Great Western Minerals Group Ltd. (GWMGF: OTCQX International) | Great Western Minerals Group Releases Positive PEA Results for Steenkampskraal Rare Earth Project in South Africa

“PEA Indicates $555 Million After-Tax NPV, 66% After-Tax IRR for
Steenkampskraal Project”

TSX Venture Symbol: GWG
OTCQX: GWMGF

CUSIP: 39141Y 10 3

SASKATOON, March 18, 2013 /PRNewswire/ – Great Western Minerals Group Ltd.
(“GWMG” or the “Company”, TSX:V – GWG) today announced positive results
from a Preliminary Economic Assessment (“PEA”) of the Company’s
Steenkampskraal rare earth element (“REE”) project that indicates
strong potential for GWMG’s integrated business model.

Project highlights (all amounts in this news release are in $ Cdn. unless otherwise
indicated
):

  • $555 Million after-tax net present value (“NPV”) applying a 10% discount
    rate and a 28% South African corporate tax rate

  • 66% after-tax internal rate of return (“IRR”)
  • 4.3 year estimated Project payback period, on an after-tax basis, from
    start of underground mining production.
  • 11 year potential life of mine

GWMG President and Chief Executive Officer Marc LeVier said, “The PEA
conducted on the Steenkampskraal project confirms our internal
projections of a high grade and excellent distribution of the critical
rare earth elements. The impressive, high-grade nature of
Steenkampskraal translates into lower tonnages for processing, which in
turn, results in low capital cost requirements relative to other REE
projects. The work undertaken on the project to date and the
accelerated metallurgical testing program is intended to enable GWMG to
advance the project rapidly. This ‘early mover’ status, combined with
GWMG’s existing alloy manufacturing capacity, positions GWMG very
favourably.”

Financial and Operating Highlights

The PEA is preliminary in nature and includes an economic assessment of
Indicated Mineral Resources and Inferred Mineral Resources (terms which
have the meanings ascribed to them by the Canadian Institute of Mining,
Metallurgy and Petroleum, CIM Definition Standards on Mineral Resources
and Mineral Reserves).

The Inferred Mineral Resources are quantified based on the potential
viability of the Resource Estimate of the Steenkampskraal project and
are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized
as Mineral Reserves (CIM Definition, Standards on Mineral Resources and
Mineral Reserves).

Mineral Resources that are not Mineral Reserves do not have demonstrated
economic viability and there is no certainty that the results of the
preliminary economic assessment will be realized.

The PEA contains a sensitivity analysis which demonstrates that the
Project valuation is most sensitive to changes in REO prices.  The
Project valuation is least sensitive to changes in capital
expenditures.

REO Pricing

GWMG has selected the midpoint of the Roskill 2015 forecast of rare
earth prices for the PEA. The forecast prices are the averages of the
high and low ranges to a midpoint.

Midpoint of Roskill 2015 Forecast

Pricing Sensitivity

Timelines

Production of mixed RECl (concentration and hydrometallurgical stages)
is projected to commence within 24 months of the completion of required
Project financing, at a design capacity of approximately 5,000 tonnes
per year of contained REOs.

Production of separated REOs is projected to commence within 12 months
of the commencement of RECl production at a design capacity of
approximately 5,000 tonnes per year of separated REOs per annum.

Resource Estimate Highlights

The PEA is based on the Resource Estimate for the Project, as filed on
SEDAR on March 7, 2013, which reports 278,000 tonnes of Inferred
Mineral Resources at an average grade of 15.2% TREO and 176,000 tonnes
of Indicated Mineral Resources at an average grade of 18.2% TREO, each
using a 1% TREO cut-off grade.  The Resource Estimate includes the
historic mine area (the “Monazite Mine Area”), and the exploration
areas to the east and west of the past producing Monazite Mine Area
(the “EXP Area”) as well as the historic upper tailings and lower
tailings.

(1)  For the Resource Estimate, “tonnes” and “grades” were rounded to 3
significant figures. Apparent errors in the totals may occur due to
rounding.

(2) “LREO” means lanthanum (La2O3), cerium (CeO2), praseodymium
(Pr6O11), neodymium (Nd2O3) and samarium (Sm2O3).  “HREO” means
europium (Eu2O3), gadolinium (Gd2O3), terbium (Tb4O7), dysprosium
(Dy2O3), holmium (Ho2O3), thulium (Tm2O3), ytterbium (Yb2O3) lutetium
(Lu2O3) and yttrium (Y2O3).  “TREO” includes yttrium.

