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Great Western Minerals Signs Option Agreement to Recommission Rare Earth Mine in South Africa
1/13/2009 7:00:45 AM - Market Wire
SASKATOON, SASKATCHEWAN, Jan 13, 2009 (Marketwire via COMTEX News Network) --
Great Western Minerals Group Ltd. ("GWMG" or the "Company") (TSX VENTURE:GWG) (PINK SHEETS:GMWGF) is pleased to announce that it has entered into an option agreement with Rare Earth Extraction Co. Ltd. ("Rareco") of Stellenbosch, South Africa, to refurbish, re-commission, and operate the currently abandoned Steenkampskraal underground mine in the Western Cape, South Africa. In addition, GWMG can acquire exclusive access to 100% of the rare earth elements mined there.
Under the terms of the agreement, GWMG has agreed to pay Rareco an amount of ZAR 1 Million (approximately C$125,000) for this option, payable in two tranches. The first payment of ZAR 500,000 was paid on signing the agreement.
The second payment of ZAR 500,000 will be made upon delivery, by Rareco, to GWMG, of an updated feasibility study and the receipt of confirmation that the application for conversion of its current Old Order Mining Right to a new mining license has been accepted by the South African Department of Mineral and Energy Affairs (the "confirmation of acceptance"). The updated feasibility study is expected to be completed by 31 March 2009 and receipt of the confirmation of acceptance is expected by 30 June 2009.
Subject to approval by GWMG of the updated feasibility study, the confirmation of acceptance, and other due diligence information to be provided by Rareco, GWMG and Rareco will negotiate a Supply Agreement under which 100% of the rare earth ore mined and processed will be made available, by Rareco, to GWMG, for a ten-year period, after which a new Supply Agreement can be negotiated.
The framework of the Supply Agreement will also include the introduction of a mutually acceptable Historically Disadvantaged South African ("HDSA") partner into the ownership structure of the mining operation. A suitable HDSA partner is required for the conversion to a new mining license. Rareco is currently in negotiations with a major mine operator in South Africa that would qualify as an HDSA partner satisfying that part of converting to a new mining licence, while at the same time bringing considerable mining expertise to the project. GWMG's participation in the project may take the form of either equity or debt, or a combination of the two.
The Steenkampskraal property is located approximately 70 km north of the town of Vanrhynsdorp, population 4,000, in the Western Cape Province of South Africa and is approximately 350 km north and west of Cape Town. Infrastructure is excellent, with access to the site by paved and gravel roads and close proximity to rail and sea-port; the governments are pro-development, and there is technical expertise available as well as a trainable work force.
The existing Steenkampskraal Mining Licence covers 474 hectares. The main rare earth-bearing mineral is monazite and is hosted by an igneous intrusive dyke system. The mineral deposit is tabular in shape with a known strike length of 400m and has been traced down dip for 250m. Thickness ranges from 0.3m to 4.0m and the average in-situ grade is 16.74% total rare earth oxide ("TREO"), making it one of the highest grade rare earth deposits known to exist. The deposit also contains significant amounts of copper, gold and phosphate which could be recovered as by-products. Very little exploration work has been done on the property and the deposit remains open along strike and at depth.
The Steenkampskraal mine originally operated through a subsidiary company of Anglo American Corporation from 1952 to 1963, making a monazite concentrate that was sold mostly for its thorium content rather than its rare earth content, and was the largest thorium source in the world during the years 1951 to 1963. In 1989, Rareco acquired the mine with the intention of becoming a rare earth elements producer. However, the fundamentals for the REE sector deteriorated significantly during that time, as China took control of the global rare earth industry, and mining became less attractive than in the current environment. Therefore, the operation was put on hold until recently.
GWMG conducted preliminary due diligence on the project and visited the site in late 2008. The underground workings were found to be completely accessible and in excellent shape. Independent review of the project was conducted by Dr Felix Mendelsohn in 1996, at the request of Rareco. These independent resource estimates indicate a recoverable resource of approximately 30,000 tonnes TREO, including rock already broken in underground stopes as outlined in the table below.
It is important to note that the independently developed data does not represent an NI-43-101 compliant reserve or resource. As such, a Qualified Person has not done sufficient work to establish any mineral resource, and this data should not be relied upon to assume any NI-43-101 compliant reserve or resource. GWMG is treating this data as a guideline only for developing the work programs necessary to bring results into compliance with NI 43-101.
