Great Western Minerals Group (CVE:GWG) announced Monday it has signed a letter of intent to enter into a long term agreement with European permanent magnet producer, Vacuumschmelze GmbH & Co. KG (VAC), whereby VAC will purchase at least 50% of its rare earth alloy needs from Great Western.
The long-term, multi-year agreement will see Great Western's wholly owned subsidiary, Less Common Metals, supply neodymium/dysprosium alloys, samarium alloys and associated metals to VAC for its permanent magnet operation.
Less Common Metals currently supplies samarium-cobalt alloys to VAC.
Great Western said its subsidiary plans to install a new melting capacity in order to provide certain compositions and microstructures that are more specific to VAC's alloy requirements in the future.
Great Western president and CEO, Jim Engdahl commented: "Moving toward a long term agreement as an approved supplier through this Letter of Intent is yet another example of [Great Western] systematically executing its fully integrated business model."
"Being able to base our Company’s expansion plans on an existing supplier relationship with a company of the market stature of Vacuumschmelze significantly increases the relevance of this LOI because our company has a strong track record of being a highly qualified supplier to VAC."
Great Western's rare earth specialty alloys are used in the battery, magnet and aerospace industries, and are produced by its two subsidiaries: Less Common Metals in Birkenhead, UK, and Great Western Technologies in Troy, Michigan.
Aside from its Steenkampskraal mine in South Africa, the Saskatoon, Saskatchewan-based company also holds interests in six rare earth exploration properties in North America.
On the TSX-Venture, Great Western's stock gained 2.44% as of 11:55 am EDT, to trade at $0.84.
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