchange Commission on May 30, 2012)
10.2	Molycorp, Inc. 2012 Employee Stock Purchase Plan, effective as of May 31, 2012 (incorporated by reference to Exhibit 10.1 to Molycorp, Inc's Current Report on Form 8-K (File No. 001-34827) filed with the Securities and Exchange Commission on June 6, 2012)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95.1	Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MOLYCORP, INC.
August 9, 2012	By:	/s/ Mark A. Smith
		Mark A. Smith President and Chief Executive Officer (Principal Executive Officer)
August 9, 2012	By:	/s/ Michael F. Doolan
		Michael F. Doolan Chief Financial Officer (Principal Financial Officer)

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EXHIBIT INDEX

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of Molycorp, Inc., as amended.
3.2	Bylaws of Molycorp, Inc., amended as of August 3, 2010 (incorporated by reference to Exhibit 3.2 to Molycorp, Inc.’s Current Report on Form 8-K (File No. 001-34827) filed with the Securities and Exchange Commission on August 6, 2010
4.1	Indenture, dated May 25, 2012, among Molycorp, Inc., the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (including the Form of 10% Senior Secured Note due 2020) (incorporated by reference to Exhibit 4.1 to Molycorp, Inc's Current Report on Form 8-K (File No. 001-34827) filed with the Securities and Exchange Commission on May 30, 2012)
4.2	Indenture, dated June 2, 2011, between Neo Material Technologies Inc. and Computershare Trust Company of Canada, as trustee (including the Form of Convertible Debentures)
4.3	Indenture, dated June 11, 2012, between Molycorp, Inc. and Computershare Trust Company of Canada
10.1	Registration Rights Agreement, dated May 25, 2012, among Molycorp, Inc., the Guarantors (as defined therein) and Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC, as representatives of the initial purchasers of the Notes (incorporated by reference to Exhibit 10.1 to Molycorp, Inc's Current Report on Form 8-K (File No. 001-34827) filed with the Securities and Exchange Commission on May 30, 2012)
10.2	Molycorp, Inc. 2012 Employee Stock Purchase Plan, effective as of May 31, 2012 (incorporated by reference to Exhibit 10.1 to Molycorp, Inc's Current Report on Form 8-K (File No. 001-34827) filed with the Securities and Exchange Commission on June 6, 2012)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95.1	Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

70

71

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

MOLYCORP, INC.

Molycorp, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies that:

1. The name of the corporation is Molycorp, Inc. The date of filing of Molycorp, Inc.’s original Certificate of Incorporation with the Secretary of State of the State of Delaware was March 4, 2010.

2. This Amended and Restated Certificate of Incorporation has been duly adopted by the directors and stockholders of the corporation in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

3. Pursuant to Section 245 of the General Corporation Law of the State of Delaware, this Amended and Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Certificate of Incorporation of the corporation, as previously amended, as set forth below:

ARTICLE I

The name of the corporation is Molycorp, Inc. (the “Company”).

ARTICLE II

The address of the Company’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of the Company’s registered agent at such address is The Corporation Trust Company.

ARTICLE III

The purpose of the Company is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as amended (the “DGCL”).

ARTICLE IV

Section 1.Authorized Capital Stock. The Company is authorized to issue two classes of capital stock, designated Common Stock and Preferred Stock. The total number of shares of capital stock that the Company is authorized to issue is 355,000,000 shares, consisting of 350,000,000 shares of Common Stock, par value $0.001 per share, and 5,000,000 shares of Preferred Stock, par value $0.001 per share.

Section 2.Preferred Stock. The Preferred Stock may be issued in one or more series. The Board of Directors of the Company (the “Board”) is hereby authorized to issue the shares of Preferred Stock in such series and to fix from time to time before issuance the number of shares to be included in any such series and the designation, relative powers, preferences, rights and qualifications, limitations or restrictions of such series. The authority of the Board with respect to each such series will include, without limiting the generality of the foregoing, the determination of any or all of the following:

(a) the number of shares of any series and the designation to distinguish the shares of such series from the

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shares of all other series;

(b) the voting powers, if any, and whether such voting powers are full or limited in such series;

(c) the redemption provisions, if any, applicable to such series, including the redemption price or prices to be paid;

(d) whether dividends, if any, will be cumulative or noncumulative, the dividend rate of such series, and the dates, conditions and preferences of dividends on such series;

(e) the rights of such series upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Company;

(f) the provisions, if any, pursuant to which the shares of such series are convertible into, or exchangeable for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Company, at such price or prices or at such rate or rates of exchange and with such adjustments applicable thereto;

(g) the right, if any, to subscribe for or to purchase any securities of the Company;

(h) the provisions, if any, of a sinking fund applicable to such series; and

(i) any other designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof;

all as may be determined from time to time by the Board and stated or expressed in the resolution or resolutions providing for the issuance of such Preferred Stock (collectively, a “Preferred Stock Designation”).

Section 3.Common Stock. Subject to the rights of the holders of any series of Preferred Stock, the holders of Common Stock will be entitled to one vote on each matter submitted to a vote at a meeting of stockholders for each share of Common Stock held of record by such holder as of the record date for such meeting.

ARTICLE V

The Board may make, adopt, amend, and repeal the Bylaws of the Company. Any Bylaw made or adopted by the Board under the powers conferred hereby may be amended or repealed by the Board (except as specified in any such Bylaw so made or amended) or by the stockholders in the manner provided in the Bylaws of the Company. Notwithstanding the foregoing and anything contained in this Certificate of Incorporation or the Bylaws to the contrary, Bylaws 1, 3, 8, 9, 10, 11, 15, 16, 18 and 37 may not be amended or repealed by the stockholders, and no provision inconsistent therewith may be adopted by the stockholders, without the affirmative vote of the holders of at least 66-2/3% of the voting power of the outstanding Voting Stock (as defined below), voting together as a single class. The Company may in its Bylaws confer powers upon the Board in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board by applicable law. For the purposes of this Certificate of Incorporation, “Voting Stock” means stock of the Company of any class or series entitled to vote generally in the election of Directors. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 66-2/3% of the Voting Stock, voting together as a single class, is required to amend or repeal, or to adopt any provision inconsistent with, this Article V.

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ARTICLE VI

Subject to the rights of the holders of any series of Preferred Stock:

(a) any action required or permitted to be taken by the stockholders of the Company must be effected at a duly called annual or special meeting of stockholders of the Company and may not be effected by any consent in writing of such stockholders; and

(b) special meetings of stockholders of the Company may be called only by (i) the Chairman of the Board (the “Chairman”), (ii) the Chief Executive Officer of the Company (the “CEO”) or (iii) the Secretary of the Company (the “Secretary”) within 10 calendar days after receipt of the written request of a majority of the total number of Directors that the Company would have if there were no vacancies (the “Whole Board”).

At any annual meeting or special meeting of stockholders of the Company, only such business will be conducted or considered as has been brought before such meeting in the manner provided in the Bylaws of the Company. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 66-2/3% of the voting power of the outstanding Voting Stock, voting together as a single class, will be required to amend or repeal, or adopt any provision inconsistent with, this Article VI.

ARTICLE VII

Section 1.Number, Election, Terms of Directors and Initial Directors. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional Directors under circumstances specified in a Preferred Stock Designation, the number of the Directors of the Company will not be less than seven nor more than eleven and will be fixed from time to time in the manner provided in the Bylaws of the Company. The Directors, other than those who may be elected by the holders of any series of Preferred Stock, will be classified with respect to the time for which they severally hold office into three classes, as nearly equal in number as possible, designated Class I, Class II, and Class III. At any meeting of stockholders at which Directors are to be elected, the number of Directors elected may not exceed the greatest number of Directors then in office in any class of Directors. The Directors first appointed to Class I will hold office for a term expiring at the annual meeting of stockholders to be held in 2011; the Directors first appointed to Class II will hold office for a term expiring at the annual meeting of stockholders to be held in 2012; and the Directors first appointed to Class III will hold office for a term expiring at the annual meeting of stockholders to be held in 2013, with the members of each class to hold office until their successors are elected and qualified. At each succeeding annual meeting of the stockholders of the Company, the successors to the class of Directors whose term expires at that meeting will be elected by plurality vote of all votes cast at such meeting to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional Directors under circumstances specified in a Preferred Stock Designation, Directors may be elected by the stockholders only at an annual meeting of stockholders. Election of Directors of the Company need not be by written ballot unless requested by the Chairman or by the holders of a majority of the Voting Stock present in person or represented by proxy at a meeting of the stockholders at which Directors are to be elected. If authorized by the Board, such

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requirement of written ballot shall be satisfied by a ballot submitted by electronic transmission, provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxy holder. The names and mailing addresses of the persons who are to serve as the initial Directors in accordance with the terms and conditions of this Article VII, Section 1 are as follows:

Class	Name	Address
Class II	Mark A. Smith	5619 Denver Tech Center Parkway, Suite 1000, Greenwood Village, Colorado 80111
Class III	Ross R. Bhappu	5619 Denver Tech Center Parkway, Suite 1000, Greenwood Village, Colorado 80111
Class II	Brian T. Dolan	5619 Denver Tech Center Parkway, Suite 1000, Greenwood Village, Colorado 80111
Class I	Charles R. Henry	5619 Denver Tech Center Parkway, Suite 1000, Greenwood Village, Colorado 80111
Class III	Mark S. Kristoff	5619 Denver Tech Center Parkway, Suite 1000, Greenwood Village, Colorado 80111
Class III	Alec Machiels	5619 Denver Tech Center Parkway, Suite 1000, Greenwood Village, Colorado 80111
Class I	Russell D. Ball	5619 Denver Tech Center Parkway, Suite 1000, Greenwood Village, Colorado 80111
Class I	Jack E. Thompson	5619 Denver Tech Center Parkway, Suite 1000, Greenwood Village, Colorado 80111

Section 2.Nomination of Director Candidates. Advance notice of stockholder nominations for the election of Directors must be given in the manner provided in the Bylaws of the Company.

Section 3.Newly Created Directorships and Vacancies. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional Directors under circumstances specified in a Preferred Stock Designation, newly created directorships resulting from any increase in the authorized number of Directors and any vacancies on the Board resulting from death, resignation, disqualification, removal or other cause will be filled solely by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. Any Director elected in accordance with the preceding sentence will hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the

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vacancy occurred and until such Director’s successor has been elected and qualified. No decrease in the number of Directors constituting the Board may shorten the term of any incumbent Director.

Section 4. Removal. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional Directors under circumstances specified in a Preferred Stock Designation, any Director may be removed from office by the stockholders only for cause and only in the manner provided in this Article VII, Section 4. At any annual meeting or special meeting of the stockholders, the notice of which identifies the Director or Directors proposed to be removed and states that the removal of a Director or Directors is among the purposes of the meeting, the affirmative vote of the holders of at least 66-2/3% of the voting power of the outstanding Voting Stock, voting together as a single class, may remove such Director or Directors for cause.

Section 5.Amendment, Repeal, Etc. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 66-2/3% of the voting power of the outstanding Voting Stock, voting together as a single class, is required to amend or repeal, or adopt any provision inconsistent with, this Article VII. The amendment or repeal of, or the adoption of any provision inconsistent with, this Article VII must be by written ballot.

ARTICLE VIII

To the full extent permitted by the DGCL or any other applicable law currently or hereafter in effect, no Director of the Company will be personally liable to the Company or its stockholders for or with respect to any acts or omissions in the performance of his or her duties as a Director of the Company. Any repeal or modification of this Article VIII will not adversely affect any right or protection of a Director of the Company existing prior to such repeal or modification.

ARTICLE IX

Section 1.Right to Indemnification. Each person who was or is a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that the person is or was a director or an officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “Indemnitee”), whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Company to the fullest extent permitted or required by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than such law permitted the Company to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith; provided, however, that, except as provided in Section 3 of this Article IX with respect to Proceedings to enforce rights to indemnification, the Company shall

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indemnify any such Indemnitee in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board of Directors of the Company.

Section 2.Right to Advancement of Expenses. The right to indemnification conferred in Section 1 of this Article IX shall include the right to be paid by the Company the expenses (including, without limitation, attorneys’ fees and expenses) incurred in defending any such Proceeding in advance of its final disposition (an “Advancement of Expenses”); provided, however, that, if the DGCL so requires, an Advancement of Expenses incurred by an Indemnitee in such person’s capacity as a director or officer (and not in any other capacity in which service was or is rendered by such Indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Company of an undertaking (an “Undertaking”), by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “Final Adjudication”) that such Indemnitee is not entitled to be indemnified for such expenses under this Section 2 or otherwise. The rights to indemnification and to the Advancement of Expenses conferred in Sections 1 and 2 of this Article IX shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators.

Section 3.Right of Indemnitee to Bring Suit. If a claim under Section 1 or 2 of this Article IX is not paid in full by the Company within 60 calendar days after a written claim has been received by the Company, except in the case of a claim for an Advancement of Expenses, in which case the applicable period shall be 20 calendar days, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Company to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an Advancement of Expenses) it shall be a defense that, and (ii) any suit brought by the Company to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Company shall be entitled to recover such expenses upon a Final Adjudication that, the Indemnitee has not met any applicable standard for indemnification set forth in the DGCL. Neither the failure of the Company (including its Board of Directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Company (including its Board of Directors, independent legal counsel or stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an Advancement of Expenses hereunder, or brought by the Company to recover an Advancement of Expenses pursuant to the terms of

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an Undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such Advancement of Expenses, under this Article IX or otherwise shall be on the Company.

Section 4.Non-Exclusivity of Rights. The rights to indemnification and to the Advancement of Expenses conferred in this Article IX shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Company’s Certificate of Incorporation, Bylaws, any agreement, vote of stockholders or disinterested directors or otherwise.

Section 5.Insurance. The Company may maintain insurance, at its expense, to protect itself and any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Company would have the power to indemnify such person against such liability under the DGCL.

Section 6.Indemnification of Employees and Agents of the Company. The Company may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the Advancement of Expenses to any employee or agent of the Company to the fullest extent of the provisions of this Article IX with respect to the indemnification and Advancement of Expenses of directors and officers of the Company.

IN WITNESS WHEREOF, Molycorp, Inc. has caused this Amended and Restated Certificate of Incorporation to be executed by its duly authorized officer this 3rd day of August, 2010.

MOLYCORP, INC.

By: /s/ John F. Ashburn, Jr.                               

Name:    John F. Ashburn, Jr.

Title:    Executive Vice President and

General Counsel

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CERTIFICATE OF DESIGNATIONS OF
5.50% SERIES A MANDATORY CONVERTIBLE PREFERRED STOCK OF
MOLYCORP, INC.

Molycorp, Inc., a Delaware corporation (the “Corporation”), hereby certifies that, pursuant to the provisions of Sections 103, 141 and 151 of the General Corporation Law of the State of Delaware, (a) on January 21, 2011 the board of directors of the Corporation (the “Board of Directors”) appointed a special committee (the “Pricing Committee”) and authorized the Pricing Committee to determine the voting powers, designations, preferences, rights and qualifications, limitations or restrictions and all other terms of the issuance of a series of preferred stock; and (b) on February 10, 2011, the Pricing Committee adopted the resolution shown immediately below, which resolution is now, and at all times since its date of adoption, has been in full force and effect:

RESOLVED, that pursuant to the provisions of the Amended and Restated Certificate of Incorporation of the Corporation (as such may be amended, modified or restated from time to time, the “Amended and Restated Certificate of Incorporation”) (which authorizes 5,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”)), and the authority vested in the Board of Directors, a series of Preferred Stock be, and it hereby is, created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof are as set forth in the Amended and Restated Certificate of Incorporation and this Certificate of Designation, as it may be amended from time to time (the “Certificate of Designations”) as follows:

Part 1. Designation and Number of Shares. Pursuant to the Amended and Restated Certificate of Incorporation, there is hereby created out of the authorized and unissued shares of Preferred Stock of the Corporation a series of Preferred Stock consisting of 1,800,000 shares (or up to 2,070,000 shares of Preferred Stock if the underwriters exercise in full their over-allotment option pursuant to the Underwriting Agreement (as such term is defined herein) to purchase additional shares) designated as the “5.50% Series A Mandatory Convertible Preferred Stock” (the “Mandatory Convertible Preferred Stock”). Such number of shares may be decreased by resolution of the Board of Directors, subject to the terms and conditions hereof; provided that no decrease shall reduce the number of shares of the Mandatory Convertible Preferred Stock to a number less than the number of shares then outstanding.

Part 2. Standard Provisions. The Standard Provisions contained in Annex A attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part of this Certificate of Designations to the same extent as if such provisions had been set forth in full herein.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be signed by John F. Ashburn, Jr., its Executive Vice President and General Counsel, this 15th day of February, 2011.

MOLYCORP, INC.
By:	/s/ John F. Ashburn, Jr.
Name: John F. Ashburn, Jr.
Title: Executive Vice President and General Counsel

Signature Page to Certificate of Designations of Mandatory Convertible Preferred Stock

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ANNEX A

STANDARD PROVISIONS

SECTION 1. General Matters; Ranking. Each share of the Mandatory Convertible Preferred Stock shall be identical in all respects to every other share of the Mandatory Convertible Preferred Stock. The Mandatory Convertible Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution of the Corporation, shall rank (i) senior to all Junior Stock, (ii) on parity with all Parity Stock and (iii) junior to all Senior Stock and the Corporation’s existing and future indebtedness.

SECTION 2. Standard Definitions. As used herein with respect to the Mandatory Convertible Preferred Stock:

“Accumulated Dividend Amount” means, with respect to any Fundamental Change Conversion, the aggregate amount of accumulated and unpaid dividends, if any, for Dividend Periods prior to the Effective Date for the relevant Fundamental Change, including for the partial Dividend Period, if any, from, and including, the Dividend Payment Date immediately preceding such Effective Date to, but excluding, such Effective Date, subject to the proviso in Section 9(a).

“Additional Fundamental Change Amount” shall have the meaning set forth in Section 9(d)(iv).

“ADRs” shall have the meaning set forth in Section 13(e).

“Agent Members” shall have the meaning set forth in Section 21.

“Amended and Restated Certificate of Incorporation” shall have the meaning set forth in the recitals.

“Applicable Market Value” means the Average VWAP per share of Common Stock over the 20 consecutive Trading Day period ending on, and including, the third Trading Day immediately preceding the Mandatory Conversion Date.

“Average VWAP” per share over a certain period means the average of the VWAP per share for each Trading Day in such period.

“Board of Directors” shall have the meaning set forth in the recitals.

“Business Day” means any day other than a Saturday or Sunday or any other day on which commercial banks in New York City are authorized or required by law or executive order to close.

“Bylaws” means the Bylaws of the Corporation, as they may be amended or restated from time to time.

“Certificate of Designations” shall have the meaning set forth in the recitals.

“Clause I Distribution” shall have the meaning set forth in Section 13(a)(iv).

“Clause II Distribution” shall have the meaning set forth in Section 13(a)(iv).

“Clause IV Distribution” shall have the meaning set forth in Section 13(a)(iv).

“Common Stock” means the common stock, par value $0.001 per share, of the Corporation.

“Conversion and Dividend Disbursing Agent” means Computershare Trust Company, N.A., the Corporation’s duly appointed conversion and dividend disbursing agent for the Mandatory Convertible Preferred Stock, and any successor appointed under Section 14.

“Conversion Date” shall have the meaning set forth in Section 3(a).

“Corporation” shall have the meaning set forth in the recitals.

“Current Market Price” per share of Common Stock (or, in the case of Section 13(a)(iv), per share of Common Stock, the Corporation’s capital stock or equity interest, as applicable) on any date means for the purposes of determining an adjustment to the Fixed Conversion Rates:

(i)    for purposes of any adjustment pursuant to Section 13(a)(ii), Section 13(a)(iv) (in the event of an adjustment not relating to a Spin-Off), or Section 13(a)(v), the Average VWAP per share of Common Stock over the five consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Date with respect to the issuance or distribution requiring such computation;

(ii)    for purposes of any adjustment pursuant to Section 13(a)(iv) relating to a Spin-Off, the Average VWAP per share of Common Stock, the Corporation’s capital stock or equity interests, as applicable, over the first ten consecutive Trading Days commencing on and including the fifth Trading Day immediately following the effective date of such distribution; and

(iii)    for purposes of any adjustment pursuant to Section 13(a)(vi), the Average VWAP per share of Common Stock over the five consecutive Trading Day period ending on the seventh Trading Day after the Expiration Date of the relevant tender offer or exchange offer.

“Depositary” means DTC or its nominee or any successor appointed by the Corporation.

“Dividend Payment Date” means March 1, June 1, September 1 and December 1 of each year commencing on June 1, 2011 to and including the Mandatory Conversion Date.

“Dividend Period” means the period from, and including, a Dividend Payment Date to, but excluding, the next Dividend Payment Date, except that the initial Dividend Period shall commence on, and include, the Initial Issue Date and shall

CLI-2007910v2#PageNum#

end on, and exclude, the June 1, 2011 Dividend Payment Date and except as otherwise provided in Section 9.

“Dividend Rate” shall have the meaning set forth in Section 3(a).

“DTC” means The Depository Trust Corporation.

“Early Conversion” shall have the meaning set forth in Section 8(a).

“Early Conversion Additional Conversion Amount” shall have the meaning set forth in Section 8(b).

“Early Conversion Average Price” shall have the meaning set forth in Section 8(b).

“Early Conversion Date” shall have the meaning set forth in Section 10(b).

“Effective Date” shall have the meaning set forth in Section 9(a).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“Exchange Property” shall have the meaning set forth in Section 13(e).

“Ex-Date,” when used with respect to any issuance or distribution, means the first date on which shares of Common Stock trade without the right to receive such issuance or distribution.

“Expiration Date” shall have the meaning set forth in Section 13(a)(vi).

“Fair Market Value” means the fair market value as determined in good faith by the Board of Directors (or an authorized committee thereof), whose determination shall be conclusive and set forth in a resolution of the Board of Directors (or such authorized committee).

“Five-DayAverage Price” shall have the meaning set forth in Section 3(c).

“Fixed Conversion Rates” means the Maximum Conversion Rate and the Minimum Conversion Rate.

“Floor Price” shall have the meaning set forth in Section 3(e).

A “Fundamental Change” shall be deemed to have occurred, at any time after the Initial Issue Date, upon: (i) the consummation of any transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, recapitalization or otherwise) in connection with which 90% or more of the Common Stock is exchanged for, converted into, acquired for or constitutes solely the right to receive, consideration 10% or more of which is not common stock that is listed on, or immediately after the transaction or event will be listed on, the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market; (ii) (a) any “person” or “group” (as such terms are used for purposes

of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other than the TNA Group, the Resource Group, the Pegasus Group, the Corporation, any of the Corporation’s majority-owned subsidiaries or any of the Corporation’s or the Corporation’s majority-owned subsidiaries’ employee benefit plans, becoming the “beneficial owner,” directly or indirectly, of more than 50% of the total voting power in the aggregate of all classes of capital stock then outstanding entitled to vote generally in elections of the Corporation’s directors, or (b) the TNA Group, the Resource Group and the Pegasus Group, in the aggregate, becoming the “beneficial owner,” directly or indirectly, of more than 65% of the total voting power in the aggregate of all classes of capital stock then outstanding entitled to vote generally in the elections of the Corporation’s directors; or (iii) the Common Stock (or any other security into which the Mandatory Convertible Preferred Stock becomes convertible in connection with a Reorganization Event) ceases to be listed or quoted on the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market.

“Fundamental Change Conversion” shall have the meaning set forth in Section 9(a).

“Fundamental Change Conversion Date” shall have the meaning set forth in Section 10(c).

“Fundamental Change Conversion Period” shall have the meaning set forth in Section 9(a).

“Fundamental Change Conversion Rate” means, for any Fundamental Change Conversion, the conversion rate set forth in the table below for the Effective Date and the Stock Price applicable to such Fundamental Change:

	Stock Price on Effective Date
Effective date	$5	$10	$20	$30	$40	$50	$60	$75	$85	$100	$125	$150	$200	$250	$300
February 16, 2011	1.7215	1.8571	1.863	1.8032	1.7453	1.7063	1.6825	1.6645	1.6591	1.6561	1.6563	1.8581	1.6813	1.6632	1.6642
March 1, 2012	1.8561	1.9368	1.9345	1.8704	1.7985	1.7432	1.7071	1.6786	1.6697	1.6638	1.6619	1.6826	1.6642	1.865	1.6655
March 1, 2013	1.9448	1.9724	1.9817	1.9477	1.8711	1.7906	1.7322	1.687	1.6745	1.6673	1.6653	1.6653	1.6658	1.686	1.6682
March 1, 2014	2.0000	2.0000	2.0000	2.0000	2.0000	2.0000	1.6667	1.6667	1.6667	1.6667	1.6667	1.6667	1.6667	1.6667	1.6667

If the Stock Price falls between two Stock Prices set forth in the table above, or if the Effective Date falls between two Effective Dates set forth in the table above, the Fundamental Change Conversion Rate shall be determined by straight-line interpolation between the Fundamental Change Conversion Rates set forth for the higher and lower Stock Prices and the earlier and later Effective Dates based on a 365-day year, as applicable.

If the Stock Price is in excess of $300.00 per share (subject to adjustment in the same manner as adjustments are made to the Stock Price in accordance with the provisions of Section 13(c)(iv)), then the Fundamental Change Conversion Rate shall be the Minimum Conversion Rate. If the Stock Price is less than $5.00 per share (subject to adjustment in the same manner as adjustments are made to the Stock Price in accordance with the provisions of Section 13(c)(iv)), then the Fundamental Change Conversion Rate shall be the Maximum Conversion Rate.

The Stock Prices in the column headings in the table above are subject to adjustment in accordance with the provisions of Section 13(c)(iv). The Fundamental Change Conversion Rates

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set forth in the table above are each subject to adjustment in the same manner as each Fixed Conversion Rate as set forth in Section 13.

“Fundamental Change Dividend Make-whole Amount” shall have the meaning set forth in Section 9(a).

“Fundamental Change Notice” shall have the meaning set forth in Section 9(b).

“Global Preferred Shares” shall have the meaning set forth in Section 21.

“Holder” means each person in whose name shares of the Mandatory Convertible Preferred Stock are registered, who shall be treated by the Corporation and the Registrar as the absolute owner of those shares of Mandatory Convertible Preferred Stock for the purpose of making payment and settling conversions and for all other purposes.

“Initial Issue Date” shall mean February 16, 2011, the first original issue date of the Mandatory Convertible Preferred Stock.

“Initial Price” shall have the meaning set forth in Section 7(b)(ii).

“Junior Stock” means (i) the Common Stock and (ii) each other class of capital stock or series of Preferred Stock established after the Initial Issue Date, the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Mandatory Convertible Preferred Stock as to dividend rights and rights upon the Corporation’s liquidation, winding-up or dissolution.

“Liquidation Dividend Amount” shall have the meaning set forth in Section 4(a).

“Liquidation Preference” means, as to the Mandatory Convertible Preferred Stock, $100 per share.

“Mandatory Conversion” shall have the meaning set forth in Section 7(a).

“Mandatory Conversion Additional Conversion Amount” shall have the meaning set forth in Section 7(c).

“Mandatory Conversion Date” means March 1, 2014.

“Mandatory Conversion Rate” shall have the meaning set forth in Section 7(b).

“Mandatory Convertible Preferred Stock” shall have the meaning set forth in Part 1 of this Certificate of Designations.

“Maximum Conversion Rate” shall have the meaning set forth in Section 7(b)(iii).

“Minimum Conversion Rate” shall have the meaning set forth in Section 7(b)(i).

“Nonpayment” shall have the meaning set forth in Section 6(b)(i).

“Nonpayment Remedy” shall have the meaning set forth in Section 6(b)(iii).

“Officer” means the Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President, any Senior Vice President, any Vice President, the Treasurer or the Secretary of the Corporation.

“Officer’s Certificate” means a certificate of the Corporation, signed by any duly authorized Officer of the Corporation.

“Parity Stock” means any class of capital stock or series of Preferred Stock established after the Initial Issue Date, the terms of which expressly provide that such class or series shall rank on a parity with the Mandatory Convertible Preferred Stock as to dividend rights and rights upon the Corporation’s liquidation, winding-up or dissolution.

“Pegasus Entities” means, collectively, PP IV Mountain Pass II, LLC, PP IV MP AIV 1, LLC, PP IV MP AIV 2, LLC and PP IV MP AIV 3, LLC.

“Pegasus Group” means, collectively, the Pegasus Entities, any affiliate of a Pegasus Entity to which such Pegasus Entity transfers shares of Common Stock and any group with which any of the foregoing files a report on Schedule 13D from time to time.

“Person” means any individual, partnership, firm, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

“Preferred Stock” shall have the meaning set forth in the recitals.

“Preferred Stock Directors” shall have the meaning set forth in Section 6(b)(i).

“Pricing Committee” shall have the meaning set forth in the recitals.

“Record Date” means, with respect to any Dividend Payment Date, the February 15, May 15, August 15 or November 15 immediately preceding the applicable March 1, June 1, September 1 or December 1 Dividend Payment Date, respectively. These Record Dates shall apply regardless of whether a particular Record Date is a Business Day.

“Record Holder” means, with respect to any Dividend Payment Date, a Holder of record of the Mandatory Convertible Preferred Stock as such Holder appears on the stock register of the Corporation at 5:00 p.m., New York City time, on the related Record Date.

“Registrar” shall initially mean Computershare Trust Company, N.A., the Corporation’s duly appointed registrar for the Mandatory Convertible Preferred Stock and any successor appointed under Section 14.

“Reorganization Event” shall have the meaning set forth in Section 13(e).

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“Resource Entities” means, collectively, Resource Capital Fund IV L.P. and Resource Capital Fund V L.P.

“Resource Group” means, collectively, the Resource Entities, any affiliate of a Resource Entity to which such Resource Entity transfers shares of Common Stock and any group with which any of the foregoing files a report on Schedule 13D from time to time.

“Scheduled Trading Day” means any day that is scheduled to be a Trading Day.

“Senior Stock” means each class of capital stock or series of Preferred Stock established after the Initial Issue Date, the terms of which expressly provide that such class or series shall rank senior to the Mandatory Convertible Preferred Stock as to dividend rights and rights upon the Corporation’s liquidation, winding-up or dissolution.

“Shelf Registration Statement” shall mean a shelf registration statement filed with the Securities and Exchange Commission in connection with the issuance of or resales of shares of Common Stock issued as payment of a dividend, including dividends paid in connection with a conversion.

“Spin-Off” means a dividend or other distribution by the Corporation to all holders of Common Stock consisting of capital stock of, or similar equity interests in, or relating to a subsidiary or other business unit of the Corporation.

“Stock Price” means, for any Fundamental Change, (i) if the holders of Common Stock receive only cash in such Fundamental Change, the amount of cash paid in such Fundamental Change per share of Common Stock, and (ii) if the holders of Common Stock receive any property other than cash in such Fundamental Change, the Average VWAP per share of Common Stock over the five consecutive Trading Day period ending on, and including, the Trading Day preceding the Effective Date.

“Threshold Appreciation Price” shall have the meaning set forth in Section 7(b)(i).

“TNA Group” means, collectively, TNA Moly Group LLC, any affiliate of TNA Moly Group LLC to which TNA Moly Group LLC transfers shares of Common Stock and any group with which either of the foregoing files a report on Schedule 13D from time to time.

“Trading Day” means a day on which shares of Common Stock:

(a)    are not suspended from trading, and on which trading in Common Stock is not limited, on any national or regional securities exchange or association or over-the-counter market during any period or periods aggregating one half-hour or longer; and

(b)    have traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of Common Stock;

provided that if the Common Stock is not traded on any such exchange, association or market, “Trading Day” means any Business Day.

“Transfer Agent” shall initially mean Computershare Trust Company, N.A., the Corporation’s duly appointed transfer agent for the Mandatory Convertible Preferred Stock and any successor appointed under Section 14.

“Trigger Event” shall have the meaning set forth in Section 13(a)(iv).

“Underwriting Agreement” means the Underwriting Agreement relating to the Mandatory Convertible Preferred Stock, dated February 10, 2011, between the Corporation and the underwriters named therein.

“Unit of Exchange Property” shall have the meaning set forth in Section 13(e).

“Voting Preferred Stock” means any class or series of Preferred Stock, other than the Mandatory Convertible Preferred Stock, ranking equally with the Mandatory Convertible Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable.

“VWAP” per share of Common Stock on any Trading Day means the per share volume-weighted average price as displayed on Bloomberg page “MCP <Equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such Trading Day; or, if such price is not available, “VWAP” means the market value per share of Common Stock on such Trading Day as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained by the Corporation for this purpose.

SECTION 3. Dividends. (a) Rate. Subject to the rights of holders of any class of capital stock ranking senior to the Mandatory Convertible Preferred Stock with respect to dividends, Holders shall be entitled to receive, when, as and if declared by the Board of Directors (or an authorized committee thereof) out of funds of the Corporation legally available therefor, cumulative dividends at the rate per annum of 5.50% on the Liquidation Preference per share of Mandatory Convertible Preferred Stock (the “Dividend Rate”) (equivalent to $5.50 per annum per share), payable in cash, by delivery of shares of Common Stock or through any combination of cash and shares of Common Stock, as determined by the Corporation in its sole discretion (subject to the limitations described below). Declared dividends on the Mandatory Convertible Preferred Stock shall be payable quarterly on each Dividend Payment Date at such annual rate, and dividends shall accumulate from the most recent date as to which dividends shall have been paid or, if no dividends have been paid, from the Initial Issue Date, whether or not in any Dividend Period or Dividend Periods there have been funds legally available for the payment of such dividends. Declared dividends shall be payable on the relevant Dividend Payment Date to Record Holders on the immediately preceding Record Date, whether or not the shares held by such Record Holders on such Record Date are converted after such Record Date and on or prior to the immediately succeeding Dividend Payment Date. If a Dividend Payment Date is not a

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Business Day, payment shall be made on the next succeeding Business Day, without any interest or other payment in lieu of interest accruing with respect to this delay.

The amount of dividends payable on each share of Mandatory Convertible Preferred Stock for each full Dividend Period (after the initial Dividend Period) shall be computed by dividing the Dividend Rate by four. Dividends payable on the Mandatory Convertible Preferred Stock for the initial Dividend Period and any partial Dividend Period shall be computed based upon the actual number of days elapsed during such period over a 360-day year (consisting of twelve 30-day months). Accumulated dividends shall not bear interest if they are paid subsequent to the applicable Dividend Payment Date.

No dividend shall be declared or paid upon, or any sum or number of shares of Common Stock set apart for the payment of dividends upon, any outstanding share of Mandatory Convertible Preferred Stock with respect to any Dividend Period unless all dividends for all preceding Dividend Periods have been declared and paid upon, or a sufficient sum or number of shares of Common Stock have been set apart for the payment of such dividends upon, all outstanding shares of Mandatory Convertible Preferred Stock.

Holders shall not be entitled to any dividends on the Mandatory Convertible Preferred Stock, whether payable in cash, property or shares of Common Stock, in excess of full cumulative dividends.

Except as described in this Section 3(a), dividends on any share of Mandatory Convertible Preferred Stock converted to Common Stock shall cease to accumulate on the Mandatory Conversion Date, the Fundamental Change Conversion Date or the Early Conversion Date (each, a “Conversion Date”), as applicable.

(b) Priority of Dividends. So long as any share of the Mandatory Convertible Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on Common Stock or any other shares of Junior Stock, and no Common Stock or other Junior Stock or Parity Stock shall be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Corporation or any of its subsidiaries unless all accumulated and unpaid dividends for all preceding Dividend Periods have been declared and paid upon, or a sufficient sum or number of shares of Common Stock have been set apart for the payment of such dividends upon, all outstanding shares of Mandatory Convertible Preferred Stock. The foregoing limitation shall not apply to (i) a dividend payable on any Common Stock or other Junior Stock in shares of any Common Stock or other Junior Stock, or to the acquisition of shares of any Common Stock or other Junior Stock in exchange for, or through application of the proceeds of the sale of, shares of any Common Stock or other Junior Stock; (ii) purchases of fractional interests in shares of any Common Stock or other Junior Stock pursuant to the conversion or exchange provisions of such shares of other Junior Stock or any securities exchangeable for or convertible into such shares of Common Stock or other Junior Stock; (iii) redemptions, purchases or other acquisitions of shares of Common Stock or other Junior Stock in connection with the administration of any employee benefit plan in the ordinary course of business, including, without limitation, the forfeiture of unvested shares of restricted stock or share withholdings upon exercise, delivery or vesting of equity awards granted to officers, directors

and employees; (iv) any dividends or distributions of rights or Common Stock or other Junior Stock in connection with a stockholders’ rights plan or any redemption or repurchase of rights pursuant to any stockholders’ rights plan; (v) the acquisition by the Corporation or any of its subsidiaries of record ownership in Common Stock or other Junior Stock or Parity Stock for the beneficial ownership of any other persons (other than the Corporation or any of its subsidiaries), including as trustees or custodians; and (vi) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation amount) or Junior Stock.

When dividends on Shares of Mandatory Convertible Preferred Stock have not been paid in full on any Dividend Payment Date or declared and a sum or number of shares of Common Stock sufficient for payment thereof set aside for the benefit of the Holders thereof on the applicable Record Date, no dividends may be declared or paid on any Parity Stock unless dividends are declared on the Mandatory Convertible Preferred Stock such that the respective amounts of such dividends declared on the Mandatory Convertible Preferred Stock and each such other class or series of Parity Stock shall bear the same ratio to each other as all accumulated and unpaid dividends per share on the shares of the Mandatory Convertible Preferred Stock and such class or series of Parity Stock (subject to their having been declared by the Board of Directors (or an authorized committee thereof) out of legally available funds) bear to each other; provided that any unpaid dividends will continue to accumulate.

Subject to the foregoing, and not otherwise, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors (or an authorized committee thereof) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and Holders shall not be entitled to participate in any such dividends.

(c) Method of Payment of Dividends. (i) Subject to the limitations described below, any declared dividend (or any portion of any declared dividend) on the Mandatory Convertible Preferred Stock, whether or not for a current Dividend Period or any prior Dividend Period, may be paid by the Corporation, as determined in the Corporation’s sole discretion:

(A)    in cash;

(B)    by delivery of shares of Common Stock; or

(C)    through any combination of cash and shares of Common Stock.

(ii)    Each payment of a declared dividend on the Mandatory Convertible Preferred Stock shall be made in cash, except to the extent the Corporation timely elects to make all or any portion of such payment in shares of Common Stock. The Corporation shall give notice to Holders of any such election and the portions of such payment that will be made in cash and in Common Stock no later than 10 Scheduled Trading Days prior to the Dividend Payment Date for such dividend.

(iii)    Any shares of Common Stock issued in payment or partial payment of a declared dividend shall be valued for such purpose at the Average VWAP per share of

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Common Stock over the five consecutive Trading Day period ending on the second Trading Day immediately preceding the applicable Dividend Payment Date (the “Five-DayAverage Price”), multiplied by 97%.

(d) No fractional shares of Common Stock shall be delivered by the Corporation to Holders in payment or partial payment of a dividend. A cash adjustment shall be paid by the Corporation to each Holder that would otherwise be entitled to receive a fraction of a share of Common Stock based on the Average VWAP per share of the Common Stock over the five consecutive Trading Day period ending on the second Trading Day immediately preceding the relevant Dividend Payment Date.

(e) Notwithstanding the foregoing, in no event shall the number of shares of Common Stock to be delivered in connection with any declared dividend exceed a number equal to the total dividend payment divided by $17.50, subject to adjustment in a manner inversely proportional to any anti-dilution adjustment to each Fixed Conversion Rate as set forth in Section 13 (such dollar amount, as adjusted from time to time, the “Floor Price”). To the extent that the amount of any declared dividend exceeds the product of the number of shares of Common Stock delivered in connection with such declared dividend and 97% of the Five-Day Average Price, the Corporation shall, if it is legally able to do so, notwithstanding any notice by the Corporation to the contrary, pay such excess amount in cash.

(f) To the extent that the Corporation, in its reasonable judgment, determines that a Shelf Registration Statement is required in connection with the issuance of, or for resales of, Common Stock issued as payment of a dividend, including dividends paid in connection with a conversion, the Corporation shall, to the extent such a Shelf Registration Statement is not currently filed and effective, use its reasonable best efforts to file and maintain the effectiveness of such a Shelf Registration Statement until the earlier of such time as all such shares of Common Stock have been resold thereunder and such time as all such shares are freely tradable without registration. To the extent applicable, the Corporation shall also use its reasonable best efforts to have such shares of Common Stock qualified or registered under applicable state securities laws, if required, and approved for listing on the New York Stock Exchange (or if the Common Stock is not then listed on the New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed).

SECTION 4. Liquidation, Dissolution or Winding Up. (a) In the event of any liquidation, winding-up or dissolution of the Corporation, whether voluntary or involuntary, each Holder shall be entitled to receive the Liquidation Preference per share of Mandatory Convertible Preferred Stock, plus an amount (the “Liquidation Dividend Amount”) equal to accumulated and unpaid dividends on such shares to (but excluding) the date fixed for liquidation, winding-up or dissolution to be paid out of the assets of the Corporation available for distribution to its stockholders, after satisfaction of liabilities owed to the Corporation’s creditors and holders of any Senior Stock and before any payment or distribution is made to holders of any Junior Stock, including, without limitation, Common Stock.

(b) Neither the sale (for cash, shares of stock, securities or other consideration) of all or substantially all of the assets or business of the Corporation (other than in connection with the

liquidation, winding-up or dissolution of the Corporation), nor the merger or consolidation of the Corporation into or with any other Person, shall be deemed to be a liquidation, winding-up or dissolution, voluntary or involuntary, of the Corporation for the purposes of this Section 4.

(c) If, upon the voluntary or involuntary liquidation, winding-up or dissolution of the Corporation, the amounts payable with respect to (1) the Liquidation Preference plus the Liquidation Dividend Amount of the Mandatory Convertible Preferred Stock and (2) the liquidation preference of, and the amount of accumulated and unpaid dividends to, but excluding, the date fixed for liquidation, dissolution or winding up, on, all Parity Stock are not paid in full, the Holders and all holders of any Parity Stock shall share equally and ratably in any distribution of the Corporation’s assets in proportion to the respective liquidation preferences and amounts equal to the accumulated and unpaid dividends to which they are entitled.

(d) After the payment to any Holder of the full amount of the Liquidation Preference and the Liquidation Dividend Amount for each of such Holder’s shares of Mandatory Convertible Preferred Stock, such Holder as such shall have no right or claim to any of the remaining assets of the Corporation.

SECTION 5. No Redemption; No Sinking Fund. The Mandatory Convertible Preferred Stock shall not be subject to any redemption, sinking fund or other similar provisions.

SECTION 6. Voting Rights.

(a) General. Holders shall not have any voting rights except as set forth in this Section 6 or as otherwise from time to time required by Delaware law.

(b) Right to Elect Two Directors Upon Nonpayment. (i) Whenever dividends on any shares of Mandatory Convertible Preferred Stock have not been declared and paid for the equivalent of six or more Dividend Periods, whether or not for consecutive Dividend Periods (a “Nonpayment”), the Holders, voting together as a single class with holders of any and all other series of Voting Preferred Stock then outstanding, shall be entitled at the Corporation’s next special or annual meeting of stockholders to vote for the election of a total of two additional members of the Board of Directors (the “Preferred Stock Directors”); provided thatthe election of any such directors will not cause the Corporation to violate the corporate governance requirements of the New York Stock Exchange (or any other exchange or automated quotation system on which the Corporation’s securities may be listed or quoted) that requires listed or quoted companies to have a majority of independent directors; and provided further that the Board of Directors shall, at no time, include more than two Preferred Stock Directors. In the event of a Nonpayment, the number of directors then constituting the Board of Directors shall be increased by two, and the new directors shall be elected at a special meeting of stockholders called at the request of the holders of record of at least 20% of the shares of Mandatory Convertible Preferred Stock or of any other series of Voting Preferred Stock (provided that such request is received at least 90 calendar days before the date fixed for the next annual or special meeting of the stockholders, failing which such election shall be held at such next annual or special meeting of stockholders), and at each subsequent annual meeting, so long as the Holders continue to have such voting rights. Whether a plurality, majority or other portion of the

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Mandatory Convertible Preferred Stock and any other Voting Preferred Stock have been voted in favor of any matter shall be determined by reference to the respective liquidation preference amounts of the Mandatory Convertible Preferred Stock and such other Voting Preferred Stock voted.

(ii)    Any request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment shall be made by written notice, signed by the requisite holders of Mandatory Convertible Preferred Stock or Voting Preferred Stock then outstanding, and delivered to the Corporation in such manner as provided for in Section 16 below, or as may otherwise be required by law.

(iii)    If and when all accumulated and unpaid dividends on the Mandatory Convertible Preferred Stock have been paid in full, or declared and a sum sufficient for such payment shall have been set aside (a “Nonpayment Remedy”), the Holders shall immediately and, without any further action by the Corporation, be divested of the foregoing voting rights, subject to the revesting of such rights in the event of each subsequent Nonpayment. If such voting rights for the Holders and all other holders of Voting Preferred Stock shall have terminated, the term of office of each Preferred Stock Director so elected shall terminate at such time and the number of directors on the Board of Directors shall automatically decrease by two.

(iv)    Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Mandatory Convertible Preferred Stock and Voting Preferred Stock (voting together as a single class), when they have the voting rights described above. In the event that a Nonpayment shall have occurred and there has not been a Nonpayment Remedy, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment) may be filled by the written consent of the Preferred Stock Director remaining in office or, if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of the Mandatory Convertible Preferred Stock and any other shares of Voting Preferred Stock then outstanding (voting together as a single class) when they have the voting rights described above; provided thatthe filling of each vacancy will not cause the Corporation to violate the corporate governance requirements of the New York Stock Exchange (or any other exchange or automated quotation system on which the Corporation’s securities may be listed or quoted) that requires listed or quoted companies to have a majority of independent directors. Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Directors after a Nonpayment (provided that such request is received at least 90 calendar days before the date fixed for the next annual or special meeting of the stockholders, failing which election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office

shall not have previously terminated and such Preferred Stock Director shall not have been removed from such office, in each case as above provided.

(c) Other Voting Rights. So long as any shares of Mandatory Convertible Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Amended and Restated Certificate of Incorporation, the affirmative vote or consent of the holders of at least two-thirds of the shares of Mandatory Convertible Preferred Stock and all other series of Voting Preferred Stock (subject to the last paragraph of this Section 6(c)) at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:

(i)    Authorization of Senior Stock. Any amendment or alteration of the Amended and Restated Certificate of Incorporation or this Certificate of Designations so as to authorize or create, or increase the authorized amount of, any specific class or series of stock of the Corporation ranking senior to the Mandatory Convertible Preferred Stock with respect to either or both the payment of dividends or the distribution of the Corporation’s assets on any liquidation, dissolution or winding up of the Corporation;

(ii)    Amendment of Mandatory Convertible Preferred Stock. Any amendment, alteration or repeal of any provision of the Amended and Restated Certificate of Incorporation or this Certificate of Designations so as to adversely affect the special rights, preferences, privileges or voting powers of the Mandatory Convertible Preferred Stock; or

(iii)    Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Mandatory Convertible Preferred Stock, or of a merger or consolidation of the Corporation with or into another corporation or other entity, unless in each case (x) the shares of Mandatory Convertible Preferred Stock remain outstanding and are not amended in any respect or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares of Mandatory Convertible Preferred Stock remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Mandatory Convertible Preferred Stock immediately prior to such consummation, taken as a whole;

provided, however, that for all purposes of this Section 6(c), (1) any increase in the amount of the Corporation’s authorized but unissued shares of Preferred Stock, (2) any increase in the amount of the Corporation’s authorized or issued shares of Mandatory Convertible Preferred Stock and (3) the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with or junior to the Mandatory Convertible Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative

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or non-cumulative) and the distribution of assets upon the liquidation, dissolution or winding up of the Corporation, shall be deemed not to adversely affect the special rights, preferences, privileges or voting powers, and the limitations and restrictions thereof, of the Mandatory Convertible Preferred Stock, and shall not require the affirmative vote or consent of Holders.

If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 6(c) would adversely affect one or more but not all series of Voting Preferred Stock (which term shall include the Mandatory Convertible Preferred Stock for the purpose of this paragraph), then only the series of Voting Preferred Stock adversely affected and entitled to vote shall vote as a class in lieu of all other series of Voting Preferred Stock.

(d) Change for Clarification. Without the consent of the Holders, so long as such action does not adversely affect the special rights, preferences, privileges or voting powers, and limitations and restrictions thereof, of the Mandatory Convertible Preferred Stock, the Corporation may amend, alter, supplement or repeal any terms of the Mandatory Convertible Preferred Stock:

(i)    to cure any ambiguity or mistake, or to correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent with any other provision contained in this Certificate of Designations; or

(ii)    to make any provision with respect to matters or questions relating to the Mandatory Convertible Preferred Stock that is not inconsistent with the provisions of this Certificate of Designations.

(e) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the Holders (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other procedural aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Amended and Restated Certificate of Incorporation, the Bylaws, applicable law and the rules of any national securities exchange or other trading facility on which the Mandatory Convertible Preferred Stock is listed or traded at the time.

SECTION 7. Mandatory Conversion on the Mandatory Conversion Date. (a) Each share of Mandatory Convertible Preferred Stock shall automatically convert (unless previously converted at the option of the Holder in accordance with Section 8 or pursuant to an exercise of a Fundamental Change Conversion right pursuant to Section 9) on the Mandatory Conversion Date (“Mandatory Conversion”), into a number of shares of Common Stock equal to the Mandatory Conversion Rate.

(b) The “Mandatory Conversion Rate” shall, subject to adjustment in accordance with Section 7(c), be as follows:

(i)    if the Applicable Market Value is greater than $60.00 (the “Threshold Appreciation Price”), then the Mandatory Conversion Rate shall be equal to 1.6667 shares of Common Stock per share of Mandatory Convertible Preferred Stock (the “Minimum Conversion Rate”);

(ii)    if the Applicable Market Value is less than or equal to the Threshold Appreciation Price but equal to or greater than $50.00 (the “Initial Price”), then the Mandatory Conversion Rate per share of Mandatory Convertible Preferred Stock shall be equal to the Liquidation Preference divided by the Applicable Market Value; or

(iii)    if the Applicable Market Value is less than the Initial Price, then the Mandatory Conversion Rate shall be equal to 2.0000 shares of Common Stock per share of Mandatory Convertible Preferred Stock (the “Maximum Conversion Rate”);

provided that the Fixed Conversion Rates, the Threshold Appreciation Price, the Initial Price and the Applicable Market Value are each subject to adjustment in accordance with the provisions of Section 13.

(c) If on or prior to the Record Date immediately preceding the Mandatory Conversion Date the Corporation has not declared all or any portion of the accumulated and unpaid dividends on the Mandatory Convertible Preferred Stock, the Mandatory Conversion Rate shall be adjusted so that Holders receive an additional number of shares of Common Stock equal to the amount of accumulated and unpaid dividends that have not been declared (“Mandatory Conversion Additional Conversion Amount”) divided by the greater of the Floor Price and 97% of the Five-Day Average Price. To the extent that the Mandatory Conversion Additional Conversion Amount exceeds the product of such number of additional shares and 97% of the Five-Day Average Price, the Corporation shall, if the Corporation is legally able to do so, declare and pay such excess amount in cash pro rata to the Holders.

SECTION 8. Early Conversion at the Option of the Holder. (a) Other than during a Fundamental Change Conversion Period, the Holders shall have the right to convert their shares of Mandatory Convertible Preferred Stock, in whole or in part (but in no event less than one share of Mandatory Convertible Preferred Stock), at any time prior to the Mandatory Conversion Date (“Early Conversion”), into shares of Common Stock at the Minimum Conversion Rate, subject to adjustment as described in Section 13 and to satisfaction of the conversion procedures set forth in Section 10.

(b) If as of any Early Conversion Date the Corporation has not declared all or any portion of the accumulated and unpaid dividends for all full Dividend Periods ending on a Dividend Payment Date prior to such Early Conversion Date, the Minimum Conversion Rate shall be adjusted, with respect to the relevant Early Conversion, so that the converting Holder receives an additional number of shares of Common Stock equal to the amount of accumulated and unpaid dividends that have not been declared for such full Dividend Periods (the “Early Conversion Additional Conversion Amount”), divided by the greater of the Floor Price and the Average VWAP per share of the Common Stock over the 20 consecutive Trading Day period ending on, and including, the third Trading Day immediately preceding the Early Conversion

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Date (such average being referred to as the “Early Conversion Average Price”). For the avoidance of doubt, to the extent that the Early Conversion Additional Conversion Amount exceeds the product of the number of additional shares and the Early Conversion Average Price, the Company will not have any obligation to pay the shortfall in cash. Except as described in the first sentence of this Section 8(b), upon any Early Conversion of any shares of the Mandatory Convertible Preferred Stock, the Corporation shall make no payment or allowance for undeclared dividends on such shares of the Mandatory Convertible Preferred Stock, unless such Early Conversion occurs after the Record Date for a declared dividend and on or prior to the immediately succeeding Dividend Payment Date, in which case the Corporation shall pay such dividend on such Dividend Payment Date to the Record Holder of the converted shares as of such Record Date, in accordance with Section 3.

SECTION 9. Fundamental Change Conversion. (a) If a Fundamental Change occurs on or prior to the Mandatory Conversion Date, the Holders shall have the right to (i) convert their shares of Mandatory Convertible Preferred Stock, in whole or in part (but in no event less than one share of Mandatory Convertible Preferred Stock) (any such conversion pursuant to this Section 9(a) being a “Fundamental Change Conversion”) at any time during the period (the “Fundamental Change Conversion Period”) that begins on the effective date of such Fundamental Change (the “Effective Date”) and ends at 5:00 p.m., New York City time, on the date that is 20 calendar days after the Effective Date (or, if earlier, the Mandatory Conversion Date) into a number of shares of Common Stock equal to the Fundamental Change Conversion Rate per share of Mandatory Convertible Preferred Stock, (ii) with respect to such converted shares, receive an amount equal to the present value, calculated using a discount rate of 5.50% per annum, of all dividend payments on such shares (excluding any Accumulated Dividend Amount) for all the remaining full Dividend Periods and for the partial Dividend Period from and including such Effective Date to but excluding the next Dividend Payment Date (the “Fundamental Change Dividend Make-whole Amount”); and (iii) with respect to such converted shares, to the extent that, as of such Effective Date, there is any Accumulated Dividend Amount, receive payment of the Accumulated Dividend Amount, in the case of clauses (ii) and (iii), subject to the Corporation’s right to deliver shares of Common Stock in lieu of all or part of such amounts as set forth in clause (d) below; provided thatif such Effective Date or the relevant Fundamental Change Conversion Date falls after the Record Date for a declared dividend and prior to the next Dividend Payment Date, the Corporation shall pay such dividend on such Dividend Payment Date to the Record Holders as of such Record Date, in accordance with Section 3, and such dividend shall not be included in the Accumulated Dividend Amount, and the Fundamental Change Dividend Make-whole Amount shall not include the present value of the payment of such dividend.

(b) On or before the twentieth calendar day prior to the anticipated Effective Date or, if such prior notice is not practicable, no later than the actual Effective Date, a written notice (the “Fundamental Change Notice”) shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders. Such notice shall state:

(i)    the event causing the Fundamental Change;

(ii)    the anticipated Effective Date or actual Effective Date, as the case may be;

(iii)    that Holders shall have the right to effect a Fundamental Change Conversion in connection with such Fundamental Change during the Fundamental Change Conversion Period;

(iv)    the Fundamental Change Conversion Period; and

(v)    the instructions a Holder must follow to effect a Fundamental Change Conversion in connection with such Fundamental Change.

If the Corporation notifies Holders of a Fundamental Change later than the twentieth calendar day prior to the Effective Date of such Fundamental Change, the Fundamental Change Conversion Period shall be extended by a number of days equal to the number of days from, and including, the twentieth calendar day prior to such Effective Date to, but excluding, the date of such notice; provided that the Fundamental Change Conversion Period shall not be extended beyond the Mandatory Conversion Date.

(c) Not later than the second Business Day following the Effective Date of a Fundamental Change, the Corporation shall notify Holders of:

(i)    the Fundamental Change Conversion Rate;

(ii)    the Fundamental Change Dividend Make-whole Amount and whether the Corporation will pay such amount, or any portion thereof, in shares of Common Stock and, if applicable, the portion of such amount that will be paid in Common Stock; and

(iii)    the Accumulated Dividend Amount and whether the Corporation will pay such amount, or any portion thereof, in shares of Common Stock and, if applicable, the portion of such amount that will be paid in Common Stock.

(d) (i) For any shares of Mandatory Convertible Preferred Stock that are converted during the Fundamental Change Conversion Period, subject to the limitations described below, the Corporation may pay the Fundamental Change Dividend Make-whole Amount and the Accumulated Dividend Amount, determined in the Corporation’s sole discretion:

(A)    in cash;

(B)    by delivery of shares of Common Stock; or

(C)    through any combination of cash and shares of Common Stock.

(ii)    The Corporation shall pay the Fundamental Change Dividend Make-whole Amount and the Accumulated Dividend Amount in cash, except to the extent the Corporation elects on or prior to the second Business Day following the Effective Date of a Fundamental Change to make all or any portion of such payments in shares of Common Stock. If the Corporation elects to make any such payment, or any portion thereof, in shares of Common Stock, such shares shall be valued for such purpose at 97% of the applicable Stock Price.

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(iii)    No fractional shares of Common Stock shall be delivered by the Corporation to converting Holders in respect of the Fundamental Change Dividend Make-whole Amount or the Accumulated Dividend Amount. A cash adjustment shall be paid by the Corporation to each Holder that would otherwise be entitled to receive a fraction of a share of Common Stock based on the Average VWAP per share of Common Stock over the five consecutive Trading Day period ending on, and including, the second Trading Day immediately preceding the relevant Conversion Date.

(iv)    Notwithstanding the foregoing, in no event shall the number of shares of Common Stock delivered in connection with the Fundamental Change Dividend Make-whole Amount and the Accumulated Dividend Amount, in the aggregate, exceed a number equal to the sum of such amounts (the “Additional Fundamental Change Amount”), divided by the greater of the Floor Price and 97% of the applicable Stock Price. To the extent that the Additional Fundamental Change Amount exceeds the product of the number of shares of Common Stock delivered in respect of such Additional Fundamental Change Amount and 97% of the applicable Stock Price, the Corporation shall, if the Corporation is legally able to do so, notwithstanding any notice by the Corporation to the contrary, pay such excess amount in cash.

SECTION 10. Conversion Procedures. (a) Pursuant to Section 7, on the Mandatory Conversion Date, any outstanding shares of Mandatory Convertible Preferred Stock shall automatically convert into shares of Common Stock. The person or persons entitled to receive the shares of Common Stock issuable upon mandatory conversion of the Mandatory Convertible Preferred Stock shall be treated as the record holder(s) of such shares of Common Stock as of 5:00 p.m., New York City time, on the Mandatory Conversion Date. Except as provided under Section 13(c)(iii) and Section 13(c)(v), prior to 5:00 p.m., New York City time, on the Mandatory Conversion Date, the shares of Common Stock issuable upon conversion of the Mandatory Convertible Preferred Stock shall not be deemed to be outstanding for any purpose and Holders shall have no rights with respect to such shares of Common Stock, including voting rights, rights to respond to tender offers and rights to receive any dividends or other distributions on the Common Stock, by virtue of holding the Mandatory Convertible Preferred Stock.

(b) To effect an Early Conversion pursuant to Section 8, a Holder who

(i)    holds a beneficial interest in a Global Preferred Share must deliver to DTC the appropriate instruction form for conversion pursuant to DTC’s conversion program and, if required, pay all transfer or similar taxes or duties, if any; or

(ii)    holds shares of Mandatory Convertible Preferred Stock in definitive, certificated form must:

(A)    complete and manually sign the conversion notice on the back of the Mandatory Convertible Preferred Stock certificate or a facsimile of such conversion notice;

(B)    deliver the completed conversion notice and the certificated shares of Mandatory Convertible Preferred Stock to be converted to the Conversion and Dividend Disbursing Agent;

(C)    if required, furnish appropriate endorsements and transfer documents; and

(D)    if required, pay all transfer or similar taxes or duties, if any.

The Early Conversion shall be effective on the date on which a Holder has satisfied the foregoing requirements, to the extent applicable (“Early Conversion Date”). A Holder shall not be required to pay any transfer or similar taxes or duties relating to the issuance or delivery of Common Stock if such Holder exercises its conversion rights, but such Holder shall be required to pay any transfer or similar tax or duty that may be payable relating to any transfer involved in the issuance or delivery of Common Stock in a name other than the name of such Holder. A certificate representing the shares of Common Stock issuable upon conversion shall be issued and delivered to the converting Holder or, if the Mandatory Convertible Preferred Stock being converted is in book-entry form, the shares of Common Stock issuable upon conversion shall be delivered to the converting Holder through book-entry transfer through the facilities of the Depositary, in each case together with delivery by the Corporation to the converting Holder of any cash to which the converting Holder is entitled, on the later of the third Business Day immediately succeeding the Early Conversion Date and the Business Day after the Holder has paid in full all applicable taxes and duties, if any.

The person or persons entitled to receive the shares of Common Stock issuable upon Early Conversion shall be treated for all purposes as the record holder(s) of such shares of Common Stock as of 5:00 p.m., New York City time, on the applicable Early Conversion Date. Except as set forth in Section 13(c)(iii) and Section 13(c)(v), prior to 5:00 p.m., New York City time on such applicable Early Conversion Date, the shares of Common Stock issuable upon conversion of any shares of Mandatory Convertible Preferred Stock shall not be deemed to be outstanding for any purpose, and Holders shall have no rights with respect to such shares of Common Stock (including voting rights, rights to respond to tender offers for the Common Stock and rights to receive any dividends or other distributions on the Common Stock) by virtue of holding shares of Mandatory Convertible Preferred Stock.

In the event that an Early Conversion is effected with respect to shares of Mandatory Convertible Preferred Stock representing less than all the shares of Mandatory Convertible Preferred Stock held by a Holder, upon such Early Conversion the Corporation shall execute and instruct the Registrar and Transfer Agent to countersign and deliver to the Holder thereof, at the expense of the Corporation, a certificate evidencing the shares of Mandatory Convertible Preferred Stock as to which Early Conversion was not effected, or, if the Mandatory Convertible Preferred Stock is held in book-entry form, the Corporation shall cause the Transfer Agent and Registrar to reduce the number of shares of Mandatory Convertible Preferred Stock represented by the global certificate by making a notation on Schedule I attached to the global certificate.

(c) To effect a Fundamental Change Conversion pursuant to Section 9, a Holder who

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(i)    holds a beneficial interest in a Global Preferred Share must deliver to DTC the appropriate instruction form for conversion pursuant to DTC’s conversion program and, if required, pay all transfer or similar taxes or duties, if any; or

(ii)    holds shares of Mandatory Convertible Preferred Stock in definitive, certificated form must:

(A)    complete and manually sign the conversion notice on the back of the Mandatory Convertible Preferred Stock certificate or a facsimile of such conversion notice;

(B)    deliver the completed conversion notice and the certificated shares of Mandatory Convertible Preferred Stock to be converted to the Conversion and Dividend Disbursing Agent;

(C)    if required, furnish appropriate endorsements and transfer documents; and

(D)    if required, pay all transfer or similar taxes or duties, if any.

The Fundamental Change Conversion shall be effective on the date on which a Holder has satisfied the foregoing requirements, to the extent applicable (the “Fundamental Change Conversion Date”). A Holder shall not be required to pay any transfer or similar taxes or duties relating to the issuance or delivery of Common Stock if such Holder exercises its conversion rights, but such Holder shall be required to pay any transfer or similar tax or duty that may be payable relating to any transfer involved in the issuance or delivery of Common Stock in a name other than the name of such Holder. A certificate representing the shares of Common Stock issuable upon conversion shall be issued and delivered to the converting Holder or, if the Mandatory Convertible Preferred Stock being converted is in book-entry form, the shares of Common Stock issuable upon conversion shall be delivered to the converting Holder through book-entry transfer through the facilities of the Depositary, in each case together with delivery by the Corporation to the converting Holder of any cash to which the converting Holder is entitled, on the later of the third Business Day immediately succeeding the Fundamental Change Conversion Date and the Business Day after the Holder has paid in full all applicable taxes and duties, if any.

The person or persons entitled to receive the shares of Common Stock issuable upon such Fundamental Change Conversion shall be treated for all purposes as the record holder(s) of such shares of Common Stock as of 5:00 p.m., New York City time, on the applicable Fundamental Change Conversion Date. Except as set forth in Section 13(c)(iii) and Section 13(c)(v), prior to 5:00 p.m., New York City time on such applicable Fundamental Change Conversion Date, the shares of Common Stock issuable upon conversion of any shares of Mandatory Convertible Preferred Stock shall not be deemed to be outstanding for any purpose, and Holders shall have no rights with respect to the Common Stock (including voting rights, rights to respond to tender offers for the Common Stock and rights to receive any dividends or other distributions on the Common Stock) by virtue of holding shares of Mandatory Convertible Preferred Stock.

In the event that a Fundamental Change Conversion is effected with respect to shares of Mandatory Convertible Preferred Stock representing less than all the shares of Mandatory Convertible Preferred Stock held by a Holder, upon such Fundamental Change Conversion the Corporation shall execute and instruct the Registrar and Transfer Agent to countersign and deliver to the Holder thereof, at the expense of the Corporation, a certificate evidencing the shares of Mandatory Convertible Preferred Stock as to which Fundamental Change Conversion was not effected, or, if the Mandatory Convertible Preferred Stock is held in book-entry form, the Corporation shall cause the Transfer Agent and Registrar to reduce the number of shares of Mandatory Convertible Preferred Stock represented by the global certificate by making a notation on Schedule I attached to the global certificate.

(d) In the event that a Holder shall not by written notice designate the name in which shares of Common Stock to be issued upon conversion of such Mandatory Convertible Preferred Stock should be registered or, if applicable, the address to which the certificate or certificates representing such shares of Common Stock should be sent, the Corporation shall be entitled to register such shares, and make such payment, in the name of the Holder as shown on the records of the Corporation and, if applicable, to send the certificate or certificates representing such shares of Common Stock to the address of such Holder shown on the records of the Corporation.

(e) Shares of Mandatory Convertible Preferred Stock shall cease to be outstanding on the applicable Conversion Date, subject to the right of Holders of such shares to receive shares of Common Stock issuable upon conversion of such shares of Mandatory Convertible Preferred Stock and other amounts and shares of Common Stock, if any, to which they are entitled pursuant to Sections 7, 8 or 9, as applicable and, if the applicable Conversion Date occurs after the Record Date for a declared dividend and prior to the immediately succeeding Dividend Payment Date, subject to the right of the Record Holders of such shares on such Record Date to receive payment of such declared dividend on such Dividend Payment Date pursuant to Section 3.

SECTION 11. Reservation of Common Stock. (a) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock or shares of Common Stock held in the treasury of the Corporation, solely for issuance upon the conversion of shares of Mandatory Convertible Preferred Stock as herein provided, free from any preemptive or other similar rights, a number of shares of Common Stock equal to the product of the Maximum Conversion Rate then in effect and the number of shares of Mandatory Convertible Preferred Stock then outstanding. For purposes of this Section 11(a), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Mandatory Convertible Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single Holder.

(b) Notwithstanding the foregoing, the Corporation shall be entitled to deliver upon conversion of shares of Mandatory Convertible Preferred Stock, as herein provided, shares of Common Stock reacquired and held in the treasury of the Corporation (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any such treasury shares are free and clear of all liens, charges, security interests or encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).

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(c) All shares of Common Stock delivered upon conversion of the Mandatory Convertible Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens, claims, security interests and other encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).

(d) Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Mandatory Convertible Preferred Stock, the Corporation shall use reasonable best efforts to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

(e) The Corporation hereby covenants and agrees that, if at any time the Common Stock shall be listed on the New York Stock Exchange or any other national securities exchange or automated quotation system, the Corporation shall, if permitted by the rules of such exchange or automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all Common Stock issuable upon conversion of, or issuable in respect of the payment of dividends, the Accumulated Dividend Amount or the Fundamental Change Dividend Make-whole Amount on, the Mandatory Convertible Preferred Stock; provided,however, that if the rules of such exchange or automated quotation system permit the Corporation to defer the listing of such Common Stock until the first conversion of Mandatory Convertible Preferred Stock into Common Stock in accordance with the provisions hereof, the Corporation covenants to list such Common Stock issuable upon the first conversion of the Mandatory Convertible Preferred Stock in accordance with the requirements of such exchange or automated quotation system at such time.

SECTION 12. Fractional Shares. (a) No fractional shares of Common Stock shall be issued as a result of any conversion of shares of Mandatory Convertible Preferred Stock.

(b) In lieu of any fractional share of Common Stock otherwise issuable in respect of any mandatory conversion pursuant to Section 7 or a conversion at the option of the Holder pursuant to Section 8 or Section 9, the Corporation shall pay an amount in cash (computed to the nearest cent) equal to the product of (i) that same fraction and (ii) the Average VWAP per share of the Common Stock over the five consecutive Trading Day period ending on, and including, the second Trading Day immediately preceding the Mandatory Conversion Date, Fundamental Change Conversion Date or Early Conversion Date, as applicable.

(c) If more than one share of the Mandatory Convertible Preferred Stock is surrendered for conversion at one time by or for the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the Mandatory Convertible Preferred Stock so surrendered.

SECTION 13. Anti-Dilution Adjustments to the Fixed Conversion Rates. (a) Each Fixed Conversion Rate shall be subject to the following adjustments:

(i)    Stock Dividends and Distributions. If the Corporation issues Common Stock to all or substantially all holders of Common Stock as a dividend or other

distribution, each Fixed Conversion Rate in effect at 5:00 p.m., New York City time, on the date fixed for determination of the holders of Common Stock entitled to receive such dividend or other distribution shall be divided by a fraction:

(A)    the numerator of which is the number of shares of Common Stock outstanding at 5:00 p.m., New York City time, on the date fixed for such determination, and

(B)    the denominator of which is the sum of the number of shares of Common Stock outstanding at 5:00 p.m., New York City time, on the date fixed for such determination and the total number of shares of Common Stock constituting such dividend or other distribution.

Any adjustment made pursuant to this clause (i) shall become effective immediately after 5:00 p.m., New York City time, on the date fixed for such determination. If any dividend or distribution described in this clause (i) is declared but not so paid or made, each Fixed Conversion Rate shall be readjusted, effective as of the date the Board of Directors (or an authorized committee thereof) publicly announces its decision not to make such dividend or distribution, to such Fixed Conversion Rate that would be in effect if such dividend or distribution had not been declared. For the purposes of this clause (i), the number of shares of Common Stock outstanding at 5:00 p.m., New York City time, on the date fixed for such determination shall not include shares held in treasury by the Corporation but shall include any shares issuable in respect of any scrip certificates issued in lieu of fractions of shares of Common Stock. The Corporation shall not pay any dividend or make any distribution on shares of Common Stock held in treasury by the Corporation.

(ii)    Issuance of Stock Purchase Rights. If the Corporation issues to all or substantially all holders of Common Stock rights or warrants (other than rights or warrants issued pursuant to a dividend reinvestment plan or share purchase plan or other similar plans), entitling such holders, for a period of up to 45 calendar days from the date of issuance of such rights or warrants, to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price, each Fixed Conversion Rate in effect at 5:00 p.m., New York City time, on the date fixed for determination of the holders of Common Stock entitled to receive such rights or warrants shall be increased by multiplying such Fixed Conversion Rate by a fraction:

(A)    the numerator of which is the sum of the number of shares of Common Stock outstanding at 5:00 p.m., New York City time, on the date fixed for such determination and the number of shares of Common Stock issuable pursuant to such rights or warrants, and

(B)    the denominator of which shall be the sum of the number of shares of Common Stock outstanding at 5:00 p.m., New York City time, on the date fixed for such determination and the number of shares of Common Stock equal to the quotient of the aggregate offering price payable to exercise such rights or warrants divided by the Current Market Price.