For a complete description of the Resource Estimate and Technical Report
please refer to the Resource Estimate, as filed on SEDAR on March 7,
2013
, at www.sedar.com.

Steenkampskraal Project Overview

The Project is comprised of three activities, as part of GWMG’s overall
five-part integrated business model, namely (i) the underground mine
and future reprocessing of tailings; (ii) the RECl Plant that produces
mixed RECl; and (iii) the solvent extraction separation plant (the “RE
Separation Plant”) that produces separated REOs.  Thereafter, GWMG’s
integrated business model includes installation of metal making
capacity and expansion of current alloy production capacity at Less
Common Metals Limited (“LCM”), GWMG’s subsidiary located in the United
Kingdom
.

The Project is based on a high grade / narrow vein underground mine,
which was successfully operated by Anglo American to recover thorium
between 1952 and 1963.  GWMG’s proposed mining method, ventilation and
overall operations consist of common and conventional processes and
procedures, of which there are numerous analogues throughout South
Africa
.  The Project is estimated to hoist approximately 165 tonnes per
day of ROM material.

In addition, and very importantly to the directors and management of
GWMG, the Project has been designed to, concurrently with production,
rehabilitate historical environmental impacts caused by former
operators.

Steenkampskraal Monazite Mine (Pty) Ltd (“SMM”), a subsidiary of GWMG,
was awarded a New Order Mining Right (the “Mining Right”) permitting
mining operations in an area of approximately 474 hectares for a
20-year period commencing June 2, 2010.  SMM also holds a Certificate
of Registration (“COR”) with the South African nuclear regulators,
which authorizes processing of radioactive material with respect to the
Steenkampskraal site, including the long term storage of the thorium
by-products that will be produced.  The COR also allows SMM to apply
for and obtain specific approvals for proposed methods of storage of
by-products.

Through its subsidiary Rare Earth Extraction Co. Limited, GWMG has
embarked on a mine refurbishment program which includes establishment
of surface infrastructure, rehabilitation of the existing shaft,
opening underground access and main haulages, the re-survey of existing
underground workings, and the installation of temporary ventilation to
facilitate preliminary activities. Furthermore, the general
refurbishment has permitted extensive in-fill and exploratory diamond
drilling on surface, as well as several campaigns of underground
sampling for assay and metallurgical testwork, and geotechnical
investigations.  These undertakings and investigations have facilitated
the Resource Estimate and the preparation of the PEA. In the interest
of health and safety, and to ensure efficient operations, a program of
re-vamping the raises, drives, cross-cuts and re-equipping of services
such as compressed air lines, water lines, power supply, rails and
ground handling box fronts has commenced.

Production Estimate

Mining, RECl and RE Separation Summary

The underground host rock demonstrates notable competence as even after
50 years the majority of the excavated and remaining old mining area
shows no visible signs of stress or instability.

The underground Monazite Mine Area will use a combination of
conventional and shrinkage stoping for flat and steeply dipping
sections of the mine, respectively.  Conventional jack leg drilling and
blasting will be used, with cleaning being done by winches scraping the
broken rock down the raises to main haulages.

The underground EXP Area is immediately adjacent to the underground
Monazite Mine Area, both contained within the New Order Mining Right. 
Access to the EXP Area is planned to be through a new separate shaft
for personnel and materials. This shaft will also be used for the
intake ventilation to the workings and there will be a separate exhaust
return air raise.  For the purpose of the PEA, it has been assumed that
the EXP Area mine layout will be similar to the existing Monazite Mine
Area.

The ultimate objective of the RECl Plant is to extract the REE’s from
the hoisted ROM material and convert them to a purified mixed RECl.
This will be performed via comminution processes, followed by
concentration, and then several stages of leaching to remove
impurities.

