Great Western says Steenkampskraal rare earth mine remains main priority

Great Western Minerals (TSE:GWG) (OTC: GWMGF), an integrated processor of rare earth minerals, said Wednesday it has continued to execute its strategy of being a "first mover" in the rare earth industry, as president and CEO Jim Engdahl updated analysts and investors on a conference call this morning about its recent developments.
Engdahl said his company's "number one priority" was developing the resource base at Steenkampskraal, a past-producing rare earth mine and processing facility in South Africa, where a refurbishement process is now underway.
The company said an NI 43-101 compliant report from the Steenkampskraal is due in the first half of next year, with the facility to begin full operations on both the mining and processing side by the first quarter of 2013. Anticipated total capital costs for the Steenkampskraal facility amount to $60 million.
Minerals present at the Steenkampskraal ore body include monazite, a phosphate source of rare earths, quartz, apatite and magnetite, with small amounts of zircon, pyrite, chalcopyrite, galena and ilmenite.
Demand for rare earths is boooming, as despite being used in relatively small amounts, the metals are necessary to the growing production of energy-efficient green products, mobile electronics and electric vehicles.
Deposits of the metals are not actually rare, but high capital costs, difficult metallurgy, marginal ‘heavy’ rare earths grades, and a lack of people with significant rare earths processing experience are major hurdles to bringing new mines to production, bringing Great Western's advanced Steenkampskraal mine to investors' attenion.
China currently produces around 97% of global rare earths, but in July of last year, the country announced significant reductions to rare earths export quotas, claiming protection of a strategic and dwindling resource. Since 2006, rare earths prices have increased between 1,000-10,000%.
The first phase of construction of a chloride processing plant at Steenkampskraal is due to be completed by the end of December. When it is at full capacity, based on production of 5,000 tonnes of rare earth oxides per year at low cash costs, the company expects to generate well in excess of $250 million in cash flow.
Engdahl downplayed the risks of nationalization in South Africa, a cause for concern for a number of foreign companies operating in the country, stating that the issue was "part of the normal political discourse" in the nation.
At the company's UK rare earth alloys processing subsidiary, Less Common Metals, which produces its specialty alloys that are used in the battery, magnet and aerospace industries, a new furnace will be commissioned in December and ready for production in early 2012, upping capacity to 2,000 tonnes per annum in the next 12 months.
The company is also working on additional supply agreements to achieve guaranteed long term sales. Great Western has been successful in this area thus far, with second quarter manufacturing and processing revenues jumping 63% to $5.18 million.
Engdahl said that the Hoidas Lake project in Saskatchewan was still promising and the company will issue an update on the project in the first quarter of next year.
On the issue of listing on AMEX to improve the company's exposure to the US market, Engdahl said there were no imminent plans for an additional listing: "We consider it every month and when the opportunity is there and the timing is there, we will seriously look at that."
The company had cash resources of around $1.5 million as at September 13, and in terms of spending timelines, most of the capital requirements have been deployed for the current and next month. Engdahl anticipates a number of the company's 23 million outstanding warrants coming in "fairly shortly" and also expects to see money come in from its current offtake agreements.
The company continues to look for early stage rare earth-related opportunities with great infrastructure, Engdahl concluded. As at 1.40 pm EDT, shares were up 6.67% at 80 cents.