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Any adjustment made pursuant to this clause (ii) shall become effective immediately after 5:00 p.m., New York City time, on the date fixed for such determination. In the event that such rights or warrants described in this clause (ii) are not so issued, each Fixed Conversion Rate shall be readjusted, effective as of the date the Board of Directors (or an authorized committee thereof) publicly announces its decision not to issue such rights or warrants, to such Fixed Conversion Rate that would then be in effect if such issuance had not been declared. To the extent that such rights or warrants are not exercised prior to their expiration or shares of Common Stock are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, each Fixed Conversion Rate shall be readjusted to such Fixed Conversion Rate that would then be in effect had the adjustment made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered. In determining whether any rights or warrants entitle the holders thereof to subscribe for or purchase shares of Common Stock at less than the Current Market Price, and in determining the aggregate offering price payable to exercise such rights or warrants, there shall be taken into account any consideration received for such rights or warrants and the value of such consideration (if other than cash, to be determined by the Board of Directors (or an authorized committee thereof)). For the purposes of this clause (ii), the number of shares of Common Stock at the time outstanding shall not include shares held in treasury by the Corporation but shall include any shares issuable in respect of any scrip certificates issued in lieu of fractions of shares of Common Stock. The Corporation shall not issue any such rights or warrants in respect of shares of Common Stock held in treasury by the Corporation.

(iii)    Subdivisions and Combinations of the Common Stock. If outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock or combined into a lesser number of shares of Common Stock, each Fixed Conversion Rate in effect at 5:00 p.m., New York City time, on the effective date of such subdivision or combination shall be multiplied by a fraction:

(A)    the numerator of which is the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such subdivision or combination, and

(B)    the denominator of which is the number of shares of Common Stock outstanding immediately prior to such subdivision or combination.

Any adjustment made pursuant to this clause (iii) shall become effective immediately after 5:00 p.m., New York City time, on the effective date of such subdivision or combination.

(iv)    Debt or Asset Distribution. (A) If the Corporation distributes to all or substantially all holders of Common Stock evidences of its indebtedness, shares of capital stock, securities, rights to acquire the Corporation’s capital stock, cash or other assets (excluding (1) any dividend or distribution covered by Section 13(a)(i), (2) any rights or warrants covered by Section 13(a)(ii), (3) any dividend or distribution covered by Section 13(a)(v) and (4) any Spin-Off to which the provisions set forth in Section 13(a)(iv)(B) apply), each Fixed Conversion Rate in effect at 5:00 p.m., New York City time, on the

date fixed for the determination of holders of Common Stock entitled to receive such distribution shall be multiplied by a fraction:

(1)    the numerator of which is the Current Market Price, and

(2)    the denominator of which is the Current Market Price minus the Fair Market Value, on such date fixed for determination, of the portion of the evidences of indebtedness, shares of capital stock, securities, rights to acquire the Corporation’s capital stock, cash or other assets so distributed applicable to one share of Common Stock.

(B)    In the case of a Spin-Off, each Fixed Conversion Rate in effect at 5:00 p.m., New York City time, on the date fixed for the determination of holders of Common Stock entitled to receive such distribution shall be multiplied by a fraction:

(1)    the numerator of which is the sum of (x) the Current Market Price of the Common Stock and (y) the Fair Market Value of the portion of those shares of capital stock or similar equity interests so distributed that is applicable to one share of Common Stock as of the fifteenth Trading Day after the effective date for such distribution (or, if such shares of capital stock or equity interests are listed on a national or regional securities exchange, the Current Market Price of such securities), and

(2)    the denominator of which is the Current Market Price of the Common Stock.

Any adjustment made pursuant to this clause (iv) shall become effective immediately after 5:00 p.m., New York City time, on the date fixed for the determination of the holders of Common Stock entitled to receive such distribution. In the event that such distribution described in this clause (iv) is not so made, each Fixed Conversion Rate shall be readjusted, effective as of the date the Board of Directors (or an authorized committee thereof) publicly announces its decision not to make such distribution, to such Fixed Conversion Rate that would then be in effect if such distribution had not been declared. If an adjustment to each Fixed Conversion Rate is required under this clause (iv) during any settlement period in respect of shares of Mandatory Convertible Preferred Stock that have been tendered for conversion, delivery of the shares of Common Stock issuable upon conversion shall be delayed to the extent necessary in order to complete the calculations provided for in this clause (iv).

For purposes of this clause (iv) (and subject in all respect to clause (ii)), rights, options or warrants distributed by the Corporation to all or substantially all holders of its Common Stock entitling them to subscribe for or purchase shares of the Corporation’s capital stock, including Common Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with such shares of the Common Stock; (ii) are not exercisable; and (iii) are also

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issued in respect of future issuances of the Common Stock, shall be deemed not to have been distributed for purposes of this clause (iv) (and no adjustment to the Conversion Rate under this clause (iv) shall be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Fixed Conversion Rates shall be made under this clause (iv). If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the Initial Issue Date, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and the date fixed for the determination of the holders of Common Stock entitled to receive such distribution with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Fixed Conversion Rates under this clause (iv) was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (x) the Fixed Conversion Rates shall be readjusted as if such rights, options or warrants had not been issued and (y) the Fixed Conversion Rates shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase price received by a holder or holders of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Common Stock as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Fixed Conversion Rates shall be readjusted as if such rights, options and warrants had not been issued.

For purposes of clause (i), clause (ii) and this clause (iv), if any dividend or distribution to which this clause (iv) is applicable includes one or both of:

(C)    a dividend or distribution of shares of Common Stock to which clause (i) is applicable (the “Clause I Distribution”); or

(D)    an issuance of rights or warrants to which clause (ii) is applicable (the “Clause II Distribution”),

then (1) such dividend or distribution, other than the Clause I Distribution, if any, and the Clause II Distribution, if any, shall be deemed to be a dividend or distribution to which this clause (iv) is applicable (the “Clause IV Distribution”) and any Fixed Conversion Rate adjustment required by this clause (iv) with respect to such Clause IV Distribution shall then be made, and (2) the Clause I Distribution, if any, and Clause II Distribution, if any, shall be deemed to immediately follow the Clause IV Distribution and any Fixed Conversion Rate adjustment required by clause (i) and clause (ii) with respect thereto shall then be made, except that, if determined by the Corporation (I) the date fixed for determination of the holders of Common Stock entitled to receive any Clause I Distribution or Clause II Distribution shall be deemed to be the date fixed for the determination of holders of Common Stock entitled to

receive the Clause IV Distribution and (II) any shares of Common Stock included in any Clause I Distribution or Clause II Distribution shall be deemed not to be “outstanding at 5:00 p.m., New York City time, on the date fixed for such determination” within the meaning of clauses (i) and (ii).

(v)    Cash Distributions. If the Corporation distributes an amount consisting exclusively of cash to all or substantially all holders of Common Stock (excluding (1) any cash that is distributed in a Reorganization Event to which Section 13(e) applies, (2) any dividend or distribution in connection with the liquidation, dissolution or winding up of the Corporation and (3) any consideration payable as part of a tender or exchange offer by the Corporation or any subsidiary of the Corporation covered by Section 13(a)(vi)), each Fixed Conversion Rate in effect at 5:00 p.m., New York City time, on the date fixed for determination of the holders of Common Stock entitled to receive such distribution shall be multiplied by a fraction:

(1)    the numerator of which is the Current Market Price, and

(2)    the denominator of which is the Current Market Price minus the amount per share of Common Stock of such distribution.

Any adjustment made pursuant to this clause (v) shall become effective immediately after 5:00 p.m., New York City time, on the date fixed for the determination of the holders of Common Stock entitled to receive such distribution. In the event that any distribution described in this clause (v) is not so made, each Fixed Conversion Rate shall be readjusted, effective as of the date the Board of Directors (or an authorized committee thereof) publicly announces its decision not to make such distribution, to such Fixed Conversion Rate which would then be in effect if such distribution had not been declared.

(vi)    Self Tender Offers and Exchange Offers. If the Corporation or any subsidiary of the Corporation successfully completes a tender or exchange offer pursuant to a Schedule TO or registration statement on Form S-4 for Common Stock (excluding any securities convertible or exchangeable for Common Stock), where the cash and the value of any other consideration included in the payment per share of Common Stock exceeds the Current Market Price, each Fixed Conversion Rate in effect at 5:00 p.m., New York City time, on the date of expiration of the tender or exchange offer (the “Expiration Date”) shall be multiplied by a fraction:

(A)    the numerator of which shall be equal to the sum of:

(1)    the aggregate cash and Fair Market Value on the Expiration Date of any other consideration paid or payable for shares of Common Stock purchased in such tender or exchange offer; and

(2)    the product of the Current Market Price and the number of shares of Common Stock outstanding immediately after such tender or

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exchange offer expires (after giving effect to the purchase or exchange of shares pursuant to such tender or exchange offer); and

(B)    the denominator of which shall be equal to the product of (1) the Current Market Price and (2) the number of shares of Common Stock outstanding immediately prior to the time such tender or exchange offer expires.

Any adjustment made pursuant to this clause (vi) shall become effective immediately after 5:00 p.m., New York City time, on the seventh Trading Day immediately following the Expiration Date. In the event that the Corporation or one of its subsidiaries is obligated to purchase shares of Common Stock pursuant to any such tender offer or exchange offer, but the Corporation or such subsidiary is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then each Fixed Conversation Rate shall be readjusted to be such Fixed Conversion Rate that would then be in effect if such tender offer or exchange offer had not been made. Except as set forth in the preceding sentence, if the application of this clause (vi) to any tender offer or exchange offer would result in a decrease in each Fixed Conversation Rate, no adjustment shall be made for such tender offer or exchange offer under this clause (vi). If an adjustment to each Fixed Conversion Rate is required pursuant to this clause (vi) during any settlement period in respect of shares of Mandatory Convertible Preferred Stock that have been tendered for conversion, delivery of the related conversion consideration shall be delayed to the extent necessary in order to complete the calculations provided for in this clause (vi).

(vii)    Except with respect to a Spin-Off, in cases where the Fair Market Value of the evidences of the Corporation’s indebtedness, shares of capital stock, securities, rights to acquire the Corporation’s capital stock, cash or other assets as to which Section 13(a)(iv) or Section 13(a)(v) applies, applicable to one share of Common Stock, distributed to holders of Common Stock equals or exceeds the Average VWAP per share of the Common Stock over the five consecutive Trading Day period ending on the Trading Day before the Ex-Date for such distribution, rather than being entitled to an adjustment in each Fixed Conversion Rate, Holders shall be entitled to receive upon conversion, in addition to a number of shares of Common Stock otherwise deliverable on the applicable Conversion Date, the kind and amount of the evidences of the Corporation’s indebtedness, shares of capital stock, securities, rights to acquire the Corporation’s capital stock, cash or other assets comprising the distribution that such Holder would have received if such Holder had owned immediately prior to the record date for determining the holders of Common Stock entitled to receive the distribution, for each share of Mandatory Convertible Preferred Stock, a number of shares of Common Stock equal to the Maximum Conversion Rate in effect on the date of such distribution.

(viii)    Rights Plans. To the extent that the Corporation has a rights plan in effect with respect to the Common Stock on any Conversion Date, upon conversion of any shares of Mandatory Convertible Preferred Stock, converting Holders shall receive, in addition to the Common Stock, the rights under such rights plan, unless, prior to such Conversion Date, the rights have separated from the Common Stock, in which case each Fixed Conversion Rate shall be adjusted at the time of separation of such rights as if the Corporation made a distribution to all holders of the Common Stock as described in

Section 13(a)(iv), subject to readjustment in the event of the expiration, termination or redemption of such rights. Any distribution of rights or warrants pursuant to a rights plan that would allow Holders to receive upon conversion, in addition to any shares of Common Stock, the rights described therein (unless such rights or warrants have separated from Common Stock) shall not constitute a distribution of rights or warrants that would entitle Holders to an adjustment to the Fixed Conversion Rates.

(b) Adjustment for Tax Reasons. The Corporation may make such increases in each Fixed Conversion Rate, in addition to any other increases required by this Section 13, as the Corporation deems advisable to avoid or diminish any income tax to holders of the Common Stock resulting from any dividend or distribution of shares of Common Stock (or issuance of rights or warrants to acquire shares of Common Stock) or from any event treated as such for income tax purposes or for any other reasons; provided thatthe same proportionate adjustment must be made to each Fixed Conversion Rate.

(c) Calculation of Adjustments; Adjustments to Threshold Appreciation Price, Initial Price and Stock Price. (i) All adjustments to each Fixed Conversion Rate shall be calculated to the nearest 1/10,000th of a share of Common Stock. Prior to the Mandatory Conversion Date, no adjustment in a Fixed Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least one percent therein. If any adjustment by reason of this Section 13(c)(i) is not required to be made, such adjustment shall be carried forward and taken into account in any subsequent adjustment; provided, however, that with respect to adjustments to be made to the Fixed Conversion Rates in connection with cash dividends paid by the Corporation, the Fixed Conversion Rates shall be adjusted regardless of whether such aggregate adjustments amount to one percent or more of the Fixed Conversion Rates no later than February 15 of each calendar year; provided, further, that on the earlier of the Mandatory Conversion Date, an Early Conversion Date and the Effective Date of a Fundamental Change, adjustments to each Fixed Conversion Rate shall be made with respect to any such adjustment carried forward that has not been taken into account before such date.

(ii)    If an adjustment is made to the Fixed Conversion Rates pursuant to Sections 13(a) or 13(b), an inversely proportional adjustment shall also be made to the Threshold Appreciation Price and the Initial Price solely for purposes of determining which of clauses (i), (ii) and (iii) of Section 7(b) shall apply on the Mandatory Conversion Date. Such adjustment shall be made by dividing each of the Threshold Appreciation Price and the Initial Price by a fraction, the numerator of which shall be either Fixed Conversion Rate immediately after such adjustment pursuant to Sections 13(a) or 13(b) and the denominator of which shall be such Fixed Conversion Rate immediately before such adjustment. Because (a) each of the Applicable Market Value and the Early Conversion Average Price is an Average VWAP per share of the Common Stock over a 20 consecutive Trading Day period, and (b) each of the Stock Price and the Five-Day Average Price is an Average VWAP per share of the Common Stock over a five consecutive Trading Day period, the Corporation shall make appropriate adjustments to the VWAP per share of the Common Stock prior to the relevant Ex-Date, effective date or Expiration Date, as the case may be, used to calculate the Applicable Market Value, the Early Conversion Average Price, the Stock Price and the Five-Day Average

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Price to account for any adjustments, pursuant to Section 13(a) or 13(b), to the Initial Price, the Threshold Appreciation Price and the Fixed Conversion Rates that become effective, or any event that would require such an adjustment if the Ex-Date, effective date or Expiration Date of such event occurs, during the applicable period.

(iii)    If:

(A)    the record date for a dividend or distribution on Common Stock occurs after the end of the 20 consecutive Trading Day period used for calculating the Applicable Market Value and before the Mandatory Conversion Date; and

(B)    such dividend or distribution would have resulted in an adjustment of the number of shares of Common Stock issuable to the Holders had such record date occurred on or before the last Trading Day of such 20 consecutive Trading Day period,

then the Corporation shall deem the Holders to be holders of record, for each share of their Mandatory Convertible Preferred Stock, of a number of shares of Common Stock equal to the Mandatory Conversion Rate for purposes of that dividend or distribution. In this case, the Holders would receive the dividend or distribution on Common Stock together with the number of shares of Common Stock issuable upon the Mandatory Conversion Date.

(iv)    If an adjustment is made to the Fixed Conversion Rates pursuant to Sections 13(a) or 13(b), a proportional adjustment shall be made to each Stock Price column heading set forth in the table included in the definition of “Fundamental Change Conversion Rate” as of the day on which the Fixed Conversion Rates are so adjusted. Such adjustment shall be made by multiplying each Stock Price included in such table, applicable immediately prior to such adjustment, by a fraction, the numerator of which is the Minimum Conversion Rate immediately prior to the adjustment giving rise to such Stock Price adjustment, and the denominator of which is the Minimum Conversion Rate as so adjusted.

(v)    No adjustment to the Fixed Conversion Rates shall be made if Holders may participate, at the same time, upon the same terms and otherwise on the same basis as holders of Common Stock and solely as a result of holding Mandatory Convertible Preferred Stock, in the transaction that would otherwise give rise to an adjustment as if they held, for each share of Mandatory Convertible Preferred Stock, a number of shares of Common Stock equal to the Maximum Conversion Rate then in effect. In addition, the Fixed Conversion Rates shall not be adjusted:

(A)    upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Corporation’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;

(B)    upon the issuance of any shares of Common Stock or rights or warrants to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Corporation or any of its subsidiaries;

(C)    upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the Initial Issue Date;

(D)    for a change solely in the par value of the Common Stock; or

(E)    for accumulated and unpaid dividends on the Mandatory Convertible Preferred Stock, except as provided under Sections 7, 8 and 9.

(d) Notice of Adjustment. Whenever the Fixed Conversion Rates and the Fundamental Change Conversion Rates set forth in the table in the definition of “Fundamental Change Conversion Rate” are to be adjusted, the Corporation shall:

(i)    compute such adjusted Fixed Conversion Rates and Fundamental Change Conversion Rates and prepare and transmit to the Transfer Agent an Officer’s Certificate setting forth such adjusted Fixed Conversion Rates and Fundamental Change Conversion Rates, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based;

(ii)    as soon as practicable following the occurrence of an event that requires an adjustment to the Fixed Conversion Rates and the Fundamental Change Conversion Rates, provide, or cause to be provided, a written notice to the Holders of the occurrence of such event; and

(iii)    as soon as practicable following the determination of such adjusted Fixed Conversion Rates and Fundamental Change Conversion Rates provide, or cause to be provided, to the Holders a statement setting forth in reasonable detail the method by which the adjustments to the Fixed Conversion Rates and Fundamental Change Conversion Rates were determined and setting forth such adjusted Fixed Conversion Rates and Fundamental Change Conversion Rates.

(e) Reorganization Events. In the event of:

(i)    any consolidation or merger of the Corporation with or into another Person (other than a merger or consolidation in which the Corporation is the continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities or other property of the Corporation or another Person);

(ii)    any sale, transfer, lease or conveyance to another Person of all or substantially all of the property and assets of the Corporation;

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(iii)    any reclassification of Common Stock into securities including securities other than Common Stock; or

(iv)    any statutory exchange of securities of the Corporation with another Person (other than in connection with a merger or acquisition),

in each case, as a result of which the Corporation’s Common Stock would be converted into, or exchanged for, securities, cash or property (each, a “Reorganization Event”), each share of Mandatory Convertible Preferred Stock outstanding immediately prior to such Reorganization

Event shall, without the consent of the Holders, become convertible into the kind of securities, cash and other property that such Holder would have been entitled to receive if such Holder had converted its Mandatory Convertible Preferred Stock into Common Stock immediately prior to such Reorganization Event (such securities, cash and other property, the “Exchange Property,” with each “Unit of Exchange Property” meaning the kind and amount of such Exchange Property that a Holder of one share of Common Stock is entitled to receive). For purposes of the foregoing, the type and amount of Exchange Property in the case of any Reorganization Event that causes the Common Stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election) shall be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election (or of all holders of Common Stock if none makes an election). The Corporation shall notify Holders of the weighted average as soon as practicable after such determination is made. The number of Units of Exchange Property for each share of Mandatory Convertible Preferred Stock converted following the effective date of such Reorganization Event shall be determined as if references in Section 7, Section 8 and Section 9 to shares of Common Stock were to Units of Exchange Property (without any interest thereon and without any right to dividends or distributions thereon which have a record date that is prior to such Conversion Date, except as provided in Section 13(a)(vii), Section 13(c)(iii) and Section 13(c)(v)). For the purpose of determining which of clauses (i), (ii) and (iii) of Section 7(b) shall apply upon Mandatory Conversion, and for the purpose of calculating the Mandatory Conversion Rate if clause (ii) of Section 7(b) is applicable, the value of a Unit of Exchange Property shall be determined in good faith by the Board of Directors (or an authorized committee thereof), except that if a Unit of Exchange Property includes common stock or American Depositary Receipts (“ADRs”) that are traded on a U.S. national securities exchange, the value of such common stock or ADRs shall be the average over the 20 consecutive Trading Day period ending on, and including, the third Trading Day immediately preceding the Mandatory Conversion Date of the volume weighted average prices for such common stock or ADRs, as displayed on the applicable Bloomberg screen (as determined in good faith by the Board of Directors (or an authorized committee thereof)); or, if such price is not available, the average market value per share of such common stock or ADRs over such period as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained by the Corporation for this purpose.

The above provisions of this Section 13(e) shall similarly apply to successive Reorganization Events and the provisions of Section 13 shall apply to any shares of capital stock or ADRs of the Corporation (or any successor thereto) received by the holders of Common Stock in any such Reorganization Event.

The Corporation (or any successor thereto) shall, as soon as reasonably practicable (but in any event within 20 calendar days) after the occurrence of any Reorganization Event, provide written notice to the Holders of such occurrence and of the kind and amount of the cash, securities or other property that constitute the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 13(e).

SECTION 14. Transfer Agent, Registrar, and Conversion and Dividend Disbursing Agent. The duly appointed Transfer Agent, Registrar and Conversion and Dividend Disbursing Agent for the Mandatory Convertible Preferred Stock shall be Computershare Trust Company, N.A. The Corporation may, in its sole discretion, remove the Transfer Agent, Registrar or Conversion and Dividend Disbursing Agent in accordance with the agreement between the Corporation and the Transfer Agent, Registrar or Conversion and Dividend Disbursing Agent, as the case may be; provided that if the Corporation removes Computershare Trust Company, N.A., the Corporation shall appoint a successor transfer agent, registrar or conversion and dividend disbursing agent, as the case may be, who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall send notice thereof by first-class mail, postage prepaid, to the Holders.

SECTION 15. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the Transfer Agent may deem and treat the Holder of any shares of Mandatory Convertible Preferred Stock as the true and lawful owner thereof for all purposes.

SECTION 16. Notices. All notices or communications in respect of the Mandatory Convertible Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Amended and Restated Certificate of Incorporation or the Bylaws and by applicable law. Notwithstanding the foregoing, if the shares of Mandatory Convertible Preferred Stock are represented by Global Preferred Shares, such notices may also be given to the Holders in any manner permitted by DTC or any similar facility used for the settlement of transactions in the Mandatory Convertible Preferred Stock.

SECTION 17. No Preemptive Rights. The Holders shall have no preemptive or preferential rights to purchase or subscribe to any stock, obligations, warrants or other securities of the Corporation of any class.

SECTION 18. Other Rights. The shares of the Mandatory Convertible Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Amended and Restated Certificate of Incorporation or as provided by applicable law.

SECTION 19. Stock Certificates.

(a) Shares of Mandatory Convertible Preferred Stock shall be represented by stock certificates substantially in the form set forth as Exhibit A hereto.

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(b) Stock certificates representing shares of the Mandatory Convertible Preferred Stock shall be signed by two authorized Officers of the Corporation, in accordance with the Bylaws and applicable Delaware law, by manual or facsimile signature.

(c) A stock certificate representing shares of the Mandatory Convertible Preferred Stock shall not be valid until manually countersigned by an authorized signatory of the Transfer Agent and Registrar. Each stock certificate representing shares of the Mandatory Convertible Preferred Stock shall be dated the date of its countersignature.

(d) If any Officer of the Corporation who has signed a stock certificate no longer holds that office at the time the Transfer Agent and Registrar countersigns the stock certificate, the stock certificate shall be valid nonetheless.

SECTION 20. Replacement Certificates.

(a) If physical certificates are issued, and any of the Mandatory Convertible Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Corporation shall, at the expense of the Holder, issue, in exchange and in substitution for and upon cancellation of the mutilated Mandatory Convertible Preferred Stock certificate, or in lieu of and substitution for the Mandatory Convertible Preferred Stock certificate lost, stolen or destroyed, a new Mandatory Convertible Preferred Stock certificate of like tenor and representing an equivalent Liquidation Preference of shares of Mandatory Convertible Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Mandatory Convertible Preferred Stock certificate and indemnity, if requested, reasonably satisfactory to the Corporation and the Transfer Agent.

(b) The Corporation is not required to issue any certificate representing the Mandatory Convertible Preferred Stock on or after the Mandatory Conversion Date. In lieu of the delivery of a replacement certificate following the Mandatory Conversion Date, the Transfer Agent, upon delivery of the evidence and indemnity described above, shall deliver the shares of Common Stock issuable and any cash deliverable pursuant to the terms of the Mandatory Convertible Preferred Stock formerly evidenced by the certificate.

SECTION 21. Book Entry Form.

(a) The Mandatory Convertible Preferred Stock shall be issued in global form (“Global Preferred Shares”) eligible for book-entry settlement with the Depositary, represented by one or more stock certificates in global form registered in the name of the Depositary or a nominee of the Depositary bearing the form of global securities legend set forth in Exhibit A. The aggregate number of shares of Mandatory Convertible Preferred Stock represented by each stock certificate representing Global Preferred Shares may from time to time be increased or decreased by a notation by the Registrar and Transfer Agent on Schedule I attached to the stock certificate.

(b) Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Certificate of Designations, with respect to any Global Preferred Shares, and the Depositary shall be treated by the Corporation, the Registrar and any agent of the Corporation or

the Registrar as the absolute owner of the Mandatory Convertible Preferred Stock. Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the Registrar or any agent of the Corporation or the Registrar from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any shares of Mandatory Convertible Preferred Stock. The Holders may grant proxies or otherwise authorize any Person to take any action that a Holder is entitled to take pursuant to the Mandatory Convertible Preferred Stock, this Certificate of Designations or the Amended and Restated Certificate of Incorporation.

(c) Transfers of a Global Preferred Share shall be limited to transfers of such Global Preferred Share in whole, but not in part, to nominees of the Depositary or to a successor of the Depositary or such successor’s nominee.

(d) If DTC is at any time unwilling or unable to continue as Depositary for the Global Preferred Shares or DTC ceases to be registered as a “clearing agency” under the Exchange Act, and in either case a successor Depositary is not appointed by the Corporation within 90 days, the Corporation shall issue certificated shares in exchange for the Global Preferred Shares. In any such case, the Global Preferred Shares shall be exchanged in whole for definitive stock certificates, in substantially the form attached hereto as Exhibit A, representing an equal aggregate Liquidation Preference. Such definitive stock certificates shall be registered in the name or names of the Person or Persons specified by DTC in a written instrument to the Registrar.

SECTION 22. Miscellaneous. (a) The Corporation shall pay any and all stock transfer and documentary stamp taxes that may be payable in respect of any issuance or delivery of shares of Mandatory Convertible Preferred Stock or shares of Common Stock or other securities issued on account of Mandatory Convertible Preferred Stock pursuant hereto or certificates representing such shares or securities. The Corporation shall not, however, be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Common Stock or other securities in a name other than that in which the shares of Mandatory Convertible Preferred Stock with respect to which such shares or other securities are issued or delivered were registered, and shall not be required to make any such issuance or delivery unless and until the Person otherwise entitled to such issuance or delivery has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or is not payable.

(b) The Liquidation Preference and the Dividend Rate each shall be subject to equitable adjustment whenever there shall occur a stock split, combination, reclassification or other similar event involving the Mandatory Convertible Preferred Stock. Such adjustments shall be determined in good faith by the Board of Directors (or an authorized committee thereof) and submitted by the Board of Directors (or such authorized committee thereof) to the Transfer Agent.

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Exhibit A

[FORM OF FACE OF MANDATORY CONVERTIBLE PREFERRED STOCK
CERTIFICATE]

[INCLUDE FOR GLOBAL PREFERRED SHARES]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE CORPORATION OR THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE STATEMENT WITH RESPECT TO SHARES. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

Certificate Number [________]     [Initial] Number of Shares of Mandatory    Convertible Preferred Stock [_____]

CUSIP 608753 208
ISIN US6087532080

MOLYCORP, INC.

5.50% Series A Mandatory Convertible Preferred Stock
(par value $0.001 per share)
(Liquidation Preference as specified below)

MOLYCORP, INC., a Delaware corporation (the “Corporation”), hereby certifies that [_______] (the “Holder”), is the registered owner of [_______] [the number shown on Schedule I hereto of] fully paid and non-assessable shares of the Corporation’s designated 5.50% Series A Mandatory Convertible Preferred Stock, with a par value of $0.001 per share and a Liquidation Preference of $100.00 per share (the “Mandatory Convertible Preferred Stock”). The shares of Mandatory Convertible Preferred Stock are transferable on the books and records of the Registrar, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Mandatory Convertible Preferred Stock represented hereby are and shall in all respects be subject to the provisions of the Certificate of Designations of 5.50% Series A Mandatory Convertible Preferred Stock of Molycorp, Inc. dated February 15, 2011 as the same may be amended from time to time (the “Certificate of Designations”). Capitalized terms used herein but not defined shall have the meaning given them in the Certificate of Designations. The Corporation will provide a copy of the Certificate of Designations to the Holder without charge upon written request to the Corporation at its principal place of business.

Reference is hereby made to the provisions of the Mandatory Convertible Preferred Stock set forth on the reverse hereof and in the Certificate of Designations, which provisions shall for all purposes have the same effect as if set forth at this place.

Upon receipt of this executed certificate, the Holder is bound by the Certificate of Designations and is entitled to the benefits thereunder.

Unless the Transfer Agent and Registrar have properly countersigned, these shares of Mandatory Convertible Preferred Stock shall not be entitled to any benefit under the Certificate of Designations or be valid or obligatory for any purpose.

CLI-2007910v2

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Corporation by two Officers of the Corporation this [___] of [_______] [____].

MOLYCORP, INC.

By:

Name:

Title:

By:

Name:

Title:

COUNTERSIGNATURE

These are shares of Mandatory Convertible Preferred Stock referred to in the within-mentioned Certificate of Designations.

Dated: [_______], [____]

[Computershare Trust Company, N.A.], as Registrar and Transfer Agent

By:

Name:

Title:

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[FORM OF REVERSE OF CERTIFICATE FOR MANDATORY
CONVERTIBLE PREFERRED STOCK]

Cumulative dividends on each share of Mandatory Convertible Preferred Stock shall be payable at the applicable rate provided in the Certificate of Designations.

The shares of Mandatory Convertible Preferred Stock shall be convertible in the manner and accordance with the terms set forth in the Certificate of Designations.

The Corporation shall furnish without charge to each Holder who so requests a summary of the authority of the Board of Directors to determine variations for future series within a class of stock and the designations, limitations, preferences and relative, participating, optional or other special rights of each class or series of share capital issued by the Corporation and the qualifications, limitations or restrictions of such preferences and/or rights.

NOTICE OF CONVERSION

(To be Executed by the Holder
in order to Convert the Mandatory Convertible Preferred Stock)

The undersigned hereby irrevocably elects to convert (the “Conversion”) 5.50% Series A Mandatory Convertible Preferred Stock (the “Mandatory Convertible Preferred Stock”), of Molycorp, Inc. (hereinafter called the “Corporation”), represented by stock certificate No(s). [______] (the “Mandatory Convertible Preferred Stock Certificates”), into common stock, par value $0.001 per share, of the Corporation (the “Common Stock”) according to the conditions of the Certificate of Designations of the Mandatory Convertible Preferred Stock (the “Certificate of Designations”), as of the date written below. If Common Stock is to be issued in the name of a person other than the undersigned, the undersigned shall pay all transfer taxes payable with respect thereto, if any. Each Mandatory Convertible Preferred Stock Certificate (or evidence of loss, theft or destruction thereof) is attached hereto.

Capitalized terms used but not defined herein shall have the meanings ascribed thereto in or pursuant to the Certificate of Designations.

Date of Conversion:

Applicable Conversion Rate:

Shares of Mandatory Convertible Preferred Stock to be Converted:

Shares of Common Stock to be Issued:*

Signature:

Name:

Address:**

Fax No.:

____________________

* The Corporation is not required to issue Common Stock until the original Mandatory Convertible Preferred Stock Certificate(s) (or evidence of loss, theft or destruction thereof) to be converted are received by the Corporation or the Conversion and Dividend Disbursing Agent.

** Address where Common Stock and any other payments or certificates shall be sent by the Corporation.

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ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of Mandatory Convertible Preferred Stock evidenced hereby to:

______________________________________________________________________________________

______________________________________________________________________________________

(Insert assignee’s social security or taxpayer identification number, if any)

______________________________________________________________________________________

______________________________________________________________________________________

(Insert address and zip code of assignee)

and irrevocably appoints:

______________________________________________________________________________________

______________________________________________________________________________________

as agent to transfer the shares of Mandatory Convertible Preferred Stock evidenced hereby on the books of the Transfer Agent. The agent may substitute another to act for him or her.

Date:

Signature: ______________________________________________________________________________

(Sign exactly as your name appears on the other side of this Certificate)

Signature Guarantee: ______________________________________________________________________

(Signature must be guaranteed by an “eligible guarantor institution” that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Transfer Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)

Schedule I¹ 

Molycorp, Inc.
Global Preferred Share
5.50% Series A Mandatory Convertible Preferred Stock
Certificate Number:

The number of shares of Mandatory Convertible Preferred Stock initially represented by this Global Preferred Share shall be [________]. Thereafter the Transfer Agent and Registrar shall note changes in the number of shares of Mandatory Convertible Preferred Stock evidenced by this Global Preferred Share in the table set forth below:

Amount of Decrease in Number of Shares Represented by this Global Preferred Share Amount of Increase in Number of Shares Represented by this Global Preferred Share Number of Shares Represented by this Global Preferred Share following Decrease or Increase Signature of Authorized Officer of Transfer Agent and Registrar

____________________

1.    Attach Schedule I only to Global Preferred Shares.

CLI-2007910v2

CERTIFICATE OF DESIGNATIONS

OF

THE SPECIAL VOTING PREFERRED STOCK

OF

MOLYCORP, INC.

(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)

Molycorp, Inc., a Delaware corporation (the “Company”), hereby certifies that the following resolution was adopted by the Board of Directors of the Company (the “Board”) pursuant to the authority of the Board as required by Section 151 of the Delaware General Corporation Law:

RESOLVED, that pursuant to the provisions of the Amended and Restated Certificate of Incorporation of the Company (as such may be amended, modified or restated from time to time, the “Amended and Restated Certificate of Incorporation”) (which authorizes 5,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”)), and the authority vested in the Board, a series of Preferred Stock be, and it hereby is, created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof are as set forth in the Amended and Restated Certificate of Incorporation and this Certificate of Designations, as it may be amended from time to time (the “Certificate of Designations”) as follows:

SPECIAL VOTING PREFERRED STOCK

Section 1. Designation, Amount and Par Value. The series of Preferred Stock shall be designated as The Special Voting Preferred Stock and the number of shares so designated shall be one (1). The share of The Special Voting Preferred Stock shall have a par value of $0.001 per share.

Section 2. Dividends. The holder of record of the share of The Special Voting Preferred Stock shall not be entitled to receive any dividends declared and paid by the Company.

Section 3. Voting Rights.

(a) The holder of record of the share of The Special Voting Preferred Stock, except as otherwise required under applicable law or as set forth in subparagraph (b) below, shall not be entitled to vote on any matter required or permitted to be voted upon by the stockholders of the Company.

(b) With respect to all meetings of the stockholders of the Company at which the holders of the Company’s common stock, par value $0.001 per share, are entitled to vote (each, a “Stockholder Meeting”) and with respect to any written consents sought by the Company from the holders of such common stock (each, a “Stockholder Consent”),

the holder of the share of The Special Voting Preferred Stock shall vote together with the holders of such common stock as a single class (except as otherwise required under applicable law), and the holder of the share of The Special Voting Preferred Stock shall be entitled to cast on such matter a number of votes equal to the number of Exchangeable Shares (the “Exchangeable Shares”) of MCP Exchangeco Inc., a Canadian corporation (“Exchangeco”), outstanding as of the record date for determining stockholders entitled to vote at such Stockholder Meeting or in connection with the applicable Stockholder Consent (i) that are not owned by the Company or its affiliates and (ii) as to which the holder of the share of The Special Voting Preferred Stock has received voting instructions from the holders of such Exchangeable Shares in accordance with the Voting and Exchange Trust Agreement (the “Trust Agreement”) to be entered into among the Company, Exchangeco and the trustee thereunder (the “Trustee”).

Section 4. Liquidation. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holder of record of the share of The Special Voting Preferred Stock shall not be entitled to receive any assets of the Company available for distribution to its stockholders.

Section 5. Other Provisions.

(a) The holder of record of the share of The Special Voting Preferred Stock shall not have any rights hereunder to convert such share into, or exchange such share for, shares of any other series or class of capital stock of the Company.

(b) The Trustee shall exercise the voting rights attached to the share of The Special Voting Preferred Stock pursuant to and in accordance with the Trust Agreement. The voting rights attached to the share of The Special Voting Preferred Stock shall terminate pursuant to and in accordance with the Trust Agreement.

(c) At such time as the share of The Special Voting Preferred Stock has no votes attached to it, The Special Voting Preferred Stock shall be automatically cancelled.

(d) The effective date of this Certificate of Designations shall be June 1, 2012.

[this space left blank intentionally – signature page follows]

CLI-2007910v2    #PageNum#

IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be signed by John F. Ashburn, Jr., its Executive Vice President and General Counsel, this 1st day of June 2012.

MOLYCORP, INC.

By: /s/ John F. Ashburn, Jr.                            

John F. Ashburn, Jr.

Executive Vice President and General Counsel

EX-4.2

Exhibit 4.2

DEBENTURE INDENTURE

DATED AS OF THE 2^ND DAY OF JUNE, 2011

AMONG NEO MATERIAL TECHNOLOGIES INC.

AND

COMPUTERSHARE TRUST COMPANY OF CANADA

PROVIDING FOR THE ISSUE OF DEBENTURES

		Page
Article 1	INTERPRETATION	5
1.1	Definitions	5
1.2	Meaning of “Outstanding”	13
1.3	Interpretation	13
1.4	Headings, etc	14
1.5	Time of Essence	14
1.6	Monetary References	14
1.7	Invalidity, etc	14
1.8	Language	14
1.9	Successors and Assigns	14
1.10	Severability	15
1.11	Entire Agreement	15
1.12	Benefits of Indenture	15
1.13	Applicable Law and Attornment	15
1.14	Currency of Payment	15
1.15	Non-Business Days	15
1.16	Accounting Terms	16
1.17	Calculations	16
1.18	Schedules	16
Article 2	THE DEBENTURES	17
2.1	Limit of Debentures	17
2.2	Terms of Debentures of any Series	17
2.3	Form of Debentures	18
2.4	Form and Terms of Initial Debentures	18
2.5	Certification and Delivery of Additional Debentures	27
2.6	Issue of Global Debentures	28
2.7	Execution of Debentures	28
2.8	Certification	29
2.9	Interim Debentures or Certificates	29
2.10	Mutilation, Loss, Theft or Destruction	29
2.11	Concerning Interest	30
2.12	Debentures to Rank Pari Passu	30
2.13	Payments of Amounts Due on Maturity	30
2.14	U.S. Legend on the Debentures	31
2.15	Payment of Interest	32
Article 3	REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP	33
3.1	Fully Registered Debentures	33
3.2	Global Debentures	33
3.3	Transferee Entitled to Registration	35
3.4	No Notice of Trusts	35
3.5	Registers Open for Inspection	35
3.6	Exchanges of Debentures	35
3.7	Closing of Registers	36
3.8	Charges for Registration, Transfer and Exchange	36
3.9	Ownership of Debentures	37
Article 4	REDEMPTION AND PURCHASE OF DEBENTURES	37

i

4.1	Applicability of Article	37
4.2	Partial Redemption	38
4.3	Notice of Redemption	38
4.4	Debentures Due on Redemption Dates	39
4.5	Deposit of Redemption Monies or Common Shares	39
4.6	Right to Repay Redemption Price in Common Shares	39
4.7	Failure to Surrender Debentures Called for Redemption	42
4.8	Cancellation of Debentures Redeemed	42
4.9	Purchase of Debentures by the Corporation	42
4.10	Right to Repay Principal Amount and Accrued Interest in Common Shares	43
Article 5	SUBORDINATION OF DEBENTURES	46
5.1	Applicability of Article	46
5.2	Order of Payment	46
5.3	Subrogation to Rights of Holders of Senior Indebtedness	47
5.4	Obligation to Pay Not Impaired	48
5.5	No Payment if Senior Indebtedness in Default	48
5.6	Payment on Debentures Permitted	48
5.7	Confirmation of Subordination	49
5.8	Knowledge of Trustee	49
5.9	Trustee May Hold Senior Indebtedness	49
5.10	Rights of Holders of Senior Indebtedness Not Impaired	49
5.11	Altering the Senior Indebtedness	49
5.12	Additional Indebtedness	50
5.13	Right of Debentureholder to Convert Not Impaired	50
5.14	Invalidated Payments	50
5.15	Contesting Security	50
Article 6	CONVERSION OF DEBENTURES	50
6.1	Applicability of Article	50
6.2	Notice of Expiry of Conversion Privilege	50
6.3	Revival of Right to Convert	51
6.4	Manner of Exercise of Right to Convert	51
6.5	Adjustment of Conversion Price	52
6.6	No Requirement to Issue Fractional Common Shares	57
6.7	Corporation to Reserve Common Shares	57
6.8	Cancellation of Converted Debentures	57
6.9	Certificate as to Adjustment	57
6.10	Notice of Special Matters	58
6.11	Protection of Trustee	58
6.12	U.S. Legend on Common Shares	58
Article 7	COVENANTS OF THE CORPORATION	59
7.1	To Pay Principal, Premium (if any) and Interest	59
7.2	To Pay Trustee's Remuneration	59
7.3	To Give Notice of Default	59
7.4	Preservation of Existence, etc	59
7.5	Keeping of Books	60
7.6	Annual Certificate of Compliance	60
7.7	Performance of Covenants by Trustee	60

ii

7.8	SEC Notice	60
7.9	No Dividends on Common Shares if Event of Default	60
7.10	Maintain Listing	60
7.11	Interest	61
Article 8	DEFAULT	61
8.1	Events of Default	61
8.2	Notice of Events of Default	63
8.3	Waiver of Default	63
8.4	Enforcement by the Trustee	63
8.5	No Suits by Debentureholders	64
8.6	Application of Monies by Trustee	65
8.7	Notice of Payment by Trustee	66
8.8	Trustee May Demand Production of Debentures	66
8.9	Remedies Cumulative	66
8.10	Judgment Against the Corporation	66
8.11	Immunity of Directors, Officers and Others	66
Article 9	SATISFACTION AND DISCHARGE	66
9.1	Cancellation and Destruction	66
9.2	Non-Presentation of Debentures	67
9.3	Repayment of Unclaimed Monies or Common Shares	67
9.4	Discharge	67
9.5	Satisfaction	68
9.6	Continuance of Rights, Duties and Obligations	69
Article 10	COMMON SHARE INTEREST PAYMENT ELECTION	70
10.1	Common Share Interest Payment Election	70
Article 11	SUCCESSORS	72
11.1	Corporation may Consolidate, etc., Only on Certain Terms	72
11.2	Successor Substituted	73
Article 12	COMPULSORY ACQUISITION	74
12.1	Definitions	74
12.2	Offer for Debentures	74
12.3	Offeror's Notice to Dissenting Shareholders	75
12.4	Delivery of Debenture Certificates	75
12.5	Payment of Consideration to Trustee	75
12.6	Consideration to be held in Trust	75
12.7	Completion of Transfer of Debentures to Offeror	75
12.8	Communication of Offer to Trust	76
Article 13	MEETINGS OF DEBENTUREHOLDERS	76
13.1	Right to Convene Meeting	76
13.2	Notice of Meetings	76
13.3	Chairman	78
13.4	Quorum	78
13.5	Power to Adjourn	78
13.6	Show of Hands	78
13.7	Poll	78
13.8	Voting	79
13.9	Proxies	79

iii

13.10	Persons Entitled to Attend Meetings	80
13.11	Powers Exercisable by Extraordinary Resolution	80
13.12	Meaning of “Extraordinary Resolution”	81
13.13	Powers Cumulative	82
13.14	Minutes	82
13.15	Instruments in Writing	82
13.16	Binding Effect of Resolutions	83
13.17	Evidence of Rights Of Debentureholders	83
13.18	Concerning Serial Meetings	83
Article 14	NOTICES	83
14.1	Notice to Corporation	83
14.2	Notice to Debentureholders	84
14.3	Notice to Trustee	84
14.4	Mail Service Interruption	84
Article 15	CONCERNING THE TRUSTEE	84
15.1	Residency and No Conflict of Interest	84
15.2	Replacement of Trustee	85
15.3	Duties of Trustee	85
15.4	Reliance Upon Declarations, Opinions, etc	85
15.5	Evidence and Authority to Trustee, Opinions, etc	86
15.6	Officers' Certificates Evidence	87
15.7	Experts, Advisers and Agents	87
15.8	Trustee May Deal in Debentures	87
15.9	Investment of Monies Held by Trustee	87
15.10	Trustee Not Ordinarily Bound	88
15.11	Trustee Not Required to Give Security	88
15.12	Trustee Not Bound to Act on Trust's Request	88
15.13	Conditions Precedent to Trustee's Obligations to Act Hereunder	88
15.14	Authority to Carry on Business	89
15.15	Compensation and Indemnity	89
15.16	Acceptance of Trust	89
15.17	Third Party Interests	90
15.18	Anti-Money Laundering	90
15.19	Privacy Laws	90
15.20	Force Majeure	90
Article 16	SUPPLEMENTAL INDENTURES	91
16.1	Supplemental Indentures	91
Article 17	RIGHTS OF RESCISSION	92
17.1	Rights of Rescission	92
Article 18	EXECUTION AND FORMAL DATE	1
18.1	Execution	1
18.2	Formal Date	1
SCHEDULE “A”		2
SCHEDULE “B” Form of Redemption Notice		1
SCHEDULE “C” Form of Maturity Notice		1
SCHEDULE “D” Form of Notice of Conversion		1
SCHEDULE “E” FORM OF CERTIFICATE OF TRANSFER		1

iv

SCHEDULE “F” FORM OF CERTIFICATE OF EXCHANGE	1
SCHEDULE “G” COMMON SHARE LEGENDS	1

v

THIS INDENTURE made as of the 2^nd day of June, 2011,

BETWEEN:

NEO MATERIAL TECHNOLOGIES INC., a corporation existing under the laws of Canada and having its head office in the City of Toronto, in the Province of Ontario (hereinafter called “Neo Materials” or the “Corporation”)

AND

COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company continued under the laws of Canada and registered to carry on business in the Province of Ontario (hereinafter called the “Trustee”)

WITNESSETH THAT:

WHEREAS the Corporation wishes to create and issue the Debentures in the manner and subject to the terms and conditions of this Indenture;

AND WHEREAS the Corporation, under the laws relating thereto, is duly authorized to create and issue the Debentures to be issued as provided herein;

AND WHEREAS, when certified by the Trustee and issued as in this Indenture provided, all necessary steps are taken in relation to the Corporation have been duly enacted, passed and/or confirmed and other proceedings taken and conditions complied with to make the creation and issue of the Debentures proposed to be issued hereunder legal, valid and binding on the Corporation in accordance with the laws relating to the Corporation;

AND WHEREAS the foregoing recitals are made as representations and statements of fact by the Corporation and not by the Trustee;

NOW THEREFORE THIS INDENTURE WITNESSES that in consideration of the respective covenants and agreements contained herein and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged), the Corporation and the Trustee covenant and agree, for the benefit of each other and for the equal and rateable benefit of the holders, as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions

In this Indenture and in the Debentures, the expressions following shall have the following meanings, namely:

(a) “1933 Act” means the United States Securities Act of 1933, as amended;

(b) “90% Redemption Right” has the meaning ascribed thereto in Section 2.4(j)(ii);

6

(c) “this Indenture”, “this Convertible Debenture Indenture”, “hereto”, “herein”, “hereby”, “hereunder”, “hereof” and similar expressions refer to this Indenture and not to any particular Article, Section, subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto;

(d) “Additional Debentures” means Debentures of any one or more series, other than the first series of Debentures, being the Initial Debentures, issued under this Indenture;

(e) “Applicable Period” means any period announced by the Board of Directors as a period of time for which a cash dividend or distribution will be declared and paid by the Corporation to the holders of all or substantially all of the outstanding Common Shares;

(f) “Applicable Securities Legislation” means applicable securities laws (including rules, regulations, policies and instruments) in each of the applicable provinces of Canada;

(g) “Auditors of the Corporation” means an independent firm of chartered accountants duly appointed as auditors of the Corporation;

(h) “Beneficial Holder” means any person who holds a beneficial interest in a Global Debenture as shown on the books of the Depository or a Depository Participant;

(i) “Board of Directors” means the board of directors of the Corporation or any committee thereof;

(j) “Business Day” means any day other than a Saturday, Sunday or any other day that the Trustee in Toronto, Ontario is not generally open for business;

(k) “Cash Change of Control” means a Change of Control in which 10% or more of the consideration for the Common Shares in the transaction or transactions constituting a Change of Control consists of: (i) cash, other than cash payments for fractional Common Shares and cash payments made in respect of dissenter’s appraisal rights; (ii) trust units, limited partnership units or other participating equity securities of a trust, limited partnership or similar entity; (iii) equity securities that are not traded or intended to be traded immediately following such transactions on a recognized stock exchange; or (iv) other property that is not traded or intended to be traded immediately following such transactions on a recognized stock exchange;

(l) “Cash Change of Control Conversion Period” has the meaning ascribed thereto in Section 2.4(k)(i);

(m) “Change of Control” means: (i) the acquisition by any Person, or group of Persons acting jointly or in concert (within the meaning of MI 62-104), of voting control or direction of an aggregate of 50% or more of the outstanding Common Shares; or (ii) the sale of all or substantially all of the assets of the Corporation, but shall not include a sale, merger, reorganization, arrangement, combination or other similar transaction if the previous holders of Common Shares hold at least 50% of the voting control or direction in such merged, reorganized, arranged, combined or other continuing entity (and in the case of a sale of all or substantially all of the assets, in the entity which has acquired such assets) immediately following completion of such transaction;

(n) “Change of Control Notice” has the meaning ascribed thereto in Section 2.4(j)(i);

(o) “Change of Control Purchase Date” has the meaning ascribed thereto in Section 2.4(j)(i);

7

(p) “Change of Control Purchase Offer” has the meaning ascribed thereto in Section 2.4(j)(i);

(q) “Common Shares” means common shares in the capital of the Corporation, as such common shares are constituted on the date of execution and delivery of this Indenture; provided that in the event of a change or a subdivision, revision, reduction, combination or consolidation thereof, any reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance or liquidation, dissolution or winding-up, or such successive changes, subdivisions, redivisions, reductions, combinations or consolidations, reclassifications, capital reorganizations, consolidations, amalgamations, arrangements, mergers, sales or conveyances or liquidations, dissolutions or windings-up, then, subject to adjustments, if any, having been made in accordance with the provisions of Section 6.5, “Common Shares” shall mean the shares or other securities or property resulting from such change, subdivision, redivision, reduction, combination or consolidation, reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance or liquidation, dissolution or winding-up;

(r) “Common Share Bid Request” means a request for bids to purchase Common Shares (to be issued by the Corporation on the Common Share Delivery Date) made by the Trustee in accordance with the Common Share Interest Payment Election Notice and which shall make the acceptance of any bid conditional upon the acceptance of sufficient bids to result in aggregate proceeds from such issue and sale of Common Shares which, together with the cash payments by the Corporation in lieu of fractional Common Shares, if any, equal the Interest Obligation;

(s) “Common Share Delivery Date” means a date, not more than 90 days and not less than one Business Day prior to the applicable Interest Payment Date, upon which Common Shares are issued by the Corporation and delivered to the Trustee for sale pursuant to Common Share Purchase Agreements;

(t) “Common Share Interest Payment Election” means an election to satisfy an Interest Obligation on the applicable Interest Payment Date in the manner described in the Common Share Interest Payment Election Notice;

(u) “Common Share Interest Payment Election Amount” means the sum of the amount of the aggregate proceeds resulting from the sale of Common Shares on the Common Share Delivery Date pursuant to acceptable bids obtained pursuant to the Common Share Bid Requests, together with any amount paid by the Corporation in respect of fractional Common Shares pursuant to Section 10.1(g), that is equal to the aggregate amount of the Interest Obligation in respect of which the Common Share Interest Payment Election Notice was delivered;

(v) “Common Share Interest Payment Election Notice” means a written notice made by the Corporation to the Trustee specifying:

(i) the Interest Obligation to which the election relates;

(ii) the Common Share Interest Payment Election Amount;

(iii) the investment banks, brokers or dealers through which the Trustee shall seek bids to purchase the Common Shares and the conditions of such bids, which may include the minimum number of Common Shares, minimum price per Common Share, timing for closing for bids and such other matters as the Corporation may specify; and

(iv) that the Trustee shall accept through the investment banks, brokers or dealers selected by

8

the Corporation only those bids which comply with such notice;

(w) “Common Share Proceeds Investment” has the meaning attributed thereto in Section 10.1(h);

(x) “Common Share Purchase Agreement” means an agreement in customary form among the Corporation, the Trustee and the Persons making acceptable bids pursuant to a Common Share Bid Request, which complies with all applicable laws, including the Applicable Securities Legislation and the rules and regulations of any stock exchange on which the Debentures or Common Shares are then listed;

(y) “Common Share Redemption Right” has the meaning attributed thereto in Section 4.6(a);

(z) “Common Share Repayment Right” has the meaning attributed thereto in Section 4.10(a);

(aa) “Conversion Price” means the dollar amount for which each Common Share may be issued from time to time upon the conversion of Debentures or any series of Debentures which are by their terms convertible in accordance with the provisions of Article 6;

(bb) “Counsel” means a barrister or solicitor or firm of barristers or solicitors retained or employed by the Trustee or retained or employed by the Corporation and reasonably acceptable to the Trustee;

(cc) “Current Market Price” means, generally, the VWAP of the Common Shares converted into US dollars at the daily Bank of Canada noon rate of exchange for each day in such period and averaged for the 20 consecutive trading days ending five trading days preceding the applicable date or, in the event that the Common Shares are (a) listed on any U.S. Securities Exchange and (b) no longer listed on the TSX, the VWAP of the Common Shares on such U.S. Securities Exchange for the 20 consecutive trading days ending five trading days preceding the applicable date. If the Common Shares are not listed on the TSX or any U.S. Securities Exchange, reference shall be made for the purpose of the above calculation to the principal securities exchange or market on which the Common Shares are listed or quoted or if no such prices are available “Current Market Price” shall be the fair value of a Common Share as reasonably determined by the Board of Directors;

(dd) “Date of Conversion” has the meaning ascribed thereto in Section 6.4(b);

(ee) “Debenture Liabilities” has the meaning ascribed thereto in Section 5.1;

(ff) “Debentureholders” or “holders” means the Persons for the time being entered in the register for Debentures as registered holders of Debentures or any transferees of such Persons by endorsement or delivery;

(gg) “Debentures” means the debentures, notes or other evidence of indebtedness of the Corporation issued and certified hereunder, or deemed to be issued and certified hereunder, including, without limitation, the Initial Debentures, and for the time being outstanding, whether in definitive or interim form;

(hh) “Defeased Debentures” has the meaning ascribed thereto in Section 9.6(b);

(ii) “Depository” means, with respect to the Debentures of any series issuable or issued in the form of one or more Global Debentures, the person designated as depository by the Corporation pursuant to Section 3.2 until a successor depository shall have become such pursuant to the applicable

9

provisions of this Indenture, and thereafter “Depository” shall mean each person who is then a depository hereunder, and if at any time there is more than one such person, “Depository” as used with respect to the Debentures of any series shall mean each depository with respect to the Global Debentures of such series;

(jj) “Depository Participant” means a broker, dealer, bank, other financial institution or other person for whom, from time to time, a Depository effects book entry for a Global Debenture deposited with the Depository;

(kk) “Effective Date” has the meaning ascribed thereto in Section 2.4(k)(i);

(ll) “Event of Default” has the meaning ascribed thereto in Section 8.1;

(mm) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended;

(nn) “Extraordinary Resolution” has the meaning ascribed thereto in Section 13.12;

(oo) “Freely Tradeable” means, in respect of shares of capital of any class of any corporation, shares which: (i) are issuable without the necessity of filing a prospectus or any other similar offering document (other than such prospectus or similar offering document that has already been filed) under Applicable Securities Legislation and such issue does not constitute a distribution (other than a distribution already qualified by prospectus or similar offering document) under Applicable Securities Legislation; and (ii) can be traded by the holder thereof without any restriction under Applicable Securities Legislation, such as hold periods, except in the case of a control distribution (as defined in National Instrument 45-102: Resale of Securities), or a transaction or series of transaction incidental to a control distribution; provided, however, that it is agreed and understood that any Common Shares issuable upon conversion of, or in connection with (including upon maturity, redemptions or a Change of Control), the Restricted Global Debentures shall be “restricted securities” under the U.S. Securities Act and shall bear the U.S. Legend;

(pp) “Fully Registered Debentures” means Debentures registered as to both principal and interest;

(qq) “generally accepted accounting principles” or “GAAP” means generally accepted accounting principles from time to time approved by the Canadian Institute of Chartered Accountants (including as further described in Section 1.16);

(rr) “Global Debenture” means a Debenture that is issued to and registered in the name of the Depository, or its nominee, pursuant to Section 2.6 for purposes of being held by or on behalf of the Depository as custodian for participants in the Depository’s book-entry only registration system;

(ss) “Government Obligations” means securities issued or guaranteed by the Government of Canada or any province thereof;

(tt) “Guarantees” means any guarantee, undertaking to assume, endorse, contingently agree to purchase, or to provide funds for the payment of, or otherwise become liable in respect of, any indebtedness, liability or obligation of any Person;

(uu) “Initial Debentures” means the Debentures designated as “5.00% Convertible Unsecured Subordinated Debentures” and described in Section 2.4;

10

(vv) “Interest Account” has the meaning ascribed thereto in Section 10.1(h);

(ww) “Interest Obligation” means the obligation of the Corporation to pay interest on the Debentures, as and when the same becomes due;

(xx) “Interest Payment Date” means a date specified in a Debenture as the date on which interest on such Debenture shall become due and payable;

(yy) “Make Whole Premium” has the meaning ascribed thereto in Section 2.4(k)(i);

(zz) “Make Whole Premium Shares” has the meaning ascribed thereto in Section 2.4(k)(ii);

(aaa) “Material Subsidiary” means any Subsidiary of the Corporation which has consolidated assets equal to or greater than 10% of the consolidated assets of the Corporation and its Subsidiaries;

(bbb) “Maturity Account” means an account or accounts required to be established by the Corporation (and which shall be maintained by and subject to the control of the Trustee) for each series of Debentures issued pursuant to and in accordance with this Indenture, which account is established specifically to hold the funds for the payment of principal at maturity of a series of Debentures;

(ccc) “Maturity Date” means the date specified for maturity of any Debentures;

(ddd) “Maturity Notice” has the meaning ascribed thereto in Section 2.4(g);

(eee) “MI 62-104” means Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids;

(fff) “Neo Materials” or the “Corporation” means Neo Material Technologies Inc. and includes any successor to or of Neo Materials which shall have complied with the provisions of Article 11;

(ggg) “Non-Recourse Debt” means any indebtedness, liabilities or other obligations (including purchase money obligations), and guarantees, indemnities, endorsements (other than endorsements for collection in the ordinary course of business) or other contingent obligations in respect of obligations of another person and, in each case, incurred to finance the creation, development, construction or acquisition of real and tangible personal property (including fixtures) and any increases in or extensions, renewals or refunding of any such indebtedness, liabilities and obligations, provided that the recourse of the lender thereof or any agent, trustee, receiver or other person acting on behalf of the lender in respect of such indebtedness, liabilities and obligations or any judgment in respect thereof is limited in all circumstances to the real and tangible personal property (including fixtures) created, developed, constructed or acquired in respect of which such indebtedness, liabilities and obligations have been incurred and to any receivables, inventory, equipment, chattel paper, intangibles and other rights or collateral arising from or connected with such property (and, for certainty, shall include the shares or other ownership interests of a Subsidiary of the Corporation which holds only such property and other rights and collateral arising from or connected therewith) and to which the lender has recourse;

(hhh) “Offer Price” has the meaning ascribed thereto in Section 2.4(j)(i);

(iii) “Offeror’s Notice” has the meaning ascribed thereto in Section 12.3;

(jjj) “Offering” means the public offering of up to US$200,000,000 aggregate principal amount of Initial

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Debentures (up to US$230,000,000 with the exercise of the Over-Allotment Option), which are qualified for distribution by the Prospectus;

(kkk) “Officers’ Certificate” means a certificate of the Corporation signed by any two authorized officers or directors of the Corporation, in their capacities as officers or directors of the Corporation, and not in their personal capacities;

(lll) “Over-Allotment Option” means the option of the underwriters under the Offering to purchase up to an additional US$30,000,000 aggregate principal amount of Initial Debentures at a price of US$1000 per Initial Debenture (plus accrued interest, if any, from the initial date of closing of the Offering to the closing of the Over-Allotment Option);

(mmm) “Periodic Offering” means an offering of Debentures of a series from time to time, the specific terms of which Debentures, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Corporation upon the issuance of such Debentures from time to time;

(nnn) “Person” includes an individual, corporation, company, partnership, joint venture, association, trust, trustee, unincorporated organization or government or any agency or political subdivision thereof (and for the purposes of the definition of “Change of Control”, in addition to the foregoing, “Person” shall include any syndicate or group that would be deemed to be a “Person” under MI 62-104);

(ooo) “Privacy Laws” has the meaning ascribed thereto in Section 15.19;

(ppp) “Prospectus” means the (final) short form prospectus of the Corporation dated May 26, 2011;

(qqq) “Redemption Date” has the meaning ascribed thereto in Section 4.3;

(rrr) “Redemption Notice” has the meaning ascribed thereto in Section 4.3;

(sss) “Redemption Price” means, in respect of a Debenture, the amount, including accrued and unpaid interest up to (but excluding) the Redemption Date fixed for such Debenture, payable on the Redemption Date, which amount may be payable by the issuance of Freely Tradeable Common Shares as provided for in Section 4.6;

(ttt) “Regulation S” means Regulation S adopted by the United States Securities and Exchange Commission under the 1933 Act;

(uuu) “Restricted Global Debenture” means a Global Debenture that bears the U.S. Legend;

(vvv) “Restricted Physical Debenture” means a definitive certificate issued in accordance with subsection 3.2(b) that bears the U.S. Legend;

(www) “SEC” has the meaning ascribed thereto in Section 7.8;

(xxx) “Senior Creditor” means a holder or holders of Senior Indebtedness and includes any representative or representatives, agent or agents or trustee or trustees of any such holder or holders;

(yyy) “Senior Indebtedness” means (a) indebtedness of the Corporation or its Subsidiaries for borrowed money; (b) obligations of the Corporation or its Subsidiaries evidenced by bonds, debentures, notes

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or other similar instruments; (c) obligations of the Corporation or its Subsidiaries arising pursuant to or in relation to bankers’ acceptances, letters of credit and letters of guarantee (including payment and reimbursement obligations in respect thereof) or indemnities issued in connection therewith; (d) obligations of the Corporation or its Subsidiaries under any swap, hedging or other similar contracts or arrangements; (e) obligations of the Corporation or its Subsidiaries under Guarantees, indemnities, assurances, legally binding comfort letters or other contingent obligations relating to the Senior Indebtedness or other obligations of any other person which would otherwise constitute Senior Indebtedness within the meaning of this definition; (f) all indebtedness of the Corporation or its Subsidiaries representing the deferred purchase price of any property including, without limitation, purchase money mortgages; (g) accounts payable to trade creditors; (h) all renewals, extensions and refinancing of any of the foregoing; (i) all accrued and unpaid interest, fees and other amounts in respect of any of the foregoing; and (j) all costs and expenses incurred by or on behalf of the holder of any Senior Indebtedness in enforcing payment or collection of any such Senior Indebtedness, including enforcing any security interest securing the same. “Senior Indebtedness” shall not include any indebtedness that would otherwise be Senior Indebtedness if it is expressly stated to be subordinate to or rank pari passu with the Debentures;

(zzz) “Senior Security” means all mortgages, liens, pledges, charges (whether fixed or floating), security interests or other encumbrances of any kind, contingent or absolute, held by or on behalf of any Senior Creditor and in any manner securing any Senior Indebtedness;

(aaaa) “Serial Meeting” has the meaning ascribed thereto in Section 13.2(b)(i);

(bbbb) “Stock Price” has the meaning ascribed thereto in Section 2.4(k)(ii);

(cccc) “Subsidiary” has the meaning ascribed thereto in the Securities Act (Ontario);

(dddd) “Time of Expiry” means the time of expiry of certain rights with respect to the conversion of Debentures under Article 6 which is to be set forth separately in the form and terms for each series of Debentures which by their terms are to be convertible;

(eeee) “Total Offer Price” has the meaning ascribed thereto in Section 2.4(j)(i);

(ffff) “trading day” means, with respect to the TSX, the TSX Venture Exchange or other market for securities, any day on which such exchange or market is open for trading or quotation;

(gggg) “Trustee” means Computershare Trust Company of Canada, or its successor or successors for the time being as trustee hereunder;

(hhhh) “TSX” means the Toronto Stock Exchange;

(iiii) “Unclaimed Funds Return Date” has the meaning ascribed thereto in Section 2.4(j)(vii);

(jjjj) “United States” or “U.S.” means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;

(kkkk) “Unrestricted Global Debenture” means a Global Debenture that does not bear the U.S. Legend;

(llll) “Unrestricted Physical Debenture” means a definitive certificate issued in accordance with subsection 3.2(b) that does not bear the U.S. Legend;

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(mmmm) “U.S. Legend” has the meaning ascribed thereto in Section 2.14;

(nnnn) “U.S. Securities Exchange” means “national securities exchange” as defined under Section 6 of the Exchange Act;

(oooo) “VWAP” means the volume weighted average trading price of the Common Shares (which must be calculated utilizing days in which the Common Shares actually trade) on the TSX (or if the Common Shares are no longer traded on the TSX, on such other exchange as the Common Shares are then traded); and

(pppp) “Written Direction of the Corporation” means an instrument in writing signed by any one officer or director of the Corporation.

1.2 Meaning of “Outstanding”

Every Debenture certified and delivered by the Trustee hereunder shall be deemed to be outstanding until it is cancelled, converted or redeemed or delivered to the Trustee for cancellation, conversion or redemption, or monies and/or Common Shares, as the case may be, for the payment thereof shall have been set aside under Section 9.2, provided that:

(a) Debentures which have been partially redeemed, purchased or converted shall be deemed to be outstanding only to the extent of the unredeemed, unpurchased or unconverted part of the principal amount thereof;

(b) when a new Debenture has been issued in substitution for a Debenture which has been lost, stolen or destroyed, only one of such Debentures shall be counted for the purpose of determining the aggregate principal amount of Debentures outstanding; and

(c) for the purposes of any provision of this Indenture entitling holders of outstanding Debentures to vote, sign consents, requisitions or other instruments or take any other action under this Indenture, or to constitute a quorum of any meeting of Debentureholders, Debentures owned directly or indirectly, legally or equitably, by the Corporation shall be disregarded except that:

(i) for the purpose of determining whether the Trustee shall be protected in relying on any such vote, consent, requisition or other instrument or action, or on the holders of Debentures present or represented at any meeting of Debentureholders, only the Debentures which the Trustee knows are so owned shall be so disregarded; and

(ii) Debentures so owned which have been pledged in good faith other than to the Corporation shall not be so disregarded if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Debentures, sign consents, requisitions or other instruments or take such other actions in his discretion free from the control of the Corporation or a Subsidiary of the Corporation.

1.3 Interpretation

In this Indenture:

(a) words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa;

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(b) all references to Articles and Schedules refer, unless otherwise specified, to articles of and schedules to this Indenture;

(c) all references to Sections refer, unless otherwise specified, to Sections, subsections or clauses of this Indenture;

(d) words and terms denoting inclusiveness (such as “include” or “includes” or “including”), whether or not so stated, are not limited by and do not imply limitation of their context or the words or phrases which precede or succeed them;

(e) reference to any agreement or other instrument in writing means such agreement or other instrument in writing as amended, modified, replaced or supplemented from time to time;

(f) unless otherwise indicated, reference to a statute shall be deemed to be a reference to such statute as amended, re-enacted or replaced from time to time; and

(g) unless otherwise indicated, time periods within which a payment is to be made or any other action is to be taken hereunder shall be calculated by including the day on which the period commences and excluding the day on which the period ends.

1.4 Headings, etc.

The division of this Indenture into Articles and Sections, the provision of a Table of Contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture or of the Debentures.

1.5 Time of Essence

Time shall be of the essence of this Indenture.

1.6 Monetary References

Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of the United States unless otherwise expressed.

1.7 Invalidity, etc.

Any provision hereof which is prohibited or unenforceable shall be ineffective only to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof.

1.8 Language

Each of the parties hereto hereby acknowledges that it has consented to and requested that this Indenture and all documents relating thereto, including, without limiting the generality of the foregoing, the form of Debenture attached hereto as Schedule “A”, be drawn up in the English language only.

1.9 Successors and Assigns

All covenants and agreements of the Corporation in this Indenture and the Debentures shall bind its successors and assigns, whether so expressed or not. All covenants and agreements of the Trustee in this

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Indenture shall bind its successors.

1.10 Severability

In case any provision in this Indenture or in the Debentures shall be invalid, illegal or unenforceable, such provision shall be deemed to be severed herefrom or therefrom and the validity, legality and enforceability of the remaining provisions shall not in any way be affected, prejudiced or impaired thereby.

1.11 Entire Agreement

This Indenture and all supplemental indentures and Schedules hereto and thereto, and the Debentures issued hereunder and thereunder, together constitute the entire agreement between the parties hereto with respect to the indebtedness created hereunder and thereunder and under the Debentures and supersedes as of the date hereof all prior memoranda, agreements, negotiations, discussions and term sheets, whether oral or written, with respect to the indebtedness created hereunder or thereunder and under the Debentures.

1.12 Benefits of Indenture

Nothing in this Indenture or in the Debentures, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any paying agent, the holders of Debentures, the Senior Creditors (to the extent provided in Article 5 only), and (to the extent provided in Section 8.11) the holders of Common Shares, any benefit or any legal or equitable right, remedy or claim under this Indenture.

1.13 Applicable Law and Attornment

This Indenture, any supplemental indenture and the Debentures shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated in all respects as Ontario contracts. With respect to any suit, action or proceedings relating to this Indenture, any supplemental indenture or any Debenture, the Corporation, the Trustee and each holder irrevocably submit and attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario.

1.14 Currency of Payment

Unless otherwise indicated in a supplemental indenture with respect to any particular series of Debentures, all payments to be made under this Indenture or a supplemental indenture shall be made in U.S. dollars.

1.15 Non-Business Days

Whenever any payment to be made hereunder shall be due, any period of time would begin or end, any calculation is to be made or any other action is to be taken on, or as of, or from a period ending on, a day other than a Business Day, such payment shall be made, such period of time shall begin or end, such calculation shall be made and such other action shall be taken, as the case may be, unless otherwise specifically provided herein, on or as of the next succeeding Business Day without any additional interest, cost or charge to the Corporation.

1.16 Accounting Terms

Except as hereinafter provided or as otherwise indicated in this Indenture, all calculations required

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or permitted to be made hereunder pursuant to the terms of this Indenture shall be made in accordance with GAAP. For greater certainty, GAAP shall include any accounting standards, including International Financial Reporting Standards, that may from time to time be approved for general application by the Canadian Institute of Chartered Accountants.

1.17 Calculations

The Corporation shall be responsible for making all calculations called for hereunder including, without limitation, calculations of Current Market Price. Whenever it is necessary to calculate the Current Market Price or any other value or amount hereunder in United States dollars for the purpose of payment or otherwise, and the Current Market Price or other value or amount to be calculated is not at the relevant time expressed in United States dollars, then the Current Market Price or other value or amount to be calculated hereunder, as applicable, shall be converted into United States dollars based on: (i) in the event that the Current Market Price or other value or amount to be calculated hereunder is expressed in Canadian dollars, the Bank of Canada daily noon rate of exchange for converting Canadian dollars into United States dollars on the Business Day immediately preceding the applicable payment or other conversion date, as applicable, or (ii) in the event that the Current Market Price or other value or amount to be calculated hereunder is expressed in any currency other than United States dollars, the exchange rate for the purchase of United States dollars with such other currency using for the purposes of such calculation the applicable noon rate posted by the Federal Reserve Bank of New York on the Business Day immediately preceding the applicable payment or other conversion date, as applicable. The Corporation shall make such calculations in good faith and, absent manifest error, the Corporation’s calculations shall be final and binding on holders and the Trustee. The Corporation will provide a schedule of its calculations to the Trustee and the Trustee shall be entitled to rely conclusively on the accuracy of such calculations without independent verification.