The RECl Plant is being designed to treat 70,000 tonnes per annum, or
approximately 192 tonnes per day, of hoisted ROM feedstock, which is
estimated to be sufficient to produce RECl containing up to 6,000
tonnes of REOs per annum. The ROM will be stockpiled on surface to be
conveyed to the RECl Plant.  Preparation of ROM will include primary
and secondary crushing followed by ball milling. The milled material
will then be floated to remove copper and iron sulphides, followed by a
monazite float to concentrate the REE-containing monazite. This will be
cracked and followed by water and acid leaching to remove impurities
and convert the REEs to a mixed RECl. Flotation tails and precipitated
impurities will be stockpiled under controlled conditions pending
re-use or recycle. The mixed RECl will be hauled to the RE Separation
Plant at Vredendal in the Western Cape of South Africa, located
approximately 100 kilometres from the Steenkampskraal mine site. 

There exists the potential to produce an alternative product in the form
of a RE carbonate from the RECl Plant, subject to process development
and proof of economic feasibility.  Operations at the Steenkampskraal
site are designed to remediate historical environmental impacts from
previous operators.

The mixed RECl will then be separated and converted into individual REOs
using a series of solvent extraction steps. Metals from the purified
solutions will subsequently be precipitated and calcined to convert to
REOs. No waste products will be stored at the RE Separation Plant.

Certain individual REOs (mainly those used in magnet alloys) will be
shipped to and utilized by LCM for further processing into metals and
alloys for its customers, while the balance of the REOs produced will
be sold into the spot market.  This comparatively short-term spot
market approach is the industry norm. However, GWMG is investigating
the potential for off-take arrangements.

Human Resources Summary

The Company’s project management team will deal with an EPCM contractor
who will manage all contractors during the planning, construction and
operations phases of the Steenkampskraal operation. Led by the Project
Director, the team will include a cross-section of experience and
skills to ensure that appropriate expertise is available for
comprehensive review of all areas of the mine, RECl Plant and RE
Separation Plant.

It is anticipated that approximately 450 employees will be required
throughout the operation including the mining, chloride production and
separation components.  It is also anticipated that the Company will
engage in a significant level of staff training in order to ensure that
sufficient multi-skilling and cross-training are achieved in order to
minimize staffing levels.

Mineral Processing and Metallurgical Testing

Various mineral processing and metallurgical investigations have been
undertaken on samples from the Project, including test work by SGS
South Africa (Pty) Ltd.  The current testing program consists of
accelerated parallel testing at Mintek (South Africa) in respect of
optimization of flotation and hydrometallurgical leaching tests, as
well as by the Saskatchewan Research Council.  Conceptually, processing
of the monazite-rich concentrate will consist of two basic components.
Beneficiation, which produces a mineral concentrate and consists of
crushing, milling, and concentration technology such as gravity,
magnetic, and flotation techniques and leaching which takes the mineral
concentrates and produces a liquid chloride solution of mixed RECl.

The mixed RECl Plant will be constructed at the Steenkampskraal mine
site, where thorium will be separated from the concentrate to meet the
required specifications for the RE Separation Plant and to meet
regulations to allow shipment.

Design work for the mine and processing plants commenced under the
guidance of DRA Mineral Projects of South Africa (“DRA”).  DRA has an
excellent track record of utilizing world class standards in its design
work and is well qualified for the Project.

The monazite concentrate has been successfully tested to create a mixed
RE chloride solution, with the potential to produce an alternative
product, namely  an RE carbonate, currently being evaluated as an
opportunity to advance cash flow. The testwork continues to further
optimize process conditions and reagent consumptions for all stages of
treatment.

Environmental Plan

The Steenkampskraal Project is being advanced under an existing and
valid Environmental Management Programme and Environmental Impact
Assessment that has been reviewed and accepted by the applicable
governing bodies of the Government of South Africa.  As changes in
Company plans or government regulations arise, the Company will take
all necessary steps to ensure it remains fully compliant with current
regulatory requirements.

On site, secure, fortified, long term storage will be authorized under
the Company’s COR, and consequently there will be no requirement for
off-site transportation of any radioactive materials. The final storage
procedure is to be assessed and confirmed according to National Nuclear
Regulator and international standards.

Options under Evaluation

Although the PEA focuses on the Steenkampskraal Project, the Company is
convinced it is uniquely positioned within the rare earth sector due
its ownership of LCM. The alloy manufacturing capability of LCM
provides the Company with ready access to international markets.  The
Company’s fully integrated business model and the long established
business relationships earned by LCM over a 21 year time frame, provide
a high level of competitive advantage.

