* More exploratory drilling may allow larger estimate

* Shares rise 7 pct; stock has gained 41 pct this year

* Moly aims to provide supplies outside of China control

April 9 (Reuters) - Molycorp Inc, one of the only non-Chinese producers of rare earths, has raised its estimates of the reserves contained in its California mine, signaling a longer life for a facility that could supply U.S. green technologies for years to come.

Shares of Molycorp, which is buying rare earth processor Neo Material Technologies for $1.3 billion, rose more than 7 percent on Monday after it said its Mountain Pass mine contained 36 percent more probable or proven reserves than it estimated earlier.

The mine has the potential to fill a big void in the global supply of rare earths, used in products as diverse as Apple's iPhone and Toyota's Prius. China, which currently produces some 90 percent of the world's needs, has clamped down on exports, roiling prices of the oxides, metals and alloys.

MolyCorp, based in Greenwood Village, Colorado, now estimates reserves at 2.94 billion pounds of contained rare earth oxide equivalent, compared with a previous estimate of 2.24 billion pounds. The analysis, completed by SRK Consulting, used a cut-off grade of 5 percent.

"It's nice that it's bigger rather than smaller, but it doesn't change our valuation" on the stock, said Jon Hykawy, an analyst at Byron Capital Markets. The mine "will now last a little beyond forever."

The fresh estimate, which could rise with further exploratory drilling, means Molycorp's total proven and probable reserves add up to about 11 times the current global demand of 120,000 tonnes a year, most of which is supplied by Chinese producers.

The U.S. company, the only producer of rare earths in the Western hemisphere, is in the process of modernizing and reopening its Mountain Pass mine as it looks to gain a bigger slice of that global market. The facility was closed in the late 1990s because of environmental issues and low prices.

Molycorp expects output at the mine to reach its Phase 1 annual rate of 19,050 tonnes by the end of the third quarter. The company sold 3,050 tonnes of rare earth equivalents in 2011, mostly from stockpiled material.

The company is pursuing a goal to develop rare earth products and technologies that will be "game changers" for the United States green energy, technology and defense sectors.

The miner's closest competitor outside China, Australia's Lynas Corp, has faced numerous permitting delays at its processing facility in Malaysia. There are also numerous smaller companies advancing rare earth projects around the world.

Molycorp's stock hit a peak of $79.12 in May 2011, as China clamped down exports of the group of 17 rare earths, sending prices for the individual metals, oxides and alloys skyrocketing.

In the second half of last year, rare earth prices fell sharply, sending Molycorp's shares of down more than 70 percent by the end of the year. The stock has since gained more than 41 percent and was up about 5 percent to $34.87 on the New York Stock Exchange on Monday morning.

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