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Molycorp, Inc. (NYSE: MCP) was having a good day with a rally of almost 6%. Any positive gain here is a welcome wagon for those shareholders who have been crushed by investing in America’s only real full-scale rare earths mining outfit. So what happens when the company names a new Chief Executive Officer under a questionable press release? Shares tank!

The American rare earths leader announced that its board of directors has appointed Constantine Karayannopoulos as Molycorp’s Interim President and Chief Executive Officer. Molycorp is “immediately undertaking a search for a permanent President and Chief Executive Officer.” Mr. Karayannopoulos succeeds Mark Smith, who has suddenly left the company.

Here is what is missing: there is no statement or quote from Mark Smith, and no word was mentioned about any developments or hints of anything about the SEC investigation. The market can only interpret this as a summary firing, and the concerns will be that the investigation is worse than what many feared when it was only recently disclosed. We do not want to start any rumor mill activity by publishing any guess as to the reason here. That being said, there may be some obvious concerns.

Karayannopoulos is listed as assuming all management responsibilities for Molycorp and its subsidiaries. As far as when, that would be effective immediately. He will continue to serve as a director and as Vice Chairman of Molycorp`s board of directors. The company said, “His exceptional track record in and knowledge of the rare earths industry puts him in a unique position to direct the leading rare earths technology company.”

Karayannopoulos is a professional engineer and previously served as President and CEO of Neo Material Technologies from 2005 until this year. At Neo Materials, he also served as Executive Vice President and Chief Operating Officer as well as Vice President and General Manager of the company`s rare earths business unit and Vice-President of Sales.

Molycorp’s Chairman is Ross Bhappu and he said, “The Board of Directors thanks Mark Smith for his significant contributions and leadership over the past four years that have brought Molycorp to this natural transition into an ongoing operating business, and we wish him well in his future endeavors. Looking ahead, we have full faith and confidence in Constantine to manage the Company, operating with the best people and assets in the industry.”

Molycorp shares are down about 4% at $10.90 in the after-hours trading session against a 52-week range of $5.75 to $35.79. This stock had risen from $9 to over $11 in just the last couple of trading sessions. Investors have every reason to worry here. If the company clarifies this as normal then maybe it will be no big deal. Still, to announce that a CEO has left the company with no explanation in the midst of a regulatory investigation is not in good taste at all. It could even be alarming.

JON C. OGG