In the course of evaluating its strategic options for the development of
rare earth separation capacity, the Company has focused on the
construction of the RE Separation Plant at Vredendal in the Western
Cape of South Africa, located approximately 100 kilometres from the
Steenkampskraal mine site.  In addition to constructing the RE
Separation Plant, and as a means to achieve revenue in the shortest
timeframe, the Company continues to evaluate the potential for entering
into a tolling arrangement whereby the mixed rare earth product
produced at the RECl Plant could be separated through the facilities of
a third party. This strategy, if followed and successful, would
significantly reduce initial capital requirements for the Project,
thereby positively impacting the Net Present Value.

There also exists the potential to produce an alternative product in the
form of a RE carbonate from the RECl Plant, subject to further
examination of chemical and economic feasibility.

The Company recognizes the funding requirements to deliver the project
and the primary objective of generating cash flow at the earliest date
possible, and is aggressively pursuing its options with the following
priorities:

  • Reductions in capital requirements through the additional studies
    currently underway as recommended by the Company’s advisors and
    building to the standard of “fit for purpose” and

  • Investigating the potential for an off-take arrangement leveraging off
    of our existing knowledge of downstream customers and the interest in
    securing a long term supply of metals.

The PEA is based on a Mineral Resource estimate and Technical Report
(the “Resource Estimate”) prepared in accordance with National
Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”), as announced and filed on SEDAR on March 7, 2013.  The
current Resource Estimate indicates a material increase in resources at
the Steenkampskraal project (the “Project”) as compared to the May 31,
2012
resource estimate. The Company will file a technical report in
respect of the PEA within the next 45 days on SEDAR under GWMG’s
profile at www.sedar.com.  The PEA was prepared by Snowden Mining Industry Consultants (Pty)
Ltd. (“Snowden”) of Johannesburg, South Africa.

Qualified Persons

The PEA was prepared by Mr Bill McKechnie, BSc. (Hons), Pr.Sci.Nat,
MSAIMM, MGSSA, the General Manager, Africa Region of Snowden Mining
Industry Consultants (Pty) Ltd.  Mr. McKechnie consents to the
inclusion in this news release of the matters based on his information
in the form and context in which it appears.  Mr. McKechnie has
sufficient experience relevant to the activity which he is undertaking
to qualify as a Qualified Person as defined under NI 43-101 and
supervised the preparation of the contents of the PEA disclosure in
this news release.

The Resource Estimate was prepared by Mr. Ivor Jones, B.Sc. (Hons.),
MSc, FAusIMM, CP Geo., the Group General Manager – Geosciences of
Snowden Mining Industry Consultants (Pty) Ltd.  Mr. Jones consents to
the inclusion in this news release of the matters based on his
information in the form and context in which it appears.  Mr. Jones has
sufficient experience relevant to the activity which he is undertaking
to qualify as a Qualified Person as defined under NI 43-101 and
reviewed the contents of the Resource Estimate disclosure in this news
release.

Snowden was assisted by Dr. John Hancox, Pr.Sci.Nat., General Manager,
Africa of Caracle Creek International Consulting (Pty) Limited of
Johannesburg in the preparation of the Resource Estimate.  Dr. Hancox
provided geological interpretations and the drillhole and underground
channel sampling database for the Resource Estimate. Dr. Hancox has
sufficient experience relevant to the style of mineralization and type
of deposit under consideration and to the activity which he is
undertaking to qualify as a Qualified Person as defined under NI 43-101
and has reviewed the contents of the Resource Estimate sections of this
news release.

Brent C. Jellicoe, B.Sc. (Hon.), P.Geo., Director of International
Exploration for GWMG, is the Qualified Person responsible for
supervising the preparation of the technical content of this news
release.

Conference Call

A Conference Call to discuss the results of the PEA news release with
President CEO Marc LeVier as well as members of the GWMG management
team is scheduled for Wednesday, March 20 at 1:00 p.m. Eastern Standard
Time
, 5:00 p.m. London Time.

