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Wednesday, 1 May 2013
Great Western files PEA for Steenkampskraal; to focus on project costs
Rare earths alloys maker Great Western Minerals Group(CVE:GWG) (OTCQX:GWMGF) says it has filed its prelimimary economic assessment study results that were announced in March for its Steenkampskraal project in South Africa, and is now focused on reducing the capital required to restart the mine.
The rare earths processor, which is transitioning to a fully integrated rare earths producer, makes specialty alloys used in the magnet, battery, defence and aerospace industries from two facilities in the U.S. and U.K. Its development program at its Steenkampskraal rare earth mine in South Africa, which includes a restart of the historical mine, is central to ensure a strong flow of feedstock for its downstream processing unit.
The preliminary economic report highlighted a C$555 million after-tax net present value for the project, when applying a 10 per cent discount rate, and a 28 per cent South African corporate tax rate.
The study also estimated a 66 per cent internal rate of return and a two and a half year payback period, on an after-tax basis, from the start of underground mining for the project - which has an 11-year potential mine life.
"We have directed our resources where we believe we can get the greatest return and add substantive value to the project to include a focus on finalizing the feasibility study which will provide greater clarity about project costs thereby reducing the risk for development," said president and CEO, Marc LeVier, in a statement Wednesday.
"Given the impact global economies have had on the mining industry and limiting access to capital, we have stopped geo-development drilling and deferred other site development activities."
He added that the company is in discussions with parties that have indicated interest in off-take agreements for metal alloy products it produces. "Any off take agreements combined with a potential tolling agreement for the separation plant will help to reduce the capital required to bring Steenkampskraal to production," he said.