Following a quarter that saw revenues plunge from last year, Molycorp's CEO said Thursday rare earth demand and prices may finally be recovering from historic lows.

Q3 revenue fell to $149 million from $205 million in the year-ago quarter but rose 9% quarter on quarter leading to a loss of $65 million including inventory writedowns. The results reflected the "worst quarter we have seen in recent memory," CEO Constantine Karayannopoulos told Reuters:

"A Chinese government crackdown on illegal mining and smuggling of rare earths has helped "a semblance of stability" return to industry demand and prices.

"We haven't gotten what I would consider an historical normal yet. But it certainly looks and feels like we are on our way towards that," Karayannopoulos said in an interview.

The $1.25 billion expansion of Molycorp's Mountain Pass mine in California, remains on track for full commissioning in the current quarter, pushing annualized production closer to the ultimate goal of 40,000 tonnes.

Molycorp (NYSE:MCP), a speculators' favourite and closely watched stock which regularly tops 10 million shares traded per day, was little changed at $4.76 a share in after hours trading in New York on Thursday on the news.

Molycorp has been plagued by controversy over the past couple of years as it restarts its Mountain Pass mine in California during what it has dubbed Project Phoenix. Once the largest supplier of rare earths anywhere in the world, the facility was mothballed in 2002.

Investors trying to get a handle on the performance of the company has had to deal with unexpected delays in filing results, huge acquisition writedowns, an SEC investigation over public disclosure and a sudden CEO departure.

The $1.1 billion stock is nothing if not volatile: MCP peaked at a whopping $75 a share in April 2011 and touched a record low of $4.61 in the same month this year.

It appeared that Molycorp was making a comeback topping $7 a share, but the announcement mid-October of a $200 million common stock sale to fund operations and the disclosure that almost half of Mountain Pass resource is cerium crashed the stock again.

A light rare earth, cerium oxide, used to polish TV screens and lenses, is one of the least valuable of the 17 elements. Cerium is trading at around $6 per kilogram, down from an all-time high of $118 in September 2011.

The price is now almost back to 2008 levels; before worries about China's monopoly of production sent prices for all rare earths into the stratosphere.