Historic underground mining operations deposited run-of-mine waste rock on the surface of the property in addition to tailings from the processing plant. Sample grades of the tailings and waste rock indicate that historically both would qualify as resource tonnages for rare earth production. In addition to the remaining in-situ material, is rock that was blasted but not hauled to surface. Some of this rock was historically considered as low grade material and was used as ballast for the underground railroad track used to support the mined rock being hauled to surface.
Mineral Resource Summary, based on historic data:
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Source Net REO(%) REO(tonnes)
Tonnes(1)
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Underground Rock:
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In-situ-Main Zone(3) 117,500 16.74 20,000
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Broken 17,000 5.00(2) 850
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HW/FW Zones 30,000 5.00(2) 1,500
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Surface Material:
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Tailings 43,500 9.52 4,150
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Rock Dump 41,500 7.0 2,900
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Totals 249,500 29,400
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(1) After 20% mining dilution.
(2) Estimates provided by Rareco.
(3) The in-situ rock also grades 0.8% Cu, 0.5g/t Au and 6.0g/t Ag.
The following table presents the distribution of rare earth oxides within
the project's monazite mineralization based on historical data and
recompiled by Rareco:
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Oxide % of Total Tonnes contained
Grade in Resource
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Cerium 46.65 13,715
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Lanthanum 21.65 6,365
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Neodymium 16.66 4,898
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Praeseodymium 5.00 1,470
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Yttrium 5.00 1,470
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Samarium 2.50 735
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Gadolinium 1.55 455
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Dysprosium 0.55 162
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Erbium 0.08 24
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Terbium 0.08 24
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Europium 0.08 24
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Thulium 0.07 20
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Ytterbium 0.07 20
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Holmium 0.05 15
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Lutetium 0.01 3
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Total 100.00 29,400
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Another positive attribute of a mining operation at Steenkampskraal, is that the thorium content (with an historic in-situ grade of 2.5%) may provide an attractive byproduct from the operation. Rareco has received expressions of interest from third parties in recovering the thorium from the operation. Using existing proven technology, Rareco believes that it can extract the thorium during the production of the final mixed rare earth chloride concentrate to meet any and all customer and environmental requirements. According to current plans, the extracted thorium will be mixed with concrete and stored in designated areas within the underground mine. The thorium can then be recovered through a simple acid digestion process if, as and when required.
GWMG intends to verify the historical resource as part of its exploration program. If the historical resource is confirmed, the Company believes that the exploration potential for increasing the resource is considered excellent using current state-of-the-art exploration techniques. The existing mineralization relates to an intrusive dyke system that is believed to extend to depth, and there has been little systematic drilling done to locate ore either along strike or below the 150 metre level.
Jim Engdahl, President and CEO of Great Western Minerals Group said "One of our corporate mandates, subsequent to our purchase of Less Common Metals, was to look for opportunities that would allow us to achieve rare earth production earlier than the scheduled start-up of our Hoidas Lake project. Steenkampskraal appears to be that opportunity. Working with Rareco's experienced operating team, the project has excellent potential for fast-tracking access to REE products for our value-added processing facilities of Great Western Technologies located in Troy, Michigan, and LCM, located in Birkenhead, UK."
Engdahl adds "If the feasibility study confirms economic viability, we are optimistic that we could move this project into production within 24 months of the completion of that study. This could give us security of supply of REE for GWTI and LCM earlier rather than later, and in a very timely fashion as demand for critical applications like permanent magnets is increasing in Japan, North America and Europe."
Gary Billingsley (C.A., P.Eng, P.Geo), Executive Chairman of Great Western Minerals Group is the Qualified Person responsible for reviewing the contents of this release.
Jim Engdahl, President
About Great Western Minerals Group Ltd.
Great Western Minerals Group Ltd. is a Canadian-based company exploring for, and developing, strategic metal resources in North America. Pursuing a vertically-integrated business model, the Company's wholly-owned subsidiaries of Less Common Metals Limited located in Birkenhead UK, and Great Western Technologies Inc., located in Troy, Michigan, produce a variety of specialty alloys for use in the battery, magnet and aerospace industries. These "designer" alloys include those containing aluminum, copper, nickel, cobalt and the rare earth elements.
Cautionary Statement on Forward-Looking Information: The statements made in this News Release may contain certain forward-looking statements. Actual events or results may differ from the Company's expectations. Certain risk factors may also affect the actual results achieved by the Company.
CUSIP: 39141Y 10 3
SOURCE: Great Western Minerals Group Ltd.
Great Western Minerals Group Ltd. Ron Malashewski Manager of Investor Relations (306) 659-4516 Email: info@gwmg.ca Great Western Minerals Group Ltd. 226 Cardinal Crescent Saskatoon, SK S7L 6H8 Website: www.gwmg.ca