Shares of mining company Molycorp Inc. rose 16 percent to a fresh lifetime high Monday after Dahlman Rose raised its price target on the only U.S. producer of rare earth minerals.

The shares climbed $8.04 to $57.94, continuing a rally that began last week after China, which produces about 97 percent of the rare earth elements critical to modern devices from iPods to wind turbines, said it would further cut its exports of the materials in 2011.

The shares reached their highest level since Molycorp's initial public offering last July.

Dahlman Rose raised its price target on the Greenwood Village, Colorado-based company's shares to $85 from $49.

"The moves by China will be supportive of the medium-term prices for (rare earth elements)," wrote analyst Anthony Young. "The metal prices that we use to drive our earnings estimates remain well below current spot prices, thus it is possible that there may be significant upside to our valuation analysis."

Molycorp is in the process of redeveloping a rare earth mine in Mountain Pass, California, that was idled about a decade ago when prices for rare earth elements were low. The company intends to begin full production from the California mine by 2012.

In the past two months Molycorp has reached deals to supply Hitachi Metals Ltd. and Sumitomo Corp. with the materials. China has been limiting its exports of rare earths to maintain supplies for its own industries.

Investors have been scrambling to gain exposure to rare-earth producers since China began to limit exports in mid-2010. Molycorp shares have almost quadrupled since the July IPO, and shares of Australian producer Lynas Corp. have notched similar gains over the past six months.