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Wednesday, 11 April 2012
Great Western Minerals on track to becoming fully integrated rare earths company
On a conference call this morning, Great Western Minerals (CVE:GWG)(OTCQX:GWMGF) updated investors and said it is on track for its strategy of becoming a fully integrated rare earth producer and processor.
Indeed, the company combines upstream resource exploration and extraction at its Steenkampskraal mine in South Africa with downstream metals processing facilities in the US and UK. Its specialty alloys are used in the battery, magnet and aerospace industries.
Rare earths refer to a group of 15 specific elements, known as lanthanides, plus scandium and yttrium, used for everything from smartphones to guided missiles. While some rare earths are relatively common, they are dispersed in a way that makes it difficult to find deposits with high enough ore grades to economically exploit.
Demand for the metals is expected to continue to grow steadily as China, which produces 97 percent of the world’s rare earths, has cut exports significantly in recent years.
As the company focuses on developing its Steenkampskraal mine to production and boosting its capacity at its processing facilities, Great Western is poised to be in early entrant into the rare earth sector outside of China, said president and CEO Jim Engdahl on a conference call this morning.
Engdahl said he sees a day when China will be a net importer, and therefore supply from the company's own source is critical.
The exploration program at Steenkampskraal is also central to ensure a strong flow of feedstock for the company's downstream processing. It intends to be one of the first to produce significant quantities of the more valuable heavy rare earth oxides, which are important materials for alloys.
The rare earth company, which eventually plans to be its own supplier as well as creating a "supply certainty" for global customers, has several operational targets this year, including the refurbishment of the mine shaft at Steenkampskraal in the first half of this year, and the completion of the NI 43 101 report for the mine by mid May.
Great Western said it is on track for both these targets, as well as for the launch of mining activities by the end of 2012, and the construction of a mixed chloride plant and separation plant near Steenkampsraal in the first half of 2013.
Yesterday, the company unveiled the assay results from the first batch of samples taken as part of the phase one program at Steenkampskraal. The sample testing was done to confirm historic work and for metallurgical purposes.
Tuesday, the company reported results from 198 of 841 samples submitted for testing in a lab. Within the underground channel sampling results, assays ranged from 15.9% total rare earth oxide (TREO) to a whopping 40.12% TREO with an average of 23.75% TREO.
Drill core assays ranged from 0.18% TREO to 31.07% TREO, with an average grade of 13.83% TREO, while surface tailings results from the first batch of 54 assays ranged from 3.85% TREO to 12.01% TREO with an average of 7.27% TREO.
In comparison to historical data for Steenkampskraal, the company saw a higher distribution of neodymium, dysprosium and terbium. Neodymium, in particular, is a primary rare earth metal required for manufacturing by the company's processing subsidiary, Less Common Metals (LCM), in the UK.
In comparison to other rare earth companies' published exploration results, Great Western also said the level of neodymium and rare earth elements "of strongest interest" to the company, including heavy rare earth elements, is 34.5% of TREO, compared to 17.7% and 27.7% for two other "leading" rare earth companies.
In February, the company launched a phase two 3,000 metre exploration program at the South African mine that will aim to extend the mineralized vein system to the west of the current mine site. As of the end of March, the company had drilled 1,483 metres.
The remaining results from the phase one program will continue to be released over the next few weeks as Great Western works toward the completion of the NI 43-101 report, Engdahl said.
With regards to the construction of the mixed chloride production plant and solvent extraction separation facility, the company is also progressing smoothly. The contract for the design of the mixed chloride plant has been signed, and an environmental impact assessment is now underway for the rare earth separation plant.
The company has a joint venture agreement with Ganzhou Qiandong Rare Earth Group of China for the final design, construction and operation of the rare earth separation facility, which gives Great Western a 75 percent stake.
The remaining rare earth oxides that will not be used by the company will be sent to end users, with which Great Western is in current negotiations.
At its LCM operation in the UK, the company completed the first pour with its new strip casting furnace at the end of January, and in late March, the company placed an order for a second strip cast furnance, allowing alloy manufacturing capacity to double when the second furnace arrives and is commissioned later this year.
The second strip cast furnace will increase the total production capacity of LCM to approximately 2,000 tonnes per annum of rare earth alloys. The company is boosting capacity in prepartion for its rare earth production coming online, and as demand for the metals grows.
Last week, the company closed a $90 million convertible bond financing with co-lead agents GMP Securities, ISM Capital and Byron Capital Markets, covering its estimated capex to production.
Engdahl also said on the conference call that the search for a new CEO continues, with a smooth transition targeted.