1.18 Schedules

The following Schedules are incorporated into and form part of this Indenture:

Schedule “A” - Form of Debenture

Schedule “B” - Form of Redemption Notice

Schedule “C” - Form of Maturity Notice

Schedule “D” - Form of Notice of Conversion

Schedule “E” - Form of Certificate of Transfer

Schedule “F” - Form of Certificate of Exchange

Schedule “G” - Common Share Legends

In the event of any inconsistency between the provisions of any Section of this Indenture and the provisions of the Schedules which form a part hereof, the provisions of this Indenture shall prevail to the extent of the inconsistency.

ARTICLE 2
THE DEBENTURES

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2.1 Limit of Debentures

Subject to the limitation in respect of the Initial Debentures set out in Section 2.4(a), the aggregate principal amount of Debentures authorized to be issued under this Indenture is unlimited, but Debentures may be issued only upon and subject to the conditions and limitations herein set forth.

2.2 Terms of Debentures of any Series

The Debentures may be issued in one or more series. There shall be established herein or in or pursuant to one or more indentures supplemental hereto, prior to the initial issuance of Debentures of any particular series:

(a) the designation of the Debentures of the series (which need not include the term “Debentures”), which shall distinguish the Debentures of the series from the Debentures of all other series;

(b) any limit upon the aggregate principal amount of the Debentures of the series that may be certified and delivered under this Indenture (except for Debentures certified and delivered upon registration of, transfer of, amendment of, or in exchange for, or in lieu of, other Debentures of the series pursuant to Sections 2.9, 2.10, 3.2, 3.3 and 3.6 and Article 4 and Article 6);

(c) the date or dates on which the principal of the Debentures of the series is payable;

(d) the rate or rates at which the Debentures of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and on which record date, if any, shall be taken for the determination of holders to whom such interest shall be payable and/or the method or methods by which such rate or rates or date or dates shall be determined;

(e) the place or places where the principal of and any interest on Debentures of the series shall be payable or where any Debentures of the series may be surrendered for registration of transfer or exchange;

(f) the right, if any, of the Corporation to redeem Debentures of the series, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which, Debentures of the series may be so redeemed;

(g) the obligation, if any, of the Corporation to redeem, purchase or repay Debentures of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a holder thereof and the price or prices at which, the period or periods within which, the date or dates on which, and any terms and conditions upon which, Debentures of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligations;

(h) if other than denominations of US$1,000 and any integral multiple thereof, the denominations in which Debentures of the series shall be issuable;

(i) subject to the provisions of this Indenture, any trustee, Depositories, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Debentures of the series;

(j) any other events of default or covenants with respect to the Debentures of the series;

(k) whether and under what circumstances the Debentures of the series will be convertible into or exchangeable for securities of any Person;

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(l) the form and terms of the Debentures of the series;

(m) if applicable, that the Debentures of the series shall be issuable in whole or in part as one or more Global Debentures and, in such case, the Depository or Depositories for such Global Debentures in whose name the Global Debentures will be registered, and any circumstances other than or in addition to those set forth in Section 2.9 or 3.2 or those applicable with respect to any specific series of Debentures, as the case may be, in which any such Global Debenture may be exchanged for Fully Registered Debentures, or transferred to and registered in the name of a person other than the Depository for such Global Debentures or a nominee thereof;

(n) if other than United States currency, the currency in which the Debentures of the series are issuable; and

(o) any other terms of the Debentures of the series (which terms shall not be inconsistent with the provisions of this Indenture).

All Debentures of any one series shall be substantially identical, except as may otherwise be established herein or by or pursuant to a resolution of the Board of Directors, Officers’ Certificate or in an indenture supplemental hereto. All Debentures of any one series need not be issued at the same time and may be issued from time to time, including pursuant to a Periodic Offering, consistent with the terms of this Indenture, if so provided herein, by or pursuant to such resolution of the Board of Directors, Officers’ Certificate or in an indenture supplemental hereto.

2.3 Form of Debentures

Except in respect of the Initial Debentures, the form of which is provided for herein, the Debentures of each series shall be substantially in such form or forms (not inconsistent with this Indenture) as shall be established herein or by or pursuant to one or more resolutions of the Board of Directors (or to the extent established pursuant to, rather than set forth in, a resolution of the Board of Directors, in an Officers’ Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto or with any rules or regulations of any securities exchange or securities regulatory authority or to conform to general usage, all as may be determined by the directors or officers of the Corporation executing such Debentures on behalf of the Corporation, as conclusively evidenced by their execution of such Debentures.

2.4 Form and Terms of Initial Debentures

(a) The first series of Debentures (the “Initial Debentures”) authorized for issue immediately is limited to an aggregate principal amount of up to US$230,000,000 and shall be designated as “5.00% Convertible Unsecured Subordinated Debentures”.

(b) The Initial Debentures shall be dated as of the date of closing of the Offering and shall mature on December 31, 2017 (the “Maturity Date” for the Initial Debentures).

(c) The Initial Debentures shall bear interest from the date of issue at the rate of 5.00% per annum (based on a year of 360 days comprised of twelve 30-day months), payable in equal (with the exception of the first interest payment, which will include interest from and including the date of closing of the

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Offering as set forth below) semi-annual payments in arrears on June 30 and December 31 in each year, the first such payment to fall due on December 31, 2011 and the last such payment (representing interest payable from the last Interest Payment Date to, but excluding, the Maturity Date of the Initial Debentures) to fall due on December 31, 2017, payable after as well as before maturity and after as well as before default, with interest on amounts in default at the same rate, compounded semi-annually. For certainty, the first interest payment will include interest accrued from and including the date of closing of the Offering to, but excluding, December 31, 2011, which will be equal to US$29.03 for each US$1,000 principal amount of Initial Debentures. Any payment required to be made on any day that is not a Business Day will be made on the next succeeding Business Day. The record dates for the payment of interest on the Initial Debentures will be June 15 and December 15 in each year (or the first Business Day prior to such date if not a Business Day).

(d) The Initial Debentures will be redeemable in accordance with the terms of Article 4, provided that the Initial Debentures will not be redeemable before December 31, 2014, except in the event of the satisfaction of certain conditions after a Change of Control has occurred as outlined herein. On and after January 1, 2015 and at any time prior to December 31, 2016, provided that the Current Market Price at the time of the Redemption Notice is at least 125% of the Conversion Price, the Initial Debentures may be redeemed at the option of the Corporation in whole or in part from time to time on notice as provided for in Section 4.3 at a Redemption Price equal to their principal amount plus accrued and unpaid interest thereon up to (but excluding) the Redemption Date. On or after January 1, 2017 and at any time prior to the Maturity Date, the Initial Debentures may be redeemed at the option of the Corporation in whole or in part from time to time on notice as provided for in Section 4.3 at a Redemption Price equal to the principal amount plus accrued and unpaid interest thereon up to (but excluding) the Redemption Date. The Redemption Notice for the Initial Debentures shall be substantially in the form of Schedule “B”. In connection with the redemption of the Initial Debentures, the Corporation may, at its option and subject to the provisions of Section 4.6 and subject to regulatory approval, elect to satisfy its obligation to pay all or a portion of the aggregate Redemption Price of the Initial Debentures to be redeemed by issuing and delivering to the holders of such Initial Debentures, such number of Freely Tradeable Common Shares as is obtained by dividing the aggregate Redemption Price by 95% of the Current Market Price in effect on the Redemption Date. If the Corporation elects to exercise such option, it shall so specify and provide details in the Redemption Notice.

(e) The Initial Debentures will be subordinated to all existing and future Senior Indebtedness of the Corporation in accordance with the provisions of Article 5. In accordance with Section 2.12, the Initial Debentures will rank pari passu with each other series of Debentures issued under this Indenture or under indentures supplemental to this Indenture (regardless of their actual date or terms of issue) and, except as prescribed by law, with all other existing and future unsecured indebtedness of the Corporation other than Senior Indebtedness.

(f) Upon and subject to the provisions and conditions of Article 6 and Section 3.7, the holder of each Initial Debenture shall have the right at such holder’s option, at any time prior to the close of business on the earlier of (i) the Business Day immediately preceding the Maturity Date of the Initial Debentures; (ii) if the Initial Debentures are called for redemption, on the Business Day immediately preceding the date specified by the Corporation for redemption of the Initial Debentures; or (iii) if subject to repurchase pursuant to a Change of Control, on the Business Day immediately preceding the payment date, subject to the satisfaction of certain conditions, by notice to the holders of Initial Debentures in accordance with Sections 2.4(d) and 4.3 (the earlier of which will be the “Time of Expiry” for the purposes of Article 6 in respect of the Initial Debentures), to convert any part, being

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US$1,000 or an integral multiple thereof, of the principal amount of a Debenture into Common Shares at the Conversion Price in effect on the Date of Conversion. To the extent a redemption is a redemption in part only of the Initial Debentures, such right to convert, if not exercised prior to the applicable Time of Expiry, shall survive as to any Initial Debentures not redeemed or converted and be applicable to the next succeeding Time of Expiry.

The Conversion Price in effect on the date hereof for each Common Share to be issued upon the conversion of Initial Debentures shall be equal to US$13.80 such that approximately 72.4637 Common Shares shall be issued for each US$1,000 principal amount of Initial Debentures so converted. Except as provided below, no adjustment in the number of Common Shares to be issued upon conversion will be made for dividends or distributions on Common Shares issuable upon conversion, the record date for the payment of which precedes the date upon which the holder becomes a holder of Common Shares in accordance with Article 6, or for interest accrued on Initial Debentures surrendered. No fractional Common Shares will be issued, and holders will receive a cash payment in satisfaction of any fractional interest based on the Current Market Price as of the Date of Conversion. The Conversion Price applicable to, and the Common Shares, securities or other property receivable on the conversion of, the Initial Debentures is subject to adjustment pursuant to the provisions of Section 2.4(k) and Section 6.5.

Holders converting their Initial Debentures will receive, in addition to the applicable number of Common Shares, accrued and unpaid interest (less any taxes required to be deducted) in respect of the Initial Debentures surrendered for conversion up to but excluding the Date of Conversion from, and including, the most recent Interest Payment Date in accordance with Section 6.4(e). For clarity, payment of such interest, whether in cash or by delivery of Freely Tradeable Common Shares pursuant to the exercise of the Common Share Interest Payment Election, may, at the option of the Corporation, be paid on the next regularly scheduled Interest Payment Date following the Date of Conversion.

Holders of Initial Debentures surrendered for conversion during the period from the close of business on any regular record date for the payment of interest on the Initial Debentures to the opening of business on the next succeeding Interest Payment Date will receive the semi-annual interest payable on such Initial Debentures on the corresponding Interest Payment Date notwithstanding the conversion. For greater certainty, such obligation will constitute a continuation of the obligation to pay accrued interest thereon, and not the satisfaction of the obligation to pay such accrued interest by the issuance of a new obligation. The Conversion Price will not be adjusted for accrued interest.

Notwithstanding any other provisions of this Indenture, if a Debenture is surrendered for conversion on an Interest Payment Date or during the five preceding Business Days, the person or persons entitled to receive Common Shares in respect of the Debenture so surrendered for conversion shall not become the holder or holders of record of such Common Shares until the Business Day following such Interest Payment Date.

A Debenture in respect of which a holder has accepted a notice in respect of a Change of Control Purchase Offer pursuant to the provisions of Section 2.4(j) may be surrendered for conversion only if such notice is withdrawn in accordance with this Indenture.

(g) On redemption or maturity of the Initial Debentures, the Corporation may, at its option and subject to the provisions of Section 4.6 and Section 4.10, as applicable, and subject to regulatory approval, elect to satisfy its obligation to pay all or a portion of the aggregate principal amount of the Initial Debentures due on redemption or maturity, by issuing and delivering to such holders of Initial Debentures Freely Tradeable Common Shares pursuant to the provisions of Sections 4.6 and 4.10,

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as applicable. If the Corporation elects to exercise such option, it shall provide details in the Redemption Notice or deliver a maturity notice (the “Maturity Notice”) to the holders of the Initial Debentures in substantially the form of Schedule “C” and provide the necessary details.

(h) The Initial Debentures shall be issued in denominations of US$1,000 and integral multiples of US$1,000. Each Initial Debenture and the certificate of the Trustee endorsed thereon shall be issued in substantially the form set out in Schedule “A”, with such insertions, omissions, substitutions or other variations as shall be required or permitted by this Indenture, and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto or with any rules or regulations of any securities exchange or securities regulatory authority or to conform with general usage, all as may be determined by the Board of Directors executing such Initial Debenture in accordance with Section 2.7 hereof, as conclusively evidenced by their execution of an Initial Debenture. Each Initial Debenture shall additionally bear such distinguishing letters and numbers as the Trustee shall approve. Notwithstanding the foregoing, an Initial Debenture may be in such other form or forms as may, from time to time, be, approved by a resolution of the Board of Directors, or as specified in an Officers’ Certificate. The Initial Debentures may be engraved, lithographed, printed, mimeographed or typewritten or partly in one form and partly in another.

The Initial Debentures shall be issued as one or more Global Debentures and the Global Debentures will be registered in the name of the Depository which, as of the date hereof, shall be CDS Clearing and Depository Services Inc. (or any nominee of the Depository). No beneficial holder will receive definitive certificates representing their interest in Debentures except as provided in this Section 2.4(h) and Section 3.2. A Global Debenture may be exchanged for Debentures in registered form that are not Global Debentures, or transferred to and registered in the name of a person other than the Depository for such Global Debentures or a nominee thereof, as provided in Section 3.2.

(i) Upon and subject to the provisions of Article 10, the Corporation may elect, from time to time, to satisfy its Interest Obligation on the Initial Debentures on any Interest Payment Date (including, for greater certainty, following conversion or upon maturity or redemption) by delivering: (i) cash, (ii) Freely Tradeable Common Shares; or (iii) a combination of (i) and (ii) to the Trustee pursuant to the Common Share Interest Payment Election.

(j) Within 30 days following the occurrence of a Change of Control, and subject to the provisions and conditions of this Section 2.4(j), the Corporation shall be obligated to offer to purchase all of the Initial Debentures then outstanding. The terms and conditions of such obligation are set forth below:

(i) Within 30 days following the occurrence of a Change of Control, the Corporation shall deliver to the Trustee, and the Trustee shall promptly deliver to the holders of the Initial Debentures, a notice stating that there has been a Change of Control and specifying the date on which such Change of Control occurred and the circumstances or events giving rise to such Change of Control (a “Change of Control Notice”) together with an offer in writing (the “Change of Control Purchase Offer”) to purchase, on the Change of Control Purchase Date (as defined below), all (or any portion actually tendered to such offer) of the Initial Debentures then outstanding from the holders thereof made in accordance with the requirements of Applicable Securities Legislation at a price per Initial Debenture equal to 100% of the principal amount thereof (the “Offer Price”) plus accrued and unpaid interest on such Initial Debentures up to, but excluding, the Change of Control Purchase Date

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(collectively, the “Total Offer Price”). If such Change of Control Purchase Date is after a record date for the payment of interest on the Initial Debentures but on or prior to an Interest Payment Date, then the interest payable on such date will be paid to the holder of record of the Debentures on the relevant record date. The “Change of Control Purchase Date” shall be the date that is 30 Business Days after the date that the Change of Control Notice and Change of Control Purchase Offer are delivered to holders of Initial Debentures.

(ii) If 90% or more in aggregate principal amount of Initial Debentures outstanding on the date the Corporation provides the Change of Control Notice and the Change of Control Purchase Offer to holders of the Initial Debentures have been tendered for purchase pursuant to the Change of Control Purchase Offer on the expiration thereof, the Corporation has the right upon written notice provided to the Trustee within 10 days following the expiration of the Change of Control Purchase Offer, to redeem all the Initial Debentures remaining outstanding on the expiration of the Change of Control Purchase Offer at the Total Offer Price as at the Change of Control Purchase Date (the “90% Redemption Right”).

(iii) Upon receipt of notice that the Corporation has exercised or is exercising the 90% Redemption Right and is acquiring the remaining Initial Debentures, the Trustee shall promptly provide written notice to each Debentureholder that did not previously accept the Offer that:

(A) the Corporation has exercised the 90% Redemption Right and is purchasing all outstanding Initial Debentures effective on the expiry of the Change of Control Purchase Offer at the Total Offer Price, and shall include a calculation of the amount payable to such holder as payment of the Total Offer Price as at the Change of Control Purchase Date;

(B) each such holder must transfer their Initial Debentures to the Trustee on the same terms as those holders that accepted the Change of Control Purchase Offer and must send their respective Initial Debentures, duly endorsed for transfer, to the Trustee within 10 days after the sending of such notice; and

(C) the rights of such holder under the terms of the Initial Debentures and this Indenture cease effective as of the date of expiry of the Change of Control Purchase Offer provided the Corporation has, on or before the time of notifying the Trustee of the exercise of the 90% Redemption Right, paid the Total Offer Price to, or to the order of, the Trustee and thereafter the Initial Debentures shall not be considered to be outstanding and the holder shall not have any right except to receive such holder’s Total Offer Price upon surrender and delivery of such holder’s Initial Debentures in accordance with the Indenture.

(iv) The Corporation shall, on or before 11:00 a.m., Toronto time, on the Business Day immediately prior to the Change of Control Purchase Date, deposit with the Trustee or any paying agent to the order of the Trustee, such sums of money as may be sufficient to pay the Total Offer Price of the Initial Debentures to be purchased or redeemed by the Corporation on the Change of Control Purchase Date (less any tax required by law to be deducted in respect of accrued and unpaid interest), provided the Corporation may elect to satisfy this requirement by providing the Trustee with a certified cheque or wire transfer for such amounts required under this Section 2.4(j)(iv) post-dated to the date of expiry of the Change

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of Control Purchase Offer. The Corporation shall also deposit with the Trustee a sum of money sufficient to pay any charges or expenses which may be incurred by the Trustee in connection with such purchase. Every such deposit shall be irrevocable. From the sums so deposited, the Trustee shall pay or cause to be paid to the holders of such Initial Debentures, the Total Offer Price to which they are entitled (less any tax required by law to be deducted in respect of accrued and unpaid interest) on the Corporation’s purchase. All Initial Debentures in respect of which payment of the Total Offer Price has been made shall be cancelled by the Trustee.

(v) In the event that one or more of such Initial Debentures being purchased in accordance with this Section 2.4(j) becomes subject to purchase in part only, upon surrender of such Initial Debentures for payment of the Total Offer Price, the Corporation shall execute and the Trustee shall certify and deliver without charge to the holder thereof or upon the holder’s order, one or more new Initial Debentures for the portion of the principal amount of the Initial Debentures not purchased.

(vi) Initial Debentures for which holders have accepted the Change of Control Purchase Offer and Initial Debentures which the Corporation has elected to redeem in accordance with this Section 2.4(j) shall become due and payable at the Total Offer Price on the Change of Control Purchase Date, in the same manner and with the same effect as if it were the date of maturity specified in such Initial Debentures, anything therein or herein to the contrary notwithstanding, and from and after the Change of Control Purchase Date, if the money necessary to purchase or redeem, or the Common Shares necessary to purchase or redeem, the Initial Debentures shall have been deposited as provided in this Section 2.4(j) and affidavits or other proofs satisfactory to the Trustee as to the publication and/or mailing of such notices shall have been lodged with it, interest on the Initial Debentures shall cease. If any question shall arise as to whether any notice has been given as above provided and such deposit made, such question shall be decided by the Trustee whose decision shall be final and binding upon all parties in interest.

(vii) In case the holder of any Initial Debenture to be purchased or redeemed in accordance with this Section 2.4(j) shall fail on or before the Change of Control Purchase Date to so surrender such holder’s Initial Debenture or shall not within such time accept payment of the monies payable, to take delivery of certificates representing such Common Shares issuable in respect thereof, or give such receipt therefor, if any, as the Trustee may require, such monies may be set aside in trust, or such certificates may be held in trust, without interest, either in the deposit department of the Trustee or in a chartered bank, and such setting aside shall for all purposes be deemed a payment to the Debentureholder of the sum or the Common Shares so set aside and the Debentureholder shall have no other right except to receive payment of the monies so paid and deposited, or take delivery of the certificates so deposited, or both, upon surrender and delivery of such holder’s Initial Debenture. In the event that any money or certificates representing Common Shares required to be deposited hereunder with the Trustee or any depository or paying agent on account of principal, premium, if any, or interest, if any, on Initial Debentures issued hereunder shall remain so deposited for a period of six years from the Change of Control Purchase Date, then such monies, or certificates representing Common Shares, together with any accumulated interest thereon, or any distributions paid thereon, shall at the end of such period be paid over or delivered over by the Trustee or such depository or paying agent to the Corporation and the Trustee shall not be responsible to Debentureholders for any amounts owing to them. Notwithstanding the

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foregoing, the Trustee will pay any remaining funds deposited hereunder on that date which is five years less one day after the Change of Control Purchase Date (the “Unclaimed Funds Return Date”) to the Corporation upon receipt from the Corporation of an unconditional letter of credit from a Canadian chartered bank in an amount equal to or in excess of the amount of the remaining funds. If the remaining funds are paid to the Corporation prior to the Unclaimed Funds Return Date, the Corporation shall reimburse the Trustee for any amounts required to be paid by the Trustee to a holder of a Debenture pursuant to the Change of Control Purchase Offer after the date of such payment of the remaining funds to the Corporation but prior to the Unclaimed Funds Return Date.

(viii) Subject to the provisions above related to Initial Debentures purchased in part, all Initial Debentures redeemed and paid under this Section 2.4(j) shall forthwith be delivered to the Trustee and cancelled and no Initial Debentures shall be issued in substitution therefor.

(k) In addition to the requirements of Section 2.4(j) in respect of a Change of Control, the following provisions shall apply in respect of the occurrence of a Cash Change of Control:

(i) In the event of the occurrence of a Cash Change of Control, then subject to regulatory approval, during the period (the “Cash Change of Control Conversion Period”) beginning 10 trading days before the anticipated effective date of the Change of Control (the “Effective Date”) and ending on the date that is 30 days after the Change of Control Notice and Change of Control Purchase Offer are delivered or mailed to holders of Initial Debentures in accordance with Section 2.4(j), holders of Initial Debentures will be entitled to convert their Initial Debentures, in whole or in part, and receive, in addition to the number of Common Shares (or, at the option of the Corporation, cash or other property or securities in substitution therefor) that such holders are entitled to receive upon such conversion in accordance with the provisions and conditions of Sections 2.4(f), 2.4(k)(v) and (vi) and Article 6, an additional number of Common Shares (or, at the option of the Corporation, cash or other property or securities in substitution therefor) per US$1,000 principal amount of Initial Debentures converted as set forth below (the “Make Whole Premium”).

(ii) The number of additional Common Shares per US$1,000 principal amount of Initial Debentures constituting the Make Whole Premium (the “Make Whole Premium Shares”) shall be determined by reference to the table following subsection (iii) below, based on the Effective Date and the price (the “Stock Price”) paid per Common Share in the transaction constituting the Change of Control. If holders of Common Shares receive only cash in the transaction constituting the Change of Control, the Stock Price shall be the cash amount paid per Common Share. Otherwise, the Stock Price shall be equal to the Current Market Price of the Common Shares immediately preceding the Effective Date; provided that for the purposes of this Section 2.4(k)(ii) and the determination of Current Market Price, the applicable period shall be calculated based on the 20 consecutive trading days ending five trading days preceding the applicable date. Notwithstanding the foregoing, in no circumstances can the effective Conversion Price (calculated by dividing US$1,000 by the number of Common Shares issuable upon conversion, including the maximum number of Make Whole Premium Shares hereunder) be less than the maximum permitted discounted price permitted by the TSX (or such other exchange on which the Debentures are then listed) at the time of announcement of the Offering, prior to any adjustments that may be made to the Stock Price to correspond to an adjustment to the Conversion Price under this Indenture.

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(iii) The following table shows the number of Make Whole Premium Shares for each hypothetical Stock Price and Effective Date set forth below, expressed as additional Common Shares per US$1,000 principal amount of Debentures. For the avoidance of doubt, the Corporation shall not be obliged to pay the Make Whole Premium otherwise than by issuance of Common Shares upon conversion of the Initial Debentures in accordance with the provisions and conditions of Section 2.4(f) and Article 6. If the Stock Price or Effective Date are not set forth on the table then:

(A) if the actual Stock Price on the Effective Date is between two Stock Prices on the table or the Effective Date is between two Effective Dates on the table, the number of Make Whole Premium Shares will be determined by a straight-line interpolation between the amounts set forth for the two Stock Prices and the two Effective Dates on the table based on a 365-day year, as applicable,

(B) if the Stock Price on the Effective Date exceeds US$40 per Common Share, subject to adjustment as set forth herein, the number of Make Whole Premium Shares to be issued will be zero, and (iii) if the Stock Price on the Effective Date is less than US$9.96 per Common Share, subject to adjustment as set forth herein, the number of Make Whole Premium Shares to be issued will be zero.

Make Whole Premium Upon a Change of Control
(Number of Additional Common Shares per US$1,000 Debentures)

Stock Price

Effective Date	$9.96	$10.50	$11.00	$11.75	$12.25	$13.00	$13.75	$14.50	$15.50
02-Jun-11	27.938	25.075	22.964	20.282	18.763	16.811	15.18	13.815	12.313
02-Jun-12	27.938	22.774	20.323	17.612	16.084	14.136	12.525	11.195	9.756
02-Jun-13	27.938	22.774	18.445	15.244	13.671	11.672	10.029	8.689	7.265
02-Jun-14	27.938	22.774	18.445	13.34	11.683	9.553	7.766	6.273	4.654
02-Jun-15	27.938	22.774	18.445	12.643	10.119	8.017	6.309	4.901	3.313
02-Jun-16	27.938	22.774	18.445	12.643	9.169	4.855	2.963	1.73	0.766
31-Dec-16	27.938	22.774	18.445	12.643	9.169	4.459	0.2635	0.337	-
31-Dec-17	27.938	22.774	18.445	12.643	9.169	4.459	0.2635	-	-

Stock Price

Effective Date	$16.50	$17.50	$20.00	$22.50	$25.00	$27.50	$30.00	$35.00	$40.00
02-Jun-11	11.097	10.103	8.288	7.079	6.219	5.573	5.065	4.306	3.756
02-Jun-12	8.619	7.713	6.139	5.16	4.502	4.025	3.657	3.111	2.717
02-Jun-13	6.174	5.338	4.0000	3.272	2.831	2.53	2.301	1.964	1.717
02-Jun-14	3.42	2.527	1.392	1.032	0.888	0.8	0.732	0.627	0.549
02-Jun-15	1.953	0.77	-	-	-	-	-	-	-
02-Jun-16	0.299	0.081	-	-	-	-	-	-	-
31-Dec-16	-	-	-	-	-	-	-	-	-
31-Dec-17	-	-	-	-	-	-	-	-	-

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(iv) The Stock Prices set forth in the table above will be adjusted as of any date on which the Conversion Price of the Initial Debentures is adjusted. The adjusted Stock Prices will equal the Stock Prices applicable immediately preceding such adjustment multiplied by a fraction, the denominator of which is the Conversion Price immediately preceding the adjustment giving rise to the Stock Price adjustment and the numerator of which is the Conversion Price as so adjusted. The number of additional Make Whole Premium Shares set forth in the table above will be adjusted in the same manner as the Conversion Price as set forth in Section 6.5 hereof, other than as a result of an adjustment of the Conversion Price by adding the Make Whole Premium as described above.

(v) Notwithstanding the foregoing, if the Date of Conversion of any Initial Debentures occurs during the period beginning on the 10th trading day prior to the Effective Date and ending at the close of business on the Effective Date, the holders of such Initial Debentures shall, on conversion of their Initial Debentures, only be entitled to receive that number of Make Whole Premium Shares (as may be adjusted pursuant to Section 6.5) on the Business Day immediately following the Effective Date and, for greater certainty, only if the Change of Control occurs.

(vi) The Make Whole Premium Shares shall be deemed to have been issued upon conversion of Initial Debentures on the Business Day immediately following the Effective Date. Section 6.5 shall apply to such conversion and, for greater certainty, the former holders of Initial Debentures in respect of which the Make Whole Premium Shares are issuable shall be entitled to receive and shall accept, in lieu of the Make Whole Premium Shares, the number of shares or other securities or cash or other property of the Corporation or of the Person or other entity resulting from the transaction that constitutes the Cash Change of Control that such holders would have been entitled to receive if such holders had been the registered holders of the applicable number of Make Whole Premium Shares on the Effective Date.

(vii) Except as otherwise provided in this Section 2.4(k), all other provisions of this Indenture applicable to a conversion of Initial Debentures shall apply to a conversion of Initial Debentures during the Cash Change of Control Conversion Period.

(l) The Trustee shall be provided with the documents and instruments referred to in Sections 2.5(b), 2.5(c) and 2.5(d) with respect to the Initial Debentures prior to the issuance of the Initial Debentures.

(m) Notwithstanding all of the foregoing, if holders of Debentures would otherwise be entitled to receive upon conversion of the Initial Debentures, any property (including cash) or securities that would not constitute “prescribed securities” for the purposes of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada) as it applied on December 31, 2007 (referred to herein as “ineligible consideration”), such holders shall not be entitled to receive such ineligible consideration but the Corporation or its successor or acquiror, as the case may be, shall have the right (at the sole option of the Corporation or such successor or acquiror, as the case may be) to deliver either such ineligible consideration or such “prescribed securities” with a market value (as conclusively determined by the Board of Directors) equal to the market value of such ineligible consideration.

(n) If required by applicable law or administrative practice, the Corporation (or any agent acting on its behalf) shall withhold or deduct the relevant amounts in respect of taxes and remit such amounts to the appropriate governmental authority in the manner and within the time required.

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2.5 Certification and Delivery of Additional Debentures

The Corporation may from time to time request the Trustee to certify and deliver Additional Debentures of any series by delivering to the Trustee the documents referred to below in this Section 2.5 whereupon the Trustee shall certify such Debentures and cause the same to be delivered in accordance with the Written Direction of the Corporation referred to below or pursuant to such procedures acceptable to the Trustee as may be specified from time to time by a Written Direction of the Corporation. The maturity date, issue date, interest rate (if any) and any other terms of the Debentures of such series shall be set forth in or determined by or pursuant to such Written Direction of the Corporation. In certifying such Debentures, the Trustee shall be entitled to receive and shall be fully protected in relying upon, unless and until such documents have been superseded or revoked:

(a) an Officers’ Certificate and/or executed supplemental indenture by or pursuant to which the form and terms of such Additional Debentures were established;

(b) a Written Direction of the Corporation requesting certification and delivery of such Additional Debentures and setting forth delivery instructions, provided that, with respect to Debentures of a series subject to a Periodic Offering:

(i) such Written Direction of the Corporation shall be delivered by the Corporation to the Trustee prior to the delivery to the Trustee of such Additional Debentures of such series for certification and delivery;

(ii) the Trustee shall certify and deliver Additional Debentures of such series for original issue from time to time, in an aggregate principal amount not exceeding the aggregate principal amount, if any, established for such series, pursuant to a Written Direction of the Corporation; and

(iii) the maturity date or dates, issue date or dates, interest rate or rates (if any) and any other terms of Additional Debentures of such series shall be determined by an executed supplemental indenture or by Written Direction of the Corporation;

(c) an opinion of Counsel, in form and substance satisfactory to the Trustee, acting reasonably, to the effect that all requirements imposed by this Indenture and by law in connection with the proposed issue of Additional Debentures have been complied with, subject to the delivery of certain documents or instruments specified in such opinion; and

(d) an Officers’ Certificate (which Officers’ Certificate shall be in such form that satisfies all applicable laws) certifying that the Corporation is not in default under this Indenture, that the terms and conditions for the certification and delivery of Additional Debentures (including those set forth in Section 15.5), have been complied with subject to the delivery of any documents or instruments specified in such Officers’ Certificate and that no Event of Default exists or will exist upon such certification and delivery.

2.6 Issue of Global Debentures

(a) The Corporation may specify that the Debentures of a series are to be issued in whole or in part as one or more Global Debentures registered in the name of a Depository, or its nominee, designated by the Corporation in the Written Direction of the Corporation delivered to the Trustee at the time of issue of such Debentures, and in such event the Corporation shall execute and the Trustee shall

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certify and deliver one or more Global Debentures that shall:

(i) represent an aggregate amount equal to the principal amount of the outstanding Debentures of such series to be represented by one or more Global Debentures;

(ii) be delivered by the Trustee to such Depository or pursuant to such Depository’s instructions; and

(iii) bear a legend substantially to the following effect:

“This Debenture is a Global Debenture within the meaning of the Indenture herein referred to and is registered in the name of a Depository or a nominee thereof. This Debenture may not be transferred to or exchanged for Debentures registered in the name of any person other than the Depository or a nominee thereof and no such transfer may be registered except in the limited circumstances described in the Indenture. Every Debenture authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, this Debenture shall be a Global Debenture subject to the foregoing, except in such limited circumstances described in the Indenture.

Unless this certificate is presented by an authorized representative of CDS Clearing and Depository Services Inc. (“CDS”) to Neo Material Technologies Inc. (the “Issuer”) or its agent for registration of transfer, exchange or payment, and any certificate issued in respect thereof is registered in the name of CDS & Co., or in such other name as is requested by an authorized representative of CDS (and any payment is made to CDS & Co. or to such other entity as is requested by an authorized representative of CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered holder hereof, CDS & Co., has a property interest in the securities represented by this certificate herein and it is a violation of its rights for another person to hold, transfer or deal with this certificate.”

(b) Each Depository designated for a Global Debenture must, at the time of its designation and at all times while it serves as such Depository, be a clearing agency registered or designated under the securities legislation of the jurisdiction where the Depository has its principal offices.

2.7 Execution of Debentures

All Debentures shall be signed (either manually or by facsimile signature) by any one authorized director or officer of the Corporation holding office at the time of signing. A facsimile signature upon a Debenture shall for all purposes of this Indenture be deemed to be the signature of the person whose signature it purports to be. Notwithstanding that any person whose signature, either manual or in facsimile, appears on a Debenture as a director or officer may no longer hold such office at the date of the Debenture or at the date of the certification and delivery thereof, such Debenture shall be valid and binding upon the Corporation and entitled to the benefits of this Indenture.

2.8 Certification

No Debenture shall be issued or, if issued, shall be obligatory or shall entitle the holder to the benefits of this Indenture, until it has been manually certified by or on behalf of the Trustee substantially in the form set out in this Indenture, in the relevant supplemental indenture, or in some other form approved by the

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Trustee. Such certification on any Debenture shall be conclusive evidence that such Debenture is duly issued, is a valid obligation of the Corporation and the holder is entitled to the benefits hereof.

The certificate of the Trustee signed on the Debentures, or interim Debentures hereinafter mentioned, shall not be construed as a representation or warranty by the Trustee as to the validity of this Indenture or of the Debentures or interim Debentures or as to the issuance of the Debentures or interim Debentures and the Trustee shall in no respect be liable or answerable for the use made of the Debentures or interim Debentures or any of them or the proceeds thereof. The certificate of the Trustee on the Debentures or interim Debentures shall, however, be a representation and warranty by the Trustee that the Debentures or interim Debentures have been duly certified by or on behalf of the Trustee pursuant to the provisions of this Indenture.

2.9 Interim Debentures or Certificates

Pending the delivery of definitive Debentures of any series to the Trustee, the Corporation may issue and the Trustee certify in lieu thereof interim Debentures in such forms and in such denominations and signed in such manner as provided herein, entitling the holders thereof to definitive Debentures of the series when the same are ready for delivery; or the Corporation may execute and the Trustee certify a temporary Debenture for the whole principal amount of Debentures of the series then authorized to be issued hereunder and deliver the same to the Trustee and thereupon the Trustee may issue its own interim certificates in such form and in such amounts, not exceeding in the aggregate the principal amount of the temporary Debenture so delivered to it, as the Corporation and the Trustee may approve entitling the holders thereof to definitive Debentures of the series when the same are ready for delivery; and, when so issued and certified, such interim or temporary Debentures or interim certificates shall, for all purposes but without duplication, rank in respect of this Indenture equally with Debentures duly issued hereunder and, pending the exchange thereof for definitive Debentures, the holders of the interim or temporary Debentures or interim certificates shall be deemed without duplication to be Debentureholders and entitled to the benefit of this Indenture to the same extent and in the same manner as though the said exchange had actually been made. Forthwith after the Corporation shall have delivered the definitive Debentures to the Trustee, the Trustee shall cancel such temporary Debentures, if any, and shall call in for exchange all interim Debentures or certificates that shall have been issued and forthwith after such exchange shall cancel the same. No charge shall be made by the Corporation or the Trustee to the holders of such interim or temporary Debentures or interim certificates for the exchange thereof. All interest paid upon interim or temporary Debentures or interim certificates shall be noted thereon as a condition precedent to such payment unless paid by cheque to the registered holders thereof.

2.10 Mutilation, Loss, Theft or Destruction

In case any of the Debentures issued hereunder shall become mutilated or be lost, stolen or destroyed, the Corporation, in its discretion, may issue, and thereupon the Trustee shall certify and deliver, a new Debenture upon surrender and cancellation of the mutilated Debenture, or in the case of a lost, stolen or destroyed Debenture, in lieu of and in substitution for the same, and the substituted Debenture shall be in a form approved by the Trustee and shall be entitled to the benefits of this Indenture and rank equally in accordance with its terms with all other Debentures issued or to be issued hereunder. In case of loss, theft or destruction the applicant for a substituted Debenture shall furnish to the Corporation and to the Trustee such evidence of the loss, theft or destruction of the Debenture as shall be satisfactory to them in their discretion and shall also furnish an indemnity and surety bond satisfactory to them in their discretion. The applicant shall pay all reasonable expenses incidental to the issuance of any substituted Debenture.

2.11 Concerning Interest

(a) All Debentures issued hereunder, whether originally or upon exchange or in substitution for

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previously issued Debentures which are interest bearing, shall bear interest (i) from and including their issue date, or (ii) from and including the last Interest Payment Date to which interest shall have been paid or made available for payment on the outstanding Debentures of that series, whichever shall be the later, or, in respect of Debentures subject to a Periodic Offering, from and including their issue date or from and including the last Interest Payment Date to which interest shall have been paid or made available for payment on such Debentures, in all cases, to and excluding the next Interest Payment Date.

(b) Subject to Section 2.11(c), unless otherwise specifically provided in the terms of the Debentures of any series, interest shall be computed on the basis of a year of 360 days. With respect to any series of Debentures, whenever interest is computed on the basis of a year (the “deemed year”) which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year.

(c) For the purposes solely of disclosure under the Interest Act (Canada), whenever interest to be paid on the Debentures is to be calculated on the basis of a year of 360 days consisting of twelve 30- day months, the yearly rate of interest to which the rate used in such calculation is equivalent during any particular period is the rate so used multiplied by a fraction of which:

(ix) the numerator is the product of:

(A) the actual number of days in the calendar year in which such period ends, and

(B) the sum of (A) the product of (x) 30 and (y) the number of complete months elapsed in the relevant period and (B) the number of days elapsed in any incomplete month in the relevant period, and

(C) the denominator is the product of (i) 360 and (ii) the actual number of days in the relevant period.

2.12 Debentures to Rank Pari Passu

The Debentures will be direct unsecured obligations of the Corporation. Each Debenture of the same series of Debentures will rank pari passu with each other Debenture of the same series (regardless of their actual date or terms of issue) and, subject to statutory preferred exceptions, with all other present and future subordinated and unsecured indebtedness of the Corporation, other than Senior Indebtedness.

2.13 Payments of Amounts Due on Maturity

Except as may otherwise be provided herein or in any supplemental indenture in respect of any series of Debentures and subject to Section 4.10, payments of amounts due upon maturity of the Debentures will be made in the following manner. The Corporation will establish and maintain with the Trustee a Maturity Account for each series of Debentures. Each such Maturity Account shall be maintained by and be subject to the control of the Trustee for the purposes of this Indenture. On or before 11:00 a.m. (Toronto time) on the Business Day immediately prior to each Maturity Date for Debentures outstanding from time to time under this Indenture, the Corporation will deliver to the Trustee a certified cheque or wire transfer for deposit in the applicable Maturity Account in an amount sufficient to pay the cash amount payable in respect of such Debentures (including the principal amount together with any accrued and unpaid interest thereon less any

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tax required by law to be deducted), provided the Corporation may elect to satisfy this requirement by providing the Trustee with a cheque for such amounts required under this Section 2.13 post-dated to the applicable Maturity Date. The Trustee, on behalf of the Corporation, will pay to each registered holder of such Debenture, appearing on the registers maintained by the Trustee, upon surrender of the Debenture at the principal office of the Trustee designated for such purpose from time to time by the Corporation and the Trustee. The delivery of such funds to the Trustee for deposit to the applicable Maturity Account will satisfy and discharge the liability of the Corporation for the Debentures to which the delivery of funds relates to the extent of the amount delivered (plus the amount of any tax deducted as aforesaid) and such Debentures will thereafter to that extent not be considered as outstanding under this Indenture and such holder will have no other right in regard thereto other than to receive out of the money so delivered or made available the amount to which it is entitled. The Trustee shall only release funds to the extent that funds have been deposited into the Maturity Account and any cheque of the Corporation has cleared the bank. For greater clarity, the Trustee shall not be obligated to release any funds until it shall have been provided readily available funds for payment to the registered holders of Debentures.

2.14 U.S. Legend on the Debentures

The Debentures and the Common Shares issuable upon conversion thereof have not been and will not be registered under the 1933 Act. All Initial Debentures originally issued and sold in the United States in reliance on an exemption from registration under Rule 144A under the 1933 Act shall bear the following legend (the “U.S. Legend”):

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 THEREUNDER, IF AVAILABLE, OR (ii) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C)(i) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION AND SATISFACTORY TO THE TRANSFER AGENT OR TRUSTEE TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

2.15 Payment of Interest

The following provisions shall apply to Debentures, except as otherwise provided in Section 2.4(b) or specified in a resolution of the Board of Directors, an Officers’ Certificate or a supplemental indenture relating to a particular series of Additional Debentures:

(a) As interest becomes due on each Debenture (except, subject to certain exceptions set forth herein including in Section 2.4(b), on conversion or on redemption, when interest may at the option of the

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Corporation be paid upon surrender of such Debenture), the Corporation, either directly or through the Trustee or any agent of the Trustee, shall send or forward by prepaid ordinary mail, electronic transfer of funds or such other means as may be agreed to by the Trustee, payment of such interest (less any tax required to be withheld therefrom) to the order of the registered holder of such Debenture appearing on the registers maintained by the Trustee at the close of business on the fifth Business Day prior to the applicable Interest Payment Date and addressed to the holder at the holder’s last address appearing on the register, unless such holder otherwise directs. If payment is made by cheque, such cheque shall be forwarded at least three days prior to each date on which interest becomes due and if payment is made by other means (such as electronic transfer of funds, provided the Trustee must receive confirmation of receipt of funds prior to being able to wire funds to holders), such payment shall be made in a manner whereby the holder receives credit for such payment on the date such interest on such Debenture becomes due. The mailing of such cheque or the making of such payment by other means shall, to the extent of the sum represented thereby, plus the amount of any tax withheld as aforesaid, satisfy and discharge all liability for interest on such Debenture, unless in the case of payment by cheque, such cheque is not paid at par on presentation. In the event of non-receipt of any cheque for or other payment of interest by the person to whom it is so sent as aforesaid, the Corporation or the Trustee will issue to such person a replacement cheque or other payment for a like amount upon being furnished with such evidence of non-receipt as it shall reasonably require and upon being indemnified to its satisfaction. Notwithstanding the foregoing, if the Corporation is prevented by circumstances beyond its control (including, without limitation, any interruption in mail service) from making payment of any interest due on each Debenture in the manner provided above, the Corporation may make payment of such interest or make such interest available for payment in any other manner acceptable to the Trustee with the same effect as though payment had been made in the manner provided above.

(b) All payments of interest on the Global Debenture shall be made by electronic funds transfer or certified cheque made payable to the Depository or its nominee on the day interest is payable for subsequent payment to Beneficial Holders of the applicable Global Debenture, unless the Corporation and the Depository otherwise agree. None of the Corporation, the Trustee or any agent of the Trustee for any Debenture issued as a Global Debenture will be liable or responsible to any person for any aspect of the records related to or payments made on account of beneficial interests in any Global Debenture or for maintaining, reviewing, or supervising any records relating to such beneficial interests.

(c) If the Corporation chooses to make a home office payment, then it shall confirm to the Trustee that a payment has been made and each registered holder to whom such payments were made shall confirm receipt in writing of such payment to the Trustee.

(d) Should any tax be required by applicable law or administrative practice to be withheld or deducted from any payment or delivery of interest, premium or principal, the Corporation (or any agent acting on its behalf) shall remit in the appropriate manner and within the time required to the relevant governmental authority the amount required to be withheld or deducted.

ARTICLE 3
REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP

3.1 Fully Registered Debentures

(a) With respect to each series of Debentures issuable as Fully Registered Debentures, the Corporation

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shall cause to be kept by and at the principal office of the Trustee in Toronto, Ontario and by the Trustee or such other registrar as the Corporation, with the approval of the Trustee, may appoint at such other place or places, if any, as may be specified in the Debentures of such series or as the Corporation may designate with the approval of the Trustee, a register in which shall be entered the names and addresses of the holders of Fully Registered Debentures and particulars of the Debentures held by them respectively and of all transfers of Fully Registered Debentures. Such registration shall be noted on the Debentures by the Trustee or other registrar unless a new Debenture shall be issued upon such transfer.

(b) No transfer of a Fully Registered Debenture shall be valid unless made on such register referred to in Section 3.1(a) by the registered holder or such holder’s executors, administrators or other legal representatives or an attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee or other registrar upon surrender of the Debentures together with a duly executed form of transfer acceptable to the Trustee and upon compliance with such other reasonable requirements as the Trustee or other registrar may prescribe, or unless the name of the transferee shall have been noted on the Debenture by the Trustee or other registrar.

3.2 Global Debentures

(a) With respect to each series of Debentures issuable in whole or in part as one or more Global Debentures, the Corporation shall cause to be kept by and at the principal offices of the Trustee in Toronto, Ontario and by the Trustee or such other registrar as the Corporation, with the approval of the Trustee, may appoint at such other place or places, if any, as the Corporation may designate with the approval of the Trustee, a register in which shall be entered the name and address of the holder of each such Global Debenture (being the Depository, or its nominee, for such Global Debenture) as holder thereof and particulars of the Global Debenture held by it, and of all transfers thereof. If any Debentures of such series are at any time not Global Debentures, the provisions of Section 3.1 shall also apply with respect to registrations and transfers of such Debentures.

(b) Notwithstanding any other provision of this Indenture, a Global Debenture may not be transferred by the registered holder thereof and accordingly, no definitive certificates shall be issued to Beneficial Holders except in the following circumstances or as otherwise specified in a resolution of the Trustee, a resolution of the Board of Directors, Officers’ Certificate or supplemental indenture relating to a particular series of Additional Debentures:

(i) Global Debentures may be transferred by a Depository to a nominee of such Depository or by a nominee of a Depository to such Depository or to another nominee of such Depository or by a Depository or its nominee to a successor Depository or its nominee;

(ii) Global Debentures may be transferred at any time after the Depository for such Global Debentures (i) has notified the Trustee, or the Corporation has notified the Trustee, that it is unwilling or unable to continue as Depository for such Global Debentures, or (ii) ceases to be eligible to be a Depository under Section 2.6(b), provided that at the time of such transfer the Corporation has not appointed a successor Depository for such Global Debentures;

(iii) Global Debentures may be transferred at any time after the Corporation has determined, in its sole discretion, to terminate the book-entry only registration system in respect of such Global Debentures and has communicated such determination to the Trustee in writing;

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(iv) Global Debentures may be transferred at any time after the Trustee has determined that an Event of Default has occurred and is continuing with respect to the Debentures of the series issued as a Global Debenture, provided that Beneficial Holders representing, in the aggregate, not less than 25% of the aggregate principal amount of the Debentures of such series advise the Depository in writing, through the Depository Participants, that the continuation of the book-entry only registration system for such series of Debentures is no longer in their best interest and also provided that at the time of such transfer the Trustee has not waived the Event of Default pursuant to Section 8.3;

(v) Global Debentures may be transferred if required by applicable law; or

(vi) Global Debentures may be transferred if the book-entry only registration system ceases to exist.

(c) With respect to the Global Debentures, unless and until definitive certificates have been issued to Beneficial Holders pursuant to subsection 3.2(b):

(i) the Corporation and the Trustee may deal with the Depository for all purposes (including paying interest on the Debentures) as the sole holder of such series of Debentures and the authorized representative of the Beneficial Holders;

(ii) the rights of the Beneficial Holders shall be exercised only through the Depository and shall be limited to those established by law and agreements between such Beneficial Holders and the Depository or the Depository Participants;

(iii) the Depository will make book-entry transfers among the Depository Participants; and

(iv) whenever this Indenture requires or permits actions to be taken based upon instruction or directions of Debentureholders evidencing a specified percentage of the outstanding Debentures, the Depository shall be deemed to be counted in that percentage only to the extent that it has received instructions to such effect from the Beneficial Holders or the Depository Participant, and has delivered such instructions to the Trustee.

(d) Whenever a notice or other communication is required to be provided to Debentureholders, unless and until definitive certificate(s) have been issued to Beneficial Holders pursuant to this Section 3.2, the Trustee shall provide all such notices and communications to the Depository and the Depository shall deliver such notices and communications to such Beneficial Holders in accordance with Applicable Securities Legislation. Upon the termination of the book-entry only registration system on the occurrence of one of the conditions specified in Section 3.2(b) with respect to a series of Debentures issued hereunder, the Trustee shall notify all applicable Depositary Participants and Beneficial Holders, through the Depository, of the availability of definitive Debenture certificates. Upon surrender by the Depository of the certificate(s) representing the Global Debentures and receipt of new registration instructions from the Depository, the Trustee shall deliver the definitive Debenture certificates for such Debentures to the holders thereof in accordance with the new registration instructions and thereafter, the registration and transfer of such Debentures will be governed by Section 3.1 and the remaining Sections of this Article 3, provided that any definitive Debenture Certificates issued or exchanged for a Restricted Global Debenture shall bear the U.S. Legend.

(e) Notwithstanding any other provisions of this Indenture or the Debentures, transfers and exchanges of Debentures and beneficial interests in Global Debentures shall be made in accordance the

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applicable rules and guidelines of the Securities Transfer Association of Canada.

3.3 Transferee Entitled to Registration

The transferee of a Debenture shall be entitled, after the appropriate form of transfer is lodged with the Trustee or other registrar and upon compliance with all other conditions in that behalf required by this Indenture or by law, to be entered on the register as the owner of such Debenture free from all equities or rights of set-off or counterclaim between the Corporation and the transferor or any previous holder of such Debenture, save in respect of equities of which the Corporation is required to take notice by statute or by order of a court of competent jurisdiction.

3.4 No Notice of Trusts

Neither the Corporation nor the Trustee nor any registrar shall be bound to take notice of or see to the execution of any trust (other than that created by this Indenture) whether express, implied or constructive, in respect of any Debenture, and may transfer the same on the direction of the person registered as the holder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.

3.5 Registers Open for Inspection

The registers referred to in Sections 3.1 and 3.2 shall at all reasonable times be open for inspection by the Corporation, the Trustee or any Debentureholder. Every registrar, including the Trustee, shall from time to time when requested so to do by the Corporation or by the Trustee, in writing, furnish the Corporation or the Trustee, as the case may be, with a list of names and addresses of holders of registered Debentures entered on the register kept by them and showing the principal amount and serial numbers of the Debentures held by each such holder, provided the Trustee shall be entitled to charge a reasonable fee to provide such a list.

3.6 Exchanges of Debentures

(a) Subject to Section 3.2 and Section 3.7, Debentures in any authorized form or denomination, other than Global Debentures, may be exchanged for Debentures in any other authorized form or denomination, of the same series and date of maturity, bearing the same interest rate and of the same aggregate principal amount as the Debentures so exchanged.

(b) In respect of exchanges of Debentures permitted by Section 3.6(a), Debentures of any series may be exchanged only at the principal offices of the Trustee in Toronto, Ontario or at such other place or places, if any, as may be specified in the Debentures of such series and at such other place or places as may from time to time be designated by the Corporation with the approval of the Trustee. Any Debentures tendered for exchange shall be surrendered to the Trustee. The Corporation shall execute and the Trustee shall certify all Debentures necessary to carry out exchanges as aforesaid. All Debentures surrendered for exchange shall be cancelled.

(c) Debentures issued in exchange for Debentures which at the time of such issue have been selected or called for redemption at a later date shall be deemed to have been selected or called for redemption in the same manner and shall have noted thereon a statement to that effect.

3.7 Closing of Registers

(a) Neither the Corporation nor the Trustee nor any registrar shall be required to:

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(i) make transfers or exchanges or convert any of Fully Registered Debentures on any Interest Payment Date for such Debentures or during the five preceding Business Days;

(ii) make transfers or exchanges of, or convert any Debentures on the day of any selection by the Trustee of Debentures to be redeemed or during the five preceding Business Days; or

(iii) make exchanges of any Debentures which will have been selected or called for redemption unless upon due presentation thereof for redemption such Debentures shall not be redeemed.

(b) Subject to any restriction herein provided, the Corporation with the approval of the Trustee may at any time close any register for any series of Debentures, other than those kept at the principal offices of the Trustee in Toronto, Ontario, and transfer the registration of any Debentures registered thereon to another register (which may be an existing register) and thereafter such Debentures shall be deemed to be registered on such other register. Notice of such transfer shall be given to the holders of such Debentures.

3.8 Charges for Registration, Transfer and Exchange

For each Debenture exchanged, registered, transferred or discharged from registration, the Trustee or other registrar, except as otherwise herein provided, may make a reasonable charge for its services and in addition may charge a reasonable sum for each new Debenture issued (such amounts to be agreed upon from time to time by the Trustee and the Corporation), and payment of such charges and reimbursement of the Trustee or other registrar for any stamp taxes or governmental or other charges required to be paid shall be made by the party requesting such exchange, registration, transfer or discharge from registration as a condition precedent thereto. Notwithstanding the foregoing provisions, no charge shall be made to a Debentureholder hereunder:

(a) for any exchange, registration, transfer or discharge from registration of any Debenture applied for within a period of two months from the date of the first delivery of Debentures of that series or, with respect to Debentures subject to a Periodic Offering, within a period of two months from the date of delivery of any such Debenture;

(b) for any exchange of any interim or temporary Debenture or interim certificate that has been issued under Section 2.9 for a definitive Debenture;

(c) for any exchange of a Global Debenture as contemplated in Section 3.2; or

(d) for any exchange of any Debenture resulting from a partial redemption under Section 4.2.

3.9 Ownership of Debentures

(a) Unless otherwise required by law, the person in whose name any registered Debenture is registered shall for all purposes of this Indenture except those relating to taxation be and be deemed to be the owner thereof and payment of or on account of the principal of and premium, if any, on such Debenture and interest thereon shall be made to such registered holder.

(b) The registered holder for the time being of any registered Debenture shall be entitled to the principal, premium, if any, and/or interest evidenced by such instruments, respectively, free from all equities or rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly and the receipt of any such registered holder for

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any such principal, premium or interest shall be a good discharge to the Trustee, any registrar and to the Corporation for the same and none shall be bound to inquire into the title of any such registered holder.

(c) Where Debentures are registered in more than one name, the principal, premium, if any, and interest from time to time payable in respect thereof may be paid to the order of all such holders, failing written instructions from them to the contrary, and the receipt of any one of such holders therefor shall be a valid discharge, to the Trustee, any registrar and to the Corporation.

(d) In the case of the death of one or more joint holders of any Debenture the principal, premium, if any, and interest from time to time payable thereon may be paid to the order of the survivor or survivors of such registered holders and the receipt of any such survivor or survivors therefor shall be a valid discharge to the Trustee and any registrar and to the Corporation.

ARTICLE 4
REDEMPTION AND PURCHASE OF DEBENTURES

4.1 Applicability of Article

Subject to regulatory approval, Section 2.4(d) and Article 5, the Corporation shall have the right at its option to redeem, either in whole at any time or in part from time to time before maturity, either by payment of money, by issuance of Freely Tradeable Common Shares as provided in Section 4.6 or any combination thereof, any Debentures issued hereunder of any series which by their terms are made so redeemable (subject, however, to any applicable restriction on the redemption of Debentures of such series) at such rate or rates of premium, if any, and on such date or dates and in accordance with such other provisions as shall have been determined at the time of issue of such Debentures and as shall have been expressed in this Indenture, in the Debentures, in an Officers’ Certificate, or in a supplemental indenture authorizing or providing for the issue thereof, or in the case of Additional Debentures issued pursuant to a Periodic Offering, in the Written Direction of the Corporation requesting the certification and delivery thereof.

Subject to regulatory approval and Article 5, the Corporation shall also have the right at its option to repay, either in whole or in part, on maturity, either by payment of money in accordance with Section 2.13, by issuance of Freely Tradeable Common Shares as provided in Section 4.10 or any combination thereof, any Debentures issued hereunder of any series which by their terms are made so repayable on maturity (subject however, to any applicable restriction on the repayment of the principal amount of the Debentures of such series) at such rate or rates of premium, if any, and on such date or dates and in accordance with such other provisions as shall have been determined at the time of issue of such Debenture and shall have been expressed in this Indenture, in the Debentures, in an Officers’ Certificate, or in a supplemental indenture authorizing or providing for the issue thereof, or in the case of Additional Debentures issued pursuant to a Periodic Offering, in the Written Direction of the Corporation requesting the certification and delivery thereof.

4.2 Partial Redemption

If less than all the Debentures of any series for the time being outstanding are at any time to be redeemed, or if a portion of the Debentures being redeemed are being redeemed for cash and a portion of such Debentures are being redeemed by the payment of Freely Tradeable Common Shares pursuant to Section 4.6, the Debentures to be so redeemed shall be selected by the Trustee on a pro rata basis to the nearest multiple of US$1,000 in accordance with the principal amount of the Debentures registered in the name of each holder or in such other manner as the Trustee deems equitable, subject to the approval of the TSX (or

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such other exchange on which the Debentures are then listed), as may be required from time to time. Unless otherwise specifically provided in the terms of any series of Debentures, no Debenture shall be redeemed in part unless the principal amount redeemed is US$1,000 or a multiple thereof. For this purpose, the Trustee may make, and from time to time vary, regulations with respect to the manner in which such Debentures may be drawn for redemption and regulations so made shall be valid and binding upon all holders of such Debentures notwithstanding that as a result thereof one or more of such Debentures may become subject to redemption in part only or for cash only. In the event that one or more of such Debentures becomes subject to redemption in part only, upon surrender of any such Debentures for payment of the Redemption Price, together with interest accrued to but excluding the Redemption Date, the Corporation shall execute and the Trustee shall certify and deliver without charge to the holder thereof or upon the holder’s order one or more new Debentures for the unredeemed part of the principal amount of the Debenture or Debentures so surrendered or, with respect to a Global Debenture, the Depository shall make notations on the Global Debenture of the principal amount thereof so redeemed. Unless the context otherwise requires, the terms “Debenture” or “Debentures” as used in this Article 4 shall be deemed to mean or include any part of the principal amount of any Debenture which in accordance with the foregoing provisions has become subject to redemption.

4.3 Notice of Redemption

Notice of redemption (the “Redemption Notice”) of any series of Debentures shall be given to the holders of the Debentures so to be redeemed not more than 60 days nor less than 40 days prior to the date fixed for redemption (the “Redemption Date”) in the manner provided in Section 14.2. Every such notice shall specify the aggregate principal amount of Debentures called for redemption, the Redemption Date, the Redemption Price and the places of payment and shall state that interest upon the principal amount of Debentures called for redemption shall cease to be payable from and after the Redemption Date. In addition, unless all the outstanding Debentures are to be redeemed, the Redemption Notice shall specify:

(a) the distinguishing letters and numbers of the registered Debentures which are to be redeemed (or of such thereof as are registered in the name of such Debentureholder);

(b) in the case of a published notice, the distinguishing letters and numbers of the Debentures which are to be redeemed or, if such Debentures are selected by terminal digit or other similar system, such particulars as may be sufficient to identify the Debentures so selected;

(c) in the case of a Global Debenture, that the redemption will take place in such manner as may be agreed upon by the Depository, the Trustee and the Corporation; and

(d) in all cases, the principal amounts of such Debentures or, if any such Debenture is to be redeemed in part only, the principal amount of such part.

In the event that all Debentures to be redeemed are registered Debentures, publication shall not be required.

4.4 Debentures Due on Redemption Dates

Notice having been given as aforesaid, all the Debentures so called for redemption shall thereupon be and become due and payable at the Redemption Price, together with accrued interest to but excluding the Redemption Date, on the Redemption Date specified in such notice, in the same manner and with the same effect as if it were the date of maturity specified in such Debentures, anything therein or herein to the contrary notwithstanding, and from and after such Redemption Date, if the monies necessary to redeem, or the Common Shares to be issued to redeem, such Debentures shall have been deposited as provided in Section

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4.5 and affidavits or other proof satisfactory to the Trustee as to the publication and/or mailing of such notices shall have been lodged with it, interest upon the Debentures shall cease. If any question shall arise as to whether any notice has been given as above provided and such deposit made, such question shall be decided by the Trustee whose decision shall be final and binding upon all parties in interest.

4.5 Deposit of Redemption Monies or Common Shares

Redemption of Debentures shall be provided for by the Corporation depositing with the Trustee or any paying agent to the order of the Trustee, on or before 11:00 a.m. (Toronto time) on the Business Day immediately prior to the Redemption Date specified in such notice, such sums of money, or certificates representing such Common Shares, or both as the case may be, as may be sufficient to pay the Redemption Price of the Debentures so called for redemption, plus accrued and unpaid interest thereon up to but excluding the Redemption Date, provided the Corporation may elect to satisfy this requirement by providing the Trustee with a certified cheque or wire transfer for such amounts required under this Section 4.5 post-dated to the Redemption Date. The Corporation shall also deposit with the Trustee a sum of money sufficient to pay any charges or expenses which may be incurred by the Trustee in connection with such redemption. Every such deposit shall be irrevocable. From the sums so deposited, or certificates so deposited, or both, the Trustee shall pay or cause to be paid, or issue or cause to be issued, to the holders of such Debentures so called for redemption, upon surrender of such Debentures, the principal, premium (if any) and interest (if any) to which they are respectively entitled on redemption.

4.6 Right to Repay Redemption Price in Common Shares

(a) Subject to the receipt of any required regulatory approvals and the other provisions of this Section 4.6, the Corporation may, at its option, in exchange for or in lieu of paying the Redemption Price in money, elect to satisfy its obligation to pay all or any portion of the Redemption Price by issuing and delivering to holders on the Redemption Date that number of Freely Tradeable Common Shares obtained by dividing the Redemption Price (or applicable portion thereof to be satisfied by the issuance and delivery of Freely Tradeable Common Shares) by 95% of the then Current Market Price of the Common Shares (which will be calculated based on the 20 consecutive trading days ending five days before the Redemption Date) (the “Common Share Redemption Right”).

(b) The Corporation shall exercise the Common Share Redemption Right by so specifying in the Redemption Notice and shall also specify the aggregate principal amount of Debentures in respect of which it is exercising the Common Share Redemption Right in such notice.

(c) The Corporation’s right to exercise the Common Share Redemption Right shall be conditional upon the following conditions being met on the Business Day preceding the Redemption Date:

(i) the issuance of the Common Shares on the exercise of the Common Share Redemption Right shall be made in accordance with Applicable Securities Legislation and such Common Shares shall be issued as Freely Tradeable Common Shares;

(ii) such additional Freely Tradeable Common Shares shall be listed on each stock exchange on which the Common Shares are then listed, the TSX, a national securities exchange in Canada or a U.S. Securities Exchange or quoted in an inter-dealer quotation system of any registered national securities association;

(iii) the Corporation shall be a reporting issuer in good standing under Applicable Securities Legislation where the distribution of such Freely Tradeable Common Shares occurs;

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(iv) no Event of Default shall have occurred and be continuing;

(v) the Trustee shall have received an Officers’ Certificate stating that conditions (i), (ii), (iii) and (iv) above have been satisfied and setting forth the number of Common Shares to be delivered for each US$1,000 principal amount of Debentures and the Current Market Price of the Common Shares on the Redemption Date; and

(vi) the Trustee shall have received an opinion of Counsel to the effect that such Common Shares have been duly authorized and, when issued and delivered pursuant to the terms of this Indenture in payment of the Redemption Price, will be validly issued as fully paid and non-assessable, that conditions (i) and (ii) above have been satisfied and that, relying exclusively on certificates of good standing issued by the relevant securities authorities, condition (iii) above is satisfied, except that the opinion in respect of condition (iii) need not be expressed with respect to those provinces where certificates are not issued.

If the foregoing conditions are not satisfied prior to the close of business on the Business Day preceding the Redemption Date, the Corporation shall pay the Redemption Price entirely in cash in accordance with Section 4.5 unless the Debentureholder waives the conditions which are not satisfied. The Corporation may not change the form of components or percentage of consideration to be paid for the Debentures except as described in the preceding sentence. When the Corporation determines the actual number of the Common Shares to be issued pursuant to the Corporation’s exercise of its Common Share Redemption Right, it will issue a press release on a national newswire disclosing the Current Market Price and such actual number of Common Shares.

(d) In the event that the Corporation duly exercises its Common Share Redemption Right, upon presentation and surrender of the Debentures for payment on the Redemption Date, at any place where a register is maintained pursuant to Article 3 or any other place specified in the Redemption Notice, the Corporation shall on or before 11:00 a.m. (Toronto time) on the Business Day immediately prior to the Redemption Date make the delivery to the Trustee for delivery to and on account of the holders, of certificates representing the Freely Tradeable Common Shares to which such holders are entitled.

(e) No fractional Freely Tradeable Common Shares shall be delivered upon the exercise of the Common Share Redemption Right but, in lieu thereof, the Corporation shall pay to the Trustee for the account of the holders, at the time contemplated in Section 4.6(d), the cash equivalent thereof determined on the basis of the Current Market Price of the Common Shares on the Redemption Date (less any tax required to be deducted, if any).

(f) A holder shall be treated as the shareholder of record of the Freely Tradeable Common Shares issued on due exercise by the Corporation of its Common Share Redemption Right effective immediately after the close of business on the Redemption Date, and shall be entitled to all substitutions therefor, all income earned thereon or accretions thereto and all dividends or distributions (including distributions and dividends in kind) thereon and arising thereafter, and in the event that the Trustee receives the same, it shall hold the same in trust for the benefit of such holder.

(g) The Corporation shall at all times reserve and keep available out of its authorized Common Shares (if the number thereof is or becomes limited), solely for the purpose of issue and delivery upon the exercise of the Corporation’s Common Share Redemption Right as provided herein, and shall issue to Debentureholders to whom Freely Tradeable Common Shares will be issued pursuant to exercise of the Common Share Redemption Right, such number of Freely Tradeable Common Shares as shall

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be issuable in such event. All Freely Tradeable Common Shares which shall be so issuable shall be duly and validly issued as fully paid and non-assessable.

(h) The Corporation shall comply with all Applicable Securities Legislation regulating the issue and delivery of Freely Tradeable Common Shares upon exercise of the Common Share Redemption Right and shall cause to be listed and posted for trading such Common Shares on each stock exchange on which the Common Shares are then listed.

(i) The Corporation shall from time to time promptly pay, or make provision satisfactory to the Trustee for the payment of, all taxes and charges which may be imposed by the laws of Canada or any province thereof (except income tax, withholding tax or security transfer tax, if any) which shall be payable with respect to the issuance or delivery of Freely Tradeable Common Shares to holders upon exercise of the Common Share Redemption Right pursuant to the terms of the Debentures and of this Indenture.

(j) If the Corporation elects to satisfy its obligation to pay all or any portion of the Redemption Price by issuing Freely Tradeable Common Shares in accordance with this Section 4.6 and if the Redemption Price (or any portion thereof) to which a holder is entitled is subject to withholding taxes and the amount of the cash payment of the Redemption Price, if any, is insufficient to satisfy such withholding taxes, the Trustee, on the Written Direction of the Corporation but for the account of the holder, shall sell, through the investment banks, brokers or dealers selected by the Corporation, out of the Freely Tradeable Common Shares issued by the Corporation for this purpose, such number of Freely Tradeable Common Shares that together with the cash payment of the Redemption Price, if any, is sufficient to yield net proceeds (after payment of all costs) to cover the amount of taxes required to be withheld, and shall remit same on behalf of the Corporation to the proper tax authorities in the manner and within the period of time prescribed for this purpose under applicable laws.

(k) Each certificate representing Freely Tradeable Common Shares issued in payment of the Redemption Price of Debentures bearing the U.S. Legend, as well as all certificates issued in exchange for or in substitution of the foregoing securities, shall bear the U.S. Legend; provided that if such Freely Tradeable Common Shares are being sold in compliance with the requirements of Rule 904 of Regulation S and in compliance with Canadian local laws and regulations, and provided that the Corporation is a “foreign issuer” within the meaning of Regulation S at the time of sale, the U.S. Legend may be removed by providing a declaration to the Trustee, as registrar and transfer agent for the Common Shares, substantially as set forth in Schedule “E” hereto (or as the Corporation or the Trustee may prescribe from time to time), together with any other evidence reasonably requested by the Corporation or Trustee, which evidence may include an opinion of counsel of recognized standing, in form and substance reasonably satisfactory to the Corporation and satisfactory to the Trustee, to the effect that the transfer is being made in compliance with Rule 904 of Regulation S; and provided further that, if any such Freely Tradeable Common Shares are being sold in accordance with Rule 144 under the 1933 Act, the U.S. Legend may be removed by delivery to the Trustee, as registrar and transfer agent for the Common Shares, of an opinion of counsel of recognized standing, in form and substance reasonably satisfactory to the Corporation and satisfactory to the Trustee, that the U.S. Legend is no longer required under applicable requirements of the 1933 Act or applicable state securities laws. Provided that the Trustee obtains confirmation from the Corporation that such opinion is satisfactory to it, it shall be entitled to rely on such opinion without further inquiry.

4.7 Failure to Surrender Debentures Called for Redemption

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In case the holder of any Debenture so called for redemption shall fail on or before the Redemption Date to so surrender such holder’s Debenture, or shall not within such time accept payment of the redemption monies payable, or take delivery of certificates representing such Common Shares issuable in respect thereof, or give such receipt therefor, if any, as the Trustee may require, such redemption monies may be set aside in trust, or such certificates may be held in trust without interest, either in the deposit department of the Trustee or in a chartered bank, and such setting aside shall for all purposes be deemed a payment to the Debentureholder of the sum or Common Shares so set aside and, to that extent, the Debenture shall thereafter not be considered as outstanding hereunder and the Debentureholder shall have no other right except to receive payment out of the monies so paid and deposited, or take delivery of the certificates so deposited, or both, upon surrender and delivery of such holder’s Debenture of the Redemption Price, as the case may be, of such Debenture, plus any accrued but unpaid interest thereon to but excluding the Redemption Date. In the event that any money, or certificates representing Common Shares, required to be deposited hereunder with the Trustee or any depository or paying agent on account of principal, premium, if any, or interest, if any, on Debentures issued hereunder shall remain so deposited for a period of five years less one day from the Redemption Date, then such monies or certificates representing Common Shares, together with any accumulated interest thereon or any distribution paid thereon, shall at the end of such period be paid over or delivered over by the Trustee or such depository or paying agent to the Corporation on its demand, and thereupon the Trustee shall not be responsible to Debentureholders for any amounts owing to them and subject to applicable law, thereafter the holder of a Debenture in respect of which such money was so repaid to the Corporation shall have no rights in respect thereof except to obtain payment of the money or certificates due from the Corporation, subject to any limitation period provided by the laws of Ontario. Notwithstanding the foregoing, the Trustee will pay any remaining funds prior to the expiry of six years after the Redemption Date to the Corporation upon receipt from the Corporation, of an unconditional letter of credit from a Canadian chartered bank in an amount equal to or in excess of the amount of the remaining funds.