Participants can sign up for the conference call as follows:

Corporate Summary

Great Western Minerals Group Ltd. is engaged in becoming an integrated
rare earth producer. Its specialty alloys are used in the battery,
magnet and aerospace industries. Produced at the Company’s wholly owned
subsidiaries Less Common Metals Limited in Ellesmere, U.K. and Great
Western Technologies Inc. in Troy, Michigan, these alloys contain
transition metals including nickel, cobalt, iron and rare earth
elements. As part of the Company’s vertical integration strategy, GWMG
also holds 100% equity ownership in Rare Earth Extraction Co. Limited,
which controls the Steenkampskraal monazite mine. In addition to an
exploration program at Steenkampskraal, GWMG also holds interests in
four active rare earth exploration and development properties in North
America
.

Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statements

Certain information set out in this News Release constitutes
forward-looking information.  Forward-looking statements (often, but
not always, identified by the use of words such as “expect”, “may”,
“could”, “anticipate” or “will” and similar expressions) may describe
expectations, opinions or guidance that are not statements of fact and
which may be based upon information provided by third parties.
Forward-looking statements are based upon the opinions, expectations
and estimates of management of GWMG as at the date the statements are
made and are subject to a variety of known and unknown risks and
uncertainties and other factors that could cause actual events or
outcomes to differ materially from those anticipated or implied by such
forward-looking statements. Those factors include, but are not limited
to, the successful and timely completion of its preliminary economic
assessment at Hoidas Lake; the assumptions and estimates in the
preliminary economic assessment of the Steenkampskraal project proving
to be accurate over time; the construction, commissioning and operation
of the proposed monazite processing facility and separation facility
within  estimated parameters; mine refurbishment activities; reliance
on third parties to meet projected timelines and commencement of
production at Steenkampskraal; risks related to the receipt of all
required approvals including those relating to the commencement of
production at the Steenkampskraal mine, delays in obtaining permits,
licenses and operating authorities in Canada, South Africa and China,
environmental matters, water and land use risks; risks associated with
the industry in general, commodity prices and exchange rate changes,
operational risks associated with exploration, development and
production operations, delays or changes in plans, including those
estimated in the preliminary economic assessment of the Steenkampskraal
project; risks associated with the uncertainty of resource estimates;
health and safety risks; uncertainty of estimates and projections of
production, costs and expenses; risks that future Hoidas Lake or
Steenkampskraal and region exploration results may not meet exploration
or corporate objectives; the adequacy of the Company’s financial
resources and the availability of additional cash from operations or
from financing on reasonable terms or at all; political risks inherent
in South Africa and China; risks associated with the relationship
between GWMG and/or its subsidiaries and communities and governments in
Canada and South Africa, radioactivity and related issues, dependence
on one mineral project; loss of, and the inability to attract, key
personnel; the factors discussed in the Company’s public disclosure
record; and other factors that could cause actions, events or results
not to be as anticipated. In light of the risks and uncertainties
associated with forward-looking statements, readers are cautioned not
to place undue reliance upon forward-looking information. Although GWMG
believes that the expectations reflected in the forward-looking
statements set out in this press release or incorporated herein by
reference are reasonable, it can give no assurance that such
expectations will prove to have been correct. Except as required by
law, GWMG does not assume any obligation to update forward looking
statements as set out in this news release. The forward-looking
statements of GWMG contained in this News Release, or incorporated
herein by reference, are expressly qualified, in their entirety, by
this cautionary statement and the risk factors contained in GWMG’s
Professional Securities Market listing particulars available at www.sedar.com.

Cautionary Note For US Investors Concerning Estimates of Indicated and
Inferred Resources

This press release uses the terms “Indicated” and “Inferred” resources. 
United States investors are advised that while such terms are
recognized and required by Canadian regulations, the United States
Securities and Exchange Commission does not recognize them. “Inferred”
mineral resources have a great amount of uncertainty as to their
existence, and as to their economic and legal feasibility. It cannot be
assumed that all or any part of an Inferred mineral resource will ever
be upgraded to a higher category. Under Canadian rules, estimates of
Inferred mineral resources may not form the basis of feasibility or
other economic studies except in limited circumstances and with
specific notification to the reader.  United States investors are
cautioned not to assume that all or any part of any mineral resources
will ever be converted into mineral Reserves (as defined under NI
43-101). United States investors are also cautioned not to assume that
all or any part of an Inferred mineral resource exists, or is
economically or legally mineable.

 

SOURCE Great Western Minerals Group Ltd.

Article source: http://www.otcmarkets.com/stock/GWMGF/news?id=60146

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