Great Western's Q2 revenues jump 63%, margins expand

Rare earths processor Great Western Minerals Group (CVE:GWG) (OTCQX:GWMGF) said Tuesday that second quarter revenues jumped 63%, while gross margins on manufacturing and processing operations climbed 81%.

For the three months ending June 30, revenue rose to $5.18 million, from $3.18 million a year earlier. The results include manufacturing and processing revenue from two of the company's subsidiaries, UK-based Less Common Metals, and US-based Great Western Technologies.

Quarterly gross margins from manufacturing and processing operations improved from around 29.3% to 32.5%.

However, net losses continued to widen, expanding to $3.61 million, or $0.01 per share, from a loss of $1.50 million, or $0.0005 per share, a year ago. The latest quarter's results includes stock-based compensation of $1.7 million, and a  $0.16 million write-off of one of its exploration properties, compared to nil in the second quarter of 2010, the company said.

Great Western's specialty alloys are used in the battery, magnet and aerospace industries, and are produced at its subsidiaries, Less Common Metals in Birkenhead, U.K., and Great Western Technologies in Troy, Michigan. These alloys contain aluminium, nickel, cobalt and rare earth elements.

During the second quarter, Less Common Metals achieved earnings before interest, taxes, depreciation and amortization of $0.94 million, up 79% from $0.53 million a year earlier.

"Great Western Minerals Group experienced exceptional growth in revenue and margin performance in the second quarter of 2011," said president and CEO, Jim Engdahl. 

"With this type of positive performance, combined with a much stronger cash position than was the case at the same point last year, GWMG is well positioned to continue its development."

The company, which finished the quarter with $10.2 million in cash, compared to $4.1 million a year ago, is also developing its Steenkampskraal rare earth mine in South Africa.

In addition to a planned exploration program at Steenkampskraal, Great Western also holds interests in six rare earth exploration properties in North America.