4.8 Cancellation of Debentures Redeemed

Subject to the provisions of Sections 4.2 and 4.9 as to Debentures redeemed or purchased in part, all Debentures redeemed and paid under this Article 4 shall forthwith be delivered to the Trustee and cancelled and no Debentures shall be issued in substitution for those redeemed.

4.9 Purchase of Debentures by the Corporation

Unless otherwise specifically provided with respect to a particular series of Debentures, the Corporation may, if it is not at the time in default hereunder, at any time and from time to time, purchase Debentures in the market (which shall include purchases from or through an investment dealer or a firm holding membership on a recognized stock exchange) or by tender or by contract, at any price. All Debentures so purchased will be delivered to the Trustee and shall be cancelled and no Debentures shall be issued in substitution therefor.

If, upon an invitation for tenders, more Debentures are tendered at the same lowest price than the Corporation is prepared to accept, the Debentures to be purchased by the Corporation shall be selected by the Trustee on a pro rata basis or in such other manner as consented to by the TSX (or such other exchange on which the Debentures are then listed which the Trustee considers appropriate), from the Debentures tendered by each tendering Debentureholder who tendered at such lowest price. For this purpose the Trustee may make, and from time to time amend, regulations with respect to the manner in which Debentures may be so selected, and regulations so made shall be valid and binding upon all Debentureholders, notwithstanding the fact that as a result thereof one or more of such Debentures become subject to purchase in part only. The holder of a Debenture of which a part only is purchased, upon surrender of such Debenture for payment,

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shall be entitled to receive, without expense to such holder, one or more new Debentures for the unpurchased part so surrendered, and the Trustee shall certify and deliver such new Debenture or Debentures upon receipt of the Debenture so surrendered or, with respect to a Global Debenture, the Depository shall make notations on the Global Debenture of the principal amount thereof so purchased.

4.10 Right to Repay Principal Amount and Accrued Interest in Common Shares

(a) Subject to the receipt of any required regulatory approvals and the other provisions of this Section 4.10, the Corporation may, at its option, in exchange for or in lieu of repaying the Debentures in money, elect to satisfy its obligation to repay the principal amount of all or any portion of the principal amount of the Debentures outstanding, together with all accrued and unpaid interest thereon, by issuing and delivering to holders on the Maturity Date of such Debentures that number of Freely Tradeable Common Shares obtained by dividing the principal amount of the Debentures (or applicable portion thereof to be satisfied by the issuance and delivery of Freely Tradeable Common Shares) together with all accrued and unpaid interest thereon by 95% of the then Current Market Price of the Common Shares (which will be calculated based on the 20 consecutive trading days ending five trading days before the Maturity Date) (the “Common Share Repayment Right”).

(b) The Corporation shall exercise the Common Share Repayment Right by so specifying in the Maturity Notice, which shall be delivered to the Trustee and the holders of Debentures not more than 60 days and not less than 40 days prior to the Maturity Date, and which shall also specify the aggregate principal amount of Debentures in respect of which it is exercising the Common Share Repayment Right on the Maturity Date.

(c) The Corporation’s right to exercise the Common Share Repayment Right shall be conditional upon the following conditions being met on the Business Day preceding the Maturity Date:

(i) the issuance of the Common Shares on the exercise of the Common Share Repayment Right shall be made in accordance with Applicable Securities Legislation and such Common Shares shall be issued as Freely Tradeable Common Shares;

(ii) such additional Freely Tradeable Common Shares shall be listed on each stock exchange on which the Common Shares are then listed, the TSX, a national securities exchange in Canada or a U.S. Securities Exchange or quoted in an inter-dealer quotation system of any registered national securities association;

(iii) the Corporation shall be a reporting issuer in good standing under Applicable Securities Legislation where the distribution of such Freely Tradeable Common Shares occurs;

(iv) no Event of Default shall have occurred and be continuing;

(v) the Trustee shall have received an Officers’ Certificate stating that conditions (i), (ii), (iii) and (iv) above have been satisfied and setting forth the number of Common Shares to be delivered for each US$1,000 principal amount of Debentures and the Current Market Price of the Common Shares on the Maturity Date; and

(vi) the Trustee shall have received an opinion of Counsel to the effect that such Common Shares have been duly authorized and, when issued and delivered pursuant to the terms of this Indenture in payment of the principal amount of the Debentures outstanding will be validly issued as fully paid and non-assessable, that conditions (i) and (ii) above have been satisfied

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and that, relying exclusively on certificates of good standing issued by the relevant securities authorities, condition (iii) above is satisfied, except that the opinion in respect of condition (iii) need not be expressed with respect to those provinces where certificates are not issued.

If the foregoing conditions are not satisfied prior to the close of business on the Business Day preceding the Maturity Date, the Corporation shall pay the principal amount of the Debentures outstanding entirely in cash in accordance with Section 2.13, unless the Debentureholder waives the conditions which are not satisfied. The Corporation may not change the form of components or percentages of consideration to be paid for the Debentures once it has given the notice required to be given to Debentureholders hereunder, except as described in the preceding sentence. When the Corporation determines the actual number of Common Shares to be issued pursuant to the exercise of its Common Share Repayment Right, it will issue a press release on a national newswire disclosing the Current Market Price and such actual number of Common Shares.

(d) In the event that the Corporation duly exercises its Common Share Repayment Right, upon presentation and surrender of the Debentures for payment on the Maturity Date, at any place where a register is maintained pursuant to Article 3 or any other place specified in the Maturity Notice, the Corporation shall on or before 11:00 a.m. (Toronto time) on the Business Day immediately prior to the Maturity Date make the delivery to the Trustee for delivery to and on account of the holders, of certificates representing the Freely Tradeable Common Shares to which such holders are entitled. The Corporation shall also deposit with the Trustee a sum of money sufficient to pay any charges or expenses which may be incurred by the Trustee in connection with the Common Share Repayment Right. Every such deposit shall be irrevocable. From the certificates so deposited in addition to amounts payable by the Trustee pursuant to Section 2.13, the Trustee shall pay or cause to be paid, to the holders of such Debentures, upon surrender of such Debentures, the principal amount of and premium (if any) on the Debentures to which they are respectively entitled on maturity and deliver to such holders the certificates to which such holders are entitled. The delivery of such certificates to the Trustee will satisfy and discharge the liability of the Corporation for the Debentures to which the delivery of certificates relates to the extent of the amount delivered (plus the amount of any certificates sold to pay applicable taxes in accordance with this Section 4.10) and such Debentures will thereafter to that extent not be considered as outstanding under this Indenture and such holder will have no other right in regard thereto other than to receive out of the certificates so delivered, the certificate(s) to which it is entitled.

(e) No fractional Freely Tradeable Common Shares shall be delivered upon the exercise of the Common Share Repayment Right but, in lieu thereof, the Corporation shall pay to the Trustee for the account of the holders, at the time contemplated in Section 4.10(d), the cash equivalent thereof determined on the basis of the Current Market Price of the Common Shares on the Maturity Date (less any tax required to be deducted, if any).

(f) A holder shall be treated as the shareholder of record of the Freely Tradeable Common Shares issued on due exercise by the Corporation of its Common Share Repayment Right effective immediately after the close of business on the Maturity Date, and shall be entitled to all substitutions therefor, all income earned thereon or accretions thereto and all dividends or distributions (including distributions and dividends in kind) thereon and arising thereafter, and in the event that the Trustee receives the same, it shall hold the same in trust for the benefit of such holder.

(g) The Corporation shall at all times reserve and keep available out of its authorized Common Shares

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(if the number thereof is or becomes limited), solely for the purpose of issue and delivery upon the exercise of the Corporation’s Common Share Repayment Right as provided herein, and shall issue to Debentureholders to whom Freely Tradeable Common Shares will be issued pursuant to exercise of the Common Share Repayment Right, such number of Freely Tradeable Common Shares as shall be issuable in such event. All Freely Tradeable Common Shares which shall be so issuable shall be duly and validly issued as fully paid and non-assessable.

(h) The Corporation shall comply with all Applicable Securities Legislation regulating the issue and delivery of Freely Tradeable Common Shares upon exercise of the Common Share Repayment Right and shall cause to be listed and posted for trading such Freely Tradeable Common Shares on each stock exchange on which the Common Shares are then listed.

(i) The Corporation shall from time to time promptly pay, or make provision satisfactory to the Trustee for the payment of, all taxes and charges which may be imposed by the laws of Canada or any province thereof (except income tax, withholding tax or security transfer tax, if any) which shall be payable with respect to the issuance or delivery of Freely Tradeable Common Shares to holders upon exercise of the Common Share Repayment Right pursuant to the terms of the Debentures and of this Indenture.

(j) If the Corporation elects to satisfy its obligation to pay all or any portion of the principal amount of Debentures due on maturity together with all accrued and unpaid interest thereon by issuing Freely Tradeable Common Shares in accordance with this Section 4.10 and if the amount (or any portion thereof) to which a holder is entitled is subject to withholding taxes and the amount of the cash payment of the amount due on maturity, if any, is insufficient to satisfy such withholding taxes, the Trustee, on the Written Direction of the Corporation but for the account of the holder, shall sell, through the investment banks, brokers or dealers selected by the Corporation, out of the Freely Tradeable Common Shares issued by the Corporation for this purpose, such number of Freely Tradeable Common Shares that together with the cash component of the amount due on maturity is sufficient to yield net proceeds (after payment of all costs) to cover the amount of taxes required to be withheld, and shall remit same on behalf of the Corporation to the proper tax authorities within the period of time prescribed for this purpose under applicable laws.

(k) Each certificate representing Freely Tradeable Common Shares issued in payment of the Debentures bearing the U.S. Legend, as well as all certificates issued in exchange for or in substitution of the foregoing securities, shall bear the U.S. Legend; provided that if such Freely Tradeable Common Shares are being sold in compliance with the requirements of Rule 904 of Regulation S and in compliance with Canadian local laws and regulations, and provided that the Corporation is a “foreign issuer” within the meaning of Regulation S at the time of sale, the U.S. Legend may be removed by providing a declaration to the Trustee, as registrar and transfer agent for the Common Shares, substantially as set forth in Schedule “E” hereto (or as the Corporation or the Trustee may prescribe from time to time), together with any other evidence reasonably requested by the Corporation or Trustee, which evidence may include an opinion of counsel of recognized standing, in form and substance reasonably satisfactory to the Corporation and satisfactory to the Trustee, to the effect that the transfer is being made in compliance with Rule 904 of Regulation S; and provided further that, if any such Freely Tradeable Common Shares are being sold in accordance with Rule 144 under the 1933 Act, the U.S. Legend may be removed by delivery to the Trustee, as registrar and transfer agent for the Common Shares, of an opinion of counsel of recognized standing, in form and substance reasonably satisfactory to the Corporation and satisfactory to the Trustee, that the U.S. Legend is no longer required under applicable requirements of the 1933 Act or applicable state securities laws.

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Provided that the Trustee obtains confirmation from the Corporation that such opinion is satisfactory to it, it shall be entitled to rely on such opinion without further inquiry.

ARTICLE 5
SUBORDINATION OF DEBENTURES

5.1 Applicability of Article

The indebtedness, liabilities and obligations of the Corporation hereunder (except as provided in Section 15.15) or under the Debentures, whether on account of principal, premium, if any, interest or otherwise, but excluding the issuance of Common Shares upon any conversion pursuant to Article 6, upon any redemption pursuant to Article 4, or at maturity pursuant to Article 4 (collectively, the “Debenture Liabilities”), shall be subordinated and postponed and subject in right of payment, to the extent and in the manner hereinafter set forth in the following Sections of this Article 5, to the full and final payment of all Senior Indebtedness, and each holder of any such Debenture by his acceptance thereof agrees to and shall be bound by the provisions of this Article 5.

5.2 Order of Payment

In the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings relative to the Corporation, or to its property or assets, or in the event of any proceedings for voluntary liquidation, dissolution or voluntary winding-up of the Corporation, whether or not involving insolvency or bankruptcy, or any marshalling of the assets and liabilities of the Corporation:

(a) all Senior Indebtedness shall first be paid in full, or provision made for such payment, before any payment is made on account of Debenture Liabilities;

(b) any payment or distribution of assets of the Corporation, whether in cash, property or securities, to which the holders of the Debentures or the Trustee on behalf of such holders would be entitled except for the provisions of this Article 5, shall be paid or delivered by the trustee in bankruptcy, receiver, assignee for the benefit of creditors, or other liquidating agent making such payment or distribution, directly to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness may have been issued, to the extent necessary to pay all Senior Indebtedness in full after giving effect to any concurrent payment or distribution, or provision therefor, to the holders of such Senior Indebtedness; and

(c) the Senior Creditors or a receiver or a receiver-manager of the Corporation or of all or part of its assets or any other enforcement agent may sell, mortgage, or otherwise dispose of the Corporation’s assets in whole or in part, free and clear of all Debenture Liabilities and without the approval of the Debentureholders or the Trustee or any requirement to account to the Trustee or the Debentureholders.

The rights and priority of the Senior Indebtedness and the subordination pursuant hereto shall not be affected by:

(i) whether or not the Senior Indebtedness is secured;

(ii) the time, sequence or order of creating, granting, executing, delivering of, or registering, perfecting or failing to register or perfect any security notice, caveat, financing statement

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or other notice in respect of the Senior Security;

(iii) the time or order of the attachment, perfection or crystallization of any security constituted by the Senior Security;

(iv) the taking of any collection, enforcement or realization proceedings pursuant to the Senior Security;

(v) the date of obtaining of any judgment or order of any bankruptcy court or any court administering bankruptcy, insolvency or similar proceedings as to the entitlement of the Senior Creditors, or any of them or the Debentureholders or any of them to any money or property of the Corporation;

(vi) the failure to exercise any power or remedy reserved to the Senior Creditors under the Senior Security or to insist upon a strict compliance with any terms thereof;

(vii) whether any Senior Security is now perfected, hereafter ceases to be perfected, is avoidable by any trustee in bankruptcy or like official or is otherwise set aside, invalidated or lapses;

(viii) the date of giving or failing to give notice to or making demand upon the Corporation; or

(ix) any other matter whatsoever.

5.3 Subrogation to Rights of Holders of Senior Indebtedness

Subject to the prior payment in full of all Senior Indebtedness, the holders of the Debentures shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Corporation to the extent of the application thereto of such payments or other assets which would have been received by the holders of the Debentures but for the provisions hereof until the principal of, premium, if any, and interest on the Debentures shall be paid in full, and no such payments or distributions to the holders of the Debentures of cash, property or securities, which otherwise would be payable or distributable to the holders of the Senior Indebtedness, shall, as between the Corporation, its creditors other than the holders of Senior Indebtedness, and the holders of Debentures, be deemed to be a payment by the Corporation to the holders of the Senior Indebtedness or on account of the Senior Indebtedness, it being understood that the provisions of this Article 5 are and are intended solely for the purpose of defining the relative rights of the holders of the Debentures, on the one hand, and the holders of Senior Indebtedness, on the other hand.

5.4 Obligation to Pay Not Impaired

Nothing contained in this Article 5 or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between the Corporation, its creditors other than the holders of Senior Indebtedness, and the holders of the Debentures, the obligation of the Corporation, which is absolute and unconditional, to pay to the holders of the Debentures the principal of, premium, if any, and interest on the Debentures, as and when the same shall become due and payable in accordance with their terms, or affect the relative rights of the holders of the Debentures and creditors of the Corporation other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 5 of the holders of Senior Indebtedness.

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5.5 No Payment if Senior Indebtedness in Default

Upon the maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise, or any other enforcement of any Senior Indebtedness, then, except as provided in Section 5.8, all such Senior Indebtedness shall first be paid in full, or shall first have been duly provided for, before any payment is made on account of the Debenture Liabilities.

In case of a circumstance constituting a default or event of default with respect to any Senior Indebtedness permitting (whether at that time or upon notice, lapse of time, or satisfaction of any other condition precedent) a Senior Creditor to demand payment or accelerate the maturity thereof where the notice of such default or event of default has been given by or on behalf of the holders of Senior Indebtedness to the Corporation or the Corporation otherwise has knowledge thereof, unless and until such default or event of default shall have been cured or waived or shall have ceased to exist, no payment (by purchase of Debentures or otherwise) shall be made by the Corporation (except as provided in Section 5.8) with respect to the Debenture Liabilities and neither the Trustee nor the holders of Debentures shall be entitled to demand, institute proceedings for the collection of (which shall, for certainty include proceedings related to an adjudication or declaration as to the insolvency or bankruptcy of the Corporation and other similar creditor proceedings), or receive any payment or benefit (including without limitation by set-off, combination of accounts or otherwise in any manner whatsoever) on account of the Debentures after the happening of such a default or event of default (except as provided in Section 5.8), and unless and until such default or event of default shall have been cured or waived or shall have ceased to exist, such payments shall be held in trust for the benefit of, and, if and when such Senior Indebtedness shall have become due and payable, shall be paid over to, the holders of the Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing an amount of the Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness.

The fact that any payment hereunder is prohibited by this Section 5.5 shall not prevent the failure to make such payment from being an Event of Default hereunder.

5.6 Payment on Debentures Permitted

Nothing contained in this Article 5 or elsewhere in this Indenture, or in any of the Debentures, shall affect the obligation of the Corporation to make, or prevent the Corporation from making, at any time except as prohibited by Sections 5.2 or 5.5, any payment of principal of or, premium, if any, or interest on the Debentures. The fact that any such payment is prohibited by Sections 5.2 or 5.5 shall not prevent the failure to make such payment from being an Event of Default hereunder. Nothing contained in this Article 5 or elsewhere in this Indenture, or in any of the Debentures, shall prevent the conversion of the Debentures or, except as prohibited by Sections 5.2 or 5.5, the application by the Trustee of any monies deposited with the Trustee hereunder for the purpose, to the payment of or on account of the Debenture Liabilities.

5.7 Confirmation of Subordination

Each holder of Debentures by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effect the subordination as provided in this Article 5 and appoints the Trustee his attorney-in-fact for any and all such purposes. Upon request of the Corporation, and upon being furnished an Officers’ Certificate stating that one or more named persons are Senior Creditors and specifying the amount and nature of the Senior Indebtedness of such Senior Creditor, the Trustee shall enter into a written agreement or agreements with the Corporation and the person or persons named in such Officers’ Certificate providing that such person or persons are entitled to all the rights and benefits of this

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Article 5 as a Senior Creditor and for such other matters as the Senior Creditor may reasonably request, including (without limitation), such as an agreement not to amend the provisions of this Article 5 and the definitions herein without the consent of such Senior Creditor. Such agreement shall be conclusive evidence that the indebtedness specified therein is Senior Indebtedness, however, nothing herein shall impair the rights of any Senior Creditor who has not entered into such an agreement.

5.8 Knowledge of Trustee

Notwithstanding the provisions of this Article 5 or any provision in this Indenture or in the Debentures contained, the Trustee will not be charged with knowledge of any Senior Indebtedness or of any default in the payment thereof, or of the existence of any Event of Default or any other fact that would prohibit the making of any payment of monies to or by the Trustee, or the taking of any other action by the Trustee, unless and until the Trustee has received written notice thereof from the Corporation, any Debentureholder or any Senior Creditor.

5.9 Trustee May Hold Senior Indebtedness

The Trustee is entitled to all the rights set forth in this Article 5 with respect to any Senior Indebtedness at the time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture deprives the Trustee of any of its rights as such holder.

5.10 Rights of Holders of Senior Indebtedness Not Impaired

No right of any present or future holder of any Senior Indebtedness to enforce the subordination herein will at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Corporation or by any non-compliance by the Corporation with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.

5.11 Altering the Senior Indebtedness

The holders of the Senior Indebtedness have the right to extend, renew, modify or amend the terms of the Senior Indebtedness or any security therefor and to release, sell or exchange such security and otherwise to deal freely with the Corporation, all without notice to or consent of the Debentureholders or the Trustee and without affecting the liabilities and obligations of the parties to this Indenture or the Debentureholders.

5.12 Additional Indebtedness

This Indenture does not restrict the Corporation from incurring additional indebtedness for borrowed money or other obligations or liabilities (including Senior Indebtedness) or mortgaging, pledging or charging its properties to secure any indebtedness or obligations or liabilities.

5.13 Right of Debentureholder to Convert Not Impaired

The subordination of the Debentures to the Senior Indebtedness and the provisions of this Article 5 do not impair in any way the right of a Debentureholder to convert its Debentures pursuant to Article 6.

5.14 Invalidated Payments

In the event that any of the Senior Indebtedness shall be paid in full and subsequently, for whatever

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reason, such formerly paid or satisfied Senior Indebtedness becomes unpaid or unsatisfied, the terms and conditions of this Article 5 shall be reinstated and the provisions of this Article shall again be operative until all Senior Indebtedness is repaid in full, provided that such reinstatement shall not give the Senior Creditors any rights or recourses against the Trustee or the Debentureholders for amounts paid to the Debentureholders subsequent to such payment or satisfaction in full and prior to such reinstatement.

5.15 Contesting Security

The Trustee, for itself and on behalf of the Debentureholders, agrees that it shall not contest or bring into question the validity, perfection or enforceability of any of the Senior Indebtedness, the Senior Security, or the relative priority of the Senior Security.

ARTICLE 6
CONVERSION OF DEBENTURES

6.1 Applicability of Article

Any Debentures issued hereunder of any series which by their terms are convertible (subject, however, to any applicable restriction of the conversion of Debentures of such series) will be convertible into Common Shares or other securities of the Corporation, at such conversion rate or rates, and on such date or dates and in accordance with such other provisions as shall have been determined at the time of issue of such Debentures and shall have been expressed in this Indenture (including Sections 2.4(f), 2.4(k) and 3.7 hereof), in such Debentures, in an Officers’ Certificate, or in a supplemental indenture authorizing or providing for the issue thereof.

Such right of conversion shall extend only to the maximum number of whole Common Shares into which the aggregate principal amount of the Debenture or Debentures surrendered for conversion at any one time by the holder thereof may be converted. Fractional interests in Common Shares shall be adjusted for in the manner provided in Section 6.6.

6.2 Notice of Expiry of Conversion Privilege

Notice of the expiry of the conversion privileges of the Debentures shall be given by or on behalf of the Corporation, not more than 60 days and not less than 40 days prior to the date fixed for the Time of Expiry, in the manner provided in Section 14.2.

6.3 Revival of Right to Convert

If the redemption of any Debenture called for redemption by the Corporation is not made or the payment of the purchase price of any Debenture which has been tendered in acceptance of an offer by the Corporation to purchase Debentures for cancellation is not made, in the case of a redemption upon due surrender of such Debenture or in the case of a purchase on the date on which such purchase is required to be made, as the case may be, then, provided the Time of Expiry has not passed, the right to convert such Debentures shall revive and continue as if such Debenture had not been called for redemption or tendered in acceptance of the Corporation’s offer, respectively.

6.4 Manner of Exercise of Right to Convert

(a) The holder of a Debenture desiring to convert such Debenture in whole or in part into Common Shares shall surrender such Debenture to the Trustee at either of its principal offices in the City of

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Toronto, Ontario together with the conversion notice attached hereto as Schedule “D” or any other written notice in a form satisfactory to the Trustee, in either case duly executed by the holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee, exercising his right to convert such Debenture in accordance with the provisions of this Article; provided that with respect to a Global Debenture, the obligation to surrender a Debenture to the Trustee shall be satisfied if the Trustee makes a notation on the Global Debenture of the principal amount thereof so converted and the Trustee is provided with all other documentation which it may request. Thereupon such Debentureholder or, subject to payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustee, his nominee(s) or assignee(s) shall be entitled to be entered in the books of the Corporation as at the Date of Conversion (or such later date as is specified in Section 6.4(b)) as the holder of the number of Common Shares into which such Debenture is convertible in accordance with the provisions of this Article and, as soon as practicable thereafter, the Corporation shall deliver to such Debentureholder or, subject as aforesaid, his nominee(s) or assignee(s), a certificate or certificates for such Common Shares and make or cause to be made any payment of interest to which such holder is entitled in accordance with Section 6.4(e) hereof.

(b) For the purposes of this Article, a Debenture shall be deemed to be surrendered for conversion on the date (herein called the “Date of Conversion”) on which it is so surrendered when the register of the Trustee is open and in accordance with the provisions of this Article or, in the case of a Global Debenture which the Trustee received notice of and all necessary documentation in respect of the exercise of the conversion rights and, in the case of a Debenture so surrendered by post or other means of transmission, on the date on which it is received by the Trustee at one of its offices specified in Section 6.4(a); provided that if a Debenture is surrendered for conversion on a day on which the register of Common Shares is closed, the person or persons entitled to receive Common Shares shall become the holder or holders of record of such Common Shares as at the date on which such registers are next reopened.

(c) Any part, being US$1,000 or an integral multiple thereof, of a Debenture in a denomination in excess of US$1,000 may be converted as provided in this Article and all references in this Indenture to conversion of Debentures shall be deemed to include conversion of such parts.

(d) The holder of any Debenture of which only a part is converted shall, upon the exercise of his right of conversion surrender such Debenture to the Trustee in accordance with Section 6.4(a), and the Trustee shall cancel the same and shall without charge forthwith certify and deliver to the holder a new Debenture or Debentures in an aggregate principal amount equal to the unconverted part of the principal amount of the Debenture so surrendered or, with respect to a Global Debenture, the Depository shall make notations on the Global Debentures of the principal amount thereof so converted.

(e) The holder of a Debenture surrendered for conversion in accordance with this Section 6.4 shall be entitled (subject to any applicable restriction on the right to receive interest on conversion of Debentures of any series) to receive accrued and unpaid interest in respect thereof, in cash, up to but excluding the Date of Conversion and the Common Shares issued upon such conversion shall only participate in respect of distributions or dividends declared in favour of shareholders of record on and after the Date of Conversion or such later date as such holder shall become the holder of record of such Common Shares pursuant to Section 6.4(b), from which applicable date they will for all purposes be and be deemed to be issued and outstanding as fully paid and nonassessable Common

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Shares.

6.5 Adjustment of Conversion Price

Subject to the requirements of the TSX (or such other exchange on which the Debentures are then listed), the Conversion Price in effect at any date shall be subject to adjustment from time to time as set forth below.

(a) If and whenever at any time prior to the Time of Expiry the Corporation shall (i) subdivide or redivide the outstanding Common Shares into a greater number of shares, (ii) reduce, combine or consolidate the outstanding Common Shares into a smaller number of shares, or (iii) issue Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a dividend or distribution (other than the issue of Common Shares to holders of Common Shares who have elected to receive dividends or distributions in the form of Common Shares in lieu of cash dividends or cash distributions paid in the ordinary course on the Common Shares), the Conversion Price in effect on the effective date of such subdivision, redivision, reduction, combination or consolidation or on the record date for such issue of Common Shares by way of a dividend or distribution, as the case may be, shall in the case of any of the events referred to in (i) and (iii) above be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, redivision or dividend, or shall, in the case of any of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred to in this Section 6.5(a) shall occur. Any such issue of Common Shares by way of a dividend or distribution shall be deemed to have been made on the record date for the dividend or distribution for the purpose of calculating the number of outstanding Common Shares under subsections (c) and (d) of this Section 6.5.

(b) If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date for the payment of a cash dividend or distribution to the holders of all or substantially all of the outstanding Common Shares in respect of any Applicable Period, the Conversion Price shall be adjusted immediately after such record date so that it shall be equal to the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the denominator shall be the Current Market Price per Common Share on such record date and of which the numerator shall be the Current Market Price per Common Share on such record date minus the amount in cash per Common Share distributed to holders of Common Shares. Such adjustment shall be made successively whenever such a record date is fixed. To the extent that any such cash dividend or distribution is not paid, the Conversion Price shall be re-adjusted to the Conversion Price which would then be in effect if such record date had not been fixed.

(c) If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date for the issuance of options, rights or warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible into Common Shares) at a price per share (or having a conversion or exchange price per share) less than 95% of the Current Market Price of a Common Share on such record date, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing the aggregate price of the total number of additional

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Common Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible securities so offered) by such Current Market Price per Common Share, and of which the denominator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such a record date is fixed. To the extent that any such options, rights or warrants are not so issued or any such options, rights or warrants are not exercised prior to the expiration thereof, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon the number of Common Shares (or securities convertible into Common Shares) actually issued upon the exercise of such options, rights or warrants were included in such fraction, as the case may be.

(d) If and whenever at any time prior to the Time of Expiry, there is a reclassification of the Common Shares or a capital reorganization of the Corporation other than as described in Section 6.5(a) or a consolidation, amalgamation, arrangement, binding share exchange, merger of the Corporation with or into any other Person or other entity or acquisition of the Corporation or other combination pursuant to which the Common Shares are converted into or acquired for cash, securities or other property; or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other Person (other than a direct or indirect wholly-owned subsidiary of the Corporation) or other entity or a liquidation, dissolution or winding-up of the Corporation, any holder of a Debenture who has not exercised its right of conversion prior to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, upon the exercise of such right thereafter, shall be entitled to receive and shall accept, in lieu of the number of Common Shares then sought to be acquired by it, such amount of cash or the number of shares or other securities or property of the Corporation or of the Person or other entity resulting from such merger, amalgamation, arrangement, acquisition, combination or consolidation, or to which such sale or conveyance may be made or which holders of Common Shares receive pursuant to such liquidation, dissolution or winding-up, as the case may be, that such holder of a Debenture would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, if, on the record date or the effective date thereof, as the case may be, the holder had been the registered holder of the number of Common Shares sought to be acquired by it and to which it was entitled to acquire upon the exercise of the conversion right. If determined appropriate by the Board of Directors, to give effect to or to evidence the provisions of this Section 6.5(d), the Corporation, its successor, or such purchasing Person or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the holder of Debentures to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any cash, shares or other securities or property to which a holder of Debentures is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between the Corporation and the Trustee pursuant to the provisions of this Section 6.5(d) shall be a supplemental indenture entered into pursuant to the provisions of Article 16. Any indenture entered into between the Corporation, any successor to the Corporation or such purchasing Person or other entity and the Trustee shall provide for adjustments

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which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 6.5(d) and which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, share exchanges, acquisitions, combinations, sales or conveyances. For greater certainty, nothing in this Section 6.5(d) shall affect or reduce the requirement for any Person to make a Change of Control Purchase Offer or to pay the Make Whole Premium in accordance with Section 2.4, and notice of any transaction to which this Section 6.5(d) applies shall be given in accordance with Section 6.10.

(e) If the Corporation shall make a distribution to all holders of Common Shares of shares in the capital of the Corporation, other than Common Shares, or evidences of indebtedness or other assets of the Corporation, including securities (but excluding (x) any issuance of rights or warrants for which an adjustment was made pursuant to Section 6.5(c), and (y) any dividend or distribution paid exclusively in cash for which an adjustment was made pursuant to Section 6.5(b)) (the “Distributed Securities”), then in each such case (unless the Corporation distributes such Distributed Securities to the holders of Debentures on such dividend or distribution date (as if each holder had converted such Debenture into Common Shares immediately preceding the record date with respect to such distribution)) the Conversion Price in effect immediately preceding the ex-distribution date fixed for the dividend or distribution shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately preceding such ex-distribution date by a fraction of which the denominator shall be the five-day VWAP for the Common Shares immediately prior to the ex‑distribution date and of which the numerator shall be the five-day VWAP for the Common Shares for the first five trading days that occur immediately post the ex-distribution date. Such adjustment shall be made successively whenever any such distribution is made and shall become effective five Business Days immediately after the ex-distribution date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not been declared.

Notwithstanding the foregoing, if the securities distributed by the Corporation to all holders of its Common Shares consist of capital stock of, or similar equity interests in, a Subsidiary or other business of the Corporation (the “Spinoff Securities”), the Conversion Price shall be adjusted, unless the Corporation makes an equivalent distribution to the holders of Debentures, so that the same shall be equal to the rate determined by multiplying the Conversion Price in effect on the record date fixed for the determination of shareholders entitled to receive such distribution by a fraction, the denominator of which shall be the sum of (A) the weighted average trading price of one Common Share over the 20 consecutive trading day period (the “Spinoff Valuation Period”) commencing on and including the fifth trading day after the date on which ex-dividend trading commences for such distribution on the TSX Venture Exchange (or such other exchange on which the Common Shares are then listed) and (B) the product of (i) the weighted average trading price (calculated in substantially the same way as the Current Market Price is calculated for the Common Shares) over the Spinoff Valuation Period of the Spinoff Securities or, if no such prices are available, the fair market value of the Spinoff Securities as reasonably determined by the Board of Directors (which determination shall be conclusive and shall be evidenced by an Officers’ Certificate delivered to the Trustee) multiplied by (ii) the number of Spinoff Securities distributed in respect of one Common Share and the numerator of which shall be the weighted average trading price of one Common Share over the Spinoff Valuation Period, such adjustment to become effective immediately preceding the opening of business on the 25^th trading day after the date on which ex-dividend trading commences; provided, however, that the Corporation may in lieu of the foregoing adjustment elect to make adequate provision so that each holder of Debentures shall have the right to receive upon conversion thereof the amount of such Spinoff Securities that such holder of Debentures would have received

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if such Debentures had been converted on the record date with respect to such distribution.

(f) If any issuer bid made by the Corporation or any of its Subsidiaries for all or any portion of Common Shares shall expire, then, if the issuer bid shall require the payment to shareholders of consideration per Common Share having a fair market value (determined as provided below) that exceeds the Current Market Price per Common Share on the last date (the “Expiration Date”) tenders could have been made pursuant to such issuer bid (as it may be amended) (the last time at which such tenders could have been made on the Expiration Date is hereinafter sometimes called the “Expiration Time”), the Conversion Price shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Price in effect immediately preceding the close of business on the Expiration Date by a fraction of which (i) the denominator shall be the sum of (A) the fair market value of the aggregate consideration (the fair market value as determined by the Board of Directors, whose determination shall be conclusive evidence of such fair market value and which shall be evidenced by an Officers’ Certificate delivered to the Trustee) payable to shareholders based on the acceptance (up to any maximum specified in the terms of the issuer bid) of all Common Shares validly tendered and not withdrawn as of the Expiration Time (the Common Shares deemed so accepted, up to any such maximum, being referred to as the “Purchased Common Shares”) and (B) the product of the number of Common Shares outstanding (less any Purchased Common Shares and excluding any Common Shares held in the treasury of the Corporation) at the Expiration Time and the Current Market Price per Common Share on the Expiration Date and (ii) the numerator of which shall be the product of the number of Common Shares outstanding (including Purchased Common Shares but excluding any Common Shares held in the treasury of the Corporation) at the Expiration Time multiplied by the Current Market Price per Common Share on the Expiration Date, such increase to become effective immediately preceding the opening of business on the day following the Expiration Date. In the event that the Corporation is obligated to purchase Common Shares pursuant to any such issuer bid, but the Corporation is permanently prevented by applicable law from effecting any or all such purchases or any or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would have been in effect based upon the number of Common Shares actually purchased, if any. If the application of this clause (f) of Section 6.5 to any issuer bid would result in a decrease in the Conversion Price, no adjustment shall be made for such issuer bid under this clause (f).

For purposes of this Section 6.5(f), the term “issuer bid” shall mean an issuer bid under Applicable Securities Legislation or a take-over bid under Applicable Securities Legislation by a Subsidiary of the Corporation for the Common Shares and all references to “purchases” of Common Shares in issuer bids (and all similar references) shall mean and include the purchase of Common Shares in issuer bids and all references to “tendered Common Shares” (and all similar references) shall mean and include Common Shares tendered in issuer bids.

(g) In any case in which this Section 6.5 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event, issuing to the holder of any Debenture converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder’s right to receive such additional Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour of holders of record of Common Shares on and after the Date of Conversion or such later date as such holder would, but for the provisions of this Section 6.5(g), have become the

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holder of record of such additional Common Shares pursuant to Section 6.4(b).

(h) The adjustments provided for in this Section 6.5 are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section, provided that, notwithstanding any other provision of this Section, no adjustment of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided however, that any adjustments which by reason of this Section 6.5(h) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

(i) For the purpose of calculating the number of Common Shares outstanding, Common Shares owned by or for the benefit of the Corporation shall not be counted.

(j) In the event of any question arising with respect to the adjustments provided in this Section 6.5, such question shall be conclusively determined by a firm of nationally recognized chartered accountants appointed by the Corporation and acceptable to the Trustee (who may be the Auditors of the Corporation); such accountants shall have access to all necessary records of the Corporation and such determination shall be binding upon the Corporation, the Trustee, and the Debentureholders.

(k) In case the Corporation shall take any action affecting the Common Shares other than action described in this Section 6.5, which in the opinion of the Board of Directors, would materially affect the rights of Debentureholders, the Conversion Price shall be adjusted in such manner and at such time, by action of the Board of Directors, subject to the prior written consent of the TSX (or such other exchange on which the Debentures are then listed), as the Board of Directors, in their sole discretion may determine to be equitable in the circumstances. Failure of the directors to make such an adjustment shall be conclusive evidence that they have determined that it is equitable to make no adjustment in the circumstances.

(l) Subject to the prior written consent of the TSX (or such other exchange on which the Debentures are then listed) no adjustment in the Conversion Price shall be made in respect of any event described in Sections 6.5(a), 6.5(b), 6.5(c), 6.5(e) or 6.5(f) other than the events described in 6.5(a)(i) or 6.5(a)(ii) if the holders of the Debentures are entitled to participate in such event on the same terms mutatis mutandis as if they had converted their Debentures prior to the effective date or record date, as the case may be, of such event.

(m) Except as stated above in this Section 6.5, no adjustment will be made in the Conversion Price for any Debentures as a result of the issuance of Common Shares at less than the Current Market Price for such Common Shares on the date of issuance or the then applicable Conversion Price.

(n) Subject to the terms of any particular series of Debentures, notwithstanding the foregoing, if holders of Debentures would otherwise be entitled to receive, upon conversion of the Debentures, any property (including cash) or securities that would not constitute “prescribed securities” for the purposes of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada) as it applied on December 31, 2007 (referred to herein as “ineligible consideration”), such holders shall not be entitled to receive such ineligible consideration but the Corporation or its successor or acquirer, as the case may be, shall have the right (at the sole option of the Corporation or such successor or acquirer, as the case may be) to deliver either such ineligible consideration or such “prescribed securities” with a market value (as conclusively determined by the Board of Directors) equal to the market value of such ineligible consideration.

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6.6 No Requirement to Issue Fractional Common Shares

The Corporation shall not be required to issue fractional Common Shares upon the conversion of Debentures pursuant to this Article. If more than one Debenture shall be surrendered for conversion at one time by the same holder, the number of whole Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of such Debentures to be converted. If any fractional interest in a Common Share would, except for the provisions of this Section, be deliverable upon the conversion of any principal amount of Debentures, the Corporation shall, in lieu of delivering any certificate representing such fractional interest, make a cash payment to the holder of such Debenture of an amount equal to the fractional interest which would have been issuable multiplied by the Current Market Price.

6.7 Corporation to Reserve Common Shares

The Corporation covenants with the Trustee that it will at all times reserve and keep available out of its authorized Common Shares (if the number thereof is or becomes limited), solely for the purpose of issue upon conversion of Debentures as in this Article provided, and conditionally allot to Debentureholders who may exercise their conversion rights hereunder, such number of Common Shares as shall then be issuable upon the conversion of all outstanding Debentures. The Corporation covenants with the Trustee that all Common Shares which shall be so issuable shall be duly and validly issued as fully-paid and non-assessable.

6.8 Cancellation of Converted Debentures

Subject to the provisions of Section 6.4 as to Debentures converted in part, all Debentures converted in whole or in part under the provisions of this Article shall be forthwith delivered to and cancelled by the Trustee and no Debenture shall be issued in substitution for those converted.

6.9 Certificate as to Adjustment

The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 6.5, deliver an Officers’ Certificate to the Trustee specifying the nature of the event requiring the same and the amount of the adjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate and the amount of the adjustment specified therein shall be verified by an opinion of a firm of nationally recognized chartered accountants appointed by the Corporation and acceptable to the Trustee (who may be the Auditors of the Corporation) and shall be conclusive and binding on all parties in interest. When so approved, the Corporation shall, except in respect of any subdivision, redivision, reduction, combination or consolidation of the Common Shares, forthwith give notice to the Debentureholders in the manner provided in Section 14.2 specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Conversion Price. The Trustee shall be entitled to rely on the calculations and adjustments set out in the Officer’s Certificate and opinion of a firm of nationally recognized chartered accountants.

6.10 Notice of Special Matters

The Corporation covenants with the Trustee that so long as any Debenture remains outstanding, it will give notice to the Trustee, and to the Debentureholders in the manner provided in Section 14.2, of its intention to fix a record date for any event referred to in Section 6.5(a), 6.5(b), 6.5(c) or 6.5(e) (other than the subdivision, redivision, reduction, combination or consolidation of its Common Shares) which may give rise to an adjustment in the Conversion Price, and, in each case, such notice shall specify the particulars of such event and the record date and the effective date for such event; provided that the Corporation shall only

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be required to specify in such notice such particulars of such event as shall have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 14 days in each case prior to such applicable record date.

In addition, the Corporation covenants with the Trustee that so long as any Debenture remains outstanding, it will give notice to the Trustee, and to the Debentureholders in the manner provided in Section 14.2, at least 30 days prior to the (i) effective date of any transaction referred to in Section 6.5(d) stating the consideration into which the Debentures will be convertible after the effective date of such transaction, and (ii) Expiration Date of any transaction referred to in Section 6.5(f) stating the consideration paid per Common Share in such transaction.

6.11 Protection of Trustee

Subject to Section 15.3, the Trustee:

(a) shall not at any time be under any duty or responsibility to any Debentureholder to determine whether any facts exist which may require any adjustment in the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same;

(b) shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any shares or other securities or property which may at any time be issued or delivered upon the conversion of any Debenture; and

(c) shall not be responsible for any failure of the Corporation to make any cash payment or to issue, transfer or deliver Common Shares or share certificates upon the surrender of any Debenture for the purpose of conversion, or to comply with any of the covenants contained in this Article.

6.12 U.S. Legend on Common Shares

(a) Each certificate representing Common Shares issued upon conversion of Debentures bearing the U.S. Legend shall have imprinted or otherwise reproduced thereon such legend or legends in substantially the form of Schedule “G” attached hereto; provided that if such Common Shares are being sold in compliance with the requirements of Rule 904 of Regulation S and in compliance with Canadian local laws and regulations, and provided that the Corporation is a “foreign issuer” within the meaning of Regulation S at the time of sale, the U.S. Legend may be removed by providing a declaration to the Trustee, as registrar and transfer agent for the Common Shares, substantially as set forth in Schedule “E” hereto (or as the Corporation or the Trustee may prescribe from time to time), together with any other evidence reasonably requested by the Corporation or Trustee, which evidence may include an opinion of counsel of recognized standing, in form and substance reasonably satisfactory to the Corporation and satisfactory to the Trustee, to the effect that the transfer is being made in compliance with Rule 904 of Regulation S; and provided further that, if any such Common Shares are being sold in accordance with Rule 144 under the 1933 Act, the U.S. Legend may be removed by delivery to the Trustee, as registrar and transfer agent for the Common Shares, of an opinion of counsel of recognized standing, in form and substance reasonably satisfactory to the Corporation and satisfactory to the Trustee, that the U.S. Legend is no longer required under applicable requirements of the 1933 Act or applicable state securities laws. Provided that the Trustee obtains confirmation from the Corporation that such counsel is satisfactory to it, it shall be entitled to rely on such opinion of counsel without further inquiry.

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ARTICLE 7
COVENANTS OF THE CORPORATION

The Corporation hereby covenants and agrees with the Trustee for the benefit of the Trustee and the Debentureholders, that so long as any Debentures remain outstanding:

7.1 To Pay Principal, Premium (if any) and Interest

The Corporation will duly and punctually pay or cause to be paid to every Debentureholder the principal of, premium (if any) and interest accrued on the Debentures of which it is the holder on the dates, at the places and in the manner mentioned herein and in the Debentures.

7.2 To Pay Trustee’s Remuneration

The Corporation will pay the Trustee reasonable remuneration for its services as Trustee hereunder and will repay to the Trustee on demand all monies which shall have been paid by the Trustee in connection with the execution of the trusts hereby created and such monies including the Trustee’s remuneration, shall be payable out of any funds coming into the possession of the Trustee in priority to payment of any principal of the Debentures or interest or premium thereon. Such remuneration shall continue to be payable until the trusts hereof be finally wound up and whether or not the trusts of this Indenture shall be in the course of administration by or under the direction of a court of competent jurisdiction.

7.3 To Give Notice of Default

The Corporation shall notify the Trustee immediately upon obtaining knowledge of any Event of Default hereunder.

7.4 Preservation of Existence, etc.

Subject to the express provisions hereof, the Corporation will carry on and conduct its activities, and cause its Subsidiaries to carry on and conduct their businesses, in a business-like manner and in accordance with good business practices; and, subject to the express provisions hereof, it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and rights.

7.5 Keeping of Books

The Corporation will keep or cause to be kept proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Corporation in accordance with generally accepted accounting principles.

7.6 Annual Certificate of Compliance

The Corporation shall deliver to the Trustee, within 120 days after the end of each calendar year, (and at any reasonable time upon demand by the Trustee) an Officers’ Certificate as to the knowledge of such officers of the Corporation who execute the Officers’ Certificate of the Corporation’s compliance with all conditions and covenants in this Indenture certifying that after reasonable investigation and inquiry, the Corporation has complied with all covenants, conditions or other requirements contained in this Indenture, the non-compliance with which could, with the giving of notice, lapse of time or otherwise, constitute an Event of Default hereunder, or if such is not the case, setting forth with reasonable particulars the circumstances of any failure to comply and steps taken or proposed to be taken to eliminate such circumstances

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and remedy such Event of Default, as the case may be.

7.7 Performance of Covenants by Trustee

If the Corporation shall fail to perform any of its covenants contained in this Indenture, the Trustee may notify the Debentureholders of such failure on the part of the Corporation or may itself perform any of the covenants capable of being performed by it, but shall be under no obligation to do so or to notify the Debentureholders. All sums so expended or advanced by the Trustee shall be repayable as provided in Section 7.2. No such performance, expenditure or advance by the Trustee shall be deemed to relieve the Corporation of any default hereunder.

7.8 SEC Notice

The Corporation represents and warrants that it does not and is not required to file reports with the U.S. Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Exchange Act, and covenants that, in the event that it shall begin to so file, the Corporation shall promptly deliver to the Trustee an Officer’s Certificate (in a form provided by the Trustee) certifying such “reporting company” status and such other information as the Trustee may reasonably require.

7.9 No Dividends on Common Shares if Event of Default

The Corporation shall not declare or pay any dividend to the holders of its issued and outstanding Common Shares after the occurrence of an Event of Default unless and until such default shall have been cured or waived or shall have ceased to exist.

7.10 Maintain Listing

The Corporation will use reasonable commercial efforts to maintain the listing of the Common Shares and the Debentures on the TSX, the TSX Venture Exchange or on a U.S. Securities Exchange, and to maintain the Corporation’s status as a “reporting issuer” (or a “reporting company”, as defined by the Exchange Act, if the Common Shares are listed on a U.S. Securities Exchange) not in default of the requirements of the Applicable Securities Legislation; provided that the foregoing covenant shall not prevent or restrict the Corporation from carrying out a transaction to which Article 11 would apply if carried out in compliance with Article 11 even if as a result of such transaction the Corporation ceases to be a “reporting issuer” in all or any of the provinces of Canada or a “reporting company”, as the case may be, or the Common Shares or Debentures cease to be listed on the TSX, the TSX Venture Exchange and/or a U.S. Securities Exchange.

7.11 Interest

The Corporation will ensure that interest on the Debentures shall not be in respect of a debt or other obligation to pay an amount to a person with whom the payer is not dealing at arm’s length, for purposes of proposed clause 212(1)(b)(i)(B) of the Income Tax Act (Canada) and any successor proposal or provision.

ARTICLE 8
DEFAULT

8.1 Events of Default

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Each of the following events constitutes, and is herein sometimes referred to as, an “Event of Default”:

(a) failure for 30 days to pay interest on the Debentures when due;

(b) failure to pay principal or premium (whether by way of payment of cash or delivery of Common Shares), if any, when due on the Debentures whether at maturity, upon redemption or a Change of Control, by declaration or otherwise;

(c) default in the delivery, when due, of any Common Shares or other consideration, including any Make Whole Premium, payable on conversion with respect to the Debentures, which default continues for 15 days;

(d) default in the observance or performance of any covenant or condition of the Indenture by the Corporation and the failure to cure (or obtain a waiver for) such default for a period of 30 days after notice in writing has been given by the Trustee or from holders of not less than 25% in aggregate principal amount of the Debentures to the Corporation specifying such default and requiring the Corporation to rectify such default or obtain a waiver for same;

(e) if a decree or order of a Court having jurisdiction is entered adjudging the Corporation or any Material Subsidiary a bankrupt or insolvent under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous laws, or issuing sequestration or process of execution against, or against any substantial part of, the property of the Corporation or any Material Subsidiary, or appointing a receiver of, or of any substantial part of, the property of the Corporation or any Material Subsidiary or ordering the winding-up or liquidation of its affairs, and any such decree or order continues unstayed and in effect for a period of 60 days;

(f) if the Corporation or any Material Subsidiary institutes proceedings to be adjudicated a bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous laws, or consents to the filing of any such petition or to the appointment of a receiver of, or of any substantial part of, the property of the Corporation or any Material Subsidiary or makes a general assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due;

(g) if a resolution is passed for the winding-up or liquidation of the Corporation or any Material Subsidiary except in the course of carrying out or pursuant to a transaction in respect of which the conditions of Section 11.1 are duly observed and performed;

(h) if, after the date of this Indenture, any proceedings with respect to the Corporation or any Material Subsidiary are taken with respect to a compromise or arrangement, with respect to creditors of the Corporation or any Material Subsidiary generally, under the applicable legislation of any jurisdiction; or

(i) if an event of default occurs or exists and is continuing under any indenture, agreement or other instrument evidencing or governing indebtedness for borrowed money (other than non-recourse debt) of the Corporation or any Material Subsidiary and as a result of such event of default (i) indebtedness for borrowed money thereunder in excess of C$10,000,000 (or the equivalent amount in any other currency) has become due and payable before the date it would otherwise have been due and payable and (ii) the holders of such indebtedness are entitled to commence, and have

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commenced, the enforcement of security they hold for such indebtedness (if any) or the exercise of any other creditors’ remedies to collect such indebtedness;

then: (x) in each and every such event listed above, the Trustee may, in its discretion, but subject to the provisions of this section, and shall, upon receipt of a request in writing signed by the holders of not less than 25% in principal amount of the Debentures then outstanding (or if the Event of Default shall exist only in respect of one or more series of the Debentures then outstanding, then upon receipt of a request in writing signed by the holders of not less than 25% in principal amount of the Debentures of such series then outstanding), subject to the provisions of Section 8.3, by notice in writing to the Corporation declare the principal of and interest and premium, if any, on all Debentures then outstanding and all other monies outstanding hereunder to be due and payable and the same shall thereupon forthwith become immediately due and payable (or, if the Event of Default shall exist only in respect of one or more series of the Debentures then outstanding, then the Trustee may declare due and payable the principal and interest and premium, if any, only with respect to such Debentures in respect of which there is an Event of Default) to the Trustee, and (y) on the occurrence of an Event of Default under Sections 8.1(e), 8.1(f) 8.1(g) or 8.1(i), the principal of and interest and premium, if any, on all Debentures then outstanding hereunder and all other monies outstanding hereunder, shall automatically without any declaration or other act on the part of the Trustee or any Debentureholder become immediately due and payable to the Trustee and, in either case, upon such amounts becoming due and payable in either (x) or (y) above, the Corporation shall forthwith pay to the Trustee for the benefit of the Debentureholders such principal, accrued and unpaid interest and premium, if any, and interest on amounts in default on such Debenture and all other monies outstanding hereunder, together with subsequent interest at the rate borne by the Debentures on such principal, interest, premium and such other monies from the date of such declaration or event until payment is received by the Trustee, such subsequent interest to be payable at the times and places and in the manner mentioned in and according to the tenor of the Debentures. Such payment when made shall be deemed to have been made in discharge of the Corporation’s obligations hereunder and any monies so received by the Trustee shall be applied in the manner provided in Section 8.6.

For greater certainty, for the purposes of this Section 8.1, a series of Debentures shall be in default in respect of an Event of Default if such Event of Default relates to a default in the payment of principal, premium, if any, or interest on the Debentures of such series in which case references to Debentures in this Section 8.1 refer to Debentures of that particular series.

For purposes of this Article 8, where the Event of Default refers to an Event of Default with respect to a particular series of Debentures as described in this Section 8.1, then this Article 8 shall apply mutatis mutandis to the Debentures of such series and references in this Article 8 to the Debentures shall mean Debentures of the particular series and references to the Debentureholders shall refer to the Debentureholders of the particular series, as applicable.

8.2 Notice of Events of Default

If an Event of Default shall occur and be continuing the Trustee shall, within 30 days after it receives written notice of the occurrence of such Event of Default, give notice of such Event of Default to the Debentureholders in the manner provided in Section 13.2, provided that notwithstanding the foregoing, unless the Trustee shall have been requested to do so by the holders of at least 25% of the principal amount of the Debentures then outstanding, the Trustee shall not be required to give such notice if the Trustee in good faith shall have determined that the withholding of such notice is in the best interests of the Debentureholders and shall have so advised the Corporation in writing.

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8.3 Waiver of Default

Upon the happening of any Event of Default hereunder:

(a) the holders of the Debentures shall have the power (in addition to the powers exercisable by Extraordinary Resolution as hereinafter provided) by requisition in writing by the holders of more than 50% of the principal amount of Debentures then outstanding, to instruct the Trustee to waive any Event of Default and to cancel any declaration made by the Trustee pursuant to Section 8.1 and the Trustee shall thereupon waive the Event of Default and cancel such declaration, or either, upon such terms and conditions as shall be prescribed in such requisition; provided that notwithstanding the foregoing if the Event of Default has occurred by reason of the nonobservance or non-performance by the Corporation of any covenant applicable only to one or more series of Debentures, then the holders of more than 50% of the principal amount of the outstanding Debentures of that series shall be entitled to exercise the foregoing power and the Trustee shall so act and it shall not be necessary to obtain a waiver from the holders of any other series of Debentures; and

(b) the Trustee, so long as it has not become bound to declare the principal and interest on the Debentures then outstanding to be due and payable, or to obtain or enforce payment of the same, shall have power to waive any Event of Default if, in the Trustee’s opinion, the same shall have been cured or adequate satisfaction made therefor, and in such event to cancel any such declaration theretofore made by the Trustee in the exercise of its discretion, upon such terms and conditions as the Trustee may deem advisable.

No such act or omission either of the Trustee or of the Debentureholders shall extend to or be taken in any manner whatsoever to affect any subsequent Event of Default or the rights resulting therefrom.

8.4 Enforcement by the Trustee

Subject to the provisions of Section 8.3 and to the provisions of any Extraordinary Resolution that may be passed by the Debentureholders, if the Corporation shall fail to pay to the Trustee, forthwith after the same shall have been declared to be due and payable under Section 8.1, the principal of and premium (if any) and interest on all Debentures then outstanding, together with any other amounts due hereunder, the Trustee may in its discretion and shall upon receipt of a request in writing signed by the holders of not less than 25% in principal amount of the Debentures then outstanding and upon being funded and indemnified to its reasonable satisfaction against all costs, expenses and liabilities to be incurred, proceed in its name as trustee hereunder to obtain or enforce payment of such principal of and premium (if any) and interest on all the Debentures then outstanding together with any other amounts due hereunder by such proceedings authorized by this Indenture or by law or equity as the Trustee in such request shall have been directed to take, or if such request contains no such direction, or if the Trustee shall act without such request, then by such proceedings authorized by this Indenture or by suit at law or in equity as the Trustee shall deem expedient.

The Trustee shall be entitled and empowered, either in its own name or as Trustee of an express trust, or as attorney-in-fact for the holders of the Debentures, or in any one or more of such capacities, to file such proof of debt, amendment of proof of debt, claim, petition or other document as may be necessary or advisable in order to have the claims of the Trustee and of the holders of the Debentures allowed in any insolvency, bankruptcy, liquidation or other judicial proceedings relative to the Corporation or its creditors or relative to or affecting its property. The Trustee is hereby irrevocably appointed (and the successive respective holders of the Debentures by taking and holding the same shall be conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective holders of the Debentures with authority to make and file in the respective names of the holders of the Debentures or on behalf of the

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holders of the Debentures as a class, subject to deduction from any such claims of the amounts of any claims filed by any of the holders of the Debentures themselves, any proof of debt, amendment of proof of debt, claim, petition or other document in any such proceedings and to receive payment of any sums becoming distributable on account thereof, and to execute any such other papers and documents and to do and perform any and all such acts and things for and on behalf of such holders of the Debentures, as may be necessary or advisable in the opinion of the Trustee, in order to have the respective claims of the Trustee and of the holders of the Debentures against the Corporation or its property allowed in any such proceeding, and to receive payment of or on account of such claims; provided, however, that subject to Section 8.3, nothing contained in this Indenture shall be deemed to give to the Trustee, unless so authorized by Extraordinary Resolution, any right to accept or consent to any plan of reorganization or otherwise by action of any character in such proceeding to waive or change in any way any right of any Debentureholder.

The Trustee shall also have the power at any time and from time to time to institute and to maintain such suits and proceedings as it may be advised shall be necessary or advisable to preserve and protect its interests and the interests of the Debentureholders.

All rights of action hereunder may be enforced by the Trustee without the possession of any of the Debentures or the production thereof on the trial or other proceedings relating thereto. Any such suit or proceeding instituted by the Trustee shall be brought in the name of the Trustee as trustee of an express trust, and any recovery of judgment shall be for the rateable benefit of the holders of the Debentures subject to the provisions of this Indenture. In any proceeding brought by the Trustee (and also any proceeding in which a declaratory judgment of a court may be sought as to the interpretation or construction of any provision of this Indenture, to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Debentures, and it shall not be necessary to make any holders of the Debentures parties to any such proceeding.

8.5 No Suits by Debentureholders

No holder of any Debenture shall have any right to institute any action, suit or proceeding at law or in equity for the purpose of enforcing payment of the principal of or interest on the Debentures or for the execution of any trust or power hereunder or for the appointment of a liquidator or receiver or for a receiving order under the Bankruptcy and Insolvency Act (Canada) or to have the Corporation wound up or to file or prove a claim in any liquidation or bankruptcy proceeding or for any other remedy hereunder, unless: (a) such holder shall previously have given to the Trustee written notice of the happening of an Event of Default hereunder; and (b) the Debentureholders by Extraordinary Resolution or by written instrument signed by the holders of at least 25% in principal amount of the Debentures then outstanding shall have made a request to the Trustee and the Trustee shall have been afforded reasonable opportunity either itself to proceed to exercise the powers hereinbefore granted or to institute an action, suit or proceeding in its name for such purpose; and (c) the Debentureholders or any of them shall have furnished to the Trustee, when so requested by the Trustee, sufficient funds and security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby; and (d) the Trustee shall have failed to act within a reasonable time after such notification, request and offer of indemnity and such notification, request and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to any such proceeding or for any other remedy hereunder by or on behalf of the holder of any Debentures.

8.6 Application of Monies by Trustee

(a) Except as herein otherwise expressly provided, any monies received by the Trustee from the Corporation pursuant to the foregoing provisions of this Article 8, or as a result of legal or other

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proceedings or from any trustee in bankruptcy or liquidator of the Corporation, shall be applied, together with any other monies in the hands of the Trustee available for such purpose, as follows:

(i) first, in payment or in reimbursement to the Trustee of its compensation, costs, charges, expenses, borrowings, advances or other monies furnished or provided by or at the instance of the Trustee in or about the execution of its trusts under, or otherwise in relation to, this Indenture, with interest thereon as herein provided;

(ii) second, but subject as hereinafter in this Section 8.6 provided, in payment, rateably and proportionately to the holders of Debentures, of the principal of and premium (if any) and accrued and unpaid interest and interest on amounts in default on the Debentures which shall then be outstanding in the priority of principal first and then premium and then accrued and unpaid interest and interest on amounts in default unless otherwise directed by Extraordinary Resolution and in that case in such order or priority as between principal, premium (if any) and interest as may be directed by such resolution; and

(iii) third, in payment of the surplus, if any, of such monies to the Corporation or its assigns;

provided, however, that no payment shall be made pursuant to clause (ii) above in respect of the principal, premium or interest on any Debenture held, directly or indirectly, by or for the benefit of the Corporation or any Subsidiary (other than any Debenture pledged for value and in good faith to a person other than the Corporation or any Subsidiary but only to the extent of such person’s interest therein) except subject to the prior payment in full of the principal, premium (if any) and interest (if any) on all Debentures which are not so held.

(b) The Trustee shall not be bound to apply or make any partial or interim payment of any monies coming into its hands if the amount so received by it, after reserving thereout such amount as the Trustee may think necessary to provide for the payments mentioned in Section 8.6(a), is insufficient to make a distribution of at least 2% of the aggregate principal amount of the outstanding Debentures, but it may retain the money so received by it and invest or deposit the same as provided in Section 15.9 until the money or the investments representing the same, with the income derived therefrom, together with any other monies for the time being under its control shall be sufficient for the said purpose or until it shall consider it advisable to apply the same in the manner hereinbefore set forth. The foregoing shall, however, not apply to a final payment in distribution hereunder.

8.7 Notice of Payment by Trustee

Not less than 15 days’ notice shall be given in the manner provided in Section 14.2 by the Trustee to the Debentureholders of any payment to be made under this Article 8. Such notice shall state the time when and place where such payment is to be made and also the liability under this Indenture to which it is to be applied. After the day so fixed, unless payment shall have been duly demanded and have been refused, the Debentureholders will be entitled to interest only on the balance (if any) of the principal monies, premium (if any) and interest due (if any) to them, respectively, on the Debentures, after deduction of the respective amounts payable in respect thereof on the day so fixed.

8.8 Trustee May Demand Production of Debentures

The Trustee shall have the right to demand production of the Debentures in respect of which any payment of principal, interest or premium required by this Article 8 is made and may cause to be endorsed on the same a memorandum of the amount so paid and the date of payment, but the Trustee may, in its

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discretion, dispense with such production and endorsement, upon such indemnity being given to it and to the Corporation as the Trustee shall deem sufficient.

8.9 Remedies Cumulative

No remedy herein conferred upon or reserved to the Trustee, or upon or to the holders of Debentures is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now existing or hereafter to exist by law or by statute.

8.10 Judgment Against the Corporation

The Corporation covenants and agrees with the Trustee that, in case of any judicial or other proceedings to enforce the rights of the Debentureholders, judgment may be rendered against it in favour of the Debentureholders or in favour of the Trustee, as trustee for the Debentureholders, for any amount which may remain due in respect of the Debentures and premium (if any) and the interest thereon and any other monies owing hereunder.

8.11 Immunity of Directors, Officers and Others

The Debentureholders and the Trustee hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any past, present or future officer, director or employee of the Corporation or holder of Common Shares of the Corporation or of any successor for the payment of the principal of or premium or interest on any of the Debentures or on any covenant, agreement, representation or warranty by the Corporation contained herein or in the Debentures.

ARTICLE 9
SATISFACTION AND DISCHARGE

9.1 Cancellation and Destruction

All Debentures shall forthwith after payment thereof be delivered to the Trustee and cancelled by it. All Debentures cancelled or required to be cancelled under this or any other provision of this Indenture shall be perforated and cancelled by the Trustee and, if required by the Corporation, the Trustee shall furnish to it a destruction certificate setting out the designating numbers of the Debentures so destroyed.

9.2 Non-Presentation of Debentures

In case the holder of any Debenture shall fail to present the same for payment on the date on which the principal of, premium (if any) or the interest thereon or represented thereby becomes payable either at maturity or otherwise or shall not accept payment on account thereof and give such receipt therefor, if any, as the Trustee may require:

(a) the Corporation shall be entitled to pay or deliver to the Trustee and direct it to set aside; or

(b) in respect of monies or Common Shares in the hands of the Trustee which may or should be applied to the payment of the Debentures, the Corporation shall be entitled to direct the Trustee to set aside; or

(c) if the redemption was pursuant to notice given by the Trustee, the Trustee may itself set aside;

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the monies or Common Shares, as the case may be, in trust to be paid to the holder of such Debenture upon due presentation or surrender thereof in accordance with the provisions of this Indenture; and thereupon the principal of, premium (if any) or the interest payable on or represented by each Debenture in respect whereof such monies or Common Shares, if applicable, have been set aside shall be deemed to have been paid and the holder thereof shall thereafter have no right in respect thereof except that of receiving delivery and payment of the monies or Common Shares, if applicable, so set aside by the Trustee upon due presentation and surrender thereof, subject always to the provisions of Section 9.3.

9.3 Repayment of Unclaimed Monies or Common Shares

Subject to applicable law, any monies or Common Shares, if applicable, set aside under Section 9.2 and not claimed by and paid to holders of Debentures as provided in Section 9.2 within five years less one day after the date of such setting aside shall be repaid and delivered to the Corporation by the Trustee and thereupon the Trustee shall be released from all further liability with respect to such monies or Common Shares, if applicable, and thereafter the holders of the Debentures in respect of which such monies or Common Shares, if applicable, were so repaid to the Corporation shall have no rights in respect thereof except to obtain payment and delivery of the monies or Common Shares, if applicable, from the Corporation subject to any limitation provided by the laws of the Province of Ontario. Notwithstanding the foregoing, the Trustee will pay any remaining funds prior to the expiry of five years less one day after the setting aside described in Section 9.2 to the Corporation upon receipt from the Corporation, of an unconditional letter of credit from a Canadian chartered bank in an amount equal to or in excess of the amount of the remaining funds. If the remaining funds are paid to the Corporation prior to the expiry of five years less one day after such setting aside, the Corporation shall reimburse the Trustee for any amounts so set aside which are required to be paid by the Trustee to a holder of a Debenture after the date of such payment of the remaining funds to the Corporation but prior to five years less one day after such setting aside.

9.4 Discharge

The Trustee shall at the written request of the Corporation release and discharge this Indenture and execute and deliver such instruments as it shall be advised by Counsel are requisite for that purpose and to release the Corporation from its covenants herein contained (other than the provisions relating to the indemnification of the Trustee), upon proof being given to the reasonable satisfaction of the Trustee that the principal of, premium (if any) and interest (including interest on amounts in default, if any), on all the Debentures and all other monies payable hereunder have been paid or satisfied or that all the Debentures having matured or having been duly called for redemption, payment of the principal of and interest (including interest on amounts in default, if any) on such Debentures and of all other monies payable hereunder has been duly and effectually provided for in accordance with the provisions hereof.

9.5 Satisfaction

(a) The Corporation shall be deemed to have fully paid, satisfied and discharged all of the outstanding Debentures of any series and the Trustee, at the expense of the Corporation, shall execute and deliver proper instruments acknowledging the full payment, satisfaction and discharge of such Debentures, when, with respect to all of the outstanding Debentures or all of the outstanding Debentures of any series, as applicable:

(i) the Corporation has deposited or caused to be deposited with the Trustee as trust funds or property in trust for the purpose of making payment on such Debentures, an amount in money or Common Shares, if applicable, sufficient to pay, satisfy and discharge the entire amount of principal of, premium, if any, and interest, if any, to maturity, or any repayment

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date or Redemption Dates, or any Change of Control Purchase Date, or upon conversion or otherwise as the case may be, of such Debentures (including the maximum amount that may be payable as a Make Whole Premium);

(ii) the Corporation has deposited or caused to be deposited with the Trustee as trust property in trust for the purpose of making payment on such Debentures:

(A) if the Debentures are issued in US dollars, such amount in US dollars of direct obligations of, or obligations the principal and interest of which are guaranteed by, the Government of the United States or Common Shares, if applicable; or

(B) if the Debentures are issued in a currency or currency unit other than US dollars, cash in the currency or currency unit in which the Debentures are payable and/or such amount in such currency or currency unit of direct obligations of, or obligations the principal and interest of which are guaranteed by, the Government of Canada or the government that issued the currency or currency unit in which the Debentures are payable or Common Shares, if applicable;

as will be sufficient to pay and discharge the entire amount of principal of, premium, if any (including the maximum amount that may be payable as a Make Whole Premium) on, and accrued and unpaid interest to maturity or any repayment date, as the case may be, of all such Debentures; or

(iii) all Debentures authenticated and delivered (other than (A) Debentures which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9 and (B) Debentures for whose payment has been deposited in trust and thereafter repaid to the Corporation as provided in Section 9.3) have been delivered to the Trustee for cancellation;

so long as in any such event:

(iv) the Corporation has paid, caused to be paid or made provisions to the satisfaction of the Trustee for the payment of all other sums payable or which may be payable (including the maximum amount that may be payable as a Make Whole Premium) with respect to all of such Debentures (together with all applicable expenses of the Trustee in connection with the payment of such Debentures); and

(v) the Corporation has delivered to the Trustee an Officers’ Certificate stating that all conditions precedent herein provided relating to the payment, satisfaction and discharge of all such Debentures have been complied with.

Any deposits with the Trustee referred to in this Section 9.5 shall be irrevocable, subject to Section 9.6, and shall be made under the terms of an escrow and/or trust agreement in form and substance satisfactory to the Trustee and which provides for the due and punctual payment of the principal of, premium, if any, and interest on the Debentures being satisfied.

(b) Upon the satisfaction of the conditions set forth in this Section 9.5 with respect to all the outstanding Debentures, or all the outstanding Debentures of any series, as applicable, the terms and conditions of the Debentures, including the terms and conditions with respect thereto set forth in this Indenture (other than those contained in Article 2 and Article 4 and the provisions of Article 1 pertaining to

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Article 2 and Article 4) shall no longer be binding upon or applicable to the Corporation.

(c) Any funds or obligations deposited with the Trustee pursuant to this Section 9.5 shall be denominated in the currency or denomination of the Debentures in respect of which such deposit is made.

(d) If the Trustee is unable to apply any money or securities in accordance with this Section 9.5 by reason of any legal proceeding or any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Corporation’s obligations under this Indenture and the affected Debentures shall be revived and reinstated as though no money or securities had been deposited pursuant to this Section 9.5 until such time as the Trustee is permitted to apply all such money or securities in accordance with this Section 9.5, provided that if the Corporation has made any payment in respect of principal of, premium, if any, or interest on Debentures or, as applicable, other amounts because of the reinstatement of its obligations, the Corporation shall be subrogated to the rights of the holders of such Debentures to receive such payment from the money or securities held by the Trustee.

9.6 Continuance of Rights, Duties and Obligations

(a) Where trust funds or trust property have been deposited pursuant to Section 9.5, the holders of Debentures and the Corporation shall continue to have and be subject to their respective rights, duties and obligations under Article 2 and Article 4.

(b) In the event that, after the deposit of trust funds or trust property pursuant to Section 9.5 in respect of a series of Debentures (the “Defeased Debentures”), any holder of any of the Defeased Debentures from time to time converts its Debentures to Common Shares or other securities of the Corporation in accordance with Subsection 2.4(d) (in respect of Initial Debentures or the comparable provision of any other series of Debentures), Article 6 or any other provision of this Indenture, the Trustee shall upon receipt of a Written Direction of the Corporation return to the Corporation from time to time the proportionate amount of the trust funds or other trust property deposited with the Trustee pursuant to Section 9.5 in respect of the Defeased Debentures which is applicable to the Defeased Debentures so converted (which amount shall be based on the applicable principal amount of the Defeased Debentures being converted in relation to the aggregate outstanding principal amount of all the Defeased Debentures).

(c) In the event that, after the deposit of trust funds or trust property pursuant to Section 9.5, the Corporation is required to make a Change of Control Purchase Offer to purchase any outstanding Debentures pursuant to Subsection 2.4(j) (in respect of Initial Debentures or the comparable provision of any other series of Debentures), in relation to Initial Debentures or to make an offer to purchase Debentures pursuant to any other similar provisions relating to any other series of Debentures, the Corporation shall be entitled to use any trust money or trust property deposited with the Trustee pursuant to Section 9.5 for the purpose of paying to any holders of Defeased Debentures who have accepted any such offer of the Corporation the Total Offer Price payable to such holders in respect of such Change of Control Purchase Offer in respect of Initial Debentures (or the total offer price payable in respect of an offer relating to any other series of Debentures). Upon receipt of a Written Direction from the Corporation, the Trustee shall be entitled to pay to such holder from such trust money or trust property deposited with the Trustee pursuant to Section 9.5 in respect of the Defeased Debentures which is applicable to the Defeased Debentures held by such holders who have accepted any such offer to the Corporation (which amount shall be based on the applicable principal amount of the Defeased Debentures held by accepting offerees in relation to the aggregate outstanding principal amount of all the Defeased Debentures).

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ARTICLE 10COMMON SHARE INTEREST PAYMENT ELECTION

10.1 Common Share Interest Payment Election

(a) Provided that the Corporation is not in default under this Indenture and that all applicable regulatory approvals have been obtained (including any required approval of any stock exchange on which the Debentures or Common Shares are then listed), the Corporation shall have the right, from time to time (including following conversion, at the time of redemption or at the time of maturity), to make a Common Share Interest Payment Election in respect of any Interest Obligation by delivering a Common Share Interest Payment Election Notice to the Trustee no later than the earlier of (i) the date required by applicable law or the rules of any stock exchange on which the Debentures or Common Shares are then listed, and (ii) the day which is 15 Business Days prior to the Interest Payment Date to which the Common Share Interest Payment Election relates. Such Common Share Interest Payment Election Notice shall provide that all or a portion of the Interest Obligation may be paid by the Corporation by the delivery of Common Shares to the Trustee and the subsequent sale of such Common Shares by the Trustee in accordance with this Section 10.1, and if only a portion of the Interest Obligation is to be paid in Common Shares, the Common Share Interest Payment Election shall state the portion to be paid in such manner and such portion to be paid directly in cash.

(b) Upon receipt of a Common Share Interest Payment Election Notice, the Trustee shall, in accordance with this Article 10 and such Common Share Interest Payment Election Notice, deliver Common Share Bid Requests to the investment banks, brokers or dealers identified by the Corporation, in its absolute discretion, in the Common Share Interest Payment Election Notice. In connection with the Common Share Interest Payment Election, the Trustee shall have the power to: (i) accept delivery of the Common Shares from the Corporation and process the Common Shares in accordance with the Common Share Interest Payment Election Notice; (ii) accept bids with respect to, and consummate sales of, such Common Shares, each as the Corporation shall direct in its absolute discretion through the investment banks, brokers or dealers identified by the Corporation in the Common Share Interest Payment Election Notice; (iii) invest the proceeds of such sales on the direction of the Corporation in Government Obligations which mature prior to an applicable Interest Payment Date and use such proceeds to pay the Interest Obligation in respect of which the Common Share Interest Payment Election was made; and (iv) perform any other action necessarily incidental thereto as directed by the Corporation in its absolute discretion. The Common Share Interest Payment Election Notice shall direct the Trustee to solicit and accept only, and each Common Share Bid Request shall provide that the acceptance of any bid is conditional on the acceptance of, sufficient bids to result in aggregate proceeds from such issue and sale of Common Shares which, together with the cash payments by the Corporation in lieu of fractional Common Shares, if any, equal the Interest Obligation on the Common Share Delivery Date.

(c) The Common Share Interest Payment Election Notice shall provide for, and all bids shall be subject to, the right of the Corporation, by delivering written notice to the Trustee at any time prior to the consummation of such delivery and sale of the Common Shares on the Common Share Delivery Date, to withdraw the Common Share Interest Payment Election (which shall have the effect of withdrawing each related Common Share Bid Request), whereupon the Corporation shall be obliged to pay directly in cash the Interest Obligation in respect of which the Common Share Interest Payment Election Notice has been delivered.

(d) Any sale of Common Shares pursuant to this Article 10 may be made to one or more Persons whose

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bids are solicited, but all such sales with respect to a particular Common Share Interest Payment Election shall take place concurrently on the Common Share Delivery Date.

(e) The amount received by a holder of a Debenture in respect of the Interest Obligation or the entitlement thereto will not be affected by whether or not the Corporation elects to satisfy the Interest Obligation pursuant to a Common Share Interest Payment Election.

(f) The Trustee shall inform the Corporation promptly following receipt of any bid or bids for Common Shares solicited pursuant to the Common Share Bid Requests. The Trustee shall accept such bid or bids as the Corporation, in its absolute discretion, shall direct by Written Direction of the Corporation, provided that the aggregate proceeds of all sales of Common Shares resulting from the acceptance of such bids (but not the income thereon), together with the amount of any cash payment by the Corporation in lieu of any fractional Common Shares, on the Common Share Delivery Date, must be equal to the related Common Share Interest Payment Election Amount in connection with any bids so accepted, the Corporation, the Trustee (if required by the Corporation in its absolute discretion) and the applicable bidders shall, not later than the Common Share Delivery Date, enter into Common Share Purchase Agreements and shall comply with all Applicable Securities Legislation, including the securities rules and regulations of any stock exchange on which the Debentures or Common Shares are then listed. The Corporation shall pay all fees and expenses in connection with the Common Share Purchase Agreements including the fees and commissions charged by the investment banks, brokers and dealers and the fees of the Trustee.

(g) Provided that: (i) all conditions specified in each Common Share Purchase Agreement to the closing of all sales thereunder have been satisfied, other than the delivery of the Common Shares to be sold thereunder against payment of the purchase price thereof; and (ii) the purchasers under each Common Share Purchase Agreement shall be ready, willing and able to perform thereunder, in each case on the Common Share Delivery Date, the Corporation shall, on the Common Share Delivery Date, deliver to the Trustee the Common Shares to be sold on such date, an amount in cash equal to the value of any fractional Common Shares and an Officers’ Certificate to the effect that all conditions precedent to such sales, including those set forth in this Indenture and in each Common Share Purchase Agreement, have been satisfied. Upon such deliveries, the Trustee shall consummate such sales on such Common Share Delivery Date by the delivery of the Common Shares to such purchasers against payment to the Trustee in immediately available funds of the purchase price therefor in an aggregate amount equal to the Common Share Interest Payment Election Amount (less any amount attributable to any fractional Common Shares), whereupon the sole right of a holder of Debentures to receive such holder’s portion of the Common Share Interest Payment Election Amount will be to receive same from the Trustee out of the proceeds of such sales of Common Shares plus any amount received by the Trustee from the Corporation attributable to any fractional Common Shares in full satisfaction of the Interest Obligation and the holder will have no further recourse to the Corporation in respect of the Interest Obligation.

(h) The Trustee shall, on the Common Share Delivery Date, use the sale proceeds of the Common Shares (together with any cash received from the Corporation in lieu of any fractional Common Shares) to purchase, on the direction of the Corporation in writing, Government Obligations which mature prior to the applicable Interest Payment Date and which the Trustee is required to hold until maturity (the “Common Share Proceeds Investment”) and shall, on such date, deposit the balance, if any, of such sale proceeds in an account established by the Corporation (and which shall be maintained by and subject to the control of the Trustee) (the “Interest Account”) for such Debentures. The Trustee shall hold such Common Share Proceeds Investment (but not income earned thereon) under

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its exclusive control in an irrevocable trust for the benefit of the holders of the Debentures. At least one Business Day prior to the Interest Payment Date, the Trustee shall deposit amounts from the proceeds of the Common Share Proceeds Investment in the Interest Account to bring the balance of the Interest Account to the Common Share Interest Payment Election Amount. On the Interest Payment Date, the Trustee shall pay the funds held in the Interest Account to the holders of record of the Debentures on the Interest Payment Date (less any tax required to be deducted) and, provided that there is no Event of Default, shall remit amounts, if any, in respect of income earned on the Common Share Proceeds Investment or otherwise in excess of the Common Share Interest Payment Election Amount to the Corporation.

(i) Neither the making of a Common Share Payment Election nor the consummation of sales of Common Shares on a Common Share Delivery Date shall (i) result in the holders of the Debentures not being entitled to receive on the applicable Interest Payment Date cash in an aggregate amount equal to the Interest Obligation payable on such date or (ii) entitle such holders to receive any Common Shares in satisfaction of such Interest Obligation.

(j) No fractional Common Shares will be issued in satisfaction of interest but in lieu thereof the Corporation will satisfy such fractional interest by a cash payment equal to the market price of such fractional interest (less any tax required to be deducted).

(k) Any action by the Trustee pursuant to this Article shall be made at the written instruction of the Corporation. The Trustee shall only settle trades as instructed by the Corporation in writing.

ARTICLE 11
SUCCESSORS

11.1 Corporation may Consolidate, etc., Only on Certain Terms

(a) The Corporation may not, without the consent of the holders, consolidate with or amalgamate or merge with or into any Person (other than a directly or indirectly wholly-owned Subsidiary of the Corporation) or sell, convey, transfer or lease all or substantially all of the properties and assets of the Corporation to another Person (other than a directly or indirectly wholly-owned Subsidiary of the Corporation) unless:

(i) the Person formed by such consolidation or into which the Corporation is amalgamated or merged, or the Person which acquires by sale, conveyance, transfer or lease all or substantially all of the properties and assets of the Corporation is a corporation, organized and existing under the laws of Canada or any province or territory thereof or the laws of the United States or any state thereof and such corporation (if other than the Corporation or the continuing corporation resulting from the amalgamation of the Corporation with another corporation under the laws of Canada or any province or territory thereof) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the obligations of the Corporation under the Debentures and this Indenture and the performance or observance of every covenant and provision of this Indenture and the Debentures required on the part of the Corporation to be performed or observed and the conversion rights shall be provided for in accordance with Article 4, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Corporation or the continuing corporation resulting from the amalgamation of the Corporation with another corporation under the laws of Canada or any province or territory thereof) formed by such consolidation or into which the

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Corporation shall have been merged or by the Person which shall have acquired the Corporation’s assets;

(ii) after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

(iii) if the Corporation or the continuing corporation resulting from the amalgamation or merger of the Corporation with another Person under the laws of Canada or any province or territory thereof or the laws of the United States or any state thereof will not be the resulting, continuing or surviving corporation, the Corporation shall have, at or prior to the effective date of such consolidation, amalgamation, merger or sale, conveyance, transfer or lease, delivered to the Trustee an Officers’ Certificate and an opinion of Counsel, each stating that such consolidation, merger or transfer complies with this Article and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article, and that all conditions precedent herein provided for relating to such transaction have been complied with.

(b) For purposes of the foregoing, the sale, conveyance, transfer or lease (in a single transaction or a series of related transactions) of the properties or assets of one or more Subsidiaries of the Corporation (other than to the Corporation or another wholly-owned Subsidiary of the Corporation), which, if such properties or assets were directly owned by the Corporation, would constitute all or substantially all of the properties and assets of the Corporation and its Subsidiaries, taken as a whole, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Corporation.

11.2 Successor Substituted

Upon any consolidation of the Corporation with, or amalgamation or merger of the Corporation into, any other Person or any sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Corporation and its Subsidiaries, taken as a whole, in accordance with Section 11.1, the successor Person formed by such consolidation or into which the Corporation is amalgamated or merged or to which such sale, conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Corporation under this Indenture with the same effect as if such successor Person had been named as the Corporation herein, and thereafter, except in the case of a lease, and except for obligations the predecessor Person may have under a supplemental indenture entered into pursuant to Section 11.1(a)(iii), the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Debentures.

ARTICLE 12
COMPULSORY ACQUISITION

12.1 Definitions

In this Article:

(a) “Affiliate” and “Associate” shall have their respective meanings set forth in the Securities Act (Ontario);

(b) “Dissenting Debentureholders” means a Debentureholder who does not accept an Offer referred

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to in Section 12.2 and includes any assignee of the Debenture of a Debentureholder to whom such an Offer is made, whether or not such assignee is recognized under this Indenture;

(c) “Offer” means an offer to acquire outstanding Debentures, which is a takeover bid for Debentures within the meaning ascribed thereto in MI 62-104, where as of the date of the offer to acquire, the Debentures that are subject to the offer to acquire, together with the Offeror’s Debentures, constitute in the aggregate 20% or more of the outstanding principal amount of the Debentures;

(d) “offer to acquire” includes an acceptance of an offer to sell;

(e) “Offeror” means a person, or two or more persons acting jointly or in concert, who make an Offer to acquire Debentures;

(f) “Offeror’s Debentures” means Debentures beneficially owned, or over which control or direction is exercised, on the date of an Offer by the Offeror, any Affiliate or Associate of the Offeror or any person or company acting jointly or in concert with the Offeror; and

(g) “Offeror’s Notice” means the notice described in Section 12.3.

12.2 Offer for Debentures

If an Offer for all of the outstanding Debentures (other than Debentures held by or on behalf of the Offeror or an Affiliate or Associate of the Offeror) is made and:

(a) within the time provided in the Offer for its acceptance or within 120 days after the date the Offer is made, whichever period is the shorter, the Offer is accepted by Debentureholders representing at least 90% of the outstanding principal amount of the Debentures, other than the Offeror’s Debentures;

(b) the Offeror is bound to take up and pay for, or has taken up and paid for the Debentures of the Debentureholders who accepted the Offer; and

(c) the Offeror complies with Sections 12.3 and 12.5;

the Offeror is entitled to acquire, and the Dissenting Debentureholders are required to sell to the Offeror, the Debentures held by the Dissenting Debentureholder for the same consideration per Debenture payable or paid, as the case may be, under the Offer.

12.3 Offeror’s Notice to Dissenting Shareholders

Where an Offeror is entitled to acquire Debentures held by Dissenting Debentureholders pursuant to Section 12.2 and the Offeror wishes to exercise such right, the Offeror shall send by registered mail within 30 days after the date of termination of the Offer a notice (the “Offeror’s Notice”) to each Dissenting Debentureholder stating that:

(a) Debentureholders holding at least 90% of the principal amount of all outstanding Debentures, other than Offeror’s Debentures, have accepted the Offer;

(b) the Offeror is bound to take up and pay for, or has taken up and paid for, the Debentures of the Debentureholders who accepted the Offer;

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(c) Dissenting Debentureholders must transfer their respective Debentures to the Offeror on the terms on which the Offeror acquired the Debentures of the Debentureholders who accepted the Offer within 21 days after the date of the sending of the Offeror’s Notice; and

(d) Dissenting Debentureholders must send their respective Debenture certificate(s) to the Trustee within 21 days after the date of the sending of the Offeror’s Notice.

12.4 Delivery of Debenture Certificates

A Dissenting Debentureholder to whom an Offeror’s Notice is sent pursuant to Section 12.3 shall, within 21 days after the sending of the Offeror’s Notice, send his or her Debenture certificate(s) to the Trustee duly endorsed for transfer.

12.5 Payment of Consideration to Trustee

Within 21 days after the Offeror sends an Offeror’s Notice pursuant to Section 12.3, the Offeror shall pay or transfer to the Trustee, or to such other person as the Trustee may direct, the cash or other consideration that is payable to Dissenting Debentureholders pursuant to Section 12.2. The acquisition by the Offeror of all Debentures held by all Dissenting Debentureholders shall be effective as of the time of such payment or transfer.

12.6 Consideration to be held in Trust

The Trustee, or the person directed by the Trustee, shall hold in trust for the Dissenting Debentureholders the cash or other consideration they or it receives under Section 12.5. The Trustee, or such persons, shall deposit cash in a separate account in a Canadian chartered bank, or other body corporate, any of whose deposits are insured by the Canada Deposit Insurance Corporation, and shall place other consideration in the custody of a Canadian chartered bank or such other body corporate.

12.7 Completion of Transfer of Debentures to Offeror

Within 30 days after the date of the sending of an Offeror’s Notice pursuant to Section 12.3, the Trustee, if the Offeror has complied with Section 12.5, shall:

(a) do all acts and things and execute and cause to be executed all instruments as in the Trustee’s opinion may be necessary or desirable to cause the transfer of the Debentures of the Dissenting Debentureholders to the Offeror;

(b) send to each Dissenting Debentureholder who has complied with Section 12.4 the consideration to which such Dissenting Debentureholder is entitled under this Article 12; and

(c) send to each Dissenting Debentureholder who has not complied with Section 12.4 a notice stating that:

(i) his or her Debentures have been transferred to the Offeror;

(ii) the Trustee or some other person designated in such notice are holding in trust the consideration for such Debentures; and

(iii) the Trustee, or such other person, will send the consideration to such Dissenting

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Debentureholder as soon as possible after receiving such Dissenting Debentureholder’s Debenture certificate(s) or such other documents as the Trustee or such other person may require in lieu thereof;

and the Trustee is hereby appointed the agent and attorney of the Dissenting Debentureholders for the purposes of giving effect to the foregoing provisions.

12.8 Communication of Offer to Trust

An Offeror cannot make an Offer for Debentures unless, concurrent with the communication of the Offer to any Debentureholder, a copy of the Offer is provided to the Corporation.

ARTICLE 13
MEETINGS OF DEBENTUREHOLDERS

13.1 Right to Convene Meeting

The Trustee or the Corporation may at any time and from time to time, and the Trustee shall, on receipt of a Written Direction of the Corporation or a written request signed by the holders of not less than 25% of the principal amount of the Debentures then outstanding and upon receiving funding and being indemnified to its reasonable satisfaction by the Corporation or by the Debentureholders signing such request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the Debentureholders. In the event of the Trustee failing, within 30 days after receipt of any such request and such funding of indemnity, to give notice convening a meeting, the Corporation or such Debentureholders, as the case may be, may convene such meeting. Every such meeting shall be held in the City of Toronto or at such other place as may be approved or determined by the Trustee.

13.2 Notice of Meetings

(a) At least 21 days’ notice of any meeting shall be given to the Debentureholders in the manner provided in Section 14.2 and a copy of such notice shall be sent by post to the Trustee, unless the meeting has been called by it. Such notice shall state the time when and the place where the meeting is to be held and shall state briefly the general nature of the business to be transacted thereat and it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article. The accidental omission to give notice of a meeting to any holder of Debentures shall not invalidate any resolution passed at any such meeting. A holder may waive notice of a meeting either before or after the meeting.

(b) If the business to be transacted at any meeting by Extraordinary Resolution or otherwise, or any action to be taken or power exercised by instrument in writing under Section 13.15, especially affects the rights of holders of Debentures of one or more series in a manner or to an extent differing in any material way from that in or to which the rights of holders of Debentures of any other series are affected (determined as provided in Sections 13.2(c) and (d)), then:

(i) a reference to such fact, indicating each series of Debentures so especially affected (hereinafter referred to as the “especially affected series”) shall be made in the notice of such meeting, and in any such case the meeting shall be and be deemed to be and is herein referred to as a “Serial Meeting”; and

(ii) the holders of Debentures of an especially affected series shall not be bound by any action

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taken at a Serial Meeting or by instrument in writing under Section 13.15 unless in addition to compliance with the other provisions of this Article 13:

(A) at such Serial Meeting: (I) there are Debentureholders present in person or by proxy and representing at least 25% in principal amount of the Debentures then outstanding of such series, subject to the provisions of this Article 13 as to quorum at adjourned meetings; and (II) the resolution is passed by the affirmative vote of the holders of more than 50% (or in the case of an Extraordinary Resolution not less than 66 2/3%) of the principal amount of the Debentures of such series then outstanding voted on the resolution; or

(B) in the case of action taken or power exercised by instrument in writing under Section 13.15, such instrument is signed in one or more counterparts by the holders of not less than 66 2/3% in principal amount of the Debentures of such series then outstanding.

(c) Subject to Section 13.2(d), the determination as to whether any business to be transacted at a meeting of Debentureholders, or any action to be taken or power to be exercised by instrument in writing under Section 13.15, especially affects the rights of the Debentureholders of one or more series in a manner or to an extent differing in any material way from that in or to which it affects the rights of Debentureholders of any other series (and is therefore an especially affected series) shall be determined by an opinion of Counsel, which shall be binding on all Debentureholders, the Trustee and the Corporation for all purposes hereof.

(d) A proposal:

(i) to extend the maturity of Debentures of any particular series or to reduce the principal amount thereof, the rate of interest or redemption premium thereon or to impair any conversion right thereof;

(ii) to modify or terminate any covenant or agreement which by its terms is effective only so long as Debentures of a particular series are outstanding; or

(iii) to reduce with respect to Debentureholders of any particular series any percentage stated in this Section 13.2 or Sections 13.4, 13.12 and 13.15;

shall be deemed to especially affect the rights of the Debentureholders of such series in a manner differing in a material way from that in which it affects the rights of holders of Debentures of any other series, whether or not a similar extension, reduction, modification or termination is proposed with respect to Debentures of any or all other series.

13.3 Chairman

Some person, who need not be a Debentureholder, nominated in writing by the Trustee shall be chairman of the meeting and if no person is so nominated, or if the person so nominated is not present within 15 minutes from the time fixed for the holding of the meeting, a majority of the Debentureholders present in person or by proxy shall choose some person present to be chairman.

13.4 Quorum

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Subject to the provisions of Section 13.12, at any meeting of the Debentureholders a quorum shall consist of Debentureholders present in person or by proxy and representing at least 25% in principal amount of the outstanding Debentures and, if the meeting is a Serial Meeting, at least 25% of the Debentures then outstanding of each especially affected series. If a quorum of the Debentureholders shall not be present within 30 minutes from the time fixed for holding any meeting, the meeting, if summoned by the Debentureholders or pursuant to a request of the Debentureholders, shall be dissolved, but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a Business Day in which case it shall be adjourned to the next following Business Day thereafter) at the same time and place and no notice shall be required to be given in respect of such adjourned meeting. At the adjourned meeting, the Debentureholders present in person or by proxy shall, subject to the provisions of Section 13.12, constitute a quorum and may transact the business for which the meeting was originally convened notwithstanding that they may not represent 25% of the principal amount of the outstanding Debentures or of the Debentures then outstanding of each especially affected series. Any business may be brought before or dealt with at an adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless the required quorum is present at the commencement of business.

13.5 Power to Adjourn

The chairman of any meeting at which a quorum of the Debentureholders is present may, with the consent of the holders of a majority in principal amount of the Debentures represented thereat, adjourn any such meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

13.6 Show of Hands

Every question submitted to a meeting shall, subject to Section 13.7, be decided in the first place by a majority of the votes given on a show of hands except that votes on Extraordinary Resolutions shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Debentures, if any, held by him.

13.7 Poll

On every Extraordinary Resolution, and on any other question submitted to a meeting when demanded by the chairman or by one or more Debentureholders or proxies for Debentureholders, a poll shall be taken in such manner and either at once or after an adjournment as the chairman shall direct. Questions other than Extraordinary Resolutions shall, if a poll be taken, be decided by the votes of the holders of a majority in principal amount of the Debentures and of each especially affected series, if applicable, represented at the meeting and voted on the poll.

13.8 Voting

On a show of hands every person who is present and entitled to vote, whether as a Debentureholder or as proxy for one or more Debentureholders or both, shall have one vote. On a poll each Debentureholder present in person or represented by a proxy duly appointed by an instrument in writing shall be entitled to one vote in respect of each US$1,000 principal amount of Debentures of which he shall then be the holder. In the case of any Debenture denominated in a currency or currency unit other than US dollars, the principal

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amount thereof for these purposes shall be computed in US dollars on the basis of the conversion of the principal amount thereof at the applicable spot buying rate of exchange for such other currency or currency unit as reported by the Bank of Canada at the close of business on the Business Day next preceding the meeting. Any fractional amounts resulting from such conversion shall be rounded to the nearest US$100. A proxy need not be a Debentureholder. In the case of joint holders of a Debenture, any one of them present in person or by proxy at the meeting may vote in the absence of the other or others but in case more than one of them be present in person or by proxy, they shall vote together in respect of the Debentures of which they are joint holders.

13.9 Proxies

A Debentureholder may be present and vote at any meeting of Debentureholders by an authorized representative. The Corporation (in case it convenes the meeting) or the Trustee (in any other case) for the purpose of enabling the Debentureholders to be present and vote at any meeting without producing their Debentures, and of enabling them to be present and vote at any such meeting by proxy and of lodging instruments appointing such proxies at some place other than the place where the meeting is to be held, may from time to time make and vary such regulations as it shall think fit providing for and governing any or all of the following matters:

(a) the form of the instrument appointing a proxy, which shall be in writing, and the manner in which the same shall be executed and the production of the authority of any person signing on behalf of a Debentureholder;

(b) the deposit of instruments appointing proxies at such place as the Trustee, the Corporation or the Debentureholder convening the meeting, as the case may be, may, in the notice convening the meeting, direct and the time, if any, before the holding of the meeting or any adjournment thereof by which the same must be deposited; and

(c) the deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be mailed, faxed, cabled, telegraphed or sent by other electronic means before the meeting to the Corporation or to the Trustee at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting.

Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as the holders of any Debentures, or as entitled to vote or be present at the meeting in respect thereof, shall be Debentureholders and persons whom Debentureholders have by instrument in writing duly appointed as their proxies.

13.10 Persons Entitled to Attend Meetings

The Corporation and the Trustee, by their respective officers and directors, the Auditors of the Corporation and the legal advisors of the Corporation, the Trustee or any Debentureholder may attend any meeting of the Debentureholders, but shall have no vote as such.

13.11 Powers Exercisable by Extraordinary Resolution

In addition to the powers conferred upon them by any other provisions of this Indenture or by law, a meeting of the Debentureholders shall have the following powers exercisable from time to time by

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Extraordinary Resolution, subject in the case of the matters in paragraphs (a), (b), (c), (d) and (1) to receipt of the prior approval of the TSX (or such other exchange on which the Debentures are then listed):

(a) power to authorize the Trustee to grant extensions of time for payment of any principal, premium or interest on the Debentures, whether or not the principal, premium, or interest, the payment of which is extended, is at the time due or overdue;

(b) power to sanction any modification, abrogation, alteration, compromise or arrangement of the rights of the Debentureholders or the Trustee against the Corporation, or against its property, whether such rights arise under this Indenture or the Debentures or otherwise;

(c) power to assent to any modification of or change in or addition to or omission from the provisions contained in this Indenture or any Debenture which shall be agreed to by the Corporation and to authorize the Trustee to concur in and execute any indenture supplemental hereto embodying any modification, change, addition or omission;

(d) power to sanction any scheme for the reconstruction, reorganization or recapitalization of the Corporation or for the consolidation, amalgamation, arrangement, combination or merger of the Corporation with any other Person or for the sale, leasing, transfer or other disposition of all or substantially all of the undertaking, property and assets of the Corporation or any part thereof, provided that no such sanction shall be necessary in respect of any such transaction if the provisions of Section 11.1 shall have been complied with;

(e) power to direct or authorize the Trustee to exercise any power, right, remedy or authority given to it by this Indenture in any manner specified in any such Extraordinary Resolution or to refrain from exercising any such power, right, remedy or authority;

(f) power to waive, and direct the Trustee to waive, any default hereunder and/or cancel any declaration made by the Trustee pursuant to Section 8.1 either unconditionally or upon any condition specified in such Extraordinary Resolution;

(g) power to restrain any Debentureholder from taking or instituting any suit, action or proceeding for the purpose of enforcing payment of the principal, premium or interest on the Debentures, or for the execution of any trust or power hereunder;

(h) power to direct any Debentureholder who, as such, has brought any action, suit or proceeding to stay or discontinue or otherwise deal with the same upon payment, if the taking of such suit, action or proceeding shall have been permitted by Section 8.5, of the costs, charges and expenses reasonably and properly incurred by such Debentureholder in connection therewith;

(i) power to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation;

(j) power to appoint a committee with power and authority (subject to such limitations, if any, as may be prescribed in the resolution) to exercise, and to direct the Trustee to exercise, on behalf of the Debentureholders, such of the powers of the Debentureholders as are exercisable by Extraordinary Resolution or other resolution as shall be included in the resolution appointing the committee. The resolution making such appointment may provide for payment of the expenses and disbursements of and compensation to such committee. Such committee shall consist of such number of persons

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as shall be prescribed in the resolution appointing it and the members need not be themselves Debentureholders. Every such committee may elect its chairman and may make regulations respecting its quorum, the calling of its meetings and the filling of vacancies occurring in its number and its procedure generally. Such regulations may provide that the committee may act at a meeting at which a quorum is present or may act by minutes signed by the number of members thereof necessary to constitute a quorum. All acts of any such committee within the authority delegated to it shall be binding upon all Debentureholders. Neither the committee nor any member thereof shall be liable for any loss arising from or in connection with any action taken or omitted to be taken by them in good faith;

(k) power to remove the Trustee from office and to appoint a new Trustee or Trustees provided that no such removal shall be effective unless and until a new Trustee or Trustees shall have become bound by this Indenture;

(l) power to sanction the exchange of the Debentures for or the conversion thereof into shares, bonds, debentures or other securities or obligations of the Corporation or of any other Person formed or to be formed;

(m) power to authorize the distribution in specie of any shares or securities received pursuant to a transaction authorized under the provisions of Section 13.11(1); and

(n) power to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Debentureholders or by any committee appointed pursuant to Section 13.11(j).

Notwithstanding the foregoing provisions of this Section 13.11 none of such provisions shall in any manner allow or permit any amendment, modification, abrogation or addition to the provisions of Article 5 which could reasonably be expected to detrimentally affect the rights, remedies or recourse of the priority of the Senior Creditors.

13.12 Meaning of “Extraordinary Resolution”

(a) The expression “Extraordinary Resolution” when used in this Indenture means, subject as hereinafter in this Article provided, a resolution proposed to be passed as an Extraordinary Resolution at a meeting of Debentureholders (including an adjourned meeting) duly convened for the purpose and held in accordance with the provisions of this Article at which the holders of not less than 25% of the principal amount of the Debentures then outstanding, and if the meeting is a Serial Meeting, at which holders of not less than 25% of the principal amount of the Debentures then outstanding of each especially affected series, are present in person or by proxy and passed by the favourable votes of the holders of not less than 66 2/3% of the principal amount of the Debentures, and if the meeting is a Serial Meeting by the affirmative vote of the holders of not less than 66 2/3% of each especially affected series, in each case present or represented by proxy at the meeting and voted upon on a poll on such resolution.

(b) If, at any such meeting, the holders of not less than 25% of the principal amount of the Debentures then outstanding and, if the meeting is a Serial Meeting, 25% of the principal amount of the Debentures then outstanding of each especially affected series, in each case are not present in person or by proxy within 30 minutes after the time appointed for the meeting, then the meeting, if convened by or on the requisition of Debentureholders, shall be dissolved but in any other case it shall stand adjourned to such date, being not less than 14 nor more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 10 days’ notice shall be given of the time

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and place of such adjourned meeting in the manner provided in Section 14.2. Such notice shall state that at the adjourned meeting the Debentureholders present in person or by proxy shall form a quorum. At the adjourned meeting the Debentureholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed thereat by the affirmative vote of holders of not less than 66 2/3% of the principal amount of the Debentures and, if the meeting is a Serial Meeting, by the affirmative vote of the holders of not less than 66 2/3% of the principal amount of the Debentures of each especially affected series, in each case present or represented by proxy at the meeting voted upon on a poll shall be an Extraordinary Resolution within the meaning of this Indenture, notwithstanding that the holders of not less than 25% in principal amount of the Debentures then outstanding, and if the meeting is a Serial Meeting, holders of not less than 25% of the principal amount of the Debentures then outstanding of each especially affected series, are not present in person or by proxy at such adjourned meeting.

(c) Votes on an Extraordinary Resolution shall always be given on a poll and no demand for a poll on an Extraordinary Resolution shall be necessary.

13.13 Powers Cumulative

Any one or more of the powers in this Indenture stated to be exercisable by the Debentureholders by Extraordinary Resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers from time to time shall not be deemed to exhaust the rights of the Debentureholders to exercise the same or any other such power or powers thereafter from time to time.

13.14 Minutes

Minutes of all resolutions and proceedings at every meeting as aforesaid shall be made and duly entered in books to be from time to time provided for that purpose by the Trustee at the expense of the Corporation, and any such minutes as aforesaid, if signed by the chairman of the meeting at which such resolutions were passed or proceedings had, or by the chairman of the next succeeding meeting of the Debentureholders, shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such meeting, in respect of the proceedings of which minutes shall have been made, shall be deemed to have been duly held and convened, and all resolutions passed thereat or proceedings taken thereat to have been duly passed and taken.

13.15 Instruments in Writing

All actions which may be taken and all powers that may be exercised by the Debentureholders at a meeting held as hereinbefore in this Article provided may also be taken and exercised by the holders of 66 2/3% of the principal amount of all the outstanding Debentures and, if the meeting at which such actions might be taken would be a Serial Meeting, by the holders of 66 2/3% of the principal amount of the Debentures then outstanding of each especially affected series, by an instrument in writing signed in one or more counterparts and the expression “Extraordinary Resolution” when used in this Indenture shall include an instrument so signed.

13.16 Binding Effect of Resolutions

Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article at a meeting of Debentureholders shall be binding upon all the Debentureholders, whether present

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at or absent from such meeting, and every instrument in writing signed by Debentureholders in accordance with Section 13.15 shall be binding upon all the Debentureholders, whether signatories thereto or not, and each and every Debentureholder and the Trustee (subject to the provisions for its indemnity herein contained) shall be bound to give effect accordingly to every such resolution, Extraordinary Resolution and instrument in writing.

13.17 Evidence of Rights Of Debentureholders

(a) Any request, direction, notice, consent or other instrument which this Indenture may require or permit to be signed or executed by the Debentureholders may be in any number of concurrent instruments of similar tenor signed or executed by such Debentureholders.

(b) The Trustee may, in its discretion, require proof of execution in cases where it deems proof desirable and may accept such proof as it shall consider proper.

13.18 Concerning Serial Meetings

If in the opinion of Counsel any business to be transacted at any meeting, or any action to be taken or power to be exercised by instrument in writing under Section 13.15, does not adversely affect the rights of the holders of Debentures of one or more series, the provisions of this Article 13 shall apply as if the Debentures of such series were not outstanding and no notice of any such meeting need be given to the holders of Debentures of such series. Without limiting the generality of the foregoing, a proposal to modify or terminate any covenant or agreement which is effective only so long as Debentures of a particular series are outstanding shall be deemed not to adversely affect the rights of the holders of Debentures of any other series.

ARTICLE 14
NOTICES

14.1 Notice to Corporation

Any notice to the Corporation under the provisions of this Indenture shall be valid and effective if delivered to the Corporation at: Suite 1740, 121 King Street West, Toronto, Ontario M5H 3T9, Attention: Chief Financial Officer, and a copy delivered to Fogler, Rubinoff LLP, 95 Wellington Street West, Suite 1200, Toronto, Ontario M5J 2Z9, Attention: Irwin Greenblatt, or if given by registered letter, postage prepaid, to such offices and so addressed and if mailed, shall be deemed to have been effectively given three days following the mailing thereof. The Corporation may from time to time notify the Trustee in writing of a change of address which thereafter, until changed by like notice, shall be the address of the Corporation for all purposes of this Indenture.

14.2 Notice to Debentureholders

All notices to be given hereunder with respect to the Debentures shall be deemed to be validly given to the holders thereof if sent by first class mail, postage prepaid, by letter or circular addressed to such holders at their post office addresses appearing in any of the registers hereinbefore mentioned and shall be deemed to have been effectively given three days following the day of mailing. Accidental error or omission in giving notice or accidental failure to mail notice to any Debentureholder or the inability of the Corporation to give or mail any notice due to anything beyond the reasonable control of the Corporation shall not invalidate any action or proceeding founded thereon.

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If any notice given in accordance with the foregoing paragraph would be unlikely to reach the Debentureholders to whom it is addressed in the ordinary course of post by reason of an interruption in mail service, whether at the place of dispatch or receipt or both, the Corporation shall give such notice by publication at least once in Toronto, Ontario (or in such of those cities as, in the opinion of the Trustee, is sufficient in the particular circumstances), each such publication to be made in a daily newspaper of general circulation in the designated city.

Any notice given to Debentureholders by publication shall be deemed to have been given on the day on which publication shall have been effected at least once in each of the newspapers in which publication was required.

All notices with respect to any Debenture may be given to whichever one of the holders thereof (if more than one) is named first in the registers hereinbefore mentioned, and any notice so given shall be sufficient notice to all holders of any persons interested in such Debenture.

14.3 Notice to Trustee

Any notice to the Trustee under the provisions of this Indenture shall be valid and effective if delivered to the Trustee at its principal office in the City of Toronto, at 100 University Avenue, 9^th Floor, Toronto, Ontario, M5J 2Y1, Attention: Manager, Corporate Trust, or if given by registered letter, postage prepaid, to such office and so addressed and, if mailed, shall be deemed to have been effectively given three days following the mailing thereof.

14.4 Mail Service Interruption

If by reason of any interruption of mail service, actual or threatened, any notice to be given to the Trustee would reasonably be unlikely to reach its destination by the time notice by mail is deemed to have been given pursuant to Section 14.3, such notice shall be valid and effective only if delivered at the appropriate address in accordance with Section 14.3.

ARTICLE 15
CONCERNING THE TRUSTEE

15.1 Residency and No Conflict of Interest

The Trustee represents to the Corporation that to the best of its knowledge at the date of execution and delivery by it of this Indenture the Trustee is not a non-resident of Canada for the purposes of the Income Tax Act (Canada) and there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder but if, notwithstanding the provisions of this Section 15.1, such a material conflict of interest exists, or hereafter arises, the validity and enforceability of this Indenture, and the Debentures issued hereunder, shall not be affected in any manner whatsoever by reason only that such material conflict of interest exists or arises but the Trustee shall, within 30 days after ascertaining that it has a material conflict of interest, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Section 15.2.

15.2 Replacement of Trustee

The Trustee may resign its trust and be discharged from all further duties and liabilities hereunder by giving to the Corporation 90 days’ notice in writing or such shorter notice as the Corporation may accept as sufficient. If at any time a material conflict of interest exists in the Trustee’s role as a fiduciary hereunder

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the Trustee shall, within 30 days after ascertaining that such a material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in this Section 15.2. The validity and enforceability of this Indenture and of the Debentures issued hereunder shall not be affected in any manner whatsoever by reason only that such a material conflict of interest exists. In the event of the Trustee resigning or being removed or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new Trustee unless a new Trustee has already been appointed by the Debentureholders. Failing such appointment by the Corporation, the retiring Trustee or any Debentureholder may apply to a Judge of the Superior Court of Ontario, on such notice as such Judge may direct at the Corporation’s expense, for the appointment of a new Trustee but any new Trustee so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Debentureholders and the appointment of such new Trustee shall be effective only upon such new Trustee becoming bound by this Indenture. Any new Trustee appointed under any provision of this Section 15.2 shall be a corporation authorized to carry on the business of a trust company in all of the Provinces of Canada and a resident of Canada for the purposes of the Income Tax Act (Canada). On any new appointment the new Trustee shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Trustee.

Any company into which the Trustee may be merged or, with or to which it may be consolidated, amalgamated or sold, or any company resulting from any merger, consolidation, sale or amalgamation to which the Trustee shall be a party, shall be the successor trustee under this Indenture without the execution of any instrument or any further act. Nevertheless, upon the written request of the successor Trustee or of the Corporation, the Trustee ceasing to act shall execute and deliver an instrument assigning and transferring to such successor Trustee, upon the trusts herein expressed, all the rights, powers and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver all property and money held by such Trustee to the successor Trustee so appointed in its place. Should any deed, conveyance or instrument in writing from the Corporation be required by any new Trustee for more fully and certainly vesting in and confirming to it such estates, properties, rights, powers and trusts, then any and all such deeds, conveyances and instruments in writing shall on request of said new Trustee, be made, executed, acknowledged and delivered by the Corporation.

15.3 Duties of Trustee

In the exercise of the rights, duties and obligations prescribed or conferred by the terms of this Indenture, the Trustee shall act honestly and in good faith and exercise that degree of care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances.

15.4 Reliance Upon Declarations, Opinions, etc.

In the exercise of its rights, duties and obligations hereunder the Trustee may, if acting in good faith, rely, as to the truth of the statements and accuracy of the opinions expressed therein, upon statutory declarations, opinions, reports or certificates furnished pursuant to any covenant, condition or requirement of this Indenture or required by the Trustee to be furnished to it in the exercise of its rights and duties hereunder, if the Trustee examines such statutory declarations, opinions, reports or certificates and determines that they comply with Section 15.5, if applicable, and with any other applicable requirements of this Indenture. The Trustee may nevertheless, in its discretion, require further proof in cases where it deems further proof desirable. Without restricting the foregoing, the Trustee may rely on an opinion of Counsel satisfactory to the Trustee notwithstanding that it is delivered by a solicitor or firm which acts as solicitors for the Corporation.

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15.5 Evidence and Authority to Trustee, Opinions, etc.

The Corporation shall furnish to the Trustee evidence of compliance with the conditions precedent provided for in this Indenture relating to any action or step required or permitted to be taken by the Corporation or the Trustee under this Indenture or as a result of any obligation imposed under this Indenture, including without limitation, the certification and delivery of Debentures hereunder, the satisfaction and discharge of this Indenture and the taking of any other action to be taken by the Trustee at the request of or on the application of the Corporation, forthwith if and when (a) such evidence is required by any other Section of this Indenture to be furnished to the Trustee in accordance with the terms of this Section 15.5, or (b) the Trustee, in the exercise of its rights and duties under this Indenture, gives the Corporation written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice.

Such evidence shall consist of:

(a) a certificate made by any two officers or directors of the Corporation, stating that any such condition precedent has been complied with in accordance with the terms of this Indenture;

(b) in the case of a condition precedent compliance with which is, by the terms of this Indenture, made subject to review or examination by a solicitor, an opinion of Counsel that such condition precedent has been complied with in accordance with the terms of this Indenture; and

(c) in the case of any such condition precedent compliance with which is subject to review or examination by auditors or accountants, an opinion or report of the Auditors of the Corporation whom the Trustee for such purposes hereby approves, that such condition precedent has been complied with in accordance with the terms of this Indenture.

Whenever such evidence relates to a matter other than the certificates and delivery of Debentures and the satisfaction and discharge of this Indenture, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, auditor, accountant, engineer or appraiser or any other person whose qualifications give authority to a statement made by him, provided that if such report or opinion is furnished by a trustee, officer or employer of the Corporation it shall be in the form of a statutory declaration. Such evidence shall be, so far as appropriate, in accordance with the immediately preceding paragraph of this Section.

Each statutory declaration, certificate, opinion or report with respect to compliance with a condition precedent provided for in the Indenture shall include (a) a statement by the person giving the evidence that he has read and is familiar with those provisions of this Indenture relating to the condition precedent in question, (b) a brief statement of the nature and scope of the examination or investigation upon which the statements or opinions contained in such evidence are based, (c) a statement that, in the belief of the person giving such evidence, he has made such examination or investigation as is necessary to enable him to make the statements or give the opinions contained or expressed therein, and (d) a statement whether in the opinion of such person the conditions precedent in question have been complied with or satisfied.

The Corporation shall furnish or cause to be furnished to the Trustee at any time if the Trustee reasonably so requires, its certificate that the Corporation has complied with all covenants, conditions or other requirements contained in this Indenture, the non-compliance with which would, with the giving of notice or the lapse of time, or both, or otherwise, constitute an Event of Default, or if such is not the case, specifying the covenant, condition or other requirement which has not been complied with and giving particulars of such non-compliance. The Corporation shall, whenever the Trustee so requires, furnish the Trustee with evidence by way of statutory declaration, opinion, report or certificate as specified by the Trustee

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as to any action or step required or permitted to be taken by the Corporation or as a result of any obligation imposed by this Indenture.

15.6 Officers’ Certificates Evidence

Except as otherwise specifically provided or prescribed by this Indenture, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, the Trustee, if acting in good faith, may rely upon an Officers’ Certificate.

15.7 Experts, Advisers and Agents

The Trustee may:

(a) employ or retain and act and rely on the opinion or advice of or information obtained from any solicitor, auditor, valuer, engineer, surveyor, appraiser or other expert, whether obtained by the Trustee or by the Corporation, or otherwise, and shall not be liable for acting, or refusing to act, in good faith on any such opinion or advice and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; and

(b) employ such agents and other assistants as it may reasonably require for the proper discharge of its duties hereunder, and may pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the trusts hereof and any solicitors employed or consulted by the Trustee may, but need not be, solicitors for the Corporation.

15.8 Trustee May Deal in Debentures

Subject to Sections 15.1 and 15.3, the Trustee may, in its personal or other capacity, buy, sell, lend upon and deal in the Debentures and generally contract and enter into financial transactions with the Corporation or otherwise, without being liable to account for any profits made thereby.

15.9 Investment of Monies Held by Trustee

Unless otherwise provided in this Indenture, any monies held by the Trustee, which, under the trusts of this Indenture, may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee, may be invested and reinvested in the name or under the control of the Trustee in securities in which, under the laws of the Province of Ontario, trustees are authorized to invest trust monies, provided that such securities are expressed to mature within two years or such shorter period selected to facilitate any payments expected to be made under this Indenture, after their purchase by the Trustee, and unless and until the Trustee shall have declared the principal of and interest on the Debentures to be due and payable, the Trustee shall so invest such monies at the Written Direction of the Corporation given in a reasonably timely manner. Unless otherwise provided in this Indenture, pending the investment of any monies as hereinbefore provided, such monies may be deposited in the name of the Trustee in any chartered bank of Canada or, with the consent of the Corporation, in the deposit department of the Trustee or any other loan or trust company authorized to accept deposits under the laws of Canada or any Province thereof at the rate of interest, if any, then current on similar deposits.

Unless and until the Trustee shall have declared the principal of and interest on the Debentures to

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be due and payable, the Trustee shall pay over to the Corporation all interest received by the Trustee in respect of any investments or deposits made pursuant to the provisions of this Section.

15.10 Trustee Not Ordinarily Bound

Except as provided in Section 8.2 and as otherwise specifically provided herein, the Trustee shall not, subject to Section 15.3, be bound to give notice to any person of the execution hereof, nor to do, observe or perform or see to the observance or performance by the Corporation of any of the obligations herein imposed upon the Corporation or of the covenants on the part of the Corporation herein contained, nor in any way to supervise or interfere with the conduct of the Corporation’s business, unless the Trustee shall have been required to do so in writing by the holders of not less than 25% of the aggregate principal amount of the Debentures then outstanding or by any Extraordinary Resolution of the Debentureholders passed in accordance with the provisions contained in Article 13, and then only after it shall have been funded and indemnified to its satisfaction against all actions, proceedings, claims and demands to which it may render itself liable and all costs, charges, damages and expenses which it may incur by so doing.

15.11 Trustee Not Required to Give Security

The Trustee shall not be required to give any bond or security in respect of the execution of the trusts and powers of this Indenture or otherwise in respect of the premises.

15.12 Trustee Not Bound to Act on Trust’s Request

Except as in this Indenture otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of the Corporation until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine.

15.13 Conditions Precedent to Trustee’s Obligations to Act Hereunder

The obligation of the Trustee to commence or continue any act, action or proceeding for the purpose of enforcing the rights of the Trustee and of the Debentureholders hereunder shall be conditional upon the Debentureholders furnishing when required by notice in writing by the Trustee, sufficient funds to commence or continue such act, action or proceeding and indemnity reasonably satisfactory to the Trustee to protect and hold harmless the Trustee against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof.

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified as aforesaid.

The Trustee may, before commencing or at any time during the continuance of any such act, action or proceeding require the Debentureholders at whose instance it is acting to deposit with the Trustee the Debentures held by them for which Debentures the Trustee shall issue receipts.

15.14 Authority to Carry on Business

The Trustee represents to the Corporation that at the date of execution and delivery by it of this Indenture it is authorized to carry on the business of a trust company in each of the provinces of Canada but

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if, notwithstanding the provisions of this Section 15.14, it ceases to be so authorized to carry on business, the validity and enforceability of this Indenture and the securities issued hereunder shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any of the provinces of Canada, either become so authorized or resign in the manner and with the effect specified in Section 15.2.

15.15 Compensation and Indemnity

(a) The Corporation shall pay to the Trustee from time to time compensation for its services hereunder as agreed separately by the Corporation and the Trustee, and shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in the administration or execution of its duties under this Indenture (including the reasonable and documented compensation and disbursements of its Counsel and all other advisers and assistants not regularly in its employ), both before any default hereunder and thereafter until all duties of the Trustee under this Indenture shall be finally and fully performed. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.

(b) The Corporation hereby indemnifies and saves harmless the Trustee and its directors, officers, agents and employees from and against any and all loss, damages, charges, expenses, claims, demands, actions or liability whatsoever which may be brought against the Trustee or which it may suffer or incur as a result of or arising out of the performance of its duties and obligations hereunder save only in the event of gross negligence, or the wilful misconduct or bad faith of the Trustee. This indemnity will survive the termination or discharge of this Indenture and the resignation or removal of the Trustee. The Trustee shall notify the Corporation promptly of any claim for which it may seek indemnity. The Corporation shall defend the claim and the Trustee shall co-operate in the defence. The Trustee may have separate Counsel and the Corporation shall pay the reasonable fees and expenses of such Counsel. The Corporation need not pay for any settlement made without its consent, which consent must not be unreasonably withheld. This indemnity shall survive the resignation or removal of the Trustee or the discharge of this Indenture.

(c) The Corporation need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through gross negligence or bad faith or breach of the Trustee’s duties hereunder.

15.16 Acceptance of Trust

The Trustee hereby accepts the trusts in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be Debentureholders, subject to all the terms and conditions herein set forth.

15.17 Third Party Interests

Each party to this Indenture (in this paragraph referred to as a “representing party”) hereby represents to the Trustee that any account to be opened by, or interest to held by, the Trustee in connection with this Indenture, for or to the credit of such representing party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by or on behalf of a third party, in which case such representing party hereby agrees to complete, execute and deliver forthwith to the Trustee a declaration, in the Trustee’s prescribed form or in such other form as may be satisfactory to it, as to the particulars of such third party.

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15.18 Anti-Money Laundering

The Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Trustee, in its sole judgment, acting reasonably, determines that such act might cause it to be in noncompliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Trustee, in its sole judgment, acting reasonably, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 10 days’ prior written notice sent to the Corporation provided that (i) the Trustee’s written notice shall describe the circumstances of such non-compliance; and (ii) if such circumstances are rectified to the Trustee’s satisfaction within such 10-day period, then such resignation shall not be effective.

15.19 Privacy Laws

The parties acknowledge that federal and/or provincial legislation that addresses the protection of individuals’ personal information (collectively, “PrivacyLaws”) applies to certain obligations and activities under this Indenture. Notwithstanding any other provision of this Indenture, neither party shall take or direct any action that would contravene, or cause the other to contravene, applicable Privacy Laws. The Corporation shall, prior to transferring or causing to be transferred personal information to the Trustee, obtain and retain required consents of the relevant individuals to the collection, use and disclosure of their personal information, or shall have determined that such consents either have previously been given upon which the parties can rely or are not required under the Privacy Laws. The Trustee shall use commercially reasonable efforts to ensure that its services hereunder comply with Privacy Laws. Specifically, the Trustee agrees: (a) to have a designated chief privacy officer; (b) to maintain policies and procedures to protect personal information and to receive and respond to any privacy complaint or inquiry; (c) to use personal information solely for the purposes of providing its services under or ancillary to this Indenture and to comply with applicable laws and not to use it for any other purpose except with the consent of or direction from the Corporation or the individual involved or as permitted by Privacy Laws; (d) not to sell or otherwise improperly disclose personal information to any third party; and (e) to employ administrative, physical and technological safeguards to reasonably secure and protect personal information against loss, theft, or unauthorized access, use or modification.

15.20 Force Majeure

Except for the payment obligations of the Corporation contained herein, neither party shall be liable to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended per for a period of time equivalent to the time lost because of any delay that is excusable under this section 15.20.

ARTICLE 16
SUPPLEMENTAL INDENTURES

16.1 Supplemental Indentures

Subject to the approval of the TSX (or such other exchange on which the Debentures are then listed, if any), from time to time the Trustee and, when authorized by a resolution of the directors of Corporation,

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the Corporation, may, and they shall when required by this Indenture, execute, acknowledge and deliver by their proper officers deeds or indentures supplemental hereto which thereafter shall form part hereof, for any one or more of the following purposes:

(a) providing for the issuance of Additional Debentures under this Indenture;

(b) adding to the covenants of the Corporation herein contained for the protection of the Debentureholders, or of the Debentures of any series, or providing for events of default, in addition to those herein specified;

(c) making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder, including the making of any modifications in the form of the Debentures which do not affect the substance thereof and which in the opinion of the Trustee relying on an opinion of Counsel will not be prejudicial to the interests of the Debentureholders;

(d) evidencing the succession, or successive successions, of others to the Corporation and the covenants of and obligations assumed by any such successor in accordance with the provisions of this Indenture;

(e) giving effect to any Extraordinary Resolution passed as provided in Article 13; and

(f) for any other purpose not inconsistent with the terms of this Indenture.

Unless the supplemental indenture requires the consent or concurrence of Debentureholders or the holders of a particular series of Debentures, as the case may be, by Extraordinary Resolution, the consent or concurrence of Debentureholders or the holders of a particular series of Debentures, as the case may be,  shall not be required in connection with the execution, acknowledgement or delivery of a supplemental indenture. The Corporation and the Trustee may amend any of the provisions of this Indenture related to matters of United States law or the issuance of Debentures into the United States in order to ensure that such issuances can be made in accordance with applicable law in the United States without the consent or approval of the Debentureholders. Further, the Corporation and the Trustee may without the consent or concurrence of the Debentureholders or the holders of a particular series of Debentures, as the case may be, by supplemental indenture or otherwise, make any changes or corrections in this Indenture which it shall have been advised by Counsel are required for the purpose of curing or correcting any ambiguity or defective or inconsistent provisions or clerical omissions or mistakes or manifest errors contained herein or in any indenture supplemental hereto or any Written Direction of the Corporation provided for the issue of Debentures, providing that in the opinion of the Trustee (relying upon an opinion of Counsel) the rights of the Debentureholders are in no way prejudiced thereby.

ARTICLE 17
RIGHTS OF RESCISSION

17.1 Rights of Rescission

If the Prospectus contains a misrepresentation (as such term is defined in the Securities Act (Ontario)) and it was a misrepresentation on the date hereof, a purchaser of Initial Debentures to whom the Prospectus was sent or delivered and who was the original purchaser of the Initial Debentures (collectively, the “Original Purchasers”) shall a have a right of action against the Corporation for rescission to receive the subscription price for each Initial Debenture for which such purchaser subscribed exercisable on notice given to the Corporation not more than 180 days subsequent to the date hereof (the “Rescission Period”). The right of

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action for rescission is only available to an Original Purchaser either while he or she is a holder of the Initial Debentures purchased or while he or she is a holder of the Common Shares issued upon conversion of such Initial Debentures during the Rescission Period.

In no event shall the Corporation be liable under this Section 17.1 if the Original Purchaser purchased the Initial Debentures with knowledge of the misrepresentation.

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ARTICLE 18

EXECUTION AND FORMAL DATE

18.1 Execution

This Indenture may be simultaneously executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument.

18.2 Formal Date

For the purpose of convenience this Indenture may be referred to as bearing the formal date of June 2, 2011 irrespective of the actual date of execution hereof.

IN WITNESS whereof the parties hereto have executed these presents under their respective corporate seals and the hands of their proper officers in that behalf.

NEO MATERIAL TECHNOLOGIES INC.

Per:   /s/ “Constantine E. Karayannopoulos”    

Constantine E. Karayannopoulos

President and Chief Executive Officer

COMPUTERSHARE TRUST COMPANY OF CANADA

Per:   /s/ “Lisa M Kudo”    

Lisa M. Kudo

Corporate Trust Officer

Per:/s/ “Michelle Schultz”    

Michelle Schultz

Associate Trust Officer

SCHEDULE “A”
TO THE CONVERTIBLE DEBENTURE INDENTURE
AMONG
NEO MATERIAL TECHNOLOGIES INC.AND
COMPUTERSHARE TRUST COMPANY OF CANADA

FORM OF GLOBAL DEBENTURE

This Debenture is a Global Debenture within the meaning of the Indenture herein referred to and is registered in the name of a Depository or a nominee thereof. This Debenture may not be transferred to or exchanged for Debentures registered in the name of any person other than the Depository or a nominee thereof and no such transfer may be registered except in the limited circumstances described in the Indenture. Every Debenture authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, this Debenture shall be a Global Debenture subject to the foregoing, except in such limited circumstances described in the Indenture.

Unless this certificate is presented by an authorized representative of CDS Clearing and Depository Services Inc. (“CDS”) to Neo Material Technologies Inc. (the “Issuer”) or its agent for registration of transfer, exchange or payment, and any certificate issued in respect thereof is registered in the name of CDS & Co., or in such other name as is requested by an authorized representative of CDS (and any payment is made to CDS & Co. or to such other entity as is requested by an authorized representative of CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered holder hereof, CDS & Co., has a property interest in the securities represented by this certificate herein and it is a violation of its rights for another person to hold, transfer or deal with this certificate.

[INSERT U.S. LEGEND, IF APPLICABLE]

CUSIP 64045YAA6
ISIN CA 64045YAA60
[U.S. RULE 144A •]
[U.S. RULE 144A •]

No. $• 

NEO MATERIAL TECHNOLOGIES INC.

(A corporation organized under the laws of Canada)

5.00% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURE
DUE DECEMBER 31, 2017

Neo Material Technologies Inc. (the “Corporation” or the “Issuer”) for value received hereby acknowledges itself indebted and, subject to the provisions of the Debenture Indenture (the “Indenture”) dated as of June 2, 2011 among the Corporation and Computershare Trust Company of Canada (the “Trustee”), promises to pay to the registered holder hereof on December 31, 2017 or on such earlier date as the principal amount hereof may become due in accordance with the provisions of the Indenture (any such date, the “Maturity Date”) the principal sum of • US Dollars (US$•) on presentation and surrender of

this Initial Debenture at the main branch of the Trustee in Toronto, Ontario in accordance with the terms of the Indenture and, subject as hereinafter provided, to pay interest on the principal amount hereof from the date hereof, or from the last Interest Payment Date to which interest shall have been paid or made available for payment hereon, whichever is later, at the rate of 5.00% per annum (based on a year of 360 days comprised of twelve 30-day months), in like money, in arrears in equal (with the exception of the first interest payment which will include interest from June 2, 2011 as set forth below) semi-annual installments (less any tax required by law to be deducted) on June 30 and December 31 in each year commencing on December 31, 2011 and the last payment (representing interest payable from the last Interest Payment Date to, but excluding, the Maturity Date) to fall due on the Maturity Date and, should the Corporation at any time make default in the payment of any principal, premium, if any, or interest, to pay interest on the amount in default at the same rate, in like money and on the same dates. For certainty, the first interest payment will include interest accrued from June 2, 2011 to, but excluding December 31, 2011, which will be equal to US$29.03 for each US$1,000 principal amount of the Initial Debentures.

The Corporation may elect, from time to time, to satisfy interest hereon by delivering: (i) cash, (ii) freely tradeable Common Shares of the Corporation; or (iii) a combination of (i) and (ii), and delivery of such cash or freely tradeable Common Shares, or any combination thereof (plus the amount of any tax required to be withheld), shall satisfy and discharge all liability for interest on this Initial Debenture.

This Initial Debenture is one of the 5.00% Convertible Unsecured Subordinated Debentures (referred to herein as the “Initial Debentures”) of the Corporation issued or issuable in one or more series under the provisions of the Indenture. The Initial Debentures authorized for issue immediately are limited to an aggregate principal amount of US$230,000,000. Reference is hereby expressly made to the Indenture for a description of the terms and conditions upon which the Initial Debentures are or are to be issued and held and the rights and remedies of the holders of the Initial Debentures and of the Corporation and of the Trustee, all to the same effect as if the provisions of the Indenture were herein set forth to all of which provisions the holder of this Initial Debenture by acceptance hereof assents.

The Initial Debentures are issuable only in denominations of US$1,000 and integral multiples thereof. Upon compliance with the provisions of the Indenture, Debentures of any denomination may be exchanged for an equal aggregate principal amount of Debentures in any other authorized denomination or denominations.

Any part, being US$1,000 or an integral multiple thereof, of the principal of this Initial Debenture, provided that the principal amount of this Initial Debenture is in a denomination in excess of US$1,000, is convertible, at the option of the holder hereof, upon surrender of this Initial Debenture at the principal office of the Trustee in Toronto, Ontario, at any time prior to the close of business on the Maturity Date or, if this Initial Debenture is called for redemption on or prior to such date, then, to the extent so called for redemption, up to but not after the close of business on the last Business Day immediately preceding the date specified for redemption of this Initial Debenture or, if called for repurchase pursuant to a Change of Control (as defined in the Indenture) on the Business Day immediately prior to the payment date, into Common Shares (without adjustment for interest accrued hereon or for dividends or distributions on Common Shares issuable upon conversion) at a conversion price of US$13.80 (the “Conversion Price”) per Common Share, being a rate of approximately 72.4637 Common Shares for each US$1,000 principal amount of Initial Debentures, all subject to the terms and conditions and in the manner set forth in the Indenture. No Initial Debentures may be converted during the five Business Days preceding and including June 30 and December 31 in each year, commencing December 31, 2011, as the registers of the Trustee will be closed during such periods. The Indenture makes provision for the adjustment of the Conversion Price in the events therein specified. No fractional Common Shares will be issued on any conversion but in lieu thereof, the Corporation will satisfy such fractional interest by a cash payment equal to the market price of such fractional interest

determined in accordance with the Indenture. Holders converting their Debentures will receive accrued and unpaid interest thereon. If a Debenture is surrendered for conversion on an Interest Payment Date or during the five preceding Business Days, the person or persons entitled to receive Common Shares in respect of the Debentures so surrendered for conversion shall not become the holder or holders of record of such Common Shares until the Business Day following such Interest Payment Date.

This Initial Debenture may be redeemed at the option of the Corporation on the terms and conditions set out in the Indenture at the Redemption Price therein and herein set out provided that this Initial Debenture is not redeemable before December 31, 2014, except in the event of the satisfaction of certain conditions after a Change of Control has occurred. On and after January 1, 2015 and prior to December 31, 2016, and provided that the Current Market Price of the Common Shares of the Corporation is at least 125% of the Conversion Price of the Initial Debentures, the Initial Debentures are redeemable at the option of the Corporation at a price equal to US$1,000 per Initial Debenture plus accrued and unpaid interest and otherwise on the terms and conditions described in the Indenture. On or after January 1, 2017 and prior to the Maturity Date, the Initial Debentures are redeemable at the option of the Corporation at a price equal to US$1,000 per Initial Debenture plus accrued and unpaid interest. The Corporation may, on notice as provided in the Indenture, at its option and subject to any applicable regulatory approval, elect to satisfy its obligation to pay all or any portion of the applicable Redemption Price by the issue of that number of Common Shares obtained by dividing the applicable Redemption Price by 95% of the daily volume weighted average trading price of the Common Shares on the TSX (or such other stock exchange on which the Initial Debentures may be listed) and converted into US dollars based on the noon exchange rate of the Bank of Canada for each day and averaged for the 20 consecutive trading days ending five trading days before the Redemption Date.

Upon the occurrence of a Change of Control of the Corporation, the Corporation is required to make an offer to purchase all of the Initial Debentures at a price equal to 100% of the principal amount of such Initial Debentures plus accrued and unpaid interest (if any) up to, but excluding, the date the Initial Debentures are so repurchased (the “Change of Control Purchase Offer”). If 90% or more of the principal amount of all Debentures outstanding on the date the Corporation provides notice of a Change of Control to the Trustee have been tendered for purchase pursuant to the Change of Control Purchase Offer, the Corporation has the right to redeem all the remaining outstanding Initial Debentures on the same date and at the same price.

In addition to the requirement for the Corporation to make a Change of Control Purchase Offer in the event of a Change of Control, if a Change of Control occurs in which 10% or more of the consideration for the Common Shares in the transaction or transactions constituting a Change of Control consists of:

(i) cash, other than cash payments for fractional Common Shares and cash payments made in respect of dissenter’s appraisal rights;

(ii) trust units, limited partnership units or other participating equity securities of a trust, limited partnership or similar entity;

(iii) equity securities that are not traded or intended to be traded immediately following such transactions on a recognized stock exchange; or

(iv) other property that is not traded or intended to be traded immediately following such transactions on a recognized stock exchange,

then subject to regulatory approvals, during the period beginning 10 trading days before the anticipated date on which the Change of Control becomes effective and ending 30 days after the Change of Control Purchase Offer is delivered, holders of Debentures will be entitled to convert their Debentures, subject to certain

limitations, and receive, in addition to the number of Common Shares they would otherwise be entitled to receive, an additional number of Common Shares per US$1,000 principal amount of Debentures calculated in accordance with the terms of the Indenture.

If an offer is made for the Initial Debentures which is a take-over bid for the Initial Debentures within the meaning of applicable Canadian securities laws and 90% or more of the principal amount of all the Initial Debentures (other than Initial Debentures held at the date of the offer by or on behalf of the Offeror, associates or affiliates of the Offeror or anyone acting jointly or in concert with the Offeror) are taken up and paid for by the Offeror, the Offeror will be entitled to acquire the Initial Debentures of those holders who did not accept the offer on the same terms as the Offeror acquired the first 90% of the principal amount of the Initial Debentures.

The Corporation may, on notice as provided in the Indenture, at its option and subject to any applicable regulatory approval, elect to satisfy the obligation to repay all or any portion of the principal amount of this Initial Debenture due on the Maturity Date, together with all accrued and unpaid interest thereon, by the issue of that number of Freely Tradeable Common Shares obtained by dividing the principal amount of this Initial Debenture (or that portion to be paid for in Common Shares pursuant to the exercise by the Corporation of the Common Share Repayment Right), together with all accrued and unpaid interest thereon, by 95% of the daily volume weighted average trading price of the Common Shares on the TSX (or such other stock exchange on which the Initial Debentures may be listed) and converted into US dollars based on the noon exchange rate of the Bank of Canada for such and averaged for the 20 consecutive trading days ending five trading days before the Maturity Date.

The indebtedness evidenced by this Initial Debenture, and by all other Initial Debentures now or hereafter certified and delivered under the Indenture, is a direct unsecured obligation of the Corporation, and is subordinated in right of payment, to the extent and in the manner provided in the Indenture, to the prior payment in full of all Senior Indebtedness, whether outstanding at the date of the Indenture or thereafter created, incurred, assumed or guaranteed.

The principal hereof may become or be declared due and payable before the stated maturity in the events, in the manner, with the effect and at the times provided in the Indenture.

The Indenture contains provisions making binding upon all holders of Debentures outstanding thereunder (or in certain circumstances specific series of Debentures) resolutions passed at meetings of such holders held in accordance with such provisions and instruments signed by the holders of a specified majority of Debentures outstanding (or specific series), which resolutions or instruments may have the effect of amending the terms of this Initial Debenture or the Indenture.

The Indenture contains provisions disclaiming any personal liability on the part of holders of Common Shares and officers, directors and employees of the Corporation in respect of any obligation or claim arising out of the Indenture or this Debenture.

This Initial Debenture may only be transferred, upon compliance with the conditions prescribed in the Indenture, in one of the registers to be kept at the principal office of the Trustee in the City of Toronto, Ontario and in such other place or places and/or by such other registrars (if any) as the Corporation with the approval of the Trustee may designate. No transfer of this Initial Debenture shall be valid unless made on the register by the registered holder hereof or his executors or administrators or other legal representatives, or his or their attorney duly appointed by an instrument in form and substance satisfactory to the Trustee or other registrar, and upon compliance with such reasonable requirements as the Trustee and/or other registrar may prescribe and upon surrender of this Initial Debenture for cancellation. Thereupon a new Initial

Debenture or Initial Debentures in the same aggregate principal amount shall be issued to the transferee in exchange hereof.

This Initial Debenture shall not become obligatory for any purpose until it shall have been certified by the Trustee under the Indenture.

Capitalized words or expressions used in this Initial Debenture shall, unless otherwise defined herein, have the meaning ascribed thereto in the Indenture.

IN WITNESS WHEREOF NEO MATERIAL TECHNOLOGIES INC. has caused this Debenture to be signed by its authorized representatives as of the 2^nd day of June, 2011.

NEO MATERIAL TECHNOLOGIES INC.

Per:   

Name:

Title:

(FORM OF TRUSTEE’S CERTIFICATE)

This Initial Debenture is one of the 5.00% Convertible Unsecured Subordinated Debentures due December 31, 2017 referred to in the Indenture within mentioned.

COMPUTERSHARE TRUST COMPANY OF CANADA

Per:   

(Authorized Officer)

(FORM OF REGISTRATION PANEL)

(No writing hereon except by Trustee or other registrar)

Date of Registration In Whose Name Registered Signature of Trustee or Registrar A-8

FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ___________________, whose address and social insurance number, if applicable, are set forth below, this Initial Debenture (or US$___________________ principal amount hereof*) of NEO MATERIAL TECHNOLOGIES INC. standing in the name(s) of the undersigned in the register maintained by the Corporation with respect to such Initial Debenture and does hereby irrevocably authorize and direct the Trustee to transfer such Initial Debenture in such register, with full power of substitution in the premises.

Dated: _________________________

Address of Transferee: _________________________________________

(Street Address, City, Province and Postal Code)

Social Insurance Number of Transferee, if applicable: ________________________

*If less than the full principal amount of the within Initial Debenture is to be transferred, indicate in the space provided the principal amount (which must be US$1,000 or an integral multiple thereof, unless you hold an Initial Debenture in a non-integral multiple of US$1,000 by reason of your having exercised your right to exchange upon the making of a Change of Control Purchase Offer, in which case such Initial Debenture is transferable only in its entirety) to be transferred.

1. The signature(s) to this assignment must correspond with the name(s) as written upon the face of this Initial Debenture in every particular without alteration or any change whatsoever.

The signature(s) on this form must be guaranteed in accordance with the transfer agent’s then current guidelines and requirements at the time of transfer. Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of closing, you may choose one of the following methods (although subject to change in accordance with industry practice and standards):

· Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words “Medallion Guaranteed”, with the correct prefix covering the face value of the certificate.

· Canada: A Signature Guarantee obtained from the Guarantor must affix a stamp bearing the actual words “Signature Guaranteed”. Signature Guarantees are not accepted from Treasury Branches, Credit Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a “Signature & Authority to Sign Guarantee” Stamp affixed to the transfer (as opposed to a “Signature Guarantee” Stamp) obtained from an authorized officer of a major Canadian Schedule 1 chartered bank.

· Outside North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature to

be over-guaranteed.

2. The registered holder of this Initial Debenture is responsible for the payment of any documentary, stamp or other transfer taxes that may be payable in respect of the transfer of this Debenture.

Signature of Guarantor:

Authorized Officer    Signature of transferring registered holder

Name of Institution

EXHIBIT “1”
TO CDS GLOBAL DEBENTURE
NEO MATERIAL TECHNOLOGIES INC.
5.00% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES
DUE DECEMBER 31, 2017

Initial Principal Amount: US$•

CUSIP 64045YAA6    ISIN CA 64045YAA60

ADJUSTMENTS

Authorization: ________________________________

Date Amount of Increase Amount of Decrease New Principal Amount Authorization

A-#PageNum#

SCHEDULE “B”
TO THE CONVERTIBLE DEBENTURE INDENTURE
AMONG
NEO MATERIAL TECHNOLOGIES INC.AND
COMPUTERSHARE TRUST COMPANY OF CANADA
FORM OF REDEMPTION NOTICE

SCHEDULE “B”Form of Redemption Notice

NEO MATERIAL TECHNOLOGIES INC.
5.00% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES
REDEMPTION NOTICE

To:	Holders of 5.00% Convertible Unsecured Subordinated Debentures (the “Debentures”) of Neo Material Technologies Inc. (the “Corporation”)
Note:	All capitalized terms used herein have the meaning ascribed thereto in the Indenture mentioned below, unless otherwise indicated.

Notice is hereby given pursuant to Section 4.3 of the convertible debenture indenture (the “Indenture”) dated as of June 2, 2011 among the Corporation and Computershare Trust Company of Canada (the “Trustee”), that the aggregate principal amount of US$• of the US$• of Debentures outstanding will be redeemed as of • (the “Redemption Date”), upon payment of a redemption amount of US$• for each US$1,000 principal amount of Debentures, being equal to the aggregate of (i) US$13.80 (the “Redemption Price”), and (ii) all accrued and unpaid interest hereon to but excluding the Redemption Date (collectively, the “Total Redemption Price”).

The Total Redemption Price will be payable upon presentation and surrender of the Debentures called for redemption at the following corporate trust office:

Computershare Trust Company of Canada

100 University Avenue, 9th Floor

Toronto, Ontario M5J 2Y1

Attention: Manager, Corporate Trust

The interest upon the principal amount of Debentures called for redemption shall cease to be payable from and after the Redemption Date, unless payment of the Total Redemption Price shall not be made on presentation for surrender of such Debentures at the above-mentioned corporate trust office on or after the Redemption Date or prior to the setting aside of the Total Redemption Price pursuant to the Indenture.

Pursuant to Section 4.6 of the Indenture, the Corporation hereby irrevocably elects to satisfy its obligation to pay US$13.80 of the Redemption Price payable to holders of Debentures in accordance with this notice by issuing and delivering to the holders that number of Freely Tradeable Common Shares obtained by dividing the Redemption Price by 95% of the Current Market Price of the Common Shares.

No fractional Common Shares shall be delivered upon the exercise by the Corporation of the above-mentioned redemption right but, in lieu thereof, the Corporation shall pay the cash equivalent thereof determined on the basis of the Current Market Price of Common Shares on the Redemption Date (less any tax required to be deducted, if any).

In this connection, upon presentation and surrender of the Debentures for payment on the Redemption Date, the Corporation shall, on the Redemption Date, make the delivery to the Trustee, at the above-mentioned corporate trust office, for delivery to and on account of the holders, of certificates representing the Freely Tradeable Common Shares to which holders are entitled together with the cash equivalent in lieu of fractional Common Shares, cash for all accrued and unpaid interest up to, but excluding, the Redemption Date, and, if only a portion of the Debentures are to be redeemed by issuing Freely Tradeable Common Shares, cash

B-#PageNum#

representing the balance of the Redemption Price.

DATED: _______________________________

NEO MATERIAL TECHNOLOGIES INC.

______________________________________________

(Authorized Director or Officer of Neo Material Technologies Inc.)

B-#PageNum#

SCHEDULE “C”
TO THE CONVERTIBLE DEBENTURE INDENTURE
AMONG
NEO MATERIAL TECHNOLOGIES INC.AND
COMPUTERSHARE TRUST COMPANY OF CANADA
FORM OF MATURITY NOTICE

SCHEDULE “C”Form of Maturity Notice

NEO MATERIAL TECHNOLOGIES INC.
5.00% CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES
MATURITY NOTICE

To:	Holders of 5.00% Convertible Unsecured Subordinated Debentures (the “Debentures”) of Neo Material Technologies Inc. (the “Corporation”)
Note:	All capitalized terms used herein have the meaning ascribed thereto in the Indenture mentioned below, unless otherwise indicated.

Notice is hereby given pursuant to Section 4.10(b) of the convertible debenture indenture (the “Indenture”) dated as of June 2, 2011 among the Corporation and Computershare Trust Company of Canada, as trustee (the “Trustee”), that the Debentures are due and payable as of December 31, 2017 (the “Maturity Date”) and the Corporation elects to satisfy its obligation to repay to holders of Debentures the principal amount of all of the Debentures outstanding on the Maturity Date, together with all accrued and unpaid interest thereon, by issuing and delivering to the holders that number of Freely Tradeable Common Shares equal to the number obtained by dividing such principal amount of the Debentures and accrued and unpaid interest thereon by 95% of the Current Market Price of Common Shares on the Maturity Date.

No fractional Common Shares shall be delivered on exercise by the Corporation of the above mentioned repayment right but, in lieu thereof, the Corporation shall pay the cash equivalent thereof determined on the basis of the Current Market Price of Common Shares on the Maturity Date (less any tax required to be deducted, if any).

In this connection, upon presentation and surrender of the Debentures for payment on the Maturity Date, the Corporation shall, on the Maturity Date, make delivery to the Trustee, at its principal trust office in Toronto, Ontario, for delivery to and on account of the holders, of certificates representing the Freely Tradeable Common Shares to which holders are entitled together with the cash equivalent in lieu of fractional Common Shares, and if only a portion of the Debentures are to be repaid by issuing Freely Tradeable Common Shares, cash representing the balance of the principal amount, premium (if any) and interest due on the Maturity Date.

DATED: _______________________________

NEO MATERIAL TECHNOLOGIES INC.

______________________________________________

(Authorized Director or Officer of Neo Material Technologies Inc.)

C-#PageNum#

SCHEDULE “D”
TO THE CONVERTIBLE DEBENTURE INDENTURE
AMONG
NEO MATERIAL TECHNOLOGIES INC.AND
COMPUTERSHARE TRUST COMPANY OF CANADA
FORM OF NOTICE OF CONVERSION

SCHEDULE “D”Form of Notice of Conversion

CONVERSION NOTICE

TO:	NEO MATERIAL TECHNOLOGIES INC.
Note:	All capitalized terms used herein have the meaning ascribed thereto in the Indenture mentioned below, unless otherwise indicated.

The undersigned registered holder of 5.00% Convertible Unsecured Subordinated Debentures irrevocably elects to convert such Debentures (or US$• principal amount thereof*) in accordance with the terms of the Indenture referred to in such Debentures and tenders herewith the Debentures, and, if applicable, directs that the Common Shares of Neo Material Technologies Inc. issuable upon a conversion be issued and delivered to the person indicated below. (If Common Shares are to be issued in the name of a person other than the holder, all requisite transfer taxes must be tendered by the undersigned).

Dated    Signature of transferring registered holder

*    If less than the full principal amount of the Debentures, indicate in the space provided the principal amount (which must be US$1,000 or integral multiples thereof).

NOTE:    If Common Shares are to be issued in the name of a person other than the holder,

The signature(s) on this form must be guaranteed in accordance with the transfer agent’s then current guidelines and requirements at the time of transfer. Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of closing, you may choose one of the following methods (although subject to change in accordance with industry practice and standards):

· Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words “Medallion Guaranteed”, with the correct prefix covering the face value of the certificate.

· Canada: A Signature Guarantee obtained from the Guarantor must affix a stamp bearing the actual words “Signature Guaranteed”. Signature Guarantees are not accepted from Treasury Branches, Credit Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a “Signature & Authority to Sign Guarantee” Stamp affixed to the transfer (as opposed to a “Signature Guarantee” Stamp) obtained from an authorized officer of a major Canadian Schedule 1 chartered bank.

D-#PageNum#

· Outside North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature to be over-guaranteed.

(Print name in which Common Shares are to be issued, delivered and registered)

Name:    

(Address)

(City, Province and Postal Code)

Name of guarantor:    

Authorized signature:    

D-#PageNum#

SCHEDULE “E”
TO THE CONVERTIBLE DEBENTURE INDENTURE
AMONG
NEO MATERIAL TECHNOLOGIES INC.AND
COMPUTERSHARE TRUST COMPANY OF CANADA
FORM OF CERTIFICATE OF TRANSFER

SCHEDULE “E”
FORM OF CERTIFICATE OF TRANSFER

Neo Material Technologies Inc.

Suite 1740, 121 King Street West

Toronto, ON M5H 3T9

Attention: Chief Financial Officer

Computershare Trust Company of Canada

9th Floor, 100 University Avenue

Toronto, ON M5J 2Y1

Attention: Senior Manager, Corporate Trust

Re:    Transfer of Debentures

Reference is hereby made to the Indenture, dated as of June 2, 2011 (the “Indenture”), among Neo Material Technologies Inc., as issuer (the “Company”), and Computershare Trust Company of Canada, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

_____________________ (the “Transferor”) owns and proposes to transfer the Debentures or interests in such Debentures specified in Annex A hereto, in the principal amount of US$_______________ (the “Transfer”), to ____________________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1.    £Check if Transferee will take delivery of a beneficial interest in a Restricted Global Debenture or a Restricted Physical Debenture pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Physical Debenture is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or physical Debenture for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or physical Debenture will be subject to the restrictions on transfer enumerated in the U.S. Legend.

2.    £Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Debenture or an Unrestricted Physical Debenture pursuant to Regulation S The Transfer is being effected pursuant to and in accordance with Rule 904 of Regulation S under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transferor is not an “affiliate” of the Company as that term is defined in Rule 405 under the Securities Act, (ii) the offer was not made, and the Transfer is not being made, to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (iii) neither the Transferor

E-#PageNum#

nor any affiliate of the Transferor nor any Person acting on any of their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the Transfer, (iv) the Transfer is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as that term is defined in Rule 144(a)(3) under the Securities Act), (v) the Transferor does not intend to replace such securities with fungible unrestricted securities and (vi) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

3.    £    Check and complete if Transferee will take delivery of a beneficial interest in an Unrestricted Global Debenture or an Unrestricted Physical Debenture pursuant to any provision of the Securities Act other than Regulation S.

(a)    £Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the U.S. Legend are not required to be imposed on the beneficial interest of the Transferor in order to maintain compliance with the Securities Act.

(b)    £    Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144A, Regulation S and Rule 144, and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the U.S. Legend are not required to be imposed on the beneficial interest of the Transferor in order to maintain compliance with the Securities Act.

In connection with requests for transfers pursuant to item 3(a) or 3(b), the Transferor must deliver to the Trustee an opinion of counsel of recognized standing in form and substance satisfactory to the Trustee and reasonably satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the Securities Act or state securities laws.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

[INSERT NAME OF TRANSFEROR]

Per:   

Name:

Title:

Dated: ___________________________

E-#PageNum#

ANNEX A TO CERTIFICATE OF TRANSFER

1.    The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a)OR (b) OR (c)]

(a)    £  a beneficial interest in the:

(i)    £  Restricted Global Debenture (CUSIP ___________)

(ii)    £  Unrestricted Global Debenture (CUSIP _______________)

(b)    £  a Restricted Physical Debenture

(c)    £  an Unrestricted Physical Debenture

2.    After the Transfer the Transferee will hold:

[CHECK ONE OF (a) OR (b) OR (c)]

(a)    £  a beneficial interest in the:

(i)    £  Restricted Global Debenture (CUSIP _____________)

(ii)    £  Unrestricted Global Debenture (CUSIP ____________)

(b)    £  a Restricted Physical Debenture

(c)    £  an Unrestricted Physical Debenture

in accordance with the terms of the Indenture.

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SCHEDULE “F”
TO THE CONVERTIBLE DEBENTURE INDENTURE AMONG
NEO MATERIAL TECHNOLOGIES INC.AND
COMPUTERSHARE TRUST COMPANY OF CANADA

SCHEDULE “F”
FORM OF CERTIFICATE OF EXCHANGE

Neo Material Technologies Inc.

Suite 1740, 121 King Street West

Toronto, ON M5H 3T0

Attention: Chief Financial Officer

Computershare Trust Company of Canada

100 University Avenue, 9th Floor

Toronto, Ontario

Attention: Senior Manager, Corporate Trust

Re:    Exchange of Debentures

(CUSIP _______________)

Reference is hereby made to the Indenture, dated as of June 2, 2011 (the “Indenture”), among Neo Material Technologies Inc., as issuer (the “Company”), and Computershare Trust Company of Canada, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

__________________________ (the “Owner”) owns and proposes to exchange the Debentures or interests in such Debentures specified herein, in the principal amount of US$__________________ (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

Exchange of Restricted Physical Debentures or Beneficial Interests in a Restricted Global Debenture for Unrestricted Physical Debentures or Beneficial Interests in an Unrestricted Global Debenture

(a)    £Check if Exchange is from a beneficial interest in a Restricted Global Debenture to a beneficial interest in an Unrestricted Global Debenture. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Debenture for a beneficial interest in an Unrestricted Global Debenture in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Debentures and pursuant to and in accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the U.S. Legend are not required to be imposed on the beneficial interest of the Owner in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Debenture is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b)    £Check if Exchange is from Restricted Physical Debenture to Unrestricted Physical Debenture. In connection with the Owner’s Exchange of a Restricted Physical Debenture for an Unrestricted Physical Debenture, the Owner hereby certifies (i) the Unrestricted Physical Debenture is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Physical Debentures and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the U.S. Legend are not required to be imposed on the Physical Debenture of the Owner in order to maintain compliance with the Securities Act and (iv) the Unrestricted Physical Debenture is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

F-#PageNum#

In connection with requests for Exchanges pursuant to item 1(a) or 1(b), the Owner must deliver to the Trustee an opinion of counsel of recognized standing in form and substance satisfactory to the Trustee and reasonably satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the Securities Act or state securities laws.

[INSERT NAME OF TRANSFEROR]

Per:   

Name:

Title:

Dated: ___________________________

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SCHEDULE “G”
TO THE CONVERTIBLE DEBENTURE INDENTURE
AMONG
NEO MATERIAL TECHNOLOGIES INC.
AND
COMPUTERSHARE TRUST COMPANY OF CANADA
COMMON SHARE LEGENDS

SCHEDULE “G”
COMMON SHARE LEGENDS

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 THEREUNDER, IF AVAILABLE, OR (ii) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C)(i) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION AND SATISFACTORY TO THE TRANSFER AGENT OR TRUSTEE TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

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EX-4.3

Exhibit 4.3

INDENTURE

DATED AS OF THE 11^th DAY OF JUNE, 2012

BETWEEN

MOLYCORP, INC.

AND

COMPUTERSHARE TRUST COMPANY OF CANADA

THIS INDENTURE is dated for reference as of the 11^th day of June, 2012.

BETWEEN:

MOLYCORP, INC., a corporation existing under the laws of the state of Delaware and having its head office in the City of Greenwood Village, in the State of Colorado (hereinafter called "Molycorp")

AND

COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company continued under the laws of Canada and registered to carry on business in the Province of Ontario (hereinafter called the "Trustee")

WITNESSETH THAT:

WHEREAS the Trustee and Neo Material Technologies Inc. (the "Corporation") entered into a debenture indenture (the "2011 Indenture") dated as of June 2, 2011 providing for the issuance of subordinate convertible debentures of the Corporation (the "Debentures");

AND WHEREAS on June 7, 2012, the Corporation amalgamated with two direct wholly-owned subsidiaries and one indirect wholly-owned subsidiary to form "Neo Material Technologies Inc." ("Neo Materials");

AND WHEREAS by operation of law, the obligations of the Corporation pursuant to the 2011 Indenture are assumed by Neo Materials;

AND WHEREAS pursuant to an arrangement made under section 192 of the Canada Business Corporations Act (the "Neo Acquisition"), Molycorp indirectly acquired all of the outstanding common shares of Neo Materials on the date hereof;

AND WHEREAS the principal amount of indebtedness of the Debentures and, in certain circumstances, the interest payable on the Debentures, are convertible into common shares of Neo Materials;

AND WHEREAS as a result of the Neo Acquisition, the common shares of Neo Materials and the

Debentures will be de-listed from the Toronto Stock Exchange;

AND WHEREAS the common shares of Molycorp (the "Molycorp Shares") are listed for trading on the New York Stock Exchange;

AND WHEREAS Neo Materials will continue to be a legal entity and obligor of the Debentures issued pursuant to the 2011 Indenture;

AND WHEREAS following the Neo Acquisition, Molycorp will be the parent company of Neo Materials and all shares issued pursuant to the provisions of the 2011 Indenture will hereafter be Molycorp Shares;

AND WHEREAS pursuant to the provisions of Subsection 6.5(d) of the 2011 Indenture and in order to implement the provisions of Subsection 6.5(d) of the 2011 Indenture, Molycorp and the Trustee wish to enter into this Indenture to provide, to the extent possible, for the application of the provisions set forth in the 2011 Indenture, as nearly as may reasonably be practicable, as they relate to Molycorp and to set out the obligations, rights and conditions relating to the issuance, sale or delivery by Molycorp of Molycorp Shares in the place and stead of the issuance, sale or delivery by Neo Materials of common shares of Neo Materials as set out in the 2011 Indenture;

AND WHEREAS all necessary steps in relation to Molycorp have been duly enacted, passed and/or confirmed and other proceedings taken and conditions complied with to make the execution and delivery of this Indenture and the obligations of Molycorp hereunder enforceable against Molycorp in accordance with the laws relating to Molycorp;

AND WHEREAS in order to set out the terms of issuance of Molycorp Shares pursuant to the provisions of the 2011 Indenture providing for the issuance of common shares of Neo Materials, the parties hereto agreed to enter into this 2012 Indenture and agree that it should be read together with the 2011 Indenture;

AND WHEREAS the foregoing recitals are made as representations and statements of fact by Molycorp and not by the Trustee;

NOW THEREFORE THIS INDENTURE WITNESSES that in consideration of the respective covenants and agreements contained herein and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged), Molycorp and the Trustee covenant and agree, for the benefit of each other and for the equal and rateable benefit of the holders, as follows:

ARTICLE 1

INTERPRETATION

1.1Definitions

In this Indenture, the following expressions shall have the following meanings, namely:

(a) "this Indenture", "the 2012 Indenture", "hereto", "herein", "hereby", "hereunder", "hereof" and similar expressions refer to this Indenture and not to any particular Article, Section, subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto;

(b) Any capitalized term used herein and not otherwise defined or assigned a meaning herein shall have the meaning ascribed thereto in the 2011 Indenture.

1.2Interpretation

In this Indenture:

(a) words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa;

(b) all references to Articles and Schedules refer, unless otherwise specified, to articles of and schedules to this Indenture;

(c) all references to Sections refer, unless otherwise specified, to Sections, subsections or clauses of this Indenture;

(d) words and terms denoting inclusiveness (such as "include" or "includes" or "including"), whether or not so stated, are not limited by and do not imply limitation of their context or the words or phrases which precede or succeed them;

(e) reference to any agreement or other instrument in writing means such agreement or other instrument in writing as amended, modified, replaced or supplemented from time to time;

(f) unless otherwise indicated, reference to a statute shall be deemed to be a reference to such statute as amended, re-enacted or replaced from time to time; and

(g) unless otherwise indicated, time periods within which a payment is to be made or any other action is to be taken hereunder shall be calculated by including the day on which the period commences and excluding the day on which the period ends.

1.3Headings, etc.

The division of this Indenture into Articles and Sections, and the insertion of headings, are for convenience of reference only and shall not affect the construction or interpretation of this Indenture or of the Debentures.

1.4Time of Essence

Time shall be of the essence of this Indenture.

1.5Monetary References

Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of the United States unless otherwise expressed.

1.6Invalidity, etc.

Any provision hereof which is prohibited or unenforceable shall be ineffective only to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof.

1.7Language

Each of the parties hereto hereby acknowledges that it has consented to and requested that this Indenture and all documents relating thereto be drawn up in the English language only.

1.8Successors and Assigns

All covenants and agreements of Molycorp in this Indenture and the Debentures shall bind their successors and assigns, whether so expressed or not. All covenants and agreements of the Trustee in this Indenture shall bind its successors.

1.9Severability

In case any provision in this Indenture shall be invalid, illegal or unenforceable, such provision shall be deemed to be severed herefrom or therefrom and the validity, legality and enforceability of the remaining provisions shall not in any way be affected, prejudiced or impaired thereby.

1.10Entire Agreement

This Indenture constitutes the entire agreement between the parties hereto with respect to the obligation to issue Common Shares pursuant to the 2011 Indenture. This Indenture shall be read with the 2011 Indenture, but provides for specific obligations between Molycorp and the Trustee.

1.11Benefits of Indenture

Nothing in this Indenture, or in the Debentures, express or implied, shall give to any Person, other than the parties hereto and to the 2011 Indenture and their successors hereunder, any paying agent, the holders of Debentures, and the holders of Common Shares, any benefit or any legal or equitable right, remedy or claim under this Indenture.

1.12Applicable Law and Attornment

This Indenture and any supplemental indenture hereto shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated in all respects as Ontario contracts. With respect to any suit, action or proceedings relating to this Indenture, or any supplemental indenture, Molycorp and the Trustee irrevocably submit and attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario.

1.13Non-Business Days

Whenever any payment to be made hereunder shall be due, any period of time would begin or end, any calculation is to be made or any other action is to be taken on, or as of, or from a period ending on, a day other than a Business Day, such payment shall be made, such period of time shall begin or end, such calculation shall be made and such other action shall be taken, as the case may be, unless otherwise specifically provided herein, on or as of the next succeeding Business Day without any additional interest, cost or charge to Molycorp.

1.14Calculations

Molycorp shall be responsible for making all calculations called for hereunder including, without limitation, calculations of Current Market Price. Whenever it is necessary to calculate the Current Market Price or any other value or amount hereunder in United States dollars for the purpose of payment or otherwise,

and the Current Market Price or other value or amount to be calculated is not at the relevant time expressed in United States dollars, then the Current Market Price or other value or amount to be calculated hereunder, as applicable, shall be converted into United States dollars based on: (i) in the event that the Current Market Price or other value or amount to be calculated hereunder is expressed in Canadian dollars, the Bank of Canada daily noon rate of exchange for converting Canadian dollars into United States dollars on the Business Day immediately preceding the applicable payment or other conversion date, as applicable, or (ii) in the event that the Current Market Price or other value or amount to be calculated hereunder is expressed in any currency other than United States dollars, the exchange rate for the purchase of United States dollars with such other currency using for the purposes of such calculation the applicable noon rate posted by the Federal Reserve Bank of New York on the Business Day immediately preceding the applicable payment or other conversion date, as applicable. Molycorp shall make such calculations in good faith and, absent manifest error, Molycorp's calculations shall be final and binding on holders and the Trustee. Molycorp will provide a schedule of its calculations to the Trustee and the Trustee shall be entitled to rely conclusively on the accuracy of such calculations without independent verification.

1.15Effective Date of this Indenture

This Indenture is dated for reference as of June 11, 2012; however, except with respect to section 2.1 of this Indenture which shall be effective immediately, the parties specifically agree that the other terms and conditions set out herein in respect of the Debentures, and the rights and obligations of the parties hereunder, shall not become effective until the later of: (i) the delivery to the Trustee of an Officers' Certificate (as defined in Section 7.5 hereof) certifying as to Molycorp's corporate authority to enter into this Indenture together with such supporting legal opinions as the Trustee may require; and (ii) the date which is the day after the Change of Control Purchase Dateunder the 2011 Indenturein respect of the Neo Acquisition. For greater certainty, the terms and conditions set out in the 2011 Indenture will remain in full force and effect unaffected hereby and will solely govern the terms and conditions of the Debentures and the rights and obligations of the parties thereto until such time as this Indenture becomes effective in accordance with this Section 1.15.

ARTICLE 2

OBLIGATIONS OF MOLYCORP IN RESPECT OF THE 2011 INDENTURE

2.1Guarantee of Payment Obligations of Neo Materials

(a) Molycorp hereby unconditionally, fully and irrevocably guarantees in accordance with and subject to the terms of the 2011 Indenture, the obligation to pay punctually all payments when due and payable by Neo Materials arising under the 2011 Indenture, whether at the Maturity Date, by acceleration or otherwise. Molycorp's obligation is a guaranty of payment and not merely of collection.

(b) Any payments made by Molycorp pursuant to this Section 2.1 shall be treated as if made by Neo Materials under the 2011 Indenture and shall have the same effect under the 2011 Indenture as if made by Neo Materials.

(c) Notwithstanding anything to the contrary in this Indenture or the 2011 Indenture, Molycorp's guaranty hereunder shall be subordinate and subject to the prior payment in full of all existing and future indebtedness of Molycorp (including Molycorp's 10% Senior Secured Notes Due 2020 in the original aggregate principal amount of $650,000,000), unless the documentation evidencing any

such indebtedness expressly provides that it is on parity with or subordinated or subject to the prior payment in full of Molycorp's guaranty hereunder.

2.2Obligations of Molycorp to issue Molycorp Shares

(a) Molycorp hereby assumes, pursuant to Subsection 6.5(d) of the 2011 Indenture, the obligations of Neo Materials set out in the 2011 Indenture in respect of the issuance, sale and delivery of Common Shares (as defined in the 2011 Indenture) with the intent and to the extent that such obligations will be satisfied by the issuance, sale or delivery by Molycorp of cash and Molycorp Shares rather than by the issuance, sale or delivery by Neo Materials of Neo Materials common shares.

(b) Where the 2011 Indenture refers to Common Shares or an obligation of the Corporation (as defined in the 2011 Indenture) to issue, sell or deliver Common Shares, the provisions of the 2011 Indenture shall be read mutatis mutandis to reflect that Molycorp will issue, sell or deliver Common Shares and not Neo Materials and that references in the 2011 Indenture to the Common Shares shall mean the Molycorp Shares, references to the holders of Common Shares shall refer to the holders of Molycorp Shares, and references to the Corporation having an obligation to issue, sell or deliver Common Shares shall refer to Molycorp having an obligation to issue, sell or deliver Molycorp Shares, as applicable.

(c) Any issuance, sale or delivery of Molycorp Shares by Molycorp pursuant to this Section 2.2 shall be treated, for the purposes of the 2011 Indenture, as if issued, sold or delivered by Neo Materials and shall have the same effect under the 2011 Indenture as if made by Neo Materials.

ARTICLE 3

EFFECT OF INDENTURE

3.1Effect of this Indenture on Section 1.1 of the 2011 Indenture

Notwithstanding the generality of the mutatis mutandis language in Section 2.2(b) hereof and for greater certainty, in order to accommodate the Neo Acquisition, and to fulfil, to the extent possible, the intent and provisions of Subsection 6.5(d) of the 2011 Indenture, the following definitions contained in Section 1.1 of the 2011 Indenture must be read as follows:

(a) "Applicable Period" means any period announced by the board of directors of Molycorp as a period of time for which a cash dividend or distribution will be declared and paid by Molycorp to the holders of all or substantially all of the outstanding Common Shares;

(b) "Applicable Securities Legislation" means applicable securities laws (including rules, regulations, policies and instruments) in each of the applicable provinces of Canada and the United States of America;

(c) "Auditors of the Corporation" means an independent firm of chartered accountants duly appointed as auditors of Molycorp;

(d) "Change of Control" means: (i) the acquisition by any Person, or group of Persons acting jointly or in concert (within the meaning of MI 62-104), of voting control or direction of an aggregate of 50% or more of the outstanding Common Shares; or (ii) the sale of all or substantially all of the assets of Molycorp, but shall not include a sale, merger, reorganization, arrangement, combination

or other similar transaction if the previous holders of Common Shares hold at least 50% of the voting control or direction in such merged, reorganized, arranged, combined or other continuing entity (and in the case of a sale of all or substantially all of the assets, in the entity which has acquired such assets) immediately following completion of such transaction;

(e) "Common Shares" means common shares in the capital of Molycorp, as such common shares are constituted on the date of execution and delivery of the 2012 Indenture; provided that in the event of a change or a subdivision, revision, reduction, combination or consolidation thereof, any reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance or liquidation, dissolution or winding-up, or such successive changes, subdivisions, redivisions, reductions, combinations or consolidations, reclassifications, capital reorganizations, consolidations, amalgamations, arrangements, mergers, sales or conveyances or liquidations, dissolutions or windings-up, then, subject to adjustments, if any, having been made in accordance with the provisions of Section 6.5 of the 2011 Indenture (read as required by the 2012 Indenture), "Common Shares" shall mean the shares or other securities or property resulting from such change, subdivision, revision, reduction, combination or consolidation, reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance or liquidation, dissolution or winding-up;

(f) "Common Share Purchase Agreement" means an agreement in customary form among Molycorp, the Trustee and the Persons making acceptable bids pursuant to a Common Share Bid Request, which complies with all applicable laws, including the Applicable Securities Legislation and the rules and regulations of any stock exchange on which the Common Shares are then listed;

(g) "Current Market Price" means, generally, the VWAP of the Common Shares on the NYSE for the 20 consecutive trading days ending five trading days preceding the applicable date. If the Common Shares are not listed on the NYSE or any U.S. Securities Exchange, reference shall be made for the purpose of the above calculation to the principal securities exchange or market on which the Common Shares are listed or quoted or if no such prices are available "Current Market Price" shall be the fair value of a Common Share as reasonably determined by the board of directors of Molycorp;

(h) "trading day" means, with respect to the NYSE or other market for securities, any day on which such exchange or market is open for trading or quotation;

(i) "VWAP" means the volume weighted average trading price of the Common Shares (which must be calculated utilizing days in which the Common Shares actually trade) on the NYSE (or if the Common Shares are no longer traded on the NYSE, on such other exchange as the Common Shares are then traded).

References to the "TSX" in the 2011 Indenture shall be read to refer to the New York Stock Exchange (the "NYSE").

3.2Effect of this Indenture on Subsection 2.4(f) of the 2011 Indenture

Notwithstanding the generality of the mutatis mutandis language in Section 2.2(b) hereof and for greater certainty, in order to accommodate the Neo Acquisition, and to fulfil, to the extent possible, the intent and provisions of Subsection 6.5(d) of the 2011 Indenture, the second paragraph of paragraph 2.4(f) of the 2011 Indenture must be read as follows:

The Initial Debentures shall be convertible into US$564.59 in cash and US$435.41 worth of Common

Shares at the Conversion Price. The Conversion Price in effect on the date hereof for each Common Share to be issued upon the conversion of Initial Debentures shall be equal to US$49.25such that approximately 8.8406 Common Shares shall be issued for each US$435.41principal amount of Initial Debentures so converted. Except as provided below, no adjustment in the number of Common Shares to be issued upon conversion will be made for dividends or distributions on Common Shares issuable upon conversion, the record date for the payment of which precedes the date upon which the holder becomes a holder of Common Shares in accordance with Article 6 of the 2011 Indenture, or for interest accrued on Initial Debentures surrendered. No fractional Common Shares will be issued, and holders will receive a cash payment in satisfaction of any fractional interest based on the Current Market Price as of the Date of Conversion. The Conversion Price applicable to, and the Common Shares, securities or other property receivable on the conversion of, the Initial Debentures is subject to adjustment pursuant to the provisions of Section 2.4(k) of the 2011 Indenture and Section 6.5 of the 2011 Indenture (each read as required by this Indenture).

3.3Effect of this Indenture on Subsection 2.4(j) of the 2011 Indenture

Notwithstanding the generality of the mutatis mutandis language in Section 2.2(b) hereof and for greater certainty, in order to accommodate the Neo Acquisition, and to fulfil, to the extent possible, the intent and provisions of Subsection 6.5(d) of the 2011 Indenture, Subsection 2.4(k) of the 2011 Indenture must be read as follows:

2.4(k) In addition to the requirements of Section 2.4(j) of the 2011 Indenture in respect of a Change of Control, the following provisions shall apply in respect of the occurrence of a Cash Change of Control:

(i) In the event of the occurrence of a Cash Change of Control, then subject to regulatory approval, during the period (the "Cash Change of Control Conversion Period") beginning 10 trading days before the anticipated effective date of the Change of Control (the "Effective Date") and ending on the date that is 30 days after the Change of Control Notice and Change of Control Purchase Offer are delivered or mailed to holders of Initial Debentures in accordance with Section 2.4(j) of the 2011 Indenture, holders of Initial Debentures will be entitled to convert their Initial Debentures, in whole or in part, and receive, in addition to the number of Common Shares (or, at the option of Molycorp, cash or other property or securities in substitution therefor) that such holders are entitled to receive upon such conversion in accordance with the provisions and conditions of Sections 2.4(f), 2.4(k)(v) and (vi) of the 2011 Indenture and Article 6 of the 2011 Indenture, an additional number of Common Shares (or, at the option of Molycorp, cash or other property or securities in substitution therefor) per US$1,000 principal amount of Initial Debentures converted as set forth below (the "Make Whole Premium").

(ii) The number of additional Common Shares per US$1,000 principal amount of Initial Debentures constituting the Make Whole Premium (the "Make Whole Premium Shares") shall be determined by reference to the table following subsection (iii) below, based on the Effective Date and the price (the "Stock Price") paid per Common Share in the transaction constituting the Change of Control. If holders of Common Shares receive only cash in the transaction constituting the Change of Control, the Stock Price shall be the cash amount paid per Common Share. Otherwise, the Stock Price shall be equal to the Current Market Price of the Common

Shares immediately preceding the Effective Date; provided that for the purposes of this subsection (k)(ii) and the determination of Current Market Price, the applicable period shall be calculated based on the 20 consecutive trading days ending five trading days preceding the applicable date. Notwithstanding the foregoing, in no circumstances can the effective Conversion Price (calculated by dividing US$1,000 by the number of Common Shares issuable upon conversion, including the maximum number of Make Whole Premium Shares hereunder) be less than the maximum permitted discounted price permitted by the NYSE (or such other exchange on which the Common Shares are then listed), if any, prior to any adjustments that may be made to the Stock Price to correspond to an adjustment to the Conversion Price under this Indenture.

(iii) The following table shows the number of Make Whole Premium Shares for each hypothetical Stock Price and Effective Date set forth below, expressed as additional Common Shares per US$1,000 principal amount of Debentures. For the avoidance of doubt, Molycorp shall not be obliged to pay the Make Whole Premium otherwise than by issuance of Common Shares upon conversion of the Initial Debentures in accordance with the provisions and conditions of Section 2.4(f) of the 2011 Indenture and Article 6 of the 2011 Indenture (read as required by this Indenture). If the Stock Price or Effective Date are not set forth on the table then:

(A) if the actual Stock Price on the Effective Date is between two Stock Prices on the table or the Effective Date is between two Effective Dates on the table, the number of Make Whole Premium Shares will be determined by a straight-line interpolation between the amounts set forth for the two Stock Prices and the two Effective Dates on the table based on a 365-day year, as applicable,

(B) if the Stock Price on the Effective Date exceeds US$142.76 per Common Share, subject to adjustment as set forth herein, the number of Make Whole Premium Shares to be issued will be zero, and (iii) if the Stock Price on the Effective Date is less than US$35.55 per Common Share, subject to adjustment as set forth herein, the number of Make Whole Premium Shares to be issued will be zero.

Make Whole Premium Upon a Change of Control
(Number of Additional Common Shares per US$1,000 Debentures)

	Stock Price
Effective Date	$35.55	$37.47	$39.26	$41.94	$43.72	$46.40	$49.07	$51.75	$55.32
June 2, 2011	3.4084	3.0592	2.8016	2.4744	2.2891	2.0509	1.852	1.6854	1.5022
June 2, 2012	3.4084	2.7784	2.4794	2.1487	1.9622	1.7246	1.5281	1.3658	1.1902
June 2, 2013	3.4084	2.7784	2.2503	1.8598	1.6679	1.424	1.2235	1.0601	0.8863
June 2, 2014	3.4084	2.7784	2.2503	1.6275	1.4253	1.1655	0.9475	0.7653	0.5678
June 2, 2015	3.4084	2.7784	2.2503	1.5424	1.2345	0.9781	0.7697	0.5979	0.4042
June 2, 2016	3.4084	2.7784	2.2503	1.5424	1.1186	0.5923	0.3615	0.2111	0.0935
December 31, 2016	3.4084	2.7784	2.2503	1.5424	1.1186	0.544	0.0321	0.0411	--
December 31, 2017	3.4084	2.7784	2.2503	1.5424	1.1186	0.544	0.0321	--	--

	Stock Price
Effective Date	$58.89	$62.46	$71.38	$80.30	$89.22	$98.15	$107.07	$124.91	$142.76
June 2, 2011	1.3538	1.2326	1.0111	0.8636	0.7587	0.6799	0.6179	0.5253	0.4582
June 2, 2012	1.0515	0.941	0.749	0.6295	0.5492	0.4911	0.4462	0.3795	0.3315
June 2, 2013	0.7532	0.6512	0.488	0.3992	0.3454	0.3087	0.2807	0.2396	0.2095
June 2, 2014	0.4172	0.3083	0.1698	0.1259	0.1083	0.0976	0.0893	0.0765	0.067
June 2, 2015	0.2383	0.0939	--	--	--	--	--	--	--
June 2, 2016	0.0365	0.0099	--	--	--	--	--	--	--
December 31, 2016	--	--	--	--	--	--	--	--	--
December 31, 2017	--	--	--	--	--	--	--	--	--

(iv) The Stock Prices set forth in the table above will be adjusted as of any date on which the Conversion Price of the Initial Debentures is adjusted. The adjusted Stock Prices will equal the Stock Prices applicable immediately preceding such adjustment multiplied by a fraction, the denominator of which is the Conversion Price immediately preceding the adjustment giving rise to the Stock Price adjustment and the numerator of which is the Conversion Price as so adjusted. The number of additional Make Whole Premium Shares set forth in the table above will be adjusted in the same manner as the Conversion Price as set forth in Section 6.5 of the 2011 Indenture (read as required by this Indenture), other than as a result of an adjustment of the Conversion Price by adding the Make Whole Premium as described above.

(v) Notwithstanding the foregoing, if the Date of Conversion of any Initial Debentures occurs during the period beginning on the 10^th trading day prior to the Effective Date and ending at the close of business on the Effective Date, the holders of such Initial Debentures shall, on conversion of their Initial Debentures, only be entitled to receive that number of Make Whole Premium Shares (as may be adjusted pursuant to Section 6.5 of the 2011 Indenture (read as required by this Indenture)) on the Business Day immediately following the Effective Date and, for greater certainty, only if the Change of Control occurs.

(vi) The Make Whole Premium Shares shall be deemed to have been issued upon conversion of Initial Debentures on the Business Day immediately following the Effective Date. Section 6.5 of the 2011 Indenture (read as required by this Indenture) shall apply to such conversion and, for greater certainty, the former holders of Initial Debentures in respect of which the Make Whole Premium Shares are issuable shall be entitled to receive and shall accept, in lieu of the Make Whole Premium Shares, the number of shares or other securities or cash or other property of Molycorp or of the Person or other entity resulting from the transaction that constitutes the Cash Change of Control that such holders would have been entitled to receive if such holders had been the registered holders of the applicable number of Make Whole Premium Shares on the Effective Date.

(vii) Except as otherwise provided in this Section, all other provisions of the 2011 Indenture applicable to a conversion of Initial Debentures shall apply to a conversion of Initial Debentures during the Cash Change of Control Conversion Period.

3.4Effect of this Indenture on Section 6.5 of the 2011 Indenture

Notwithstanding the generality of the mutatis mutandis language in Section 2.2(b) hereof and for greater certainty, in order to accommodate the Neo Acquisition, and to fulfil, to the extent possible, the intent and provisions of Subsection 6.5(d) of the 2011 Indenture, Section 6.5 of the 2011 Indenture must be read as follows:

6.5    Adjustment of Conversion Price

Subject to the requirements of the NYSE (or such other exchange on which the Common Shares are then listed), the Conversion Price in effect at any date shall be subject to adjustment from time to time as set forth below.

(a) If and whenever at any time prior to the Time of Expiry, Molycorp shall (i) subdivide or redivide the outstanding Common Shares into a greater number of shares, (ii) reduce, combine or consolidate the outstanding Common Shares into a smaller number of shares, or (iii) issue Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a dividend or distribution (other than the issue of Common Shares to holders of Common Shares who have elected to receive dividends or distributions in the form of Common Shares in lieu of cash dividends or cash distributions paid in the ordinary course on the Common Shares), the Conversion Price in effect on the effective date of such subdivision, redivision, reduction, combination or consolidation or on the record date for such issue of Common Shares by way of a dividend or distribution, as the case may be, shall in the case of any of the events referred to in (i) and (iii) above be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, redivision or dividend, or shall, in the case

of any of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred to in this subsection (a) shall occur. Any such issue of Common Shares by way of a dividend or distribution shall be deemed to have been made on the record date for the dividend or distribution for the purpose of calculating the number of outstanding Common Shares under subsections (c) and (d) of Section 6.5 of the 2011 Indenture (read as required by this Indenture).

(b) If and whenever at any time prior to the Time of Expiry, Molycorp shall fix a record date for the payment of a cash dividend or distribution to the holders of all or substantially all of the outstanding Common Shares in respect of any Applicable Period, the Conversion Price shall be adjusted immediately after such record date so that it shall be equal to the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the denominator shall be the Current Market Price per Common Share on such record date and of which the numerator shall be the Current Market Price per Common Share on such record date minus the amount in cash per Common Share distributed to holders of Common Shares. Such adjustment shall be made successively whenever such a record date is fixed. To the extent that any such cash dividend or distribution is not paid, the Conversion Price shall be re-adjusted to the Conversion Price which would then be in effect if such record date had not been fixed.

(c) If and whenever at any time prior to the Time of Expiry, Molycorp shall fix a record date for the issuance of options, rights or warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible into Common Shares) at a price per share (or having a conversion or exchange price per share) less than 95% of the Current Market Price of a Common Share on such record date, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing the aggregate price of the total number of additional Common Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible securities so offered) by such Current Market Price per Common Share, and of which the denominator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such a record date is fixed. To the extent that any such options, rights or warrants are not so issued or any such options, rights or warrants are not exercised prior to the expiration thereof, the Conversion Price shall be re-adjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon the number of Common Shares (or securities convertible into Common Shares) actually issued upon the exercise of such options, rights or warrants were included in such fraction, as the case may be.

(d) If and whenever at any time prior to the Time of Expiry, there is a reclassification of the Common Shares or a capital reorganization of Molycorp other than as described in Section 6.5(a) of the 2011 Indenture (read as required by this Indenture) or a consolidation, amalgamation, arrangement, binding share exchange, merger of Molycorp with or into any other Person or other entity or acquisition of Molycorp or other combination pursuant to which the Common

Shares are converted into or acquired for cash, securities or other property; or a sale or conveyance of the property and assets of Molycorp as an entirety or substantially as an entirety to any other Person (other than a direct or indirect wholly-owned subsidiary of Molycorp) or other entity or a liquidation, dissolution or winding-up of Molycorp, any holder of a Debenture who has not exercised its right of conversion prior to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, upon the exercise of such right thereafter, shall be entitled to receive and shall accept, in lieu of the number of Common Shares then sought to be acquired by it, such amount of cash or the number of shares or other securities or property of Molycorp or of the Person or other entity resulting from such merger, amalgamation, arrangement, acquisition, combination or consolidation, or to which such sale or conveyance may be made or which holders of Common Shares receive pursuant to such liquidation, dissolution or winding-up, as the case may be, that such holder of a Debenture would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, if, on the record date or the effective date thereof, as the case may be, the holder had been the registered holder of the number of Common Shares sought to be acquired by it and to which it was entitled to acquire upon the exercise of the conversion right. If determined appropriate by the board of directors of Molycorp, to give effect to or to evidence the provisions of this subsection (d), Molycorp, its successor, or such purchasing Person or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in the 2011 Indenture with respect to the rights and interests thereafter of the holder of Debentures to the end that the provisions set forth in the 2011 Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any cash, shares or other securities or property to which a holder of Debentures is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between Molycorp and the Trustee pursuant to the provisions of this subsection (d) shall be a supplemental indenture entered into pursuant to the provisions of Article 5 of the 2012 Indenture. Any indenture entered into between Molycorp, any successor to Molycorp or such purchasing Person or other entity and the Trustee shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this subsection (d) and which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, share exchanges, acquisitions, combinations, sales or conveyances. For greater certainty, nothing in this subsection (d) shall affect or reduce the requirement for any Person to make a Change of Control Purchase Offer or to pay the Make Whole Premium in accordance with Section 2.4 of the 2011 Indenture (read as required by this Indenture), and notice of any transaction to which this subsection (d) applies shall be given in accordance with Section 6.10 of the 2011 Indenture.

(e) If Molycorp shall make a distribution to all holders of Common Shares of shares in the capital of Molycorp, other than Common Shares, or evidences of indebtedness or other assets of Molycorp, including securities (but excluding (x) any issuance of rights or warrants for which an adjustment was made pursuant to Section 6.5(c) of the 2011 Indenture (read as required by this Indenture), and (y) any dividend or distribution paid exclusively in cash for which an adjustment was made pursuant to Section 6.5(b) of the 2011 Indenture (read as required this

Indenture)) (the "Distributed Securities"), then in each such case (unless Molycorp distributes such Distributed Securities to the holders of Debentures on such dividend or distribution date (as if each holder had converted such Debenture into Common Shares immediately preceding the record date with respect to such distribution)) the Conversion Price in effect immediately preceding the ex-distribution date fixed for the dividend or distribution shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately preceding such ex-distribution date by a fraction of which the denominator shall be the five-day VWAP for the Common Shares immediately prior to the ex-distribution date and of which the numerator shall be the five-day VWAP for the Common Shares for the first five trading days that occur immediately post the ex-distribution date. Such adjustment shall be made successively whenever any such distribution is made and shall become effective five Business Days immediately after the ex-distribution date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not been declared.

Notwithstanding the foregoing, if the securities distributed by Molycorp to all holders of its Common Shares consist of capital stock of, or similar equity interests in, a Subsidiary or other business of Molycorp (the "Spinoff Securities"), the Conversion Price shall be adjusted, unless Molycorp makes an equivalent distribution to the holders of Debentures, so that the same shall be equal to the rate determined by multiplying the Conversion Price in effect on the record date fixed for the determination of shareholders entitled to receive such distribution by a fraction, the denominator of which shall be the sum of (A) the weighted average trading price of one Common Share over the 20 consecutive trading day period (the "Spinoff Valuation Period") commencing on and including the fifth trading day after the date on which ex-dividend trading commences for such distribution on the NYSE (or such other exchange on which the Common Shares are then listed) and (B) the product of (i) the weighted average trading price (calculated in substantially the same way as the Current Market Price is calculated for the Common Shares) over the Spinoff Valuation Period of the Spinoff Securities or, if no such prices are available, the fair market value of the Spinoff Securities as reasonably determined by the board of directors of Molycorp (which determination shall be conclusive and shall be evidenced by an Officers' Certificate of Molycorp delivered to the Trustee) multiplied by (ii) the number of Spinoff Securities distributed in respect of one Common Share and the numerator of which shall be the weighted average trading price of one Common Share over the Spinoff Valuation Period, such adjustment to become effective immediately preceding the opening of business on the 25^th trading day after the date on which ex-dividend trading commences; provided, however, that Molycorp may in lieu of the foregoing adjustment elect to make adequate provision so that each holder of Debentures shall have the right to receive upon conversion thereof the amount of such Spinoff Securities that such holder of Debentures would have received if such Debentures had been converted on the record date with respect to such distribution.

(f) If any issuer bid made by Molycorp or any of its Subsidiaries for all or any portion of Common Shares shall expire, then, if the issuer bid shall require the payment to shareholders of consideration per Common Share having a fair market value (determined as provided below) that exceeds the Current Market Price per Common Share on the last date (the "Expiration Date") tenders could have been made pursuant to such issuer bid (as it may be amended) (the last time at which such tenders could have been made on the Expiration Date is hereinafter sometimes called the "Expiration Time"), the Conversion Price shall be adjusted so that the

same shall equal the rate determined by multiplying the Conversion Price in effect immediately preceding the close of business on the Expiration Date by a fraction of which (i) the denominator shall be the sum of (A) the fair market value of the aggregate consideration (the fair market value as determined by the board of directors of Molycorp, whose determination shall be conclusive evidence of such fair market value and which shall be evidenced by an Officers' Certificate of Molycorp delivered to the Trustee) payable to shareholders based on the acceptance (up to any maximum specified in the terms of the issuer bid) of all Common Shares validly tendered and not withdrawn as of the Expiration Time (the Common Shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Common Shares") and (B) the product of the number of Common Shares outstanding (less any Purchased Common Shares and excluding any Common Shares held in the treasury of Molycorp) at the Expiration Time and the Current Market Price per Common Share on the Expiration Date and (ii) the numerator of which shall be the product of the number of Common Shares outstanding (including Purchased Common Shares but excluding any Common Shares held in the treasury of Molycorp) at the Expiration Time multiplied by the Current Market Price per Common Share on the Expiration Date, such increase to become effective immediately preceding the opening of business on the day following the Expiration Date. In the event that Molycorp is obligated to purchase Common Shares pursuant to any such issuer bid, but Molycorp is permanently prevented by applicable law from effecting any or all such purchases or any or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would have been in effect based upon the number of Common Shares actually purchased, if any. If the application of this subsection (f) to any issuer bid would result in a decrease in the Conversion Price, no adjustment shall be made for such issuer bid under this subsection (f).

For purposes of the foregoing, the term "issuer bid" shall mean an issuer bid under Applicable Securities Legislation or a take-over bid under Applicable Securities Legislation by a Subsidiary of Molycorp for the Common Shares and all references to "purchases" of Common Shares in issuer bids (and all similar references) shall mean and include the purchase of Common Shares in issuer bids and all references to "tendered Common Shares" (and all similar references) shall mean and include Common Shares tendered in issuer bids.

(g) In any case in which this Section shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, Molycorp may defer, until the occurrence of such event, issuing to the holder of any Debenture converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that Molycorp shall deliver to such holder an appropriate instrument evidencing such holder's right to receive such additional Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour of holders of record of Common Shares on and after the Date of Conversion or such later date as such holder would, but for the provisions of this subsection (g), have become the holder of record of such additional Common Shares pursuant to Section 6.4(b) of the 2011 Indenture (read as required by this Indenture).

(h) The adjustments provided for in this Section are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section, provided that, notwithstanding any other provision of this Section, no adjustment of the Conversion Price

shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided however, that any adjustments which by reason of this subsection (h) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

(i) For the purpose of calculating the number of Common Shares outstanding, Common Shares owned by or for the benefit of Molycorp shall not be counted.

(j) In the event of any question arising with respect to the adjustments provided in this Section, such question shall be conclusively determined by a firm of nationally recognized chartered accountants appointed by Molycorp and acceptable to the Trustee (who may be the auditors of Molycorp); such accountants shall have access to all necessary records of Molycorp and such determination shall be binding upon Molycorp, the Corporation, the Trustee, and the Debentureholders.

(k) In case Molycorp shall take any action affecting the Common Shares other than action described in this Section 6.5 of the 2011 Indenture, which in the opinion of the board of directors of Molycorp, would materially affect the rights of Debentureholders, the Conversion Price shall be adjusted in such manner and at such time, by action of the such board of directors, as it, in its sole discretion, may determine to be equitable in the circumstances. Failure of the board of directors of Molycorp to make such an adjustment shall be conclusive evidence that such board has determined that it is equitable to make no adjustment in the circumstances.

(l) No adjustment in the Conversion Price shall be made in respect of any event described in Sections 6.5(a), 6.5(b), 6.5(c), 6.5(e) or 6.5(f) of the 2011 Indenture (each read as required by this Indenture) above other than the events described in 6.5(a)(i) or 6.5(a)(ii) of the 2011 Indenture (each read as required by this Indenture) if the holders of the Debentures are entitled to participate in such event on the same terms mutatis mutandis as if they had converted their Debentures prior to the effective date or record date, as the case may be, of such event.

(m) Except as stated above in this Section, no adjustment will be made in the Conversion Price for any Debentures as a result of the issuance of Common Shares at less than the Current Market Price for such Common Shares on the date of issuance or the then applicable Conversion Price.

(n) Subject to the terms of any particular series of Debentures, notwithstanding the foregoing, if holders of Debentures would otherwise be entitled to receive, upon conversion of the Debentures, any property (including cash) or securities that would not constitute "prescribed securities" for the purposes of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada) as it applied on December 31, 2007 (referred to herein as "ineligible consideration"), such holders shall not be entitled to receive such ineligible consideration but Molycorp or its successor or acquirer, as the case may be, shall have the right (at the sole option of Molycorp or such successor or acquirer, as the case may be) to deliver either such ineligible consideration or such "prescribed securities" with a market value (as conclusively determined by the board of directors of Molycorp) equal to the market value of such ineligible consideration.

3.5Effect of this Indenture on Section 11.1 of the 2011 Indenture

Notwithstanding the generality of the mutatis mutandis language in Section 2.2(b) hereof and for greater certainty, in order to accommodate the Neo Acquisition, and to fulfil, to the extent possible, the intent and provisions of Subsection 6.5(d) of the 2011 Indenture, Section 11.1 of the 2011 Indenture must be read

as follows:

11.1    Molycorp may Consolidate, etc., Only on Certain Terms

(a) Molycorp may not, without the consent of the holders, consolidate with or amalgamate or merge with or into any Person (other than a directly or indirectly wholly-owned Subsidiary of Molycorp) or sell, convey, transfer or lease all or substantially all of the properties and assets of Molycorp to another Person (other than a directly or indirectly wholly-owned Subsidiary of Molycorp) unless:

(i) the Person formed by such consolidation or into which Molycorp is amalgamated or merged, or the Person which acquires by sale, conveyance, transfer or lease all or substantially all of the properties and assets of Molycorp is a corporation, organized and existing under the laws of Canada or any province or territory thereof or the laws of the United States or any state thereof and such corporation (if other than Molycorp or the continuing corporation resulting from the amalgamation of Molycorp with another corporation under the laws of Canada or any province or territory thereof or the United States or any state thereof) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the obligations of Molycorp under the Debentures and this Indenture and the performance or observance of every covenant and provision of this Indenture and the Debentures required on the part of Molycorp to be performed or observed and the conversion rights shall be provided for in accordance with Article 4 of the 2011 Indenture, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than Molycorp or the continuing corporation resulting from the amalgamation of Molycorp with another corporation under the laws of Canada or any province or territory thereof or the laws of the United States or any state therof) formed by such consolidation or into which Molycorp shall have been merged or by the Person which shall have acquired Molycorp's assets;

(ii) after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

(iii) if Molycorp or the continuing corporation resulting from the amalgamation or merger of Molycorp with another Person under the laws of Canada or any province or territory thereof or the laws of the United States or any state thereof will not be the resulting, continuing or surviving corporation, Molycorp shall have, at or prior to the effective date of such consolidation, amalgamation, merger or sale, conveyance, transfer or lease, delivered to the Trustee an Officers' Certificate and an opinion of counsel to the Trustee or counsel to Molycorp, each stating that such consolidation, amalgamation, merger or transfer complies with this Article and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article, and that all conditions precedent herein provided for relating to such transaction have been complied with.

(b) For purposes of the foregoing, the sale, conveyance, transfer or lease (in a single transaction or a series of related transactions) of the properties or assets of one or more Subsidiaries of Molycorp (other than to Molycorp or another wholly-owned Subsidiary of Molycorp), which,

if such properties or assets were directly owned by Molycorp, would constitute all or substantially all of the properties and assets of Molycorp and its Subsidiaries, taken as a whole, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of Molycorp.

3.6Effect of the Indenture on Section 11.2 of the 2011 Indenture

Notwithstanding the generality of the mutatis mutandis language in Section 2.2(b) hereof and for greater certainty, in order to accommodate the Neo Acquisition, and to fulfil, to the extent possible, the intent and provisions of Subsection 6.5(d) of the 2011 Indenture, Section 11.2 of the 2011 Indenture must be read as follows:

11.2    Successor Substituted

Upon any consolidation of Molycorp with, or amalgamation or merger of Molycorp into, any other Person or any sale, conveyance, transfer or lease of all or substantially all of the properties and assets of Molycorp and its Subsidiaries, taken as a whole, in accordance with Section 11.1 of the 2011 Indenture (read as required by this Indenture), the successor Person formed by such consolidation or into which Molycorp is amalgamated or merged or to which such sale, conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Molycorp under this Indenture with the same effect as if such successor Person had been named as Molycorp herein, and thereafter, except in the case of a lease, and except for obligations the predecessor Person may have under a supplemental indenture entered into pursuant to Section 11.1(a)(iii) of the 2011 Indenture (read as required by this Indenture), the predecessor Person shall be relieved of all obligations and covenants under the 2012 Indenture, the 2011 Indenture and the Debentures.

ARTICLE 4

MAINTAIN LISTING

Notwithstanding the generality of the mutatis mutandis language in Section 2.2(b) hereof and for greater certainty, in order to accommodate the Neo Acquisition, and to fulfil, to the extent possible, the intent and provisions of Subsection 6.5(d) of the 2011 Indenture, Molycorp covenants and agrees to use reasonable commercial efforts to maintain the listing of the Common Shares on the NYSE, the Toronto Stock Exchange, the TSX Venture Exchange or on a U.S. Securities Exchange, and to maintain Molycorp's status as a "reporting company" as defined by the Exchange Act not in default of the requirements of the Applicable Securities Legislation; provided that the foregoing covenant shall not prevent or restrict Molycorp from carrying out a transaction to which Article 11 of the 2011 Indenture (read as required by this Indenture) would apply if carried out in compliance with such Article 11 even if as a result of such transaction Molycorp ceases to be a "reporting company", or the Common Shares cease to be listed on the NYSE, the Toronto Stock Exchange, the TSX Venture Exchange and/or a U.S. Securities Exchange.

ARTICLE 5

SUPPLEMENTAL INDENTURES

5.1Supplemental Indentures

From time to time the Trustee and, when authorized by a resolution of the board of directors of Molycorp, Molycorp, may, and they shall when required by this Indenture, execute, acknowledge and deliver by their proper officers deeds or indentures supplemental hereto which thereafter shall form part hereof, for any one or more of the following purposes:

(a) evidencing the succession, or successive successions, of others to Molycorp and the covenants of and obligations assumed by any such successor in accordance with the provisions of this Indenture; and

(b) for any other purpose not inconsistent with the terms of this Indenture.

Without limiting the generality of the foregoing and without the consent or approval of all or any of the Debentureholders, Molycorp and the Trustee may, by supplemental indenture or otherwise, (i) amend any of the provisions of this Indenture related to matters of United States law or the issuance of Common Shares into the United States in order to ensure that such issuances can be made in accordance with applicable law in the United States; and (ii) make any changes or corrections in this Indenture which it shall have been advised by Molycorp's counsel are required for the purpose of curing or correcting any ambiguity or defective or inconsistent provisions or clerical omissions or mistakes or manifest errors contained herein or in any indenture supplemental hereto, providing that in the opinion of the Trustee (relying upon an opinion of Molycorp's counsel) the rights of the Debentureholders are in no way prejudiced thereby.

ARTICLE 6

NOTICES

6.1Notice to Molycorp

Any notice to Molycorp under the provisions of this Indenture shall be valid and effective if delivered to the Molycorp at: 5619 DTC Parkway Suite 1000, Greenwood Village, Colorado U.S.A. 80111, Attention: Chief Financial Officer, or if given by registered letter, postage prepaid, to such office and so addressed and if mailed, shall be deemed to have been effectively given three days following the mailing thereof. Molycorp may from time to time notify the Trustee in writing of a change of address which thereafter, until changed by like notice, shall be the address of Molycorp for all purposes of this Indenture.

6.2Notice to Trustee

Any notice to the Trustee under the provisions of this Indenture shall be valid and effective if delivered to the Trustee at its principal office in the City of Toronto, at 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, Attention: Manager, Corporate Trust, or if given by registered letter, postage prepaid, to such office and so addressed and, if mailed, shall be deemed to have been effectively given three days following the mailing thereof.

6.3Mail Service Interruption

If by reason of any interruption of mail service, actual or threatened, any notice to be given to the Trustee would reasonably be unlikely to reach its destination by the time notice by mail is deemed to have been given pursuant to Section 6.2 of this Indenture, such notice shall be valid and effective only if delivered at the appropriate address in accordance with Section 6.2 of this Indenture.

ARTICLE 7

CONCERNING THE TRUSTEE

7.1Residency and No Conflict of Interest

The Trustee represents to Molycorp that to the best of its knowledge at the date of execution and delivery by it of this Indenture the Trustee is not a non-resident of Canada for the purposes of the Income Tax Act (Canada) and there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder but if, notwithstanding the provisions of this Section 7.1, such a material conflict of interest exists, or hereafter arises, the validity and enforceability of this Indenture, the 2011 Indenture and the Debentures issued thereunder, shall not be affected in any manner whatsoever by reason only that such material conflict of interest exists or arises but the Trustee shall, within 30 days after ascertaining that it has a material conflict of interest, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Section 15.2 of the 2011 Indenture.

7.2Replacement of Trustee

The Trustee may resign its trust and be discharged from all further duties and liabilities hereunder by giving to Molycorp 90 days' notice in writing or such shorter notice as Molycorp may accept as sufficient. If at any time a material conflict of interest exists in the Trustee's role as a fiduciary hereunder the Trustee shall, within 30 days after ascertaining that such a material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in this Section 7.2. The validity and enforceability of this Indenture and of the Debentures issued hereunder shall not be affected in any manner whatsoever by reason only that such a material conflict of interest exists. In the event of the Trustee resigning or being removed or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, Molycorp shall forthwith appoint a new Trustee unless a new Trustee has already been appointed by the Debentureholders. Failing such appointment by Molycorp, the retiring Trustee or any Debentureholder may apply to a Judge of the Superior Court of Ontario, on such notice as such Judge may direct at Molycorp's expense, for the appointment of a new Trustee but any new Trustee so appointed by Molycorp or by the Court shall be subject to removal as aforesaid by the Debentureholders and the appointment of such new Trustee shall be effective only upon such new Trustee becoming bound by this Indenture. Any new Trustee appointed under any provision of this Section 7.2 shall be a corporation authorized to carry on the business of a trust company in all of the Provinces of Canada and a resident of Canada for the purposes of the Income Tax Act (Canada). On any new appointment the new Trustee shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Trustee.

Any company into which the Trustee may be merged or, with or to which it may be consolidated, amalgamated or sold, or any company resulting from any merger, consolidation, sale or amalgamation to which the Trustee shall be a party, shall be the successor trustee under this Indenture without the execution of any instrument or any further act. Nevertheless, upon the written request of the successor Trustee or of Molycorp, the Trustee ceasing to act shall execute and deliver an instrument assigning and transferring to such successor Trustee, upon the trusts herein expressed, all the rights, powers and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver all property and money held by such Trustee to the successor Trustee so appointed in its place. Should any deed, conveyance or instrument in writing from Molycorp be required by any new Trustee for more fully and certainly vesting in and confirming to it such estates, properties, rights, powers and trusts, then any and all such deeds, conveyances and instruments in writing shall on request of said new Trustee, be made, executed, acknowledged and delivered by Molycorp.

7.3Duties of Trustee

In the exercise of the rights, duties and obligations prescribed or conferred by the terms of this Indenture, the Trustee shall act honestly and in good faith and exercise that degree of care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances.

7.4Reliance Upon Declarations, Opinions, etc.

In the exercise of its rights, duties and obligations hereunder the Trustee may, if acting in good faith, rely, as to the truth of the statements and accuracy of the opinions expressed therein, upon statutory declarations, opinions, reports or certificates furnished pursuant to any covenant, condition or requirement of this Indenture or required by the Trustee to be furnished to it in the exercise of its rights and duties hereunder, if the Trustee examines such statutory declarations, opinions, reports or certificates and determines that they comply with Section 7.5 of this Indenture, if applicable, and with any other applicable requirements of this Indenture. The Trustee may nevertheless, in its discretion, require further proof in cases where it deems further proof desirable. Without restricting the foregoing, the Trustee may rely on an opinion of counsel including Molycorp's counsel satisfactory to the Trustee.

7.5Evidence and Authority to Trustee, Opinions, etc.

Molycorp shall furnish to the Trustee to the extent required by the Trustee any evidence of corporate authority relating to any action or step required or permitted to be taken by Molycorp under this Indenture or as a result of any obligation imposed under this Indenture, or the taking of any action to be taken by the Trustee at the request of or on the application of Molycorp, forthwith if and when (a) such evidence is required by any other Section of this Indenture to be furnished to the Trustee, or (b) the Trustee, in the exercise of its rights and duties under this Indenture, gives Molycorp written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice.

Whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, the Trustee, if acting in good faith, may rely upon an Officers' Certificate.

For the purposes of this Indenture, "Officers' Certificate" means a certificate of Molycorp signed by any two authorized officers or directors of Molycorp, in their capacities as officers or directors of Molycorp, and not in their personal capacities. Each evidentiary document shall include (a) a statement by the person(s) giving the evidence that they have read and are familiar with those provisions of this Indenture, (b) a brief statement of the nature and scope of the examination or investigation upon which the statements or opinions contained in such evidence are based, (c) a statement that, in the belief of the person giving such evidence, they have made such examination or investigations as is necessary to enable them to make the statements or give the opinions contained or expressed therein, and (d) a statement whether in the opinion of such person the authority relating to such action or step hereunder is required or permitted or not.

7.6Experts, Advisers and Agents

The Trustee may:

(a) employ or retain and act and rely on the opinion or advice of or information obtained from any solicitor, auditor, valuer, engineer, surveyor, appraiser or other expert, whether obtained by the Trustee or by Molycorp, or otherwise, and shall not be liable for acting, or refusing to act, in good faith on any such opinion or advice and may pay proper and reasonable compensation for all such

legal and other advice or assistance as aforesaid; and

(b) employ such agents and other assistants as it may reasonably require for the proper discharge of its duties hereunder, and may pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the trusts hereof and any solicitors employed or consulted by the Trustee may, but need not be, solicitors for Molycorp.

7.7No Risk of Funds

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified.

7.8Trustee Not Bound to Act on Molycorp's Request

Except as in this Indenture otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of Molycorp until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine.

7.9Authority to Carry on Business

The Trustee represents to Molycorp that at the date of execution and delivery by it of this Indenture it is authorized to carry on the business of a trust company in each of the provinces of Canada but if, notwithstanding the provisions of this Section 7.9, it ceases to be so authorized to carry on business, the validity and enforceability of this Indenture and the securities issued hereunder shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any of the provinces of Canada, either become so authorized or resign in the manner and with the effect specified in Section 7.2 of this Indenture.

7.10Compensation and Indemnity

(a) Molycorp shall pay to the Trustee from time to time compensation for its services hereunder as agreed separately by Molycorp and the Trustee, and shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in the administration or execution of its duties under this Indenture (including the reasonable and documented compensation and disbursements of its counsel and all other advisers and assistants not regularly in its employ), both before any default hereunder and thereafter until all duties of the Trustee under this Indenture shall be finally and fully performed. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust.

(b) Molycorp hereby indemnifies and saves harmless the Trustee and its directors, officers, agents and employees from and against any and all loss, damages, charges, expenses, claims, demands, actions or liability whatsoever which may be brought against the Trustee or which it may suffer or incur as a result of or arising out of the performance of its duties and obligations hereunder save only in the event of gross negligence, or the wilful misconduct or bad faith of the Trustee. This indemnity will survive the termination or discharge of this Indenture and the resignation or removal of the Trustee.

The Trustee shall notify Molycorp promptly of any claim for which it may seek indemnity. Molycorp shall defend the claim and the Trustee shall co-operate in the defence. The Trustee may have separate counsel and Molycorp shall pay the reasonable fees and expenses of such counsel. Molycorp need not pay for any settlement made without its consent, which consent must not be unreasonably withheld. This indemnity shall survive the resignation or removal of the Trustee or the discharge of this Indenture.

(c) Molycorp need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through gross negligence or bad faith or breach of the Trustee's duties hereunder.

7.11Third Party Interests

Each party to this Indenture (in this paragraph referred to as a "representing party") hereby represents to the Trustee that any account to be opened by, or interest to held by, the Trustee in connection with this Indenture, for or to the credit of such representing party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by or on behalf of a third party, in which case such representing party hereby agrees to complete, execute and deliver forthwith to the Trustee a declaration, in the Trustee's prescribed form or in such other form as may be satisfactory to it, as to the particulars of such third party.

7.12Anti-Money Laundering

The Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Trustee, in its sole judgment, acting reasonably, determines that such act might cause it to be in noncompliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Trustee, in its sole judgment, acting reasonably, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 10 days' prior written notice sent to Molycorp provided that (i) the Trustee's written notice shall describe the circumstances of such non-compliance; and (ii) if such circumstances are rectified to the Trustee's satisfaction within such 10-day period, then such resignation shall not be effective.

7.13Privacy Laws

The parties acknowledge that federal and/or provincial legislation that addresses the protection of individuals' personal information (collectively, "Privacy Laws") applies to certain obligations and activities under this Indenture. Notwithstanding any other provision of this Indenture, neither party shall take or direct any action that would contravene, or cause the other to contravene, applicable Privacy Laws. Molycorp shall, prior to transferring or causing to be transferred personal information to the Trustee, obtain and retain required consents of the relevant individuals to the collection, use and disclosure of their personal information, or shall have determined that such consents either have previously been given upon which the parties can rely or are not required under the Privacy Laws. The Trustee shall use commercially reasonable efforts to ensure that its services hereunder comply with Privacy Laws. Specifically, the Trustee agrees: (a) to have a designated chief privacy officer; (b) to maintain policies and procedures to protect personal information and to receive and respond to any privacy complaint or inquiry; (c) to use personal information solely for the purposes of providing its services under or ancillary to this Indenture and to comply with applicable laws and not to use it for any other purpose except with the consent of or direction from Molycorp or the individual involved or as permitted by Privacy Laws; (d) not to sell or otherwise improperly disclose personal information to any third party; and (e) to employ administrative, physical and technological safeguards to

reasonably secure and protect personal information against loss, theft, or unauthorized access, use or modification.

7.14Force Majeure

Except for the payment obligations of Molycorp contained herein, neither party shall be liable to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended per for a period of time equivalent to the time lost because of any delay that is excusable under this Section 7.14.

ARTICLE 8

EXECUTION AND FORMAL DATE AND TERMINATION

8.1Execution

This Indenture may be simultaneously executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument.

8.2Formal Date

For the purpose of convenience this Indenture may be referred to as bearing the formal date as of June 11, 2012 irrespective of the actual date of execution hereof or the actual effective date hereof.

8.3Termination

The Trustee shall release and discharge this Indenture and execute and deliver such instruments as it shall be advised by Molycorp's counsel are requisite for that purpose and to release Molycorp from its covenants herein contained (other than the provisions relating to the indemnification of the Trustee), contemporaneously with and upon the first to occur of: (i) the Trustee releasing and discharging the 2011 Indenture pursuant to Section 9.4 of the 2011 Indenture; and (ii) Neo Materials being deemed to have fully repaid, satisfied and discharged all of the outstanding Debentures pursuant to Section 9.5 of the 2011 Indenture.

IN WITNESS whereof the parties hereto have executed these presents under their respective corporate seals and the hands of their proper officers in that behalf.

MOLYCORP, INC.
Per:	/s/ Mark A. Smith
Mark Smith President and Chief Executive Officer
COMPUTERSHARE TRUST COMPANY OF CANADA
Per:	/s/ Lisa M. Kudo
Lisa M. Kudo Corporate Trust Officer
Per:	/s/ Mary Abraham
Mary Abraham Corporate Trust Officer

ACKNOWLEDGED this 11th day of June, 2012.

NEO MATERIALS TECHNOLOGIES INC.
Per:	/s/ Michael F. Doolan
Michael Doolan Executive Vice President and Chief Financial Officer

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Mark A. Smith, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Molycorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2012

/s/ MARK A. SMITH

Mark A. Smith

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Michael F. Doolan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Molycorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2012

/s/ MICHAEL F. DOOLAN

Michael F. Doolan

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Molycorp, Inc. (the “Company”) for the quarterly period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Mark A. Smith, as President and Chief Executive Officer of the Company, and Michael F. Doolan, as Chief Financial Officer of the Company, each hereby certifies, pursuant to and solely for the purpose of 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes‑Oxley Act of 2002, to the best of his knowledge and belief, that:

(1)    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ MARK A. SMITH

Mark A. Smith

President and Chief Executive Officer

August 9, 2012

/s/ MICHAEL F. DOOLAN

Michael F. Doolan

Chief Financial Officer

August 9, 2012

EX-95.1

Exhibit 95.1

Molycorp, Inc.

Mine Safety Disclosure for the Quarter Ended June 30, 2012

Molycorp, Inc. (the “Company”) operates a single rare earth mine and processing facility at Mountain Pass, California (the “Molycorp Mountain Pass facility”). Operations at the Molycorp Mountain Pass facility are subject to regulation by, among other agencies, the federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977, as amended by the Mine Improvement and New Emergency Response Act of 2006 (the “Mine Act”).

Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Section 1503(a)”) requires the Company to present certain information regarding mining safety in its periodic reports filed with the Securities and Exchange Commission.

The following table reflects citations, orders and notices issued to the Company by MSHA during the three months ended June 30, 2012 (the “Reporting Period”) and contains certain additional information as required by Section 1503(a) and Item 104 of Regulation S-K, including information regarding mining‑related fatalities, proposed assessments from MSHA and legal actions (“Legal Actions”) before the Federal Mine Safety and Health Review Commission (“FMSHRC”), an independent adjudicative agency that provides administrative trial and appellate review of legal disputes arising under the Mine Act. The proposed assessments for the Reporting Period were taken from the MSHA data retrieval system as of July 2, 2012.

Included below is the information required by Section 1503(a) with respect to the Molycorp Mountain Pass facility (MSHA Identification Number 0402542) for the Reporting Period:

		Three Months Ended June 30, 2012
(A)	Total number of alleged violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under Section 104 of the Mine Act for which the Company received a citation from MSHA	5
(B)	Total number of orders issued under Section 104(b) of the Mine Act	—
(C)	Total number of citations and orders for alleged unwarrantable failure by the Company to comply with mandatory health or safety standards under Section 104(d) of the Mine Act	—
(D)	Total number of alleged flagrant violations under Section 110(b)(2) of the Mine Act	—
(E)	Total number of imminent danger orders issued under Section 107(a) of the Mine Act	—
(F)	Total dollar value of proposed assessments from MSHA under the Mine Act	$	1,445
(G)	Total number of mining‑related fatalities	—
(H)	Received notice from MSHA of a pattern of violations under Section 104(e) of the Mine Act	No
(I)	Received notice from MSHA of the potential to have a pattern of violations under Section 104(e) of the Mine Act	No
(J)	Total number of Legal Actions pending as of the last day of the Reporting Period (1)	9
(K)	Total number of Legal Actions instituted during the Reporting Period	3
(L)	Total number of Legal Actions resolved during the Reporting Period	—

(1) For the quarter ended June 30, 2012, four Legal Actions relate to the Company's contest of proposed penalties referenced in Subpart C of FMSHRC's Procedural Rules. The other five Legal Actions relate to complaints for compensation by construction contractors arising from a 103(k) Order that MSHA issued to Molycorp Minerals, LLC in the first quarter of 2012.

XML

Acquisitions (Tables)

6 Months Ended

Jun. 30, 2012

Business Combinations [Abstract]

Summarizes the purchase prices and opening balance sheets for the acquisitions

	June 11, 2012
Purchase consideration:
Cash consideration	$	908,181
Fair value of Molycorp common stock and Exchangeable Shares issued	284,144
Total purchase consideration	$	1,192,325
Estimated fair values of the assets and liabilities acquired:
Cash and cash equivalents	$	317,169
Accounts receivable	101,470
Inventory	250,989
Prepaid expenses and other current assets	26,893
Property, plant and equipment	70,391
Investments	21,019
Intangibles	491,786
Goodwill	501,571
Other non-current assets	22,859
Accounts payable and accrued expenses	(138,576		)
Debt - current	(255,056		)
Other current liabilities	(29,939		)
Deferred tax liabilities	(158,177		)
Long-term debt	(281		)
Other non-current liabilities	(14,032		)
Non-controlling interests	(15,761		)
Total purchase consideration	$	1,192,325

Effective acquisition date for financial reporting purposes:	Molycorp Silmet April 1, 2011			MMA April 15, 2011
Purchase consideration:
Cash consideration	$	9,021		$	17,500
Fair value of Molycorp common stock issued	72,653			—
Total purchase consideration	$	81,674		$	17,500
Fair values of the assets and liabilities acquired:
Cash	$	105		$	6,395
Accounts receivable and other current assets	8,626			5,474
Inventory	37,404			11,327
Property, plant and equipment, net	63,393			4,512
Intangible assets subject to amortization	2,669			—
Goodwill	1,455			1,977
Liabilities	(19,974		)	(8,989		)
Deferred tax liabilities	—			(3,196		)
Long-term debt	(3,184		)	—
Noncontrolling interest	(8,820		)	—
Total purchase consideration	$	81,674		$	17,500

Summary of actual and pro forma information

(In thousands, except per share amounts)	Sales		Net Income		Net Income Attributable To Molycorp		EPS Basic
Unaudited pro forma January 1, 2011 to June 30, 2011 (combined entity)	$	159,350	$	55,463	$	54,495	$	0.6

(In thousands, except per share amounts)	Sales		Net Income (Loss)			Net Income (Loss) Attributable To Molycorp			EPS Basic
Actual June 11, 2012 to June 30, 2012 (acquiree)	$	43,647	$	47		$	(633	)	$	(0.01	)
Unaudited pro forma April 1, 2012 to June 30, 2012 (combined entity)	$	260,542	$	(59,519	)	$	(62,114	)	$	(0.60	)
Unaudited pro forma January 1, 2012 to June 30, 2012 (combined entity)	$	523,865	$	(59,079	)	$	(63,466	)	$	(0.63	)
Unaudited pro forma April 1, 2011 to June 30, 2011 (combined entity)	$	315,758	$	83,642		$	78,354		$	0.69
Unaudited pro forma January 1, 2011 to June 30, 2011 (combined entity)	$	474,817	$	92,564		$	86,352		$	0.75

Schedule of Business Acquisitions, Transaction Costs by Type [Table Text Block]

(In thousands)	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Corporate development
Legal, accounting and advisory fees	$	14,043	$	16,074
Other expenses:
Contingent forward contract loss	$	30,770	$	37,589
Interest expense:
Bridge loan fee	$	7,937	$	7,937

XML

Deposits (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Deposits [Line Items]
Deposits	$ 23,283,000	$ 23,286,000
Deposits related to construction insurance program	1,500,000
Other restricted cash requirements related to deposits	1,200,000
Kern River Gas Transmission Company
Deposits [Line Items]
Escrow deposit	$ 20,600,000

XML

Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2012

Supplemental Cash Flow Information [Abstract]

Summary of supplemental cash flow information

(2

XML

Commitments and Contingencies Commitments and Contingencies (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Long-term Purchase Commitment [Line Items]
Purchase obligations and other commitment, Total	$ 326,114
Purchase obligations and other commitment, Less Than 1 Year	322,800
Purchase obligations and other commitment, 1 - 3 Years	1,749
Purchase obligations and other commitment, 4 - 5 Years	538
Purchase obligation and other comitment, More Than Five Years	1,027
Molycorp Canada
Long-term Purchase Commitment [Line Items]
Purchase obligations and other commitment, 1 - 3 Years	$ 8,500

XML

Property, Plant and Equipment, net (Details) (USD $)	3 Months Ended			6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011	Jun. 30, 2012		Jun. 30, 2011	Dec. 31, 2011
Property, plant and equipment
Plant modernization and other capital costs	$ 244,400,000		$ 73,000,000	$ 510,200,000		$ 114,200,000
Capitalized interest related to plant modernization and other capitalized costs	9,500,000		600,000	13,300,000		700,000
Capital expenditure on accrual basis	226,000,000		66,500,000	479,600,000		106,000,000
Property, plant and equipment at cost	1,183,933,000			1,183,933,000			584,865,000
Less accumulated depreciation	(30,629,000)			(30,629,000)			(23,237,000)
Property, plant and equipment, net	1,153,304,000			1,153,304,000			561,628,000
Land
Property, plant and equipment
Property, plant and equipment at cost	12,106,000			12,106,000			11,059,000
Land improvements
Property, plant and equipment
Property, plant and equipment at cost	15,823,000			15,823,000			15,748,000
Buildings and improvements
Property, plant and equipment
Property, plant and equipment at cost	54,740,000			54,740,000			23,677,000
Plant and equipment
Property, plant and equipment
Property, plant and equipment at cost	126,907,000			126,907,000			68,441,000
Vehicles
Property, plant and equipment
Property, plant and equipment at cost	1,978,000			1,978,000			1,235,000
Computer software
Property, plant and equipment
Property, plant and equipment at cost	4,669,000			4,669,000			3,002,000
Furniture and fixtures
Property, plant and equipment
Property, plant and equipment at cost	731,000			731,000			464,000
Construction in progress
Property, plant and equipment
Property, plant and equipment at cost	926,864,000	[1]		926,864,000	[1]		436,547,000	[1]
Capital Leases
Property, plant and equipment
Property, plant and equipment at cost	15,658,000			15,658,000			0
Mineral properties
Property, plant and equipment
Property, plant and equipment at cost	$ 24,457,000			$ 24,457,000			$ 24,692,000

[1] (a) Represents costs incurred for Project Phoenix Phase 1 and Project Phoenix Phase 2 and all other capital projects. See Note 2.

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Subsequent Events (Details) (Preferred dividend, USD $)	0 Months Ended
	Aug. 31, 2012
Preferred dividend
Subsequent Events
Cash dividend declared (in dollars per share)	$ 1.375

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Concentrations (Tables)

6 Months Ended

Jun. 30, 2012

Risks and Uncertainties [Abstract]

Summary of percent of revenue, by product, accounting for more than 10% of sales

	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Lanthanum products	7	%	15	%
Didymium, Neodymium and Praseodymium products	8	%	16	%

	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011
Lanthanum products	15	%	27	%
Cerium products	23	%	25	%
Didymium, Neodymium and Praseodymium products	21	%	20	%

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. ASU 2011-12 defers the requirement that companies present reclassification adjustments for each component of Accumulated Other Comprehensive Income (“AOCI”) in both net income and other comprehensive income on the face of the financial statements. Companies will continue to be required to present amounts reclassified out of AOCI on the face of the financial statements or disclose those amounts in the notes to the financial statements. During the deferral period, there is no requirement to separately present or disclose the reclassification adjustments into net income. For the period ended June 30, 2012, the Company did not have any reclassification adjustments for components of AOCI.

In September 2011, the Financial Accounting Standard Board (FASB) issued ASU 2011-08, Testing Goodwill for Impairment. Under this updated guidance, an entity will have the option to first assess qualitatively whether it is necessary to perform the current two-step goodwill impairment test. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is necessary. The update does not change how an entity performs the two-step impairment test under the current guidance. This ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not expect the adoption of this updated guidance to have a significant impact on its financial statements.

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Net Change in Operating Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Decrease (increase) in operating assets:
Accounts receivable	$ 58,705	$ (20,711)
Inventory	14,126	(12,593)
Prepaid expenses and other assets	(8,875)	(417)
Increase (decrease) in operating liabilities:
Accounts payable	(29,116)	14,194
Income tax payable	(17,405)	0
Interest payable	(5,143)
Asset retirement obligation	0	(339)
Accrued expenses	(37,466)	7,395
Net change in operating assets and liabilities	$ (25,174)	$ (12,471)

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Intangible Assets (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Intangible Assets
Gross carrying amount	$ 495,026,000	$ 3,455,000
Less accumulated amortization	(3,099,000)	(383,000)
Net carrying amount	491,927,000	3,072,000
Customer relationships
Intangible Assets
Gross carrying amount	350,077,000	2,153,000
Rare Earth Quotas
Intangible Assets
Gross carrying amount	80,300,000	0
Patents
Intangible Assets
Gross carrying amount	39,753,000	0
Trade name
Intangible Assets
Gross carrying amount	16,586,000	786,000
Land Use Rights
Intangible Assets
Gross carrying amount	3,420,000	0
Other
Intangible Assets
Gross carrying amount	4,890,000	516,000
Molycorp Canada
Intangible Assets
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangibles	$ 489,200,000

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Pension (Details) (Pension Plan, USD $) In Thousands, unless otherwise specified	1 Months Ended
	Jun. 30, 2012
Pension Plan
Components of net periodic benefit cost:
Service Cost	$ 0
Interest cost	18
Expected return on assets	(14)
Amortization of transition obligations/(asset)	0
Amortization of prior service cost	0
Amortization of actuarial loss	12
Net periodic benefit cost	$ 16

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Pension (Narrative) (Details) (Pension Plan, USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Contributions by Employer	$ 0.1
Defined Benefit Plan, Expected Employer Contributions During Current Fiscal Year	$ 0.2

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Concentrations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended	3 Months Ended	6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Sales MMA NdFeB alloys	Jun. 30, 2011 Sales MMA NdFeB alloys	Jun. 30, 2012 Sales MMA NdFeB alloys	Jun. 30, 2012 Sales Molycorp Canada Rare earth and other rare metals	Jun. 30, 2012 Sales Molycorp Canada Rare earth and other rare metals	Jun. 30, 2012 Sales Molycorp Mountain Pass facility	Jun. 30, 2012 Sales Molycorp Mountain Pass facility Lanthanum products	Jun. 30, 2011 Sales Molycorp Mountain Pass facility Lanthanum products	Jun. 30, 2012 Sales Molycorp Mountain Pass facility Lanthanum products	Jun. 30, 2011 Sales Molycorp Mountain Pass facility Lanthanum products	Jun. 30, 2011 Sales Molycorp Mountain Pass facility Cerium products	Jun. 30, 2011 Sales Molycorp Mountain Pass facility Cerium products	Jun. 30, 2012 Sales Molycorp Mountain Pass facility Didymium, Neodymium and Praseodymium products	Jun. 30, 2011 Sales Molycorp Mountain Pass facility Didymium, Neodymium and Praseodymium products	Jun. 30, 2012 Sales Molycorp Mountain Pass facility Didymium, Neodymium and Praseodymium products	Jun. 30, 2011 Sales Molycorp Mountain Pass facility Didymium, Neodymium and Praseodymium products	Jun. 30, 2012 Sales Limited Number of Customers Molycorp Silmet customer	Jun. 30, 2011 Sales Limited Number of Customers Molycorp Silmet customer	Jun. 30, 2012 Sales Limited Number of Customers Molycorp Silmet customer	Jun. 30, 2012 Sales Limited Number of Customers MMA customer	Jun. 30, 2011 Sales Limited Number of Customers MMA customer	Jun. 30, 2012 Sales Limited Number of Customers MMA customer	Jun. 30, 2012 Sales Limited Number of Customers MMA Customer one	Jun. 30, 2011 Sales Limited Number of Customers MMA Customer one	Jun. 30, 2012 Sales Limited Number of Customers MMA Customer one	Jun. 30, 2012 Sales Limited Number of Customers Molycorp Mountain Pass facility customer	Jun. 30, 2011 Sales Limited Number of Customers Molycorp Mountain Pass facility customer	Jun. 30, 2012 Sales Limited Number of Customers Molycorp Mountain Pass facility customer	Jun. 30, 2011 Sales Limited Number of Customers Molycorp Mountain Pass facility customer	Jun. 30, 2011 Sales Limited Number of Customers Molycorp Mountain Pass facility Customer one	Jun. 30, 2012 Sales Limited Number of Customers Molycorp Mountain Pass facility Customer one	Jun. 30, 2011 Sales Limited Number of Customers Molycorp Mountain Pass facility Customer one	Jun. 30, 2011 Sales Limited Number of Customers Molycorp Mountain Pass facility Customer two	Jun. 30, 2012 Sales Limited Number of Customers Molycorp Mountain Pass facility Customer two	Jun. 30, 2011 Sales Limited Number of Customers Molycorp Mountain Pass facility Customer two	Jun. 30, 2012 Sales Limited Number of Products Molycorp Silmet products
Concentrations
Percentage of sales to total sales threshold										10.00%
Percentage of entity's sales					60.00%	61.00%	74.00%	43.00%	23.00%		7.00%	15.00%	15.00%	27.00%	23.00%	25.00%	8.00%	21.00%	16.00%	20.00%	55.00%	59.00%	56.00%	71.00%	71.00%	78.00%	9.00%	7.00%	13.00%	84.00%	61.00%	85.00%	58.00%
Number of rare metal products																																								2
Sales, net of intercompany transactions	$ 104,577	$ 99,615	$ 189,047	$ 125,876																				$ 9,200	$ 7,300	$ 24,700								$ 18,600	$ 22,700	$ 26,400	$ 18,300	$ 24,400	$ 24,100
Number of customers representing a specified percentage of sales																					4	3	4	1	1	1					2	2	2
Number of customers representing a specified percentage of sales, net of intercompany sales																														3	2	3	2

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

(a) Future Operating Lease Commitments

The Company has certain operating leases for office space, trailers and certain equipment. Remaining annual minimum payments under these leases at June 30, 2012 were as follows:

(In thousands)	Total		Less Than 1 Year		1 - 3 Years		4 - 5 Years		More Than 5 Years
Operating lease obligations	$	10,297	$	2,198	$	5,556	$	1,188	$	1,355

(b) Purchase Commitments

In connection with the Molycorp Mountain Pass facility modernization and expansion and future operations, the Company entered into contractual commitments for the purchase of materials and services from various vendors. As a result of the Molycorp Canada acquisition, the Company assumed other purchase obligations totaling $8.5 million at June 30, 2012, which are expected to be settled between 2012 and 2013. Future payments for all purchase commitments at June 30, 2012 were as follows:

(In thousands)	Total		Less Than 1 Year		1 - 3 Years		4 - 5 Years		More Than 5 Years
Purchase obligations and other commitment	$	326,114	$	322,800	$	1,749	$	538	$	1,027

(c) Potential Environmental Obligations

As part of its ongoing remediation efforts at the Molycorp Mountain Pass facility, the Company identified liner defects in three of the onsite evaporation ponds in 2011. These defects led to minor groundwater contamination issues that are limited to a small area directly underneath the evaporation ponds. In order to remediate this issue, the Company will replace the primary lining system and might have to install a groundwater recovery system. The Company estimated the cost of these items at between $2.4 million and $4.6 million, which will be treated as capital expenditures and are included in the purchase obligations table above. The Company is in the process of finalizing the remediation plans with the Regional Water Quality Control Board.

(d) Labor Contract

Certain Molycorp Mountain Pass facility employees are covered by a collective bargaining agreement with the United Steelworkers of America that expires on March 15, 2015. At June 30, 2012, 206 employees, or approximately 60% of the Company’s workforce at the Molycorp Mountain Pass facility, were covered by this collective bargaining agreement.

At June 30, 2012, 176 employees, or approximately 30% of the workforce at the Company’s Molycorp Silmet facility, were unionized employees. The contract with the labor union in Estonia was renewed in February 2012.

(e) Reclamation Surety Bonds

At June 30, 2012, Molycorp had placed $28.8 million of surety bonds with California state and regional agencies to secure its Mountain Pass facility closure and reclamation obligations.

(f) Purported Class Action and Derivative Lawsuits

In February 2012, a purported class action lawsuit captioned, Angelo Albano, Individually and on Behalf of All Others Similarly Situated v. Molycorp, Inc., et al., was filed against the Company and certain of its executive officers in the U.S. District Court for the District of Colorado. This federal court action alleges, among other things, that the Company and those officers violated Section 10(b) of the Securities Exchange Act of 1934 in connection with statements relating to its third quarter fiscal 2011 financial results and fourth quarter 2011 production guidance that the Company had filed with or furnished to the SEC, or otherwise made available to the public. The plaintiffs are seeking unspecified damages and other relief. The Company believes the allegations are without merit and that it has valid defenses to such allegations. The Company intends to defend this action vigorously. The Company is unable to provide meaningful quantification of how the final resolution of these claims may impact its future consolidated financial position or results of operations.

Seven stockholder derivative lawsuits have been filed in three different jurisdictions purportedly on behalf of Molycorp, Inc., against certain of its directors, certain of its officers, and certain of its private equity investors. These cases have been filed in the Delaware Court of Chancery, the U.S. District Court in Colorado, and the District Court in Arapahoe County, Colorado. They are captioned: Gaines v. Smith et al., Case No. 7282 (Del. Ch. Feb. 12, 2012); Paskowitz v. Smith et al., Case No. 7319 (Del. Ch. Mar. 9, 2012); Wilson v. Smith et al., No. 7395-VCN (Del. Ch. April 4, 2012); Wells v. Smith et al., No. 1:12-cv-00447-WJM (D. Colo. Feb. 21, 2012); Swaggerty v. Smith et al., No. 12-cv-00589-CMA-KLM (D. Colo. Mar. 7, 2012); Clem v. Smith et al., No. 12 CV 392 (Arapahoe Cnty., Colo. Feb. 24, 2012); and Nationwide Consulting, Inc. v. Smith et al., No. 12 CV 448 (Arapahoe Cnty., Colo. Mar. 5, 2012). The Clem and Nationwide cases, which were previously consolidated under the caption Clem v. Smith et al., No. 12 CV 392 (Arapahoe Cnty., Colo.), have been voluntarily dismissed without prejudice. The Wells and Swaggerty cases have both been dismissed without prejudice in favor of the lawsuits proceeding in the Delaware Court of Chancery. As a result, plaintiffs in the Wells and Swaggerty cases filed notices of appeal before the 10th Circuit.

The derivative complaints challenge among other things certain sales of stock by officers, directors and private equity firms, and certain Molycorp corporate acquisitions during 2011. The complaints assert causes of action for: (1) alleged breaches of fiduciary duty, including the duties of loyalty and due care; (2) alleged unjust enrichment; (3) alleged waste of corporate assets; and (4) alleged “abuse of control.” On behalf of Molycorp, the plaintiffs in the derivative actions seek, among other things, monetary damages, restitution, an accounting, and certain changes to corporate governance procedures.

The defendants have filed a motion in each case seeking to consolidate the derivative actions in one jurisdiction, and have expressed a preference for the Delaware Court of Chancery.

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Capital Requirements (Details)	6 Months Ended										1 Months Ended					1 Months Ended		6 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)	Jun. 30, 2012 Molycorp Mountain Pass facility USD ($) Mg	Jun. 30, 2012 Other Capital Projects USD ($)	Jun. 30, 2012 Minimum USD ($)	Jun. 30, 2012 Minimum Molycorp Mountain Pass facility USD ($)	Jun. 30, 2012 Maximum USD ($)	Jun. 30, 2012 Maximum Molycorp Mountain Pass facility USD ($)	Aug. 31, 2012 Convertible Subordinated Debt	Jun. 30, 2012 Convertible Subordinated Debt	Jun. 12, 2012 Convertible Subordinated Debt USD ($)	Jun. 30, 2012 Secured Debt	May 25, 2012 Secured Debt USD ($)	Jan. 31, 2012 Intermetallics Japan USD ($)	Jan. 31, 2012 Intermetallics Japan JPY (¥)	Jun. 30, 2012 Intermetallics Japan USD ($)
Capital Expenditures [Line Items]
Planned annual production capacity (in metric tonnes)					19,050
Capital Expenditures [Abstract]
Future anticipated capex					$ 895,000,000	$ 138,000,000
Future anticipated other administrative expenses								10,000,000		15,000,000
Future anticipated capex, remainder of fiscal year					289,000,000	15,000,000
Future anticipated capex, year two					25,000,000
Capital contribution																31,400,000	2,500,000,000
Payments to acquire interest in JV	14,805,000	0																14,800,000
Estimated cash payments for Debentures resulting from change in control							192,000,000		230,000,000
Anticipated future capex under discretionary plan that can be deferred, remainder of fiscal year							75,000,000
Debt Disclosure [Abstract]
Debt instrument, face amount													230,000,000		650,000,000
Debt Instrument, Interest Rate, Stated Percentage	10.00%											5.00%	5.00%	10.00%
Debt instrument, redeemable debt, redemption percentage of principal amount											100.00%
Cash and cash equivalents	$ 369,262,000	$ 680,282,000	$ 418,855,000	$ 316,430,000

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Debt and Capital Lease Obligations (Tables)

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Summary of the current and non-current portions of the debt outstanding

	June 30, 2012
	Current		Non-Current
Senior Notes 10.00%, net of discount, due June 2020	$	—	$	635,498
Convertible Notes 3.25%, net of discount, due June 2016	—		194,720
Debentures 5.00%, net of discount	230,227		—
Bank loans with a weighted average rate of 4.07% due July 2012 - September 2017	33,009		4,777
Total debt	263,236		834,995
Capital lease obligations	333		15,324
Total debt and capital lease obligations	$	263,569	$	850,319

	December 31, 2011
	Current		Non-Current
Convertible Notes 3.25%, net of discount, due June 2016	$	—	$	190,877
Bank loans 2.69% - 3.88% due February 2012 - September 2017	1,516		5,668
Total debt	$	1,516	$	196,545

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Derivative Instruments (Details) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2012 USD ($)	Mar. 31, 2012 USD ($)	Mar. 28, 2012 CAD
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Fair value of put option	$ 9.1	$ 9.1
Unrealized loss on change in put option fair value	0.1
Notional amount of derivatives				870.0
Realized loss on settlement of derivative forward contracts		$ 37.5	$ 6.7

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Property, Plant and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment

	June 30, 2012			December 31, 2011
Land	$	12,106		$	11,059
Land improvements	15,823			15,748
Buildings and improvements	54,740			23,677
Plant and equipment	126,907			68,441
Vehicles	1,978			1,235
Computer software	4,669			3,002
Furniture and fixtures	731			464
Construction in progress (a)	926,864			436,547
Capital Leases	15,658			—
Mineral properties	24,457			24,692
Property, plant and equipment at cost	1,183,933			584,865
Less accumulated depreciation	(30,629		)	(23,237		)
Property, plant and equipment, net	$	1,153,304		$	561,628

(a) Represents costs incurred for Project Phoenix Phase 1 and Project Phoenix Phase 2 and all other capital projects. See Note 2.

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Trade Accounts Receivable (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Receivables [Abstract]
Allowance for doubtful accounts	$ 2.5	$ 0

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Commitments and Contingencies (Details) (Office space, trailers and certain equipment, USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Office space, trailers and certain equipment
Remaining annual minimum payments under operating leases
Operating lease obligations, Less Than 1 Year	$ 2,198
Operating lease obligations, 1 -3 Years	5,556
Operating lease obligations, 4 - 5 Years	1,188
Operating lease obligations, More Than 5 Years	1,355
Operating lease obligations, total minimum payments	$ 10,297

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Asset Retirement Obligation (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Asset retirement obligation activity
Balance at beginning of period	$ 15,541,000	$ 12,471,000
Obligations settled	(500,000)	(1,030,000)
Accretion expense	495,000	955,000
Revisions in estimated cash flows	8,433,000	2,508,000
Gain on settlement	0	637,000
Balance at end of period	23,969,000	15,541,000
Asset Retirement Obligation [Abstract]
Asset Retirement Obligation, Current	3,800,000
Financial assurance requirement satisfied with surety bonds	$ 28,800,000

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Net Change in Operating Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2012

Net Change in Operating Assets and Liabilities

Schedule of changes in operating assets and liabilities, net of the effects of acquisitions and dispositions

	Six Months Ended
(In thousands)	June 30, 2012			June 30, 2011
Decrease (increase) in operating assets:
Accounts receivable	$	58,705		$	(20,711	)
Inventory	14,126			(12,593		)
Prepaid expenses and other assets	(8,875		)	(417		)
Increase (decrease) in operating liabilities:
Accounts payable	(29,116		)	14,194
Income tax payable	(17,405		)	—
Interest payable	(5,143		)
Asset retirement obligation	—			(339		)
Accrued expenses	(37,466		)	7,395
	$	(25,174	)	$	(12,471	)

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Segment Information

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Segment Information

Segment Information

As a result of the Molycorp Canada acquisition on June 11, 2012, management has temporarily organized the Company into four operating segments: Molycorp Mountain Pass; Molycorp Silmet; Molycorp Metals and Alloys (“MMA”); and Molycorp Canada. As the Company further integrates Molycorp Canada operations, management anticipates organizing the Company into different reportable segments in future periods.

Molycorp Mountain Pass owns and operates the Molycorp Mountain Pass facility. Molycorp Silmet, which was acquired on April 1, 2011, produces REO and rare metals at the Company's manufacturing facility located in Sillamäe, Estonia. MMA, which was acquired on April 15, 2011, manufactures neodymium and samarium magnet alloy and other specialty alloy products at the Company's facility in Tolleson, Arizona. Molycorp Canada manufactures Neo Powders, which are used to make bonded magnets for a variety of electronic and mechanical products such as micro motors, precision motors, sensors and other applications requiring high levels of magnetic strength, flexibility, small size and reduced weight. Molycorp Canada produces Neo Powders through its wholly owned manufacturing facilities in Tianjin, China and Korat, Thailand. Molycorp Canada also manufactures and distributes rare earths and zirconium-based engineered products, as well as other rare metals and their compounds. The rare earths and zirconium-based engineered products are primarily supplied to the automotive catalyst, electronics, ceramic and glass industries. Rare metals from the Molycorp Canada segment are primarily used in the wireless, light-emitting diode, flat panel display, turbine, solar and catalyst industries. Molycorp Canada produces rare earths and zirconium-based engineered products, and other rare metals and their compounds, through its joint ventures and at its majority owned manufacturing facilities in Jiangsu Province, China; Shandong Province, China; Stade, Germany; Sagard, Germany and Quapaw, Oklahoma, and its wholly owned manufacturing facilities in Peterborough, Ontario; Napanee, Ontario; Blanding, Utah and the Hyeongok Industrial Zone in South Korea.

The following tables provide operating and financial information of the four operating segments for the three months ended and at June 30, 2012, and for the six months ended June 30, 2012 (the information for Molycorp Canada is for the period from June 12, 2012 through June 30, 2012):

Three months ended and at June 30, 2012 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Molycorp Canada			Eliminations(a)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	16,533		$	31,541		$	12,870		$	43,633		$	—		$	—		$	104,577
Intersegment	400			712			—			14			(1,126		)	—			—
Total sales	16,933			32,253			12,870			43,647			(1,126		)	—			104,577
Cost of sales:
Costs excluding depreciation and amortization	(22,277		)	(37,947		)	(17,112		)	(37,703		)	11,470			—			(103,569		)
Depreciation and amortization	(2,229		)	(1,526		)	(79		)	(1,247		)	—			—			(5,081		)
Gross (loss) profit	(7,573		)	(7,220		)	(4,321		)	4,697			10,344			—			(4,073		)
Operating expenses:
Selling, general and administrative	(9,041		)	(1,510		)	(116		)	(1,737		)	—			(10,666		)	(23,070		)
Corporate development	—			—			—			—			—			(14,925		)	(14,925		)
Depreciation, amortization and accretion	(365		)	(77		)	—			(1,813		)	—			(24		)	(2,279		)
Research and development	(2,006		)	(359		)	—			(1,175		)	—			(2,509		)	(6,049		)
Operating (loss) income	(18,985		)	(9,166		)	(4,437		)	(28		)	10,344			(28,124		)	(50,396		)
Interest expense	—			(177		)	(175		)	(828		)	—			(8,625		)	(9,805		)
Other income (expense)	21			(2,385		)	8			(478		)	—			(30,935		)	(33,769		)
(Loss) income before income taxes and equity earnings (loss)	$	(18,964	)	$	(11,728	)	$	(4,604	)	$	(1,334	)	$	10,344		$	(67,684	)	$	(93,970	)
Equity (loss) earnings in results of affiliates	$	(15,754	)	$	—		$	—		$	309		$	15,754		$	(566	)	$	(257	)
Total assets	$	433,808		$	79,185		$	20,174		$	1,746,876		$	(80,988	)	$	960,173		$	3,159,228
Investment in equity method affiliates	$	14,011		$	—		$	—		$	19,053		$	—		$	—		$	33,064
Capital expenditures (c)	$	228,787		$	5,254		$	—		$	832		$	—		$	—		$	234,873

Six months ended June 30, 2012 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Molycorp Canada			Eliminations(a)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	61,011		$	52,577		$	31,826		$	43,633		$	—		$	—		$	189,047
Intersegment	2,232			3,922			—			14			(6,168		)	—			—
Total sales	63,243			56,499			31,826			43,647			(6,168		)	—			189,047
Cost of sales:
Costs excluding depreciation and amortization	(39,344		)	(71,205		)	(35,668		)	(37,703		)	30,279			—			(153,641		)
Depreciation and amortization	(4,008		)	(3,042		)	(155		)	(1,247		)	—			—			(8,452		)
Gross profit (loss)	19,891			(17,748		)	(3,997		)	4,697			24,111			—			26,954
Operating expenses:
Selling, general and administrative	(18,464		)	(3,048		)	(295		)	(1,737		)	—			(23,709		)	(47,253		)
Corporate development	—			—			—			—			—			(18,305		)	(18,305		)
Depreciation, amortization and accretion	(699		)	(77		)	—			(1,813		)	—			(48		)	(2,637		)
Research and development	(4,091		)	(438		)	—			(1,175		)	—			(3,995		)	(9,699		)
Operating (loss) income	(3,363		)	(21,311		)	(4,292		)	(28		)	24,111			(46,057		)	(50,940		)
Interest expense	—			(318		)	(452		)	(828		)	—			(8,122		)	(9,720		)
Other income (expense)	89			(762		)	5			(478		)	—			(37,597		)	(38,743		)
(Loss) income before income taxes and equity earnings (loss)	$	(3,274	)	$	(22,391	)	$	(4,739	)	$	(1,334	)	$	24,111		$	(91,776	)	$	(99,403	)
Equity (loss) earnings in results of affiliates	$	(26,898	)	$	—		$	—		$	309		$	26,898		$	(793	)	$	(484	)
Capital expenditures (c)	$	488,225		$	7,755		$	100		$	832		$	—		$	—		$	496,912

________________________

(a) The $80,988 of total assets elimination is comprised of $2,662 intercompany investments and $78,326 intercompany accounts receivable and profits in inventory. The cost of sales elimination amounts of $11,470 for three months ended June 30, 2012 and $30,279 for the six months ended June 30, 2012, include elimination of the intercompany gross profits as well as elimination of lower of cost or market adjustments related to the intercompany inventory.

(b) Includes expenses incurred by and capital invested in the sales office in Tokyo, Japan.

(c) On an accrual basis excluding capitalized interest.

Prior to the acquisition of Molycorp Canada on June 11, 2012, the Company was organized into three operating segments: Molycorp Mountain Pass, Molycorp Silmet and MMA. The following tables provide operating and financial information of the three segments for the three months ended and at June 30, 2011, and for the six months ended June 30, 2011. Some of the prior interim period captions and segments subtotals have been modified to conform to the current interim period presentation:

Three months ended and at June 30, 2011 (In thousands)	Molycorp     Mountain Pass			Molycorp Silmet			MMA			Eliminations(d)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	60,348		$	29,017		$	10,250		$	—					$	99,615
Intersegment	15,947			3,639			—			(19,586		)				—
Total sales	76,295			32,656			10,250			(19,586		)				99,615
Cost of sales:
Costs excluding depreciation and amortization	(19,493		)	(20,321		)	(10,935		)	10,401			—			(40,348		)
Depreciation and amortization	(2,216		)	(151		)	(208		)	—			—			(2,575		)
Gross profit (loss)	54,586			12,184			(893		)	(9,185		)	—			56,692
Operating expenses:
Selling, general and administrative	(1,518		)	(1,453		)	(112		)	—			(7,393		)	(10,476		)
Corporate development	—			—			—			—			(2,042		)	(2,042		)
Depreciation, amortization and accretion	(332		)	—			(191		)	—			—			(523		)
Research and development	(1,734		)	—			—			—			(19		)	(1,753		)
Operating income (loss)	51,002			10,731			(1,196		)	(9,185		)	(9,454		)	41,898
Other income (expense)	—			(61		)	2			—			304			245
Income before income taxes	$	51,002		$	10,670		$	(1,194	)	$	(9,185	)	$	(9,150	)	$	42,143
Total assets at June 30, 2011	$	399,908		$	152,984		$	29,705		$	(140,923	)	$	699,992		$	1,141,666
Capital expenditures (c)	$	70,142		$	2,231		$	—		$	—		$	—		$	72,373

(d) The total assets elimination of $140,923 is comprised of $114,000 of intercompany investments and $26,923 of intercompany accounts receivable and profits in inventory.

Six months ended June 30, 2011 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Eliminations			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	86,609		$	29,017		$	10,250		$	—					$	125,876
Intersegment	15,947			3,639			—			(19,586		)				—
Total sales	102,556			32,656			10,250			(19,586		)				125,876
Cost of sales:
Costs excluding depreciation and amortization	(34,214		)	(20,321		)	(10,935		)	10,401			—			(55,069		)
Depreciation and amortization	(4,172		)	(151		)	(208		)	—			—			(4,531		)
Gross profit (loss)	64,170			12,184			(893		)	(9,185		)	—			66,276
Operating expenses:
Selling, general and administrative	(4,941		)	(1,453		)	(112		)	—			(12,669		)	(19,175		)
Corporate development	—			—			—			—			(3,317		)	(3,317		)
Depreciation, amortization and accretion	(649		)	—			(191		)	—			—			(840		)
Research and development	(3,000		)	—			—			—			(17		)	(3,017		)
Operating income (loss)	55,580			10,731			(1,196		)	(9,185		)	(16,003		)	39,927
Other income (expense)	$	(37	)	$	(61	)	$	2		$	—		$	313		$	217
Income before income taxes	$	55,543		$	10,670		$	(1,194	)	$	(9,185	)	$	(15,690	)	$	40,144
Capital expenditures (c)	$	111,966		$	2,231		$	—		$	—					$	113,497

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Debt and Capital Lease Obligations (Details) (USD $)	6 Months Ended						1 Months Ended				6 Months Ended		6 Months Ended						6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 Senior Notes 10.00%, net of discount, due June 2020	May 25, 2012 Senior Notes 10.00%, net of discount, due June 2020	Jun. 30, 2012 Convertible Notes 3.25%, net of discount, due June 2016	Dec. 31, 2011 Convertible Notes 3.25%, net of discount, due June 2016	Aug. 31, 2012 Debentures 5.00%, net of discount, due December 2017	Jun. 30, 2012 Debentures 5.00%, net of discount, due December 2017	Jun. 12, 2012 Debentures 5.00%, net of discount, due December 2017	Jun. 30, 2012 Bank loans with a weighted average rate of 4.07% due July 2012 - September 2017	Jun. 30, 2012 Bank loans 2.69% - 3.88% due February 2012 - September 2017	Dec. 31, 2011 Bank loans 2.69% - 3.88% due February 2012 - September 2017	Jun. 30, 2012 Before June 1, 2016	Jun. 30, 2012 After June 1, 2016	Jun. 30, 2012 Before June 1, 2015	Jun. 30, 2012 Molycorp Canada Debentures 5.00%, net of discount, due December 2017	Jun. 30, 2012 Molycorp Canada Bank loans with a weighted average rate of 4.07% due July 2012 - September 2017	Jun. 30, 2012 Molycorp Canada and Molycorp Silmet Bank loans with a weighted average rate of 4.07% due July 2012 - September 2017	Jun. 30, 2012 Maximum Senior Notes 10.00%, net of discount, due June 2020
Debt Instrument [Line Items]
Interest rate (as a percent)	10.00%		10.00%		3.25%			5.00%	5.00%	4.07%
Debt instrument, minimum interest rate											2.69%
Debt instrument, maximum interest rate											3.88%
Convertible debt instrument, conversion price									$ 13.80
Convertible subordinated debt								$ 230,200,000
Number of days following acquisition																19 days
Convertible debt instrument, carrying amount of equity component								3,100,000
Debt instrument, redeemable debt, redemption percentage of principal amount							100.00%						100.00%	105.00%
Debt instrument, redeemable debt, redeemable principal from proceeds from equity															35.00%
Debt instrument, redeemable debt, redeemable percentage of principal from proceed from equity															110.00%
Number of days until filing of registration statement																			180 days
Number of days until registration statement is effective																			270 days
Debt instrument, face amount				650,000,000					230,000,000
Current portion of debt outstanding	263,236,000	1,516,000	0		0	0		230,227,000				1,516,000					31,700,000	33,009,000
Short-term Debt, Weighted Average Interest Rate																	4.20%
Non-Current portion of debt outstanding	834,995,000	196,545,000	635,498,000		194,720,000	190,877,000		0		4,777,000		5,668,000
Interest Expense, Debt								600,000
Long-term purchase commitment, monthly purchase amount	400,000
Capital lease obligations, Current	333,000
Capital lease obligations, Non-Current	15,324,000
Total debt and Capital lease obligations, Current	263,569,000	1,516,000
Total debt and Capital lease obligations, Non-Current	850,319,000	196,545,000
Long-term Purchase Commitment, Period (in years)	10 years
Long-term Debt, by Maturity [Abstract]
Remainder of 2012	261,600,000
2013	1,600,000
2014	1,400,000
2015	1,300,000
2016	230,700,000
2017	300,000
Thereafter	$ 650,000,000

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(Loss) Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Schedule of earnings per share, basic and diluted

(In thousands, except share and per share amounts)	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011
Net (loss) income attributable to Molycorp stockholders	$	(67,604	)	$	47,787
Dividends on Convertible Preferred Stock	(2,846		)	(2,846		)
(Loss) income attributable to common stockholders	(70,450		)	44,941
Weighted average common shares outstanding—basic	99,175,285			83,847,119
Basic (loss) earnings per share	$	(0.71	)	$	0.54
Weighted average common shares outstanding—diluted	99,175,285			84,413,499
Diluted (loss) earnings per share	$	(0.71	)	$	0.53

(In thousands, except share and per share amounts)	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
Net (loss) income attributable to Molycorp stockholders	$	(71,082	)	$	45,589
Dividends on Convertible Preferred Stock	(5,693		)	(4,269		)
(Loss) income attributable to common stockholders	(76,775		)	41,320
Weighted average common shares outstanding—basic	93,090,872			83,054,811
Basic (loss) earnings per share	$	(0.82	)	$	0.50
Weighted average common shares outstanding—diluted	93,090,872			83,339,566
Diluted (loss) earnings per share	$	(0.82	)	$	0.50

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Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2012

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

	Six Months Ended
(In thousands)	June 30, 2012		June 30, 2011
Non-cash financing activities and investing activities:
Change in accrued capital expenditures	$	93,446	$	34,540

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Net Change in Operating Assets and Liabilities

6 Months Ended

Jun. 30, 2012

Net Change in Operating Assets and Liabilities

Net Change in Operating Assets and Liabilities

Net Change in Operating Assets and Liabilities

Net change in operating assets and liabilities, net of the effects of acquisitions and dispositions, consists of the following:

	Six Months Ended
(In thousands)	June 30, 2012			June 30, 2011
Decrease (increase) in operating assets:
Accounts receivable	$	58,705		$	(20,711	)
Inventory	14,126			(12,593		)
Prepaid expenses and other assets	(8,875		)	(417		)
Increase (decrease) in operating liabilities:
Accounts payable	(29,116		)	14,194
Income tax payable	(17,405		)	—
Interest payable	(5,143		)
Asset retirement obligation	—			(339		)
Accrued expenses	(37,466		)	7,395
	$	(25,174	)	$	(12,471	)

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Mineral Properties and Development Costs (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Mineral Industries Disclosures [Abstract]
Capitalized depletion costs in in work-in-process inventory	$ 61	$ 82

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of activity related to stock-based awards

PBRSUs	Number of Shares	Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	—	—
Granted	46,036	$	30.30
Forfeited	—	—
Vested	—	—
Unvested at June 30, 2012	46,036	$	30.33

RSUs	Number of Shares		Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	78,544		$	56.55
Granted	211,503		$	25.81
Forfeited	—		—
Vested*	(22,180	)	$	28.44
Unvested at June 30, 2012	267,867		$	34.72

* Represents deferral and conversion of a portion of fees payable to certain non-employee directors of the Company, and deferral and conversion of a portion of the 2011 annual cash bonuses paid to certain executive officers and other employees of the Company.

RSAs	Number of Shares		Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	48,924		$	40.20
Granted	—		—
Forfeited	(238	)	$	48.87
Vested	—		—
Unvested at June 30, 2012	48,686		$	40.15

Summary of the activity and other information related to stock option awards

	June 30, 2012
Stock Options	Number of Shares	Weighted Average Exercise Price
Outstanding at January 1, 2012	52,819	$	48.87
Granted	—	—
Exercised	—	—
Forfeited and expired	—	—
Outstanding at June 30, 2012	52,819	$	48.87
Options exercisable at June 30, 2012	17,606	$	48.87

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Research and Development

6 Months Ended

Jun. 30, 2012

Research and Development [Abstract]

Research and Development

Research and Development

The Company invests significant resources to improve the efficiency of its REO processing operations, the development of new applications for individual rare earth elements and exploratory drilling. These costs consist primarily of salaries, outside labor, material and equipment.

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Derivative Instruments

6 Months Ended

Jun. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The Company accounts for derivative instruments using the fair value method. GAAP provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

As a result of the Molycorp Canada acquisition, the Company assumed a liability associated with the put option issued to holders of the noncontrolling interest of Buss & Buss, a business acquired by Molycorp Canada's predecessor company. The Buss & Buss put option is related to a share purchase agreement (“SPA”) between NMT Holding GmbH, a German subsidiary of the Company, and the shareholders of Buss & Buss entered into May 27, 2010 by Molycorp Canada's predecessor company. The SPA includes a call and a put option on shares of the remaining shareholder and his legal successors. If the call option is exercised by the Company, a premium is added to the consideration to purchase the underlying shares in Buss & Buss. If the put option is exercised by the remaining shareholder of Buss & Buss or his legal successors, a discount will reduce the cost basis of the securities sold to the Company. The Company did not apply hedge accounting to this derivative. The put option had a fair value of $9.1 million at June 30, 2012, recorded as Derivative liability in the condensed consolidated balance sheets. The change in fair value of the put option resulted in an unrealized loss of $0.1 million for the period from June 12, 2012 to June 30, 2012, which was recognized in Interest expense in the condensed consolidated statements of operations and comprehensive income.

The technique Molycorp used to fair value this derivative is the income approach based on a discounted cash flow model. With the exception of the risk free interest rate, the inputs used to fair value this put option are based on unobservable Level 3 inputs based on management's assumptions. Any reasonably foreseeable changes in assumed levels of unobservable inputs used to fair value this put option would not be expected to have a material impact on the Company's financial position or results of operations.

On March 28, 2012, the Company entered into a contingent forward contract to purchase Canadian dollars with a notional amount of Cdn$870.0 million to manage the foreign currency exposure with respect to its planned acquisition of Molycorp Canada. The Company did not apply hedge accounting to this contingent forward contract. Upon settlement of this derivative on June 11, 2012 (Molycorp Canada acquisition date), the Company recognized a loss of $37.5 million in Other expense. Of this loss $6.7 million was recognized during the three months ended March 31, 2012, and the remainder during the second quarter of 2012.

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Capital Requirements

6 Months Ended

Jun. 30, 2012

CapitalRequirements

Capital Requirements [Text Block]

Capital Requirements

Capital expenditures for the engineering, procurement and construction portion ("EPC") of the Company’s modernization and expansion efforts, including achieving an annual production capacity of 19,050 mt at the Molycorp Mountain Pass facility (“Project Phoenix Phase 1”), and the Company’s second phase capacity expansion plan (“Project Phoenix Phase 2”), currently are expected to total approximately $895.0 million. Capital expenditures for other current and planned 2012 capital projects related to operations at the Molycorp Mountain Pass facility, including post-EPC, start-up, commissioning and other costs, are expected to total approximately $138.0 million.

These estimates do not include certain other capitalizable costs such as preliminary engineering, insurance, permitting, contracting and other legal costs, post-construction and plant commissioning costs and capitalized interest. The Company is also incurring other administrative expenses related to the construction of Project Phoenix Phase 1 and Project Phoenix Phase 2, which are expected to total approximately $10.0 million to $15.0 million in the second half of 2012.

All amounts for future capital spending are estimates that are subject to change as the projects are further developed. Capital spending for the Molycorp Mountain Pass facility plant modernization and expansion project, including Project Phoenix Phase 1, Project Phoenix Phase 2 and the other capital projects, is expected to be approximately $289.0 million for the remainder of 2012, and approximately $25.0 million in 2013, each on an accrual basis. The Company is encountering cost pressures on its projects and has initiated measures to mitigate certain adverse cost trends. The Company may incur additional costs, which may be material, if its mitigation measures are not successful.

Anticipated capital expenditures at all other operating facilities of the Company are expected to be approximately $15.0 million for the remainder of 2012. See Note 7.

Other cash requirements may include payments in August 2012 to certain holders of Molycorp Canada's $230.0 million5% subordinated unsecured convertible debentures due December 2017 (the “Debentures”), in connection with the exercise of certain buyout and conversion rights triggered by the change of control provisions contained in the underlying indenture. The change of control provisions in the underlying indenture allow the holders of Debentures to elect to (a) have their Debentures purchased by Molycorp Canada at a price equal to 100% of the principal amount thereof plus accrued but unpaid interest up to, but not including, the purchase date, or (b) convert their Debentures into common shares of Molycorp Canada's predecessor company, including a number of additional “make-whole” shares. Holders of Debentures who elect to convert their Debentures will, in lieu of receiving shares of Molycorp Canada's predecessor company, have the right to make the same per share election for cash or share consideration that was offered to the shareholders of Molycorp Canada's predecessor company pursuant to the Arrangement Agreement as if such holders had converted their Debentures immediately prior to the closing under the Arrangement Agreement, all subject to the same proration mechanisms  found therein. Such holders will also be entitled to receive accrued but unpaid interest through the date of conversion. Holders who fail to make either of the above elections may retain their Debentures. The Company currently estimates that cash payments resulting from the exercise of buyout and conversion rights may total approximately $192.0 million to $230.0 million plus accrued interest from June 30, 2012.

Additionally, Molycorp will contribute, upon achievement of certain milestones and subject to the approval of Molycorp’s Board of Directors, Japanese Yen (JPY) 2.5 billion in cash (or approximately $31.4 million based on the JPY/ U.S. dollar exchange rate at June 30, 2012), in exchange for ordinary shares of Intermetallics Japan ("IMJ") over a period of twelve months. The actual remittance amounts will vary depending on the future exchange rate between the U.S. dollar and the Japanese Yen, and the achievement of certain milestones by the joint venture. The Company contributed $14.8 million to IMJ through June 30, 2012. See Note 10.

Molycorp expects to fund the remaining capital expenditures under Project Phoenix Phase 1, Project Phoenix Phase 2 and other capital expenditures related to operations at the Molycorp Mountain Pass and all other operating facilities, as well as working capital and other cash requirements, with its available cash balances of $369.3 million at June 30, 2012, anticipated future cash flow from operations and proceeds from other financing arrangements. The Company will need to secure additional financing for a substantial portion of its cash requirements for the remainder of 2012 and the first six months of 2013, including capital expenditures at its Mountain Pass facility and other capital projects, as well as other cash requirements, such as cash payments for the Debentures. The Company is in negotiations with various third-parties with respect to potential equipment leasing arrangements, asset-based revolving credit facilities and other financing arrangements, and is considering the issuance of equity and/or debt. The Company is also in negotiations with certain related persons for commercial transactions that would be provided at market terms and generate significant cash proceeds.

If the Company is unable to raise sufficient capital through the issuance of equity and/or debt, or other alternative sources of financing, management has the ability to exercise discretion over certain capital expenditures, which the Company estimates to total at least $75.0 million for the remainder of 2012. Such discretionary measures can be implemented without any material impact to the Company's current operations or production capacity under Project Phoenix Phase 1 or Phase 2.

There can be no assurance that the Company will be successful in raising additional capital in the future on commercially acceptable terms, or at all.

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Pension

6 Months Ended

Jun. 30, 2012

Compensation and Retirement Disclosure [Abstract]

Pension

Pension

In accordance with the terms of the Arrangement Agreement, Molycorp maintained the terms of the benefit plan for Molycorp Canada’s current and former employees. Molycorp Canada's predecessor company had a defined benefit pension plan (“Pension Plan”), which covered all hourly employees employed as of September 30, 1995, and all hourly employees subsequently hired by Molycorp Canada's predecessor company up to 2003 at its former U.S. manufacturing facility in Anderson, Indiana. A December 31 measurement date is used for the Pension Plan. Molycorp paid $0.1 million as of June 30, 2012 of the estimated total contributions to the Pension Plan for 2012 of $0.2 million.

Molycorp also maintained the terms of Molycorp Canada postretirement medical and life insurance benefits plan for certain employees from the Anderson, Indiana manufacturing facility. The measurement date for this postretirement benefit plan (“PBP”) is December 31.

The actuarial valuation for funding purposes of the Pension Plan and PBP is January 1 of each year. The components of the net periodic pension expense for the period from June 12, 2012 to June 30, 2012 for the Pension Plan and PBP are set forth below (in thousands):

Pension Plan and PBP	For the period from June 12, 2012 to June 30, 2012
Components of net periodic benefit cost:
Service Cost	$	—
Interest cost	18
Expected return on assets	(14		)
Amortization of transition obligation/(asset)	—
Amortization of prior service cost	—
Amortization of actuarial loss	12
Net periodic benefit cost	$	16

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2012

Payables and Accruals [Abstract]

Schedule of accrued expenses

	June 30, 2012		December 31, 2011
Defined contribution plan	$	1,312	$	1,088
Professional fees	14,242		—
Accrued payroll and related benefits	10,570		3,024
Sales and use tax	6,671		1,367
Bonus accrual	2,426		4,845
Interest payable	6,992		345
Advance from customer	5,120		—
Other accrued expenses	9,272		2,229
Total accrued expenses	$	56,605	$	12,898

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Inventory (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Current:
Concentrate stockpiles	$ 1,341,000		$ 1,341,000		$ 3,704,000
Raw materials	103,554,000		103,554,000		44,770,000
Work in process	51,366,000		51,366,000		16,602,000
Finished goods	159,140,000		159,140,000		45,045,000
Materials and supplies	4,471,000		4,471,000		1,822,000
Total current	319,872,000		319,872,000		111,943,000
Long-term:
Concentrate stockpiles	2,112,000		2,112,000		1,144,000
Raw materials	8,329,000		8,329,000		3,186,000
Finished goods	4,000		4,000		32,000
Total long-term	10,445,000		10,445,000		4,362,000
Production costs that would have been allocated to additional tons produced, assuming operations at normal production rates	2,400,000	900,000	5,400,000	3,500,000
Write-down of inventory as a result of production or purchase costs in excess of net realizable value	19,500,000	0	26,100,000	600,000
Write-down of work-in-process inventory and stockpile based on estimated REO quantities	$ 0	$ 1,000,000

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Related-Party Transactions (Details) (USD $)	6 Months Ended			12 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended		3 Months Ended		1 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Traxys North America LLC and affiliates	Dec. 31, 2011 Traxys North America LLC and affiliates	Jun. 30, 2012 Traxys North America LLC and affiliates Lanthanum oxide	Jun. 30, 2012 Traxys North America LLC and affiliates Lanthanum oxide	Dec. 31, 2011 Traxys North America LLC and affiliates Tantalum Metal	Jun. 30, 2012 Traxys North America LLC and affiliates Tantalum Metal	Jun. 11, 2012 Neo Material Technologies, Inc. neodymium/praseodymium	Jun. 11, 2012 Neo Material Technologies, Inc. Rare earth metals	Jun. 30, 2012 TMT Compounds	Jun. 30, 2012 Keli Metals	Jun. 30, 2012 Ingal Stade Gallium Metal
Related Party Transactions
Principal payments made	$ 0	$ 1,688,000	$ 900,000	$ 3,100,000
Outstanding amount of short-term borrowing payable to related party			0	900,000
Outstanding amount of trade accounts payable related to sales made to related party but not remitted			0	2,800,000
Purchases made from related party					1,900,000	6,200,000					500,000	5,300,000	500,000
Related party receivables			74,000	190,000			2,100,000	100,000
Sales to related party							$ 3,200,000		$ 4,300,000	$ 1,600,000

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 369,262	$ 418,855
Restricted cash	4,951	0
Trade accounts receivable, net (Note 4)	118,402	70,679
Inventory (Note 5)	319,872	111,943
Deferred charges (Note 15)	16,627	7,318
Deferred tax assets (Note 15)	9,179	0
Income tax receivable	28,648	10,514
Prepaid expenses and other current assets	46,038	19,735
Total current assets	912,979	639,044
Non-current assets:
Deposits (Note 6)	23,283	23,286
Property, plant and equipment, net (Note 7)	1,153,304	561,628
Inventory (Note 5)	10,445	4,362
Intangible assets, net (Note 9)	491,927	3,072
Investments (Note 10)	55,339	20,000
Deferred tax assets (Note 15)	1,704	0
Goodwill (Note 11)	505,003	3,432
Other non-current assets	5,244	301
Total non-current assets	2,246,249	616,081
Total assets	3,159,228	1,255,125
Current liabilities:
Trade accounts payable	287,928	161,587
Accrued expenses (Note 12)	56,605	12,898
Income tax payable	25,013	0
Deferred tax liabilities (Note 15)	692	1,356
Debt and capital lease obligations (Note 14)	263,569	1,516
Other current liabilities	3,807	1,266
Total current liabilities	637,614	178,623
Non-current liabilities:
Asset retirement obligation (Note 13)	20,162	15,145
Deferred tax liabilities (Note 15)	172,715	18,899
Debt and capital lease obligations (Note 14)	850,319	196,545
Derivative liability (Note 25)	9,148	0
Pension liabilities (Note 26)	2,835	0
Other non-current liabilities	3,404	683
Total non-current liabilities	1,058,583	231,272
Total liabilities	1,696,197	409,895
Commitments and contingencies (Note 19)
Stockholders' equity:
Common stock, $0.001 par value; 350,000,000 shares authorized at June 30, 2012 (Note 16)	110	84
Preferred stock, $0.001 par value; 5,000,000 shares authorized at June 30, 2012 (Note 16)	2	2
Additional paid-in capital	1,518,347	838,547
Accumulated other comprehensive loss	(10,172)	(8,481)
(Deficit) retained earnings	(61,697)	15,078
Total Molycorp stockholders' equity	1,446,590	845,230
Noncontrolling interests	16,441	0
Total stockholders' equity	1,463,031	845,230
Total liabilities and stockholders' equity	$ 3,159,228	$ 1,255,125

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Commitments and Contingencies Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum rental payments for operating leases

(In thousands)	Total		Less Than 1 Year		1 - 3 Years		4 - 5 Years		More Than 5 Years
Operating lease obligations	$	10,297	$	2,198	$	5,556	$	1,188	$	1,355

Schedule of minimum payments for purchase obligations

(In thousands)	Total		Less Than 1 Year		1 - 3 Years		4 - 5 Years		More Than 5 Years
Purchase obligations and other commitment	$	326,114	$	322,800	$	1,749	$	538	$	1,027

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net (loss) income	$ (70,402)	$ 46,557
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion	11,188	5,895
Deferred income tax benefit	(12,131)	(13,481)
Inventory write-downs	26,106	1,585
Stock-based compensation expense	1,900	3,386
Foreign exchange losses, net	1,214	0
Allowance for doubtful accounts	2,500	0
Equity results of affiliates	484	0
Other operating adjustments and write-downs	(66)	(113)
Net change in operating assets and liabilities (Note 22)	(25,174)	(12,471)
Net cash (used in) provided by operating activities	(64,381)	31,358
Cash flows from investing activities:
Cash paid in connection with acquisitions, net of cash acquired	(591,011)	(20,021)
Investment in joint venture	(14,805)	0
Deposits	(488)	10,700
Capital expenditures	(403,932)	(79,291)
Other investing activities	2	(33)
Net cash used in investing activities	(1,010,234)	(88,645)
Cash flows provided by financing activities:
Capital contributions	390,225	0
Repayments of short-term borrowings-related party	0	(1,688)
Repayments of debt	(2,188)	(2,958)
Net proceeds from sale of preferred stock	0	199,642
Net proceeds from sale of Senior Notes	635,373	0
Net proceeds from sale of Convertible Notes	0	223,100
Payments of preferred dividends	(5,693)	(3,320)
Proceeds from debt	9,745	6,288
Other financing activities	(2,394)	(22)
Net cash provided by financing activities	1,025,068	421,042
Effect of exchange rate changes on cash	(46)	97
Net change in cash and cash equivalents	(49,593)	363,852
Cash and cash equivalents at beginning of the period	418,855	316,430
Cash and cash equivalents at end of period	$ 369,262	$ 680,282

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Acquisitions (Details)	1 Months Ended	3 Months Ended		6 Months Ended			1 Months Ended	3 Months Ended	6 Months Ended			1 Months Ended	3 Months Ended			6 Months Ended		1 Months Ended	3 Months Ended	6 Months Ended			1 Months Ended			1 Months Ended			6 Months Ended			6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($) Y	Jun. 30, 2011 USD ($)	Jun. 12, 2012 USD ($)	Oct. 31, 2011 Molycorp Silmet USD ($)	Jun. 30, 2012 Molycorp Silmet Mg	Jun. 30, 2011 Molycorp Silmet USD ($)	Oct. 24, 2011 Molycorp Silmet USD ($)	Apr. 02, 2011 Molycorp Silmet USD ($)	Apr. 30, 2011 Molycorp Silmet AS Silmet Grupp USD ($)	Mar. 31, 2012 Molycorp Silmet AS Silmet Grupp D	Apr. 02, 2011 Molycorp Silmet AS Silmet Grupp	Apr. 02, 2011 Molycorp Silmet Treibacher Industrie AG USD ($)	Jun. 30, 2012 MMA USD ($)	Apr. 16, 2011 MMA USD ($)	Apr. 30, 2011 MMA Santoku Y	Jun. 30, 2012 Molycorp Canada USD ($)	Jun. 30, 2012 Molycorp Canada USD ($)	Jun. 12, 2012 Molycorp Canada USD ($)	Jun. 12, 2012 Molycorp Canada CAD	Jun. 30, 2012 MCP Exchangeco Inc.	Jun. 30, 2012 MCP Exchangeco Inc. Molycorp Canada	Jun. 12, 2012 MCP Exchangeco Inc. Molycorp Canada	Jun. 30, 2012 Molycorp	Jun. 30, 2012 Molycorp Molycorp Canada	Jun. 12, 2012 Molycorp Molycorp Canada	Jun. 30, 2012 Customer relationships Molycorp Silmet Y	Jun. 30, 2012 Customer relationships Molycorp Canada Y	Jun. 12, 2012 Customer relationships Molycorp Canada USD ($)	Jun. 30, 2012 Rare Earth Quotas Molycorp Canada Y	Jun. 12, 2012 Rare Earth Quotas Molycorp Canada USD ($)	Jun. 30, 2012 Patents Molycorp Canada Y	Jun. 12, 2012 Patents Molycorp Canada USD ($)	Jun. 30, 2012 Trade name Molycorp Canada Y	Jun. 12, 2012 Trade name Molycorp Canada USD ($)	Jun. 30, 2012 Other Molycorp Canada Y	Jun. 12, 2012 Other Molycorp Canada USD ($)
Business Acquisition, Transaction Costs [Abstract]
Corporate development: Legal, accounting and advisory fees		$ 14,925,000	$ 2,042,000	$ 18,305,000	$ 3,317,000														$ 14,043,000	$ 16,074,000
Other expenses: Contingent forward contracts																						11.30
Interest expense: Bridge loan fee																									0.4242			0.4242
Interest acquired (as a percent)										9.977%	90.023%			80.00%	10.023%
Purchase consideration:
Cash consideration										10,000,000	9,021,000				9,000,000		17,500,000				908,181,000
Fair value of Molycorp common stock issued						284,100,000					72,653,000						0				284,144,000
Total purchase consideration											81,674,000						17,500,000				1,192,325,000
The fair values of the assets and liabilities acquired:
Cash and cash equivalent											105,000						6,395,000				317,169,000
Accounts receivable																					101,470,000
Accounts receivable and other current assets											8,626,000						5,474,000
Inventory											37,404,000						11,327,000				250,989,000
Prepaid expenses and other current assets																					26,893,000
Property, plant and equipment											63,393,000						4,512,000				70,391,000
Investments																					21,019,000
Intangibles											2,669,000						0				491,786,000										348,100,000		80,300,000		39,800,000		15,800,000		7,800,000
Goodwill											1,455,000						1,977,000				501,571,000
Other non-current assets																					22,859,000
Accounts payable and accrued expenses																					(138,576,000)
Debt - current																					(255,056,000)
Other current liabilities																					(29,939,000)
Liabilities											(19,974,000)						(8,989,000)
Deferred tax liabilities											0						(3,196,000)				(158,177,000)
Long-term debt											(3,184,000)						0				(281,000)
Other non-current liabilities																					(14,032,000)
Noncontrolling interest											(8,820,000)						0				(15,761,000)
Total purchase consideration											81,674,000						17,500,000				1,192,325,000
Fair value of trade receivable acquired	101,500,000	101,500,000		101,500,000							5,000,000						4,900,000
Weighted average useful life (in years)																														15		11		2		10		12
Actuals
Revenue		104,577,000	99,615,000	189,047,000	125,876,000
Net income		(67,604,000)	47,787,000	(71,082,000)	45,589,000
Basic earnings per share		$ (0.71)	$ 0.54	$ (0.82)	$ 0.50
Net (loss) income		(66,924,000)	48,755,000	(70,402,000)	46,557,000
Net (income) loss attributable to noncontrolling interest		(680,000)	(968,000)	(680,000)	(968,000)
Unaudited proforma
Sales	43,647,000	260,542,000	315,758,000	523,865,000	474,817,000				159,350
Net Income (Loss)	47,000	(59,519,000)	83,642,000	(59,079,000)	92,564,000				55,463
Net Income (Loss) Attributable To Molycorp	(633,000)	(62,114,000)	78,354,000	(63,466,000)	86,352,000				54,495
EPS Basic (in dollars per share)	$ (0.01)	$ (0.60)	$ 0.69	$ (0.63)	$ 0.75				$ 0.6
Other actual and pro forma information
Intercompany sales		0	0	0	0											19,600,000
Non-recurring acquisition related costs																1,800,000
Purchase price variance capitalized																1,100,000
Finite-Lived Assets, Useful Life, Minimum				2
Finite-Lived Assets, Useful Life, Maximum				30
DIrect Transaction Expenses Excluded from Nonrecurring Expense		103,900,000		114,700,000
Other disclosures
Common stock issued to acquire the entity (in shares)												1,593,419											507,203	507,203		13,545,426	13,545,426
Period of marketing and distribution agreement (in years)																		5
Adjustments to Additional Paid in Capital							400,000
Number of consecutive trading days considered for calculation of closing price													20
Contractual value of shares issued to acquire the entity												80,000,000
Increase in rare earth production capacity (in mt)								3,000
Period of rare earth products purchase and supply agreement (in years)																		2
Discount percentage deducted from common stock price												23.00%
Finite-Lived Intangible Assets, Average Useful Life																													15
Business Acquisition, Cost of Acquired Entity, Contingent Forward Contract Loss																			30,770,000	37,589,000
Business Acquisition, Cost of Acquired Entity, Bridge Loan Fee																			7,937,000	7,937,000
Recognized Transaction Costs		$ 52,800,000		$ 61,600,000

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Schedule of segment information

Three months ended and at June 30, 2012 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Molycorp Canada			Eliminations(a)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	16,533		$	31,541		$	12,870		$	43,633		$	—		$	—		$	104,577
Intersegment	400			712			—			14			(1,126		)	—			—
Total sales	16,933			32,253			12,870			43,647			(1,126		)	—			104,577
Cost of sales:
Costs excluding depreciation and amortization	(22,277		)	(37,947		)	(17,112		)	(37,703		)	11,470			—			(103,569		)
Depreciation and amortization	(2,229		)	(1,526		)	(79		)	(1,247		)	—			—			(5,081		)
Gross (loss) profit	(7,573		)	(7,220		)	(4,321		)	4,697			10,344			—			(4,073		)
Operating expenses:
Selling, general and administrative	(9,041		)	(1,510		)	(116		)	(1,737		)	—			(10,666		)	(23,070		)
Corporate development	—			—			—			—			—			(14,925		)	(14,925		)
Depreciation, amortization and accretion	(365		)	(77		)	—			(1,813		)	—			(24		)	(2,279		)
Research and development	(2,006		)	(359		)	—			(1,175		)	—			(2,509		)	(6,049		)
Operating (loss) income	(18,985		)	(9,166		)	(4,437		)	(28		)	10,344			(28,124		)	(50,396		)
Interest expense	—			(177		)	(175		)	(828		)	—			(8,625		)	(9,805		)
Other income (expense)	21			(2,385		)	8			(478		)	—			(30,935		)	(33,769		)
(Loss) income before income taxes and equity earnings (loss)	$	(18,964	)	$	(11,728	)	$	(4,604	)	$	(1,334	)	$	10,344		$	(67,684	)	$	(93,970	)
Equity (loss) earnings in results of affiliates	$	(15,754	)	$	—		$	—		$	309		$	15,754		$	(566	)	$	(257	)
Total assets	$	433,808		$	79,185		$	20,174		$	1,746,876		$	(80,988	)	$	960,173		$	3,159,228
Investment in equity method affiliates	$	14,011		$	—		$	—		$	19,053		$	—		$	—		$	33,064
Capital expenditures (c)	$	228,787		$	5,254		$	—		$	832		$	—		$	—		$	234,873

Six months ended June 30, 2012 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Molycorp Canada			Eliminations(a)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	61,011		$	52,577		$	31,826		$	43,633		$	—		$	—		$	189,047
Intersegment	2,232			3,922			—			14			(6,168		)	—			—
Total sales	63,243			56,499			31,826			43,647			(6,168		)	—			189,047
Cost of sales:
Costs excluding depreciation and amortization	(39,344		)	(71,205		)	(35,668		)	(37,703		)	30,279			—			(153,641		)
Depreciation and amortization	(4,008		)	(3,042		)	(155		)	(1,247		)	—			—			(8,452		)
Gross profit (loss)	19,891			(17,748		)	(3,997		)	4,697			24,111			—			26,954
Operating expenses:
Selling, general and administrative	(18,464		)	(3,048		)	(295		)	(1,737		)	—			(23,709		)	(47,253		)
Corporate development	—			—			—			—			—			(18,305		)	(18,305		)
Depreciation, amortization and accretion	(699		)	(77		)	—			(1,813		)	—			(48		)	(2,637		)
Research and development	(4,091		)	(438		)	—			(1,175		)	—			(3,995		)	(9,699		)
Operating (loss) income	(3,363		)	(21,311		)	(4,292		)	(28		)	24,111			(46,057		)	(50,940		)
Interest expense	—			(318		)	(452		)	(828		)	—			(8,122		)	(9,720		)
Other income (expense)	89			(762		)	5			(478		)	—			(37,597		)	(38,743		)
(Loss) income before income taxes and equity earnings (loss)	$	(3,274	)	$	(22,391	)	$	(4,739	)	$	(1,334	)	$	24,111		$	(91,776	)	$	(99,403	)
Equity (loss) earnings in results of affiliates	$	(26,898	)	$	—		$	—		$	309		$	26,898		$	(793	)	$	(484	)
Capital expenditures (c)	$	488,225		$	7,755		$	100		$	832		$	—		$	—		$	496,912

________________________

(a) The $80,988 of total assets elimination is comprised of $2,662 intercompany investments and $78,326 intercompany accounts receivable and profits in inventory. The cost of sales elimination amounts of $11,470 for three months ended June 30, 2012 and $30,279 for the six months ended June 30, 2012, include elimination of the intercompany gross profits as well as elimination of lower of cost or market adjustments related to the intercompany inventory.

(b) Includes expenses incurred by and capital invested in the sales office in Tokyo, Japan.

(c) On an accrual basis excluding capitalized interest.

Three months ended and at June 30, 2011 (In thousands)	Molycorp     Mountain Pass			Molycorp Silmet			MMA			Eliminations(d)			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	60,348		$	29,017		$	10,250		$	—					$	99,615
Intersegment	15,947			3,639			—			(19,586		)				—
Total sales	76,295			32,656			10,250			(19,586		)				99,615
Cost of sales:
Costs excluding depreciation and amortization	(19,493		)	(20,321		)	(10,935		)	10,401			—			(40,348		)
Depreciation and amortization	(2,216		)	(151		)	(208		)	—			—			(2,575		)
Gross profit (loss)	54,586			12,184			(893		)	(9,185		)	—			56,692
Operating expenses:
Selling, general and administrative	(1,518		)	(1,453		)	(112		)	—			(7,393		)	(10,476		)
Corporate development	—			—			—			—			(2,042		)	(2,042		)
Depreciation, amortization and accretion	(332		)	—			(191		)	—			—			(523		)
Research and development	(1,734		)	—			—			—			(19		)	(1,753		)
Operating income (loss)	51,002			10,731			(1,196		)	(9,185		)	(9,454		)	41,898
Other income (expense)	—			(61		)	2			—			304			245
Income before income taxes	$	51,002		$	10,670		$	(1,194	)	$	(9,185	)	$	(9,150	)	$	42,143
Total assets at June 30, 2011	$	399,908		$	152,984		$	29,705		$	(140,923	)	$	699,992		$	1,141,666
Capital expenditures (c)	$	70,142		$	2,231		$	—		$	—		$	—		$	72,373

(d) The total assets elimination of $140,923 is comprised of $114,000 of intercompany investments and $26,923 of intercompany accounts receivable and profits in inventory.

Six months ended June 30, 2011 (In thousands)	Molycorp Mountain Pass			Molycorp Silmet			MMA			Eliminations			Corporate and other(b)			Total Molycorp, Inc.
Sales:
External	$	86,609		$	29,017		$	10,250		$	—					$	125,876
Intersegment	15,947			3,639			—			(19,586		)				—
Total sales	102,556			32,656			10,250			(19,586		)				125,876
Cost of sales:
Costs excluding depreciation and amortization	(34,214		)	(20,321		)	(10,935		)	10,401			—			(55,069		)
Depreciation and amortization	(4,172		)	(151		)	(208		)	—			—			(4,531		)
Gross profit (loss)	64,170			12,184			(893		)	(9,185		)	—			66,276
Operating expenses:
Selling, general and administrative	(4,941		)	(1,453		)	(112		)	—			(12,669		)	(19,175		)
Corporate development	—			—			—			—			(3,317		)	(3,317		)
Depreciation, amortization and accretion	(649		)	—			(191		)	—			—			(840		)
Research and development	(3,000		)	—			—			—			(17		)	(3,017		)
Operating income (loss)	55,580			10,731			(1,196		)	(9,185		)	(16,003		)	39,927
Other income (expense)	$	(37	)	$	(61	)	$	2		$	—		$	313		$	217
Income before income taxes	$	55,543		$	10,670		$	(1,194	)	$	(9,185	)	$	(15,690	)	$	40,144
Capital expenditures (c)	$	111,966		$	2,231		$	—		$	—					$	113,497

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(Loss) Earnings per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share [Abstract]
Net (loss) income attributable to Molycorp stockholders	$ (67,604)	$ 47,787	$ (71,082)	$ 45,589
Dividends on Convertible Preferred Stock	(2,846)	(2,846)	(5,693)	(4,269)
(Loss) Income attributable to common stockholders	$ (70,450)	$ 44,941	$ (76,775)	$ 41,320
Weighted average common shares outstanding - basic	99,175,285	83,847,119	93,090,872	83,054,811
Basic earnings per share	$ (0.71)	$ 0.54	$ (0.82)	$ 0.50
Weighted average common shares outstanding - diluted	99,175,285	84,413,499	93,090,872	83,339,566
Diluted earnings per share	$ (0.71)	$ 0.53	$ (0.82)	$ 0.50

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Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

At June 30, 2012 and December 31, 2011, the Company had 109,941,469 and 83,896,043 shares of common stock outstanding, respectively, and 2,070,000 shares of 5.50% Series A Mandatory Convertible Preferred Stock (“Convertible Preferred Stock”) outstanding.

As a result of the acquisition of Molycorp Canada on June 11, 2012, Molycorp and MCP Exchangeco Inc. issued an aggregate of 13,545,426 shares of common stock and 507,203 Exchangeable Shares in consideration for that portion of the purchase price Molycorp paid to Molycorp Canada’s former shareholders who elected to receive shares of Molycorp common stock in addition to or in lieu of cash on the acquisition date. The $284.1 million fair value recorded in additional paid-in capital related to the issuance of acquisition consideration was based on the closing price of the Company’s common stock on June 11, 2012.

On March 8, 2012, Molibdenos y Metales S.A. (“Molymet”), the world’s largest processor of molybdenum and rhenium, headquartered in Santiago, Chile, purchased 12,500,000 shares of the Company’s common stock for $390.1 million, net of stock issuance costs of $0.1 million, at a purchase price of $31.218 per share, which price was determined based on the average daily volume weighted average price of the Company’s common stock on The New York Stock Exchange for the 20 consecutive trading days immediately preceding the date of the agreement, plus a 10% premium. Pursuant to this investment, Molymet acquired the right to nominate a member of the Company’s Board of Directors for so long as Molymet owns a certain percentage of the Company’s common stock.

In May and February of 2012, the Company declared a cash dividend of $1.375 per share on the Convertible Preferred Stock, respectively. $2.8 million of the aggregate dividend was paid on June 1, 2012 to holders of record at the close of business on May 15, 2012, and $2.8 million was paid on March 1, 2012 to holders of record at the close of business on February 15, 2012.

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Inventory (Tables)

6 Months Ended

Jun. 30, 2012

Inventory Disclosure [Abstract]

Schedule of inventory

	June 30, 2012		December 31, 2011
Current:
Concentrate stockpiles	$	1,341	$	3,704
Raw materials	103,554		44,770
Work in process	51,366		16,602
Finished goods	159,140		45,045
Materials and supplies	4,471		1,822
Total current	$	319,872	$	111,943
Long-term:
Concentrate stockpiles	$	2,112	$	1,144
Raw materials	8,329		3,186
Finished goods	4		32
Total long-term	$	10,445	$	4,362

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

During the first two quarters of 2012, the Company granted performance-based restricted stock units ("PBRSUs") and restricted stock units (“RSUs”) to its executive officers, to certain other employees and to some non-employee directors of the Company under the 2010 Equity and Performance Incentive Plan. The RSUs vest on the third anniversary of the grant date. The grant-date fair value of RSUs is determined using the Company’s common stock price on the date of grant and is recognized as stock-based compensation expense on a straight-line basis over the three-year vesting period for the awards that are expected to vest. The PBRSUs vest with respect to between 0% and 150% of the PBRSUs granted to an individual on the basis of the achievement of certain management objectives measured by specified levels of total shareholder return relative to a defined index group over the performance period from January 1, 2012 through December 31, 2014, or upon the occurrence of certain change of control or termination events. The grant-date fair value of PBRSUs is determined using a lattice approach that incorporates a Monte Carlo simulation model. The compensation cost associated with the PBRSUs is recognized straight-line over the performance period for the awards that are expected to vest, even if the market conditions are never satisfied.

During the second quarter of 2012, the Company issued 483 PBRSUs to certain employees, and a total of 22,659 RSUs to certain employees and non-employee directors of the Company.

In the first quarter of 2012, the Company granted 45,553 PBRSUs, in aggregate, to its executive officers and certain other employees, and a total of 188,844 RSUs to certain employees and non-employee directors of the Company.

Some of the RSUs granted to the non-employee directors, in both the first and second quarter of 2012, relate to the grantees' election to convert a portion of their quarterly cash retainer into RSUs. These converted RSUs are fully vested because they relate to services already rendered by the non-employee directors. The same non-employee directors who elected to convert their cash retainer into RSUs, received additional RSUs as matching contributions by the Company equal to 25% of the converted units. The matching RSUs vest on the third anniversary of the grant date.

Included in the RSUs issued during the first quarter of 2012, are also grants related to the election by certain executive officers and other employees of the Company to convert a portion of their 2011 annual cash bonuses into RSUs. These RSUs are fully vested because they relate to services already rendered by the grantees. The conversion of the 2011 annual bonuses into RSUs resulted into an increase in Additional Paid-In Capital of $0.6 million in the first quarter of 2012. The same named executive officers and other employees received additional RSUs as matching contribution by the Company equal to 25% of the converted RSUs. The matching RSUs vest on the third anniversary of the grant date.

The following tables summarize the activity related to stock-based awards during the first and second quarter of 2012:

PBRSUs	Number of Shares	Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	—	—
Granted	46,036	$	30.30
Forfeited	—	—
Vested	—	—
Unvested at June 30, 2012	46,036	$	30.33

RSUs	Number of Shares		Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	78,544		$	56.55
Granted	211,503		$	25.81
Forfeited	—		—
Vested*	(22,180	)	$	28.44
Unvested at June 30, 2012	267,867		$	34.72

* Represents deferral and conversion of a portion of fees payable to certain non-employee directors of the Company, and deferral and conversion of a portion of the 2011 annual cash bonuses paid to certain executive officers and other employees of the Company.

RSAs	Number of Shares		Weighted Average Grant-Date Fair Value
Unvested at January 1, 2012	48,924		$	40.20
Granted	—		—
Forfeited	(238	)	$	48.87
Vested	—		—
Unvested at June 30, 2012	48,686		$	40.15

The following tables summarize the activity related to stock options during the first two quarters of 2012:

	June 30, 2012
Stock Options	Number of Shares	Weighted Average Exercise Price
Outstanding at January 1, 2012	52,819	$	48.87
Granted	—	—
Exercised	—	—
Forfeited and expired	—	—
Outstanding at June 30, 2012	52,819	$	48.87
Options exercisable at June 30, 2012	17,606	$	48.87

The stock-based compensation associated with all equity awards was $1.1 million and $1.9 million for the three months and six months ended June 30, 2012, respectively, and $0.5 million and $3.4 million for the three months and six months ended June 30, 2011, respectively.

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Commitments and Contingencies (Details 2) (USD $)		12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011 Potential Environmental Obligations
Commitments and Contingencies Disclosure [Abstract]
Unrecorded Unconditional Purchase Obligation Due in Years One to Three	$ 1,749,000
Potential Environmental Obligations
Number of liner defects		3
Remediation costs, low estimate		2,400,000
Remediation costs, high estimate		$ 4,600,000

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Molycorp, Inc. (“Molycorp” or the “Company”) is one of the world's leading rare earth products and rare metals companies. Molycorp owns: a world-class rare earth mine and processing facilities at Mountain Pass, California (the "Molycorp Mountain Pass facility"); Molycorp Silmet, one of the largest rare earth oxide ("REO") and rare metal producers in Europe; and the only producer of rare earth alloys in the United States. Following the acquisition of Neo Material Technologies, Inc. (formerly referred to as “Neo” and now “Molycorp Canada”) on June 11, 2012, Molycorp is currently a leading global producer of neodymium-iron-boron (“NdFeB”) magnetic powders (“Neo Powders”), which are used to manufacture bonded NdFeB permanent rare earth magnets, and a leading global manufacturer and distributor of rare earths and zirconium-based engineered materials and applications, and other rare metals and their compounds.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Regulation S-X promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”). While the December 31, 2011 balance sheet information was derived from the Company’s audited financial statements, for interim periods, GAAP and Regulation S-X do not require all information and related disclosures that are required in the annual financial statements, and all disclosures required by GAAP for annual financial statements have not been included. Therefore, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with Molycorp’s consolidated financial statements and related notes for the year ended December 31, 2011, included in Molycorp’s Form 10-K for the fiscal year ended December 31, 2011 filed on February 28, 2012.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, and which, in the opinion of management, are necessary for the fair presentation of Molycorp’s financial position, results of operations and cash flows at June 30, 2012, and for all periods presented. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The preparation of the financial statements, in accordance with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on the Company’s historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ significantly from these estimates under different assumptions and conditions. Significant estimates made by management in the accompanying financial statements include the collectability of accounts receivable, the recoverability of inventory, the useful lives and recoverability of long-lived assets such as property, plant and equipment, intangible assets and investments, capital leases, uncertain tax positions, the fair values of assets acquired and liabilities assumed, including business combinations, and the adequacy of the Company’s asset retirement obligations.

As a result of restarting mining operations at the Molycorp Mountain Pass facility in early 2012, and the substantial increase in revenue through the acquisition of Molycorp Canada in June 2012, Molycorp exited development stage status in the second quarter of 2012.

Certain prior period amounts have been reclassified to conform to the current period presentation.  Such reclassifications did not affect results of operations.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001
Common stock, shares authorized	350,000,000
Preferred stock, par value	$ 0.001
Preferred stock, shares authorized	5,000,000

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Acquisitions

6 Months Ended

Jun. 30, 2012

Business Combinations [Abstract]

Acquisitions

Acquisitions

On June 11, 2012, Molycorp completed the acquisition of all of the outstanding equity of Molycorp Canada's predecessor company pursuant to the terms of an arrangement agreement (the "Arrangement Agreement") for an aggregate purchase price of approximately $1.2 billion. Pursuant to the Arrangement Agreement, Molycorp Canada's former shareholders elected to receive: (a) cash consideration equal to Canadian dollars ("Cdn") $11.30 per share of Molycorp Canada's predecessor company's common stock; or (b) share consideration of 0.4242 shares of Molycorp common stock or 0.4242 shares (the "Exchangeable Shares") issued by MCP Exchangeco Inc., Molycorp's wholly owned Canadian subsidiary, which are exchangeable for shares of Molycorp's common stock on a one for one basis, per each share of Molycorp Canada's predecessor company's common stock; or (c) a combination of cash and shares of Molycorp common stock or Exchangeable Shares, all subject to the proration mechanics set forth in the Arrangement Agreement.

The consideration paid to Molycorp Canada's former shareholders was comprised of approximately $908.2 million in cash, exclusive of realized losses on the contingent forward contract to purchase Canadian dollars, accounted for as a separate transaction apart from the business combination, as further discussed in Note 25. Additionally, approximately 13.5 million shares of Molycorp common stock and 0.5 million Exchangeable Shares were issued and collectively valued at $284.1 million based on the closing price of the Company's common stock on the acquisition date in accordance with the relevant accounting guidance.

The following is a preliminary allocation of the Molycorp Canada purchase price (in thousands) and is based on management's preliminary estimates of the fair value of the tangible and intangible assets and liabilities of Molycorp Canada. This valuation is subject to change as the Company obtains additional information on the assets acquired and liabilities assumed during the acquisition measurement period (up to one year from the acquisition date).

	June 11, 2012
Purchase consideration:
Cash consideration	$	908,181
Fair value of Molycorp common stock and Exchangeable Shares issued	284,144
Total purchase consideration	$	1,192,325
Estimated fair values of the assets and liabilities acquired:
Cash and cash equivalents	$	317,169
Accounts receivable	101,470
Inventory	250,989
Prepaid expenses and other current assets	26,893
Property, plant and equipment	70,391
Investments	21,019
Intangibles	491,786
Goodwill	501,571
Other non-current assets	22,859
Accounts payable and accrued expenses	(138,576		)
Debt - current	(255,056		)
Other current liabilities	(29,939		)
Deferred tax liabilities	(158,177		)
Long-term debt	(281		)
Other non-current liabilities	(14,032		)
Non-controlling interests	(15,761		)
Total purchase consideration	$	1,192,325

The fair value of the accounts receivable acquired includes trade receivables of $101.5 million, which are considered to be collectible at June 30, 2012.

Molycorp Canada's intangible assets subject to amortization relate to: a) customer relationships of $348.1 million with a weighted average useful life of approximately fifteen years; b) rare earth quotas of $80.3 million with a useful life of approximately eleven years; c) patents of $39.8 million with a weighted average useful life of approximately two years; d) trade name of $15.8 million with a useful life of approximately ten years; and e) other of $7.8 million with a weighted average useful life of approximately twelve years.

Goodwill associated with the Molycorp Canada acquisition arose primarily because of Molycorp Canada's proven leadership in the development, processing, and distribution of technically advanced rare earth products; greater exposure to the world’s largest and fastest-growing rare earths consuming market; deferred tax liabilities and expected synergies that do not qualify for separate recognition. The goodwill is not amortized and is not deductible for tax purposes.

The amounts of Molycorp Canada's sales, earnings and earnings per share included in the Company’s condensed consolidated statements of operations since the acquisition date, and the sales, earnings and earnings per share of the combined entity had the acquisition date been January 1, 2011, are as follows:

(In thousands, except per share amounts)	Sales		Net Income (Loss)			Net Income (Loss) Attributable To Molycorp			EPS Basic
Actual June 11, 2012 to June 30, 2012 (acquiree)	$	43,647	$	47		$	(633	)	$	(0.01	)
Unaudited pro forma April 1, 2012 to June 30, 2012 (combined entity)	$	260,542	$	(59,519	)	$	(62,114	)	$	(0.60	)
Unaudited pro forma January 1, 2012 to June 30, 2012 (combined entity)	$	523,865	$	(59,079	)	$	(63,466	)	$	(0.63	)
Unaudited pro forma April 1, 2011 to June 30, 2011 (combined entity)	$	315,758	$	83,642		$	78,354		$	0.69
Unaudited pro forma January 1, 2011 to June 30, 2011 (combined entity)	$	474,817	$	92,564		$	86,352		$	0.75

The unaudited pro forma amounts are not necessarily indicative of the operating results that would have occurred if the Molycorp Canada acquisition had taken place on January 1, 2011.

The unaudited pro forma sales, earnings and earnings per share of the combined entity above are adjusted a) to eliminate the effect of sales and costs that occurred previous to the business combination between the Company and Molycorp Canada; b) to reflect the net incremental depreciation and amortization expense as a result of the allocation of the purchase price to certain depreciable and amortizable assets with useful lives ranging from two to thirty years c) the tax effect of unaudited pro forma adjustments using the Molycorp federal, state and international statutory tax rates based on the applicable tax jurisdictions; and d) the estimated net increase of interest expense associated with the issuance the Senior Notes as part of the acquisition. The weighted average number of shares outstanding utilized in the EPS basic calculation have been adjusted to reflect the additional shares issued pursuant to the acquisition of Molycorp Canada and the related Molibdenos y Metales S.A. equity financing further discussed in Note 16. The unaudited pro forma earnings of the combined entity for the three and six months ended June 30, 2012, were also adjusted to exclude $103.9 million and $114.7 million, respectively, of non-recurring transaction costs, which resulted directly from the transaction. For the three and six months ended June 30, 2012, the Company recognized approximately $52.8 million and $61.6 million, respectively, of transaction costs in the condensed consolidated statements of operations and comprehensive income as follows:

(In thousands)	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Corporate development
Legal, accounting and advisory fees	$	14,043	$	16,074
Other expenses:
Contingent forward contract loss	$	30,770	$	37,589
Interest expense:
Bridge loan fee	$	7,937	$	7,937

Molycorp Silmet and MMA

The following table summarizes the purchase prices and opening balance sheets for the acquisition of 90.023% controlling interest in Molycorp Silmet on April 1, 2011 and of MMA on April 15, 2011 (in thousands):

Effective acquisition date for financial reporting purposes:	Molycorp Silmet April 1, 2011			MMA April 15, 2011
Purchase consideration:
Cash consideration	$	9,021		$	17,500
Fair value of Molycorp common stock issued	72,653			—
Total purchase consideration	$	81,674		$	17,500
Fair values of the assets and liabilities acquired:
Cash	$	105		$	6,395
Accounts receivable and other current assets	8,626			5,474
Inventory	37,404			11,327
Property, plant and equipment, net	63,393			4,512
Intangible assets subject to amortization	2,669			—
Goodwill	1,455			1,977
Liabilities	(19,974		)	(8,989		)
Deferred tax liabilities	—			(3,196		)
Long-term debt	(3,184		)	—
Noncontrolling interest	(8,820		)	—
Total purchase consideration	$	81,674		$	17,500

The fair value of the accounts receivable acquired includes trade receivables of $5.0 million for Molycorp Silmet and $4.9 million for MMA. These trade receivables were collected by December 31, 2011. Molycorp Silmet’s intangible assets subject to amortization relate primarily to customer relationships with a weighted average useful life of 15 years. Goodwill associated with the Molycorp Silmet acquisition arose primarily because of the acquired workforce. Goodwill associated with the MMA acquisition arose primarily because of the requirement to record a deferred tax liability for the difference between the assigned values and the tax basis of assets acquired and liabilities assumed at amounts that do not reflect fair value. The goodwill is not amortized and is not deductible for tax purposes. The fair value of the noncontrolling interest in Molycorp Silmet as of April 1, 2011 was valued using a combination of the market approach and income approach.

The pro forma sales, earnings and earnings per share of the Company had both acquisitions occurred on January 1, 2011, are as follows:

(In thousands, except per share amounts)	Sales		Net Income		Net Income Attributable To Molycorp		EPS Basic
Unaudited pro forma January 1, 2011 to June 30, 2011 (combined entity)	$	159,350	$	55,463	$	54,495	$	0.6

The unaudited pro forma amounts are not necessarily indicative of the operating results that would have occurred if these acquisitions had taken place on January 1, 2011.

The 2011 earnings of the combined entity were adjusted to exclude $19.6 million of intercompany sales and $1.8 million of non-recurring acquisition-related costs the Company incurred to acquire Molycorp Silmet and MMA, and to reverse $1.1 million of purchase price variance MMA capitalized during the first quarter of 2011.

Molycorp Silmet

On April 1, 2011, Molycorp acquired 80% of the outstanding shares of Molycorp Silmet from AS Silmet Grupp in exchange for 1,593,419 shares of Molycorp common stock contractually valued at $80.0 million based on the average closing price of the Company’s common stock as reported by The New York Stock Exchange for the 20 consecutive trading days immediately preceding April 1, 2011, the acquisition date.

Generally, the acquisition-date fair value of shares of common stock transferred by the acquirer is the closing price of that stock on the same date adjusted by a discount that a market participant would require as a result of any restrictions on the sale or transferability of the stock. The fair value of common stock of $72.7 million disclosed in the table above is based on the closing price of the Company’s common stock on the acquisition date, net of an estimated discount of 23% that a market participant would require given that issuance of the shares of common stock Molycorp transferred in consideration to AS Silmet Grupp was not registered under the Securities Act of 1933 and such shares were subject to certain lock-up provisions, which limited AS Silmet Grupp’s ability to sell these shares. AS Silmet Grupp retained a 9.977% ownership interest in Molycorp Silmet on the acquisition date; Molycorp acquired the other 10.023% from Treibacher Industrie AG for $9.0 million in cash also on April 1, 2011.

On October 24, 2011, the Company acquired the remaining 9.977% ownership interest in Molycorp Silmet for $10.0 million in cash, which resulted in an adjustment to Additional Paid-In Capital of $0.4 million for the difference between the consideration paid and the carrying value of the noncontrolling interest at October 24, 2011.

The Molycorp Silmet acquisition provides Molycorp with a European base of operations and increases the Company’s yearly REO production capacity by approximately 3,000 mt. Molycorp Silmet sources a portion of rare earth feed stocks for production of its products primarily from the Molycorp Mountain Pass facility. The main focus of Molycorp Silmet is on the production of REO and metals, including didymium metal, a critical component in the manufacture of NdFeB permanent rare earth magnets. Molycorp Silmet’s manufacturing operation is located in Sillamäe, Estonia.

MMA

On April 15, 2011, Molycorp completed the acquisition from Santoku Corporation (“Santoku”) of all the issued and outstanding shares of capital stock of Santoku America, Inc., which is now known as MMA, an Arizona based corporation, in an all-cash transaction for $17.5 million. The acquisition provides Molycorp with access to certain intellectual properties relative to the development, processing and manufacturing of neodymium and samarium magnet alloy products. As part of the stock purchase agreement, Santoku will provide consulting services to Molycorp for the purpose of maintaining and enhancing the quality of MMA’s products. Molycorp and Santoku also entered into five-year marketing and distribution agreements for the sale and distribution of neodymium and samarium magnet alloy products produced by each party. Additionally, the parties entered into a rare earth products purchase and supply agreement through which MMA will supply Santoku with certain rare earth alloys for a two-year period at prices equal to the feedstock cost plus the applicable product premium as such terms are defined in the agreement.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 03, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Molycorp, Inc.
Entity Central Index Key	0001489137
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		110,078,757
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

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Accrued Expenses

6 Months Ended

Jun. 30, 2012

Payables and Accruals [Abstract]

Accrued Expenses

Accrued Expenses

Accrued expenses at June 30, 2012 and December 31, 2011 consisted of the following (in thousands):

	June 30, 2012		December 31, 2011
Defined contribution plan	$	1,312	$	1,088
Professional fees	14,242		—
Accrued payroll and related benefits	10,570		3,024
Sales and use tax	6,671		1,367
Bonus accrual	2,426		4,845
Interest payable	6,992		345
Advance from customer	5,120		—
Other accrued expenses	9,272		2,229
Total accrued expenses	$	56,605	$	12,898

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Condensed Consolidated Statements of Operations and Comprehensive Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales	$ 104,577	$ 99,615	$ 189,047	$ 125,876
Cost of sales:
Costs excluding depreciation and amortization	(103,569)	(40,348)	(153,641)	(55,069)
Depreciation and amortization	(5,081)	(2,575)	(8,452)	(4,531)
Gross (loss) profit	(4,073)	56,692	26,954	66,276
Operating expenses:
Selling, general and administrative	(23,070)	(10,476)	(47,253)	(19,175)
Corporate development	14,925	2,042	18,305	3,317
Depreciation, amortization and accretion	(2,279)	(523)	(2,637)	(840)
Research and development	(6,049)	(1,753)	(9,699)	(3,017)
Operating (loss) income	(50,396)	41,898	(50,940)	39,927
Other (expense) income:
Other (expense) income	(30,980)	133	(37,558)	(35)
Foreign exchange (losses) gains, net	(2,789)	42	(1,185)	42
Interest (expense) income, net	(9,805)	70	(9,720)	210
Total other income (expense)	(43,574)	245	(48,463)	217
(Loss) income before income taxes and equity earnings	(93,970)	42,143	(99,403)	40,144
Income tax benefit	27,303	6,612	29,485	6,413
Equity in results of affiliates	(257)	0	(484)	0
Net (loss) income	(66,924)	48,755	(70,402)	46,557
Net income attributable to noncontrolling interest	(680)	(968)	(680)	(968)
Net (loss) income attributable to Molycorp stockholders	(67,604)	47,787	(71,082)	45,589
Net (loss) income	(66,924)	48,755	(70,402)	46,557
Other comprehensive income:
Foreign currency translation adjustments	(4,221)	1,324	(1,691)	1,324
Comprehensive (loss) income	(71,145)	50,079	(72,093)	47,881
Comprehensive (loss) income attributable to:
Molycorp stockholders	(70,465)	48,980	(71,413)	46,782
Noncontrolling interest	(680)	1,099	(680)	1,099
Comprehensive (loss) income	$ (71,145)	$ 50,079	$ (72,093)	$ 47,881
Weighted average shares outstanding (Common shares)
Basic	99,175,285	83,847,119	93,090,872	83,054,811
Diluted	99,175,285	84,413,499	93,090,872	83,339,566
(Loss) income per share of common stock (Note 17):
Basic	$ (0.71)	$ 0.54	$ (0.82)	$ 0.50
Diluted	$ (0.71)	$ 0.53	$ (0.82)	$ 0.50

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Deposits

6 Months Ended

Jun. 30, 2012

Deposits [Abstract]

Deposits

Deposits

The Company had $23.3 million in deposits reported as non-current assets at June 30, 2012 and December 31, 2011, respectively. The deposits at June 30, 2012 consist of $20.6 million under an escrow arrangement for the Company’s facilities agreement with Kern River Gas Transmission Company ("Kern River"), $1.5 million related to the Company’s construction insurance program and $1.2 million comprised primarily of other deposit requirements.

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Inventory

6 Months Ended

Jun. 30, 2012

Inventory Disclosure [Abstract]

Inventory

Inventory

At June 30, 2012 and December 31, 2011, inventory consisted of the following (in thousands):

	June 30, 2012		December 31, 2011
Current:
Concentrate stockpiles	$	1,341	$	3,704
Raw materials	103,554		44,770
Work in process	51,366		16,602
Finished goods	159,140		45,045
Materials and supplies	4,471		1,822
Total current	$	319,872	$	111,943
Long-term:
Concentrate stockpiles	$	2,112	$	1,144
Raw materials	8,329		3,186
Finished goods	4		32
Total long-term	$	10,445	$	4,362

Assessment of normal production levels

For the three months ended June 30, 2012 and 2011, Molycorp determined that $2.4 million and $0.9 million, respectively, of production costs would have been allocated to additional production, assuming Molycorp had been operating at normal production ranges. For the six months ended June 30, 2012 and 2011, the Company determined that $5.4 million and $3.5 million, respectively, of production costs would have been allocated to additional production, assuming Molycorp had been operating at normal production ranges. As a result, these costs were excluded from inventory and instead expensed during the applicable periods. The assessment of normal production levels is judgmental and is unique to each quarter.

Write-downs of inventory

For the three months ended June 30, 2012 and 2011, the Company recognized write-downs of $19.5 million, and $0, respectively, as a result of production or purchase costs in excess of net realizable value. For the six months ended June 30, 2012 and 2011, Molycorp recognized write-downs of $26.1 million, and $0.6 million, respectively, as a result of production or purchase costs in excess of net realizable value. In addition, the Company recognized write-downs of work-in-process and stockpile inventory totaling $0 and $1.0 million for the three months ended June 30, 2012 and 2011, respectively, based on adjustments to estimated REO quantities.

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(Loss) Earnings per Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

(Loss) Earnings per Share

(Loss) Earnings per Share

For the three and six months ended June 30, 2012 and 2011, respectively, the paid dividends on the Convertible Preferred Stock were subtracted from net (loss) income attributable to Molycorp stockholders for the purpose of computing the basic and diluted earnings per share.

(In thousands, except share and per share amounts)	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011
Net (loss) income attributable to Molycorp stockholders	$	(67,604	)	$	47,787
Dividends on Convertible Preferred Stock	(2,846		)	(2,846		)
(Loss) income attributable to common stockholders	(70,450		)	44,941
Weighted average common shares outstanding—basic	99,175,285			83,847,119
Basic (loss) earnings per share	$	(0.71	)	$	0.54
Weighted average common shares outstanding—diluted	99,175,285			84,413,499
Diluted (loss) earnings per share	$	(0.71	)	$	0.53

(In thousands, except share and per share amounts)	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
Net (loss) income attributable to Molycorp stockholders	$	(71,082	)	$	45,589
Dividends on Convertible Preferred Stock	(5,693		)	(4,269		)
(Loss) income attributable to common stockholders	(76,775		)	41,320
Weighted average common shares outstanding—basic	93,090,872			83,054,811
Basic (loss) earnings per share	$	(0.82	)	$	0.50
Weighted average common shares outstanding—diluted	93,090,872			83,339,566
Diluted (loss) earnings per share	$	(0.82	)	$	0.50

Diluted earnings per share reflect the dilutive impact of potential common stock and unvested restricted shares of common stock in the weighted average number of common shares outstanding during the period, if dilutive. For this purpose, the “treasury stock method” and “if-converted method,” as applicable, are used.

Under the treasury stock method, assumed proceeds upon the exercise of stock options are considered to be used to purchase common stock at the average market price of the shares during the period. Also under the treasury stock method, fixed awards and nonvested shares, such as restricted stock units, are deemed options for purposes of computing diluted earnings per share. At June 30, 2012 and 2011, all potential common stock under the treasury stock method were antidilutive in nature; consequently, the Company did not have any adjustments between earnings per share and diluted earnings per share related to stock options and restricted stock units.

In applying the if-converted method, conversion is not assumed for purposes of computing diluted earnings per share if the effect would be antidilutive. Convertible preferred stock (such as the Convertible Preferred Stock) is antidilutive whenever the amount of the dividend declared in or accumulated for the current period per common share obtainable on conversion, including the deemed dividend in the period from a beneficial conversion feature, exceeds basic earnings per share. The Convertible Preferred Stock was antidilutive at June 30, 2012 and 2011. Also, under the if-converted method, convertible debt (such as the Convertible Notes and the Debentures) is antidilutive whenever its interest per common share obtainable on conversion, including any deemed interest from a beneficial conversion feature and nondiscretionary adjustments, net of tax, exceeds basic earnings per share. At June 30, 2012, the Convertible Notes and the Debentures, and the Convertible Notes at June 30, 2011, were antidilutive.

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Asset Retirement Obligation

6 Months Ended

Jun. 30, 2012

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligation

Asset Retirement Obligation

The following table presents the activity in the Company’s asset retirement obligation for the six months ended June 30, 2012, and for the year ended December 31, 2011 (in thousands):

	Six Months Ended June 30, 2012			Year Ended December 31, 2011
Balance at beginning of period	$	15,541		$	12,471
Obligations settled	(500		)	(1,030		)
Accretion expense	495			955
Revisions in estimated cash flows	8,433			2,508
Gain on settlement	—			637
Balance at end of period	$	23,969		$	15,541

The balance above for the six months ended June 30, 2012 includes a short-term portion of $3.8 million, which is recorded under other current liabilities. The Company is required to provide the applicable governmental agencies with financial assurances relating to its closure and reclamation obligations. At June 30, 2012, the Company had financial assurance requirements of $28.8 million, which were satisfied with surety bonds placed with California state and regional agencies.

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Intangible Assets

6 Months Ended

Jun. 30, 2012

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

Intangible Assets

At June 30, 2012 and December 31, 2011, amortizable intangible assets consisted of the following (in thousands):

	June 30, 2012			December 31, 2011
Customer relationships	$	350,077		$	2,153
Rare earth quotas	80,300			—
Patents	39,753			—
Trade name	16,586			786
Land use rights	3,420			—
Other	4,890			516
Gross carrying amount	495,026			3,455
Less accumulated amortization	(3,099		)	(383		)
Net carrying amount	$	491,927		$	3,072

At June 30, 2012, the net carrying amounts of customer relationships, rare earth quotas, patents, trade name, and other intangible assets included preliminary estimates of $489.2 million as a result of the Molycorp Canada acquisition. The Company expects to complete the final determination of these estimates and related estimated lives for amortizable intangible assets no later than the second quarter of 2013.

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Accrued Expenses (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accrued Expenses
Defined contribution plan	$ 1,312	$ 1,088
Professional fees	14,242	0
Accrued payroll and related benefits	10,570	3,024
Sales and use tax	6,671	1,367
Bonus accrual	2,426	4,845
Interest payable	6,992	345
Advance from customer	5,120	0
Other accrued expenses	9,272	2,229
Total accrued expenses	$ 56,605	$ 12,898

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Property, Plant and Equipment, net

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, net

Property, Plant and Equipment, net

The Company capitalized $244.4 million and $73.0 million in plant modernization and other capital costs for the three months ended June 30, 2012 and 2011, respectively, and $510.2 million and $114.2 million for the six months ended June 30, 2012 and 2011, respectively. These amounts include capitalized interest of $9.5 million and $0.6 million for the three months ended June 30, 2012 and 2011, respectively, and $13.3 million and $0.7 million for the six months ended June 30, 2012 and 2011, respectively.

Capital expenditures under Project Phoenix Phase 1 and Project Phoenix Phase 2, and other capital projects related to operations at Molycorp Mountain Pass, totaled $226.0 million and $66.5 million for the three months ended June 30, 2012 and 2011, respectively, and $479.6 million and $106.0 million for the six months ended June 30, 2012 and 2011, respectively. These amounts are on an accrual basis and exclude capitalized interest.

At June 30, 2012 and December 31, 2011, property, plant and equipment consisted of the following (in thousands):

	June 30, 2012			December 31, 2011
Land	$	12,106		$	11,059
Land improvements	15,823			15,748
Buildings and improvements	54,740			23,677
Plant and equipment	126,907			68,441
Vehicles	1,978			1,235
Computer software	4,669			3,002
Furniture and fixtures	731			464
Construction in progress (a)	926,864			436,547
Capital Leases	15,658			—
Mineral properties	24,457			24,692
Property, plant and equipment at cost	1,183,933			584,865
Less accumulated depreciation	(30,629		)	(23,237		)
Property, plant and equipment, net	$	1,153,304		$	561,628

(a) Represents costs incurred for Project Phoenix Phase 1 and Project Phoenix Phase 2 and all other capital projects. See Note 2.

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Mineral Properties and Development Costs

6 Months Ended

Jun. 30, 2012

Mineral Industries Disclosures [Abstract]

Mineral Properties and Development Costs

Mineral Properties and Development Costs

Mineral properties and development costs, which are referred to collectively as mineral properties, include acquisition costs, drilling costs, and the cost of other development work, all of which are capitalized. The Company began depleting mineral properties in 2012 using the units of production method over estimated proven and probable reserves. For the three and six months ended June 30, 2012, the Company capitalized $61 thousand and $82 thousand, respectively, of depletion costs in work-in-process inventory related to the reserves that were mined and crushed during these periods.

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Investments

6 Months Ended

Jun. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

Boulder Wind Power, Inc.

On September 13, 2011, the Company invested $20.0 million into Boulder Wind Power, Inc. Series B convertible preferred stock, which is accounted for at cost. At June 30, 2012, the fair value of this investment was not estimated as there were no identified events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment.

Intermetallics Japan Joint Venture

On November 28, 2011, Molycorp, Daido Steel Co., Ltd. (“Daido”) and Mitsubishi Corporation (“Mitsubishi”) entered into a preliminary shareholders agreement for the purpose of establishing a new private company, IMJ, to manufacture sintered NdFeB permanent rare earth magnets. The capital contribution ratio of the newly formed company is 30.0% by Molycorp, 35.5% by Daido and 34.5% by Mitsubishi. According to the definitive shareholders agreement, which was signed in January 2012, Molycorp will contribute, upon achievement of certain milestones and subject to the approval of Molycorp’s Board of Directors, Japanese Yen (JPY) 2.5 billion in cash (or approximately $31.4 million based on the JPY/ U.S. dollar exchange rate at June 30, 2012), in exchange for ordinary shares of IMJ over a period of twelve months. The actual remittance amounts will vary depending on the future exchange rate between the U.S. dollar and the Japanese Yen, and the achievement of certain milestones by the joint venture. The Company contributed $14.8 million to IMJ through June 30, 2012.

Molycorp accounts for this investment under the equity method because it has the ability to exercise significant influence over the operating and financial policies of IMJ, as evidenced by Molycorp’s ownership share and its proportional voting rights and representation in the Board of Directors of IMJ. The condensed consolidated statement of operations and comprehensive income for the three and six months ended June 30, 2012 include a loss of $0.2 million and $0.6 million, respectively, associated with this equity method interest.

Ganzhou Keli Rare Earth New Material Co., Ltd.

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 25% ownership interest in Ganzhou Keli Rare Earth New Material Co., Ltd. (“Keli”), a company that converts REO into metals for use in Neo Powders. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $12.2 million. Molycorp accounts for this ownership interest under the equity method because it has the ability to exercise significant influence over the operating and financial policies of Keli, as evidenced by Molycorp’s ownership share and its proportional voting rights. The condensed consolidated statements of operations and comprehensive income include a gain of $0.3 million for the period from June 12, 2012 to June 30, 2012 associated with this equity method ownership interest.

Toda Magnequench Magnetic Materials Co. Ltd.

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 33% ownership interest in Toda Magnequench Magnetic Materials Co. Ltd. (“TMT”), a company that produces rare earth magnetic compounds with Neo Powders supplied by Magnequench (Tianjin) Company Limited in its normal course of business. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $1.6 million. Molycorp accounts for this ownership interest under the equity method because it has the ability to exercise significant influence over the operating and financial policies of TMT, as evidenced by Molycorp’s ownership share and its proportional voting rights.

Ingal Stade GmbH

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 50% ownership interest in Ingal Stade GmbH (“Ingal Stade”), a joint venture facility in Stade, Germany with 5N Plus that extracts gallium metal from alumina smelter bayer liquor. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $4.9 million. Molycorp accounts for this ownership interest under the equity method.

Atlantic Metals & Alloys, LLC

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 19.5% ownership interest in Atlantic Metals & Alloys,LLC, a company which provides refining services for residues and scrap of the rare and platinum group metals. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $1.4 million. Molycorp accounts for this ownership interest under the cost method. At June 30, 2012, the fair value of this investment was not estimated as there were no identified events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment.

Vive Crop Protection

As a result of the Molycorp Canada acquisition in June 2012, Molycorp acquired a 7% ownership interest in Vive Crop Protection, a company that specializes in the formulation of active ingredients used in crop protection. The preliminary purchase allocation attributable to this investment at the time of the Molycorp Canada acquisition was $0.9 million. Molycorp accounts for this ownership interest under the cost method. At June 30, 2012, the fair value of this investment was not estimated as there were no identified events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment.

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Stockholders' Equity (Details) (USD $)	6 Months Ended			3 Months Ended			3 Months Ended		6 Months Ended		1 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 12, 2012	Mar. 31, 2012 Molymet D	Jun. 30, 2012 Common Stock	Dec. 31, 2011 Common Stock	Jun. 30, 2012 Series A Mandatory Convertible Preferred Stock	Mar. 31, 2012 Series A Mandatory Convertible Preferred Stock	Jun. 30, 2012 Series A Mandatory Convertible Preferred Stock	Dec. 31, 2011 Series A Mandatory Convertible Preferred Stock	Jun. 30, 2012 MCP Exchangeco Inc.	Jun. 30, 2012 Molycorp
Stockholders' Equity
Shares outstanding					109,941,469	83,896,043	2,070,000		2,070,000	2,070,000
Dividend rate (as a percent)							5.50%
Common stock issued to acquire the entity (in shares)											507,203	13,545,426
Fair value of common stock			$ 284,100,000
Issuance of shares for investment				12,500,000
Issuance of shares for investment (in dollars)	299,905,000			390,100,000
Stock issuance costs				100,000
Price per share of common stock issued for investment				$ 31.218
Number of consecutive trading days to calculate common stock price				20
Premium percentage added to common stock price				10.00%
Cash dividend declared (in dollars per share)									$ 1.375
Cash dividend declared and paid (in dollars)	$ 5,693,000	$ 3,320,000					$ 2,800,000	$ 2,800,000

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Stock-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended				6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 PBRSUs	Mar. 31, 2012 PBRSUs	Jun. 30, 2012 PBRSUs	Jun. 30, 2012 PBRSUs Minimum	Jun. 30, 2012 PBRSUs Maximum	Jun. 30, 2012 RSUs	Mar. 31, 2012 RSUs	Jun. 30, 2012 RSUs		Mar. 01, 2012 RSUs	Feb. 02, 2012 RSUs	Jun. 30, 2012 RSAs	Jun. 30, 2012 Stock options
Stock-Based Compensation
Matching contribution by entity (as a percent)														25.00%	25.00%
Percentage of units vesting								0.00%	150.00%
Increase in Additional Paid-In Capital due to conversion of the 2011 annual bonuses into RSUs												$ 0.6
Vesting period (in years)												3 years
Number of Shares
Unvested at the beginning of the period (in shares)						0	0				78,544	78,544				48,924
Granted (in shares)					483	45,553	46,036			22,659	188,844	211,503				0
Forfeited (in shares)							0					0				(238)
Vested (in shares)							0					(22,180)	[1]			0
Unvested at the end of the period (in shares)					46,036		46,036			267,867		267,867				48,686
Weighted Average Grant-Date Fair Value
Unvested shares at the beginning of the period (in dollars per share)						$ 0.00	$ 0.00				$ 56.55	$ 56.55				$ 40.20
Granted (in dollars per share)							$ 30.30					$ 25.81				$ 0.00
Forfeited (in dollars per share)					$ 0.00		$ 0.00			$ 0.00		$ 0.00				$ 48.87
Vested (in dollars per share)							$ 0.00					$ 28.44	[1]			$ 0.00
Unvested shares at the end of the period (in dollars per share)					$ 30.33		$ 30.33			$ 34.72		$ 34.72				$ 40.15
Number of Shares
Outstanding at beginning of year (in shares)																	52,819
Granted (in shares)																	0
Exercised (in shares)																	0
Forfeited and expired (in shares)																	0
Outstanding at end of year (in shares)																	52,819
Options exercisable at year-end (in shares)																	17,606
Weighted Average Exercise Price
Outstanding at beginning of year (in dollars per share)																	$ 48.87
Granted (in dollars per share)																	$ 0.00
Exercised (in dollars per share)																	$ 0.00
Forfeited and expired (in dollars per share)																	$ 0.00
Outstanding at end of year (in dollars per share)																	$ 48.87
Options exercisable at year-end (in dollars per share)																	$ 48.87
Total annual compensation cost recognized	$ 1.1	$ 0.5	$ 1.9	$ 3.4

[1] Represents deferral and conversion of a portion of fees payable to certain non-employee directors of the Company, and deferral and conversion of a portion of the 2011 annual cash bonuses paid to certain executive officers and other employees of the Company.

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Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Tax Disclosure [Abstract]
Net loss	$ 66,924,000	$ (48,755,000)	$ 70,402,000	$ (46,557,000)
Acquisition related expense, permanent difference			11,300,000
Net deferred income tax liabilities	162,500,000		162,500,000
Deferred charges and income tax payable due to net tax effect of the elimination in consolidation of all intercompany balances and transactions	$ 16,600,000		$ 16,600,000

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Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Preferred stock dividend

In August 2012, the Company declared a cash dividend of $1.375 per share on the Convertible Preferred Stock to be paid on September 1, 2012 to holders of record at the close of business on August 15, 2012.

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended					6 Months Ended
	Jun. 30, 2012 segment		Mar. 31, 2012 segment	Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011		Dec. 31, 2011
Segment Reporting [Abstract]
Number of primary divisions or operating segments	4		3
Sales:
External	$ 104,577			$ 99,615		$ 189,047		$ 125,876
Intersegment	0			0		0		0
Total sales	104,577			99,615		189,047		125,876
Costs excluding depreciation and amortization	(103,569)			(40,348)		(153,641)		(55,069)
Depreciation and amortization	(5,081)			(2,575)		(8,452)		(4,531)
Gross (loss) profit	(4,073)			56,692		26,954		66,276
Selling, general and administrative	(23,070)			(10,476)		(47,253)		(19,175)
Corporate development	(14,925)			(2,042)		(18,305)		(3,317)
Depreciation, amortization and accretion	(2,279)			523		(2,637)		840
Research and development	(6,049)			(1,753)		(9,699)		(3,017)
Operating (loss) income	(50,396)			41,898		(50,940)		39,927
Interest income (expense)	(9,805)			70		(9,720)		210
Other income (expense)	(33,769)					(38,743)
Total other income (expense)	(43,574)			245		(48,463)		217
(Loss) income before income taxes and equity earnings	(93,970)			42,143		(99,403)		40,144
Equity in results of affiliates	(257)			0		(484)		0
Total assets	3,159,228			1,141,666		3,159,228		1,141,666		1,255,125
Investment in equity method affiliates	33,064					33,064
Capital expenditures	234,873	[1]		72,373		496,912	[1]	113,497	[1]
Molycorp Mountain Pass facility
Sales:
External	16,533			60,348		61,011		86,609
Intersegment	400			15,947		2,232		15,947
Total sales	16,933			76,295		63,243		102,556
Costs excluding depreciation and amortization	(22,277)			(19,493)		(39,344)		(34,214)
Depreciation and amortization	(2,229)			(2,216)		(4,008)		(4,172)
Gross (loss) profit	(7,573)			54,586		19,891		64,170
Selling, general and administrative	(9,041)			(1,518)		(18,464)		(4,941)
Corporate development	0			0		0		0
Depreciation, amortization and accretion	(365)			(332)		(699)		(649)
Research and development	(2,006)			(1,734)		(4,091)		(3,000)
Operating (loss) income	(18,985)			51,002		(3,363)		55,580
Interest income (expense)	0					0
Other income (expense)	21					89
Total other income (expense)				0				(37)
(Loss) income before income taxes and equity earnings	(18,964)			51,002		(3,274)		55,543
Equity in results of affiliates	(15,754)					(26,898)
Total assets	433,808			399,908		433,808		399,908
Investment in equity method affiliates	14,011					14,011
Capital expenditures	228,787	[1]		70,142		488,225	[1]	111,966	[1]
Molycorp Silmet
Sales:
External	31,541			29,017		52,577		29,017
Intersegment	712			3,639		3,922		3,639
Total sales	32,253			32,656		56,499		32,656
Costs excluding depreciation and amortization	(37,947)			(20,321)		(71,205)		(20,321)
Depreciation and amortization	(1,526)			(151)		(3,042)		(151)
Gross (loss) profit	(7,220)			12,184		(17,748)		12,184
Selling, general and administrative	(1,510)			(1,453)		(3,048)		(1,453)
Corporate development	0			0		0		0
Depreciation, amortization and accretion	(77)			0		(77)		0
Research and development	(359)			0		(438)		0
Operating (loss) income	(9,166)			10,731		(21,311)		10,731
Interest income (expense)	(177)					(318)
Other income (expense)	(2,385)					(762)
Total other income (expense)				(61)				(61)
(Loss) income before income taxes and equity earnings	(11,728)			10,670		(22,391)		10,670
Equity in results of affiliates	0					0
Total assets	79,185			152,984		79,185		152,984
Investment in equity method affiliates	0					0
Capital expenditures	5,254	[1]		2,231		7,755	[1]	2,231	[1]
MMA
Sales:
External	12,870			10,250		31,826		10,250
Intersegment	0			0		0		0
Total sales	12,870			10,250		31,826		10,250
Costs excluding depreciation and amortization	(17,112)			(10,935)		(35,668)		(10,935)
Depreciation and amortization	(79)			(208)		(155)		(208)
Gross (loss) profit	(4,321)			(893)		(3,997)		(893)
Selling, general and administrative	(116)			(112)		(295)		(112)
Corporate development	0			0		0		0
Depreciation, amortization and accretion	0			(191)		0		(191)
Research and development	0			0		0		0
Operating (loss) income	(4,437)			(1,196)		(4,292)		(1,196)
Interest income (expense)	(175)					(452)
Other income (expense)	8					5
Total other income (expense)				2				2
(Loss) income before income taxes and equity earnings	(4,604)			(1,194)		(4,739)		(1,194)
Equity in results of affiliates	0					0
Total assets	20,174			29,705		20,174		29,705
Investment in equity method affiliates	0					0
Capital expenditures	0	[1]		0		100	[1]	0	[1]
Molycorp Canada
Sales:
External	43,633					43,633
Intersegment	14					14
Total sales	43,647					43,647
Costs excluding depreciation and amortization	(37,703)					(37,703)
Depreciation and amortization	(1,247)					(1,247)
Gross (loss) profit	4,697					4,697
Selling, general and administrative	(1,737)					(1,737)
Corporate development	0					0
Depreciation, amortization and accretion	(1,813)					(1,813)
Research and development	(1,175)					(1,175)
Operating (loss) income	(28)					(28)
Interest income (expense)	(828)					(828)
Other income (expense)	(478)					(478)
(Loss) income before income taxes and equity earnings	(1,334)					(1,334)
Equity in results of affiliates	309					309
Total assets	1,746,876					1,746,876
Investment in equity method affiliates	19,053					19,053
Capital expenditures	832	[1]				832	[1]
Eliminations
Sales:
External	0	[2]		0	[3]	0	[2]	0
Intersegment	(1,126)	[2]		(19,586)	[3]	(6,168)	[2]	(19,586)
Total sales	(1,126)	[2]		(19,586)		(6,168)	[2]	(19,586)
Costs excluding depreciation and amortization	11,470	[2]		10,401	[3]	30,279	[2]	10,401
Depreciation and amortization	0	[2]		0	[3]	0	[2]	0
Gross (loss) profit	10,344	[2]		(9,185)	[3]	24,111	[2]	(9,185)
Selling, general and administrative	0	[2]		0	[3]	0	[2]	0
Corporate development	0	[2]		0		0	[2]	0
Depreciation, amortization and accretion	0	[2]		0	[3]	0	[2]	0
Research and development	0	[2]		0	[3]	0	[2]	0
Operating (loss) income	10,344	[2]		(9,185)	[3]	24,111	[2]	(9,185)
Interest income (expense)	0	[2]				0	[2]
Other income (expense)	0	[2]				0	[2]
Total other income (expense)				0	[3]			0
(Loss) income before income taxes and equity earnings	10,344	[2]		(9,185)	[3]	24,111	[2]	(9,185)
Equity in results of affiliates	15,754	[2]				26,898	[2]
Total assets	(80,988)	[2]		(140,923)	[3]	(80,988)	[2]	(140,923)	[3]
Investment in equity method affiliates	0	[2]				0	[2]
Capital expenditures	0	[1],[2]		0	[3]	0	[1],[2]	0	[1]
Intercompany investments	(2,662)			114,000		(2,662)		114,000
Intercompany accounts receivable	(78,326)			26,923		(78,326)		26,923
Cost of Goods Sold	11,470					30,279
Corporate and other
Sales:
External	0	[4]				0	[4]
Intersegment						0	[4]
Total sales	0	[4]				0	[4]
Costs excluding depreciation and amortization	0	[4]		0		0	[4]	0	[4]
Depreciation and amortization	0	[4]		0		0	[4]	0	[4]
Gross (loss) profit	0	[4]		0		0	[4]	0	[4]
Selling, general and administrative	(10,666)	[4]		(7,393)		(23,709)	[4]	(12,669)	[4]
Corporate development	(14,925)	[4]		(2,042)		(18,305)	[4]	(3,317)	[4]
Depreciation, amortization and accretion	(24)	[4]		0		(48)	[4]	0	[4]
Research and development	(2,509)	[4]		(19)		(3,995)	[4]	(17)	[4]
Operating (loss) income	(28,124)	[4]		(9,454)		(46,057)	[4]	(16,003)	[4]
Interest income (expense)	(8,625)	[4]				(8,122)	[4]
Other income (expense)	(30,935)	[4]				(37,597)	[4]
Total other income (expense)				304				313	[4]
(Loss) income before income taxes and equity earnings	(67,684)	[4]		(9,150)		(91,776)	[4]	(15,690)	[4]
Equity in results of affiliates	(566)	[4]				(793)	[4]
Total assets	960,173	[4]		699,992		960,173	[4]	699,992
Investment in equity method affiliates	0	[4]				0	[4]
Capital expenditures	$ 0	[1],[4]		$ 0		$ 0	[1],[4]

[1] On an accrual basis excluding capitalized interest.

[2] The $80,988 of total assets elimination is comprised of $2,662 intercompany investments and $78,326 intercompany accounts receivable and profits in inventory. The cost of sales elimination amounts of $11,470 for three months ended June 30, 2012 and $30,279 for the six months ended June 30, 2012, include elimination of the intercompany gross profits as well as elimination of lower of cost or market adjustments related to the intercompany inventory.

[3] The total assets elimination of $140,923 is comprised of $114,000 of intercompany investments and $26,923 of intercompany accounts receivable and profits in inventory.

[4] Includes expenses incurred by and capital invested in the sales office in Tokyo, Japan.

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

At June 30, 2012, the Company’s net loss of $70.4 million included $11.3 million in acquisition related expense, which is a permanent difference between its loss for financial reporting and tax purposes. Molycorp had net deferred income tax liabilities of $162.5 million at June 30, 2012 primarily related to the purchase accounting adjustment associated with the Molycorp Canada acquisition.

At June 30, 2012, Molycorp determined that it, more likely than not, will realize its deferred tax assets and concluded that no valuation allowance is required. In making this determination, management analyzed, among other things, the Company’s recent history of earnings and cash flows, forecasts of future earnings, and the nature and timing of future deductions and benefits represented by the deferred tax assets and liabilities.

The Company has undistributed earnings for several foreign subsidiaries at June 30, 2012, for which deferred taxes have not been provided. Such earnings are considered indefinitely invested in the foreign subsidiaries. If such earnings were repatriated, additional tax expense may result, although the calculation of such additional taxes is not practicable.

The net tax effect of the elimination in consolidation of intercompany balances and transactions resulted in a deferred charge and income tax payable of $16.6 million at June 30, 2012.

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Concentrations

6 Months Ended

Jun. 30, 2012

Risks and Uncertainties [Abstract]

Concentrations

Concentrations

(a) Limited Number of Products

Molycorp Mountain Pass

Percentages of Molycorp Mountain Pass’ sales by product, net of intercompany transactions, that accounted for more than 10% of consolidated sales for the three and six months ended June 30, 2012 and 2011, respectively, were approximately as follows:

	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
Lanthanum products	7	%	15	%
Didymium, Neodymium and Praseodymium products	8	%	16	%

	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011
Lanthanum products	15	%	27	%
Cerium products	23	%	25	%
Didymium, Neodymium and Praseodymium products	21	%	20	%

Molycorp Silmet

The majority of sales from the Molycorp Silmet facility during the three and six months ended June 30, 2012, and for the period from April 1, 2011 (the acquisition date) to June 30, 2011, net of intercompany sales, consisted of cerium, neodymium and praseodymium rare earth products, and two rare metal products, tantalum and niobium.

MMA

The MMA facility sold primarily NdFeB alloys and samarium-cobalt alloys during the three and six months ended June 30, 2012, and for the period from April 15, 2011 (the acquisition date) to June 30, 2011. MMA’s sales of NdFeB alloys were approximately 60% and 74% of consolidated sales for the three and six months ended June 30, 2012, respectively, and approximately 61% of consolidated sales for the period from April 15, 2011 to June 30, 2011.

Molycorp Canada

Molycorp Canada sold Neo Powders, rare earths and zirconium based engineered materials and other rare metals for the period from June 12, 2012 to June 30, 2012. Molycorp Canada's sales of Neo Powders, rare earth and other rare metals were approximately 43% and 23% of consolidated sales for the three and six months ended June 30, 2012, respectively.

(b) Limited Number of Customers

Molycorp Mountain Pass

For the six months ended June 30, 2012, Molycorp Mountain Pass’ sales to two of its customers in excess of 10% of consolidated sales were $22.7 million and $24.4 million, respectively.

For the quarter ended June 30, 2011, Molycorp Mountain Pass’ sales to two of its customers in excess of 10% of consolidated sales were $18.6 million, and $18.3 million, respectively. For the six months ended June 30, 2011, Molycorp Mountain Pass’ sales to two of its customers in excess of 10% of consolidated sales were $26.4 million and $24.1 million, respectively.

Molycorp Mountain Pass’ sales to three of its customers, net of intercompany sales, represented in total approximately 84% and 85% of Molycorp Mountain Pass’ sales for the three and six months ended June 30, 2012, respectively.

For the three and six months ended June 30, 2011, Molycorp Mountain Pass’ sales to two of its customers, net of intercompany sales, represented in total approximately 61% and 58% of Molycorp Mountain Pass’ sales, respectively.

Molycorp Silmet

Sales to four of Molycorp Silmet’s customers during the three and six months ended June 30, 2012, were approximately 55% and 56% of Molycorp Silmet’s sales, respectively.

For the period from April 1, 2011 to June 30, 2011, sales to three of Molycorp Silmet’s customers were approximately 59% of Molycorp Silmet’s sales.

MMA

MMA’s sales to one of its customers for the three and six months ended June 30, 2012, were $9.2 million and $24.7 million, respectively, or approximately 9% and 13% of the Company’s consolidated sales, respectively, and approximately 71% and 78% of MMA’s sales for that period, respectively.

MMA’s sales to one of its customers for the period from April 15, 2011 to June 30, 2011, were $7.3 million, or approximately 7% of the Company’s consolidated sales, and approximately 71% of MMA’s sales.

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Pension (Tables)

6 Months Ended

Jun. 30, 2012

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Benefit Costs [Table Text Block]

Pension Plan and PBP	For the period from June 12, 2012 to June 30, 2012
Components of net periodic benefit cost:
Service Cost	$	—
Interest cost	18
Expected return on assets	(14		)
Amortization of transition obligation/(asset)	—
Amortization of prior service cost	—
Amortization of actuarial loss	12
Net periodic benefit cost	$	16

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Asset Retirement Obligation (Tables)

6 Months Ended

Jun. 30, 2012

Asset Retirement Obligation Disclosure [Abstract]

Schedule of activity in asset retirement obligation

	Six Months Ended June 30, 2012			Year Ended December 31, 2011
Balance at beginning of period	$	15,541		$	12,471
Obligations settled	(500		)	(1,030		)
Accretion expense	495			955
Revisions in estimated cash flows	8,433			2,508
Gain on settlement	—			637
Balance at end of period	$	23,969		$	15,541

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Condensed Consolidated Statement of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Total Molycorp Stockholders' Equity	Common Stock	Series A Mandatory Convertible Preferred Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Retained Earnings	Noncontrolling interest
Balance at Dec. 31, 2011	$ 845,230	$ 845,230	$ 84	$ 2	$ 838,547	$ (8,481)	$ 15,078	$ 0
Balance (in shares) at Dec. 31, 2011			83,896,043	2,070,000
Increase (Decrease) in Stockholders' Equity
Stock-based compensation (Note 18)	2,484	2,484	0	0	2,484	0	0	0
Stock-based compensation (Note 18) (in shares)			0	0
Issuance of shares for investment from Molymet, net of stock issuance costs (Note 16)	390,093	390,093	12	0	390,081	0	0	0
Issuance of shares for investment from Molymet, net of stock issuance costs (Note 16) (in shares)			12,500,000	0
Issuance of shares for interest in Molycorp Canada (Note 16) (in shares)	299,905	284,144	14	0	284,130	0	0	15,761
Issuance of shares for interest in Molycorp Canada (Note 16) (in shares)			13,545,426	0
Component of convertible debt (Note 14)	3,105	3,105			3,105	0	0	0
Net (loss) income	(70,402)	(71,082)	0	0	0	0	(71,082)	680
Preferred dividends	(5,693)	(5,693)	0	0	0	0	(5,693)	0
Other comprehensive income	(1,691)	(1,691)	0	0	0	(1,691)	0	0
Balance at Jun. 30, 2012	$ 1,463,031	$ 1,446,590	$ 110	$ 2	$ 1,518,347	$ (10,172)	$ (61,697)	$ 16,441
Balance (in shares) at Jun. 30, 2012			109,941,469	2,070,000

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Trade Accounts Receivable

6 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Trade Accounts Receivable

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company reviews the need for an allowance for doubtful accounts on a quarterly basis. At June 30, 2012 and December 31, 2011, the allowance for doubtful accounts was $2.5 million and $0, respectively.

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Investments (Details)	1 Months Ended	3 Months Ended		6 Months Ended		1 Months Ended		3 Months Ended	6 Months Ended				1 Months Ended
	Sep. 30, 2011 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jan. 31, 2012 Intermetallics Japan USD ($)	Jan. 31, 2012 Intermetallics Japan JPY (¥)	Jun. 30, 2012 Intermetallics Japan USD ($)	Jun. 30, 2012 Intermetallics Japan USD ($)	Nov. 28, 2011 Intermetallics Japan Molycorp	Nov. 28, 2011 Intermetallics Japan Daido	Nov. 28, 2011 Intermetallics Japan Mitsubishi	Jun. 30, 2012 Keli USD ($)	Jun. 12, 2012 Keli USD ($)	Jun. 12, 2012 TMT USD ($)	Jun. 12, 2012 Ingal Stade USD ($)	Jun. 12, 2012 Atlantic Metals USD ($)	Jun. 12, 2012 Vive USD ($)
Investments in non-marketable securities
Investment in Boulder Wind Power's Series B convertible preferred stock	$ 20,000,000
Intermetallics Japan - IMJ
Capital contribution ratio (as a percent)										30.00%	35.50%	34.50%
Capital contribution						31,400,000	2,500,000,000
Capital contribution				14,805,000	0				14,800,000
Ownership in Subsidiary (as a percent)														25.00%	33.00%	50.00%	19.50%	7.00%
Fair Value of the Equity Investment of a Business Acquisition														12,200,000	1,600,000	4,900,000	1,400,000	900,000
(Gain) / Loss from the entity's proportional ownership in joint venture		$ (257,000)	$ 0	$ (484,000)	$ 0			$ 200,000	$ 600,000				$ (300,000)

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Commitments and Contingencies (Details 3) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012 jurisdiction	Feb. 29, 2012 lawsuit
Reclamation Surety Bonds
Surety bonds placed to secure the closure and reclamation obligations	$ 28.8
Purported class action and derivative lawsuits
Number of stockholder derivative lawsuits		7
Number of different jurisdictions in which lawsuits have been filed	3
Number of jurisdictions where defendants have filed a motion in each case seeking to consolidate derivative actions	1
Employees covered by collective bargaining agreement under facility | Workforce | Molycorp Silmet
Labor Contract
Number of employees	176
Concentration risk (as a percent)	30.00%
Employees covered by collective bargaining agreement under facility | Workforce | Molycorp Mountain Pass facility
Labor Contract
Number of employees	206
Concentration risk (as a percent)	60.00%

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Related-Party Transactions

6 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

Transactions with Traxys North America LLC

The Company made principal payments of $0.9 million and $3.1 million for the six month period ended June 30, 2012 and for the year ended December 31, 2011, respectively, under the inventory financing arrangement with Traxys North America LLC (“Traxys and affiliates”), a subsidiary of one of the Company’s stockholders, Traxys S.a.r.l. The outstanding amounts payable to Traxys and affiliates under this arrangement were $0 and $0.9 million reported under Other current liabilities on the condensed consolidated balance sheet at June 30, 2012 and December 31, 2011, respectively. Molycorp also had outstanding amounts payable to Traxys and affiliates under the same arrangement of $0 and $2.8 million reported in Trade accounts payable at June 30, 2012 and December 31, 2011, respectively, associated with product purchased from Traxys and affiliates in 2011. For the three and six months ended June 30, 2011, the Company made purchases of lanthanum oxide from Traxys and affiliates in the amount of $1.9 million and $6.2 million, respectively.

The Company and Traxys and affiliates also jointly market and sell certain lanthanum oxide, cerium oxide, misch metal and erbium oxide products. Per the terms of this other arrangement, the Company and Traxys and affiliates split gross margin equally once all costs associated with the sale are recovered by both parties. Additionally, the Company had an outstanding related party receivable from Traxys and affiliates in the amount of $0.1 million and $0.2 million at June 30, 2012 and December 31, 2011, respectively.

At June 30, 2012 and December 31, 2011, Molycorp had also a balance receivable from Traxys and affiliates of $0.1 million and $2.1 million, respectively, related to sales of tantalum metal to Traxys and affiliates of $3.2 million in 2011.

Transactions with Neo Material Technologies Inc.

During the three and six months ended June 30, 2012, but prior to June 11, 2012, Molycorp sold neodymium/ praseodymium oxides to Neo Material Technologies, Inc. for $4.3 million. Additionally, during the three and six months ended June 30, 2012, but prior to June 11, 2012, the Company sold heavy rare earths to Neo Material Technologies, Inc. for $1.6 million. There were no sales between the companies in the comparative 2011 periods. The related intercompany accounts receivable and payable were eliminated in consolidation.

Transactions with equity method investees: TMT, Keli and Ingal Stade

The Company supplies Neo Powders to TMT to produce rare earth magnetic compounds. Molycorp then purchases these compounds back from TMT in its normal course of business. Additionally, Keli processes rare earth oxides into metals for inclusion in the Neo Powders.

For the period from June 12, 2012 to June 30, 2012, the Company purchased $0.5 million worth of compounds from TMT, and purchased metals and received services from Keli amounting to $5.3 million.

Ingal Stade sells gallium to the Company's facilities located in Ontario, Canada and to some of its facilities in the United States. For the period from June 12, 2012 to June 30, 2012, the Company purchased $0.5 million of gallium metal from Ingal Stade.

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Supplemental Cash Flow Information (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Non-cash financing activities and investing activities:
Change in accrued capital expenditures	$ 93,446	$ 34,540

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2012

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Schedule of amortizable intangible assets

	June 30, 2012			December 31, 2011
Customer relationships	$	350,077		$	2,153
Rare earth quotas	80,300			—
Patents	39,753			—
Trade name	16,586			786
Land use rights	3,420			—
Other	4,890			516
Gross carrying amount	495,026			3,455
Less accumulated amortization	(3,099		)	(383		)
Net carrying amount	$	491,927		$	3,072

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Debt and Capital Lease Obligations

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Debt

Debt and Capital Lease Obligations

On May 25, 2012, Molycorp issued $650.0 million aggregate principal amount of the senior secured notes due 2020 ("Senior Notes") in an offering exempt from the registration requirements of the Securities Act of 1933. The Senior Notes will bear interest at the rate of 10% per year payable on June 1 and December 1 of each year beginning on December 1, 2012. At any time and from time to time prior to June 1, 2016, the Company may redeem any of the Senior Notes at a price equal to 100% of the principal amount thereof plus an applicable make-whole premium and accrued and unpaid interest. At any time and from time to time from and after June 1, 2016, Molycorp may redeem the Senior Notes, in whole or in part, at a redemption price for the Senior Notes plus accrued and unpaid interest, initially at 105% of the principal amount thereof, but gradually declining to 100% of the principal amount thereof. In addition, at any time and from time to time prior to June 1, 2015, the Company may redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of one or more permitted sales of Molycorp’s capital stock at a redemption price (expressed as a percentage of principal amount) of 110% plus accrued and unpaid interest. Upon the occurrence of a change of control, Molycorp will be required to offer to repurchase all of the Senior Notes. The Senior Notes are senior secured obligations of Molycorp and are guaranteed by certain of Molycorp’s domestic subsidiaries ("Guarantors"). A substantial portion of the net proceeds from the offering of the Senior Notes were used to fund the cash consideration the Company paid for Molycorp Canada. The remainder of the net proceeds from the issuance of the Senior Notes will be used for general corporate purposes. The Company, the Guarantors and the initial purchasers of the Senior Notes agreed to file an exchange offer registration statement with the Securities and Exchange Commission ("SEC") within 180 days of the May 25, 2012 issuance date, and use their respective commercially reasonable efforts to have it declared effective at the earliest possible time and in any event within 270 days following the issuance date.

As a result of the Molycorp Canada acquisition, the Company assumed $230.0 million principal amount of the Debentures with a par value of $1,000 per Debenture and maturing on December 31, 2017. The Debentures carry a 5% coupon and are convertible at $13.80 per share of Molycorp Canada's predecessor company. As required under the change in control provisions of the Debentures, holders of the Debentures have the option to either require the Company to repurchase the Debentures at par plus accrued interest, convert the Debentures to shares of Molycorp common stock, or hold the Debentures to maturity. The Debenture holders that convert will receive, at their election, the same cash and/or share consideration that was paid to Molycorp Canada's former shareholders in connection with the acquisition of Molycorp Canada, subject to the same pro-ration calculation, as if such holders had converted immediately prior to the acquisition. The Debenture holders must exercise their options under the change in control provisions, if at all, on or before August 11, 2012. The Company separately accounts for the liability and equity components of the Debentures to reflect the issuer's economic interest cost. The equity component of the Debentures is included in the additional paid-in capital section of the condensed consolidated statement of stockholders' equity at June 30, 2012, and the value of the equity component is treated as original issue discount for purposes of accounting for the debt component of the Debentures. At June 30, 2012, Molycorp recognized a liability component related to the Debentures of approximately $230.2 million, which includes a small accretion of the original issue discount for the 19 days following the acquisition of Molycorp Canada, and an equity component of $3.1 million. Total interest cost related to the Debentures for the period from June 12, 2012 to June 30, 2012 was $0.6 million.

Additional short-term indebtedness was assumed as part of the acquisition of Molycorp Canada totaling $31.7 million, which relates to various bank loans maturing between July 2012 and December 2012 with a weighted average interest rate of approximately 4.2%.

On September 1, 2010, Molycorp and Kern River entered into a firm Transportation Service Agreement ("TSA") under which Kern River agreed to construct and operate facilities necessary to provide natural gas transportation services to the Molycorp Mountain Pass facility. Under the terms of the TSA, Molycorp agreed to pay Kern River for the cost attributable to the design, permitting, and construction of the delivery facilities through a transportation service charge of approximately $0.4 million per month for ten years. This charge includes reimbursement to Kern River for construction of the delivery facilities and installation, as well as reimbursement and compensation for transportation services. The term of the TSA started on June 1, 2012, the date on which Kern River deemed the TSA facilities ready to provide service. The Company accounted for the TSA as a capital lease under the relevant accounting guidance.

The following tables provide a summary of the current and non-current portions of the debt outstanding at June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012
	Current		Non-Current
Senior Notes 10.00%, net of discount, due June 2020	$	—	$	635,498
Convertible Notes 3.25%, net of discount, due June 2016	—		194,720
Debentures 5.00%, net of discount	230,227		—
Bank loans with a weighted average rate of 4.07% due July 2012 - September 2017	33,009		4,777
Total debt	263,236		834,995
Capital lease obligations	333		15,324
Total debt and capital lease obligations	$	263,569	$	850,319

	December 31, 2011
	Current		Non-Current
Convertible Notes 3.25%, net of discount, due June 2016	$	—	$	190,877
Bank loans 2.69% - 3.88% due February 2012 - September 2017	1,516		5,668
Total debt	$	1,516	$	196,545

Scheduled minimum debt repayments are $261.6 million for the remainder of 2012, $1.6 million in 2013, $1.4 million in 2014, $1.3 million in 2015, $230.7 million in 2016, $0.3 million in 2017 and $650.0 million thereafter.