July 28, 2008
Great Western Minerals Group Updates Activities
SASKATOON, SASKATCHEWAN--(Marketwire - July 28, 2008) - Great Western Minerals Group Ltd. ("GWMG" or the "Company") (TSX VENTURE:GWG) (PINK SHEETS:GWMGF) is pleased to provide an update of its unique "mine-to-market" strategy to become a fully integrated explorer and global supplier of rare earth elements ("REE'") and other strategic metals.
The Fundamentals of the Rare Earth Sector Remain Strong: The world demand for REE continues to accelerate while China, the primary supplier of REE, further reduces exports of those elements. In 2007, global consumption was approximately 108,000 tonnes, with China consuming approximately 65% of that amount, Japan and SE Asia consuming approximately 25%, and the remaining 10% consumed by the US. At a growth rate of 10-15% per year, demand for REE is expected to be approximately 190,000 tonnes per year by 2012, which is believed to exceed the projected supply available from sources that are currently known.
In addition, with the upcoming Olympics in Beijing, many industrial facilities in China are temporarily suspending operations for many weeks in advance of the games in an effort to improve the air quality. Many end-users of REE from China are concerned that this will further disrupt the shipment of REE from the country.
In the meantime, hybrid vehicle manufacturers such as Toyota have announced that they are aggressively increasing production in 2010 and beyond. With an estimated 20 kg of REE in each hybrid vehicle, this could significantly increase the demand for REE, particularly for the NiMH batteries and the permanent magnets used in the vehicles. As a result, one can expect a further increase in prices as the demand begins to exceed supply.
With strong fundamentals supporting the industry, GWMG continues to aggressively move ahead in the implementation of its "mine-to- market" strategy.
Financing: GWMG has retained Research Capital Corporation of Toronto, with participation by PowerOne Capital Markets, to implement an early exercise program for eligible warrants issued through financings since late 2006. Successful completion of this program could add approximately $10.65 million to the Company's treasury, if all eligible warrants are exercised.
Proceeds of this financing will be allocated to several activities. These activities include the exploration programs at Hoidas Lake in Saskatchewan and Deep Sands in Utah; the metallurgical testing and research to develop cost-effective methods of extracting the REE from the host rock; initiatives to expand the customer base and range of products and services of each of Great Western Technologies Inc; and Less Common Metals Ltd., and for general working capital purposes.
Hoidas Lake: The summer exploration and drilling program is currently underway at Hoidas Lake. This program will test a number of VLF-EM and surface showings throughout the area for the presence of other vein systems and will test the footwall of the JAK Zone extension to the south that was identified in the 2008 winter drilling program.
So far, two of the VLF-EM targets were tested in the Hoidas west and south areas, both of which appear to be fault zones. Three targets in the Nisikkatch South area were tested with four drill holes. Two holes tested the surface mineralization at the Nisikkatch South showings and encountered narrow veins of apatite-diopside- allanite mineralization.
In addition, a geotechnical drilling program consisting of six holes will test the location of proposed dams for the tailings pond and two drill holes will test the footwall of the JAK zone for geotechnical data. Four of the six tailings pond holes have now been completed.
The prospecting crews have identified a significant new showing south of Hoidas Lake and a narrow showing at the north end of Nisikkatch Lake. This type of mineralization is typical of the JAK Zone and follow up work is required to further assess the potential of these showings.
Assay results for this drilling program are expected in late fall of 2008.
Plans for further exploration at Hoidas Lake will be based on the assay results of the current drilling program, the results of the ongoing metallurgical testing, and recommendations developed in the Preliminary Economic Assessment Report (PEAR).
Phase 2 Metallurgy: Metallurgical tests are continuing at several labs in an effort to expedite the development of the most cost- effective method for enhancing the grade of the mineralization in advance of leaching, and minimizing overall costs in the processing and refining of the rare earth samples. Once the optimal process is defined, the results will be incorporated into the PEAR.
Transportation Study: This study will review the transportation alternatives and determine the most effective route to transport materials to and from Hoidas Lake. So far, several alternatives have been presented which have the potential to reduce the transportation and operating costs of a mining operation at Hoidas Lake. Once completed, this information will also be included in the PEAR.
Deep Sands Project, Utah: The drilling program at Deep Sands announced in May 2008 is nearing completion. The objective of this program is to begin compiling sufficient data to complete a 43-101 compliant resource estimate, suitable for a Preliminary Economic Assessment Report and move toward a feasibility study.
Two drill rigs were deployed on this program. A truck mounted rig capable of drilling holes to 50 metres in depth has completed 76 holes, to an average depth of 23 metres, for a total of 1753 metres. In addition, a track mounted rig has completed nearly 700 holes of a separate 900-hole, 4,260 metre program, to systematically sample the upper 6 metres of the targeted area. It is expected that this program will be completed by late August.
Samples, once collected, will initially be analyzed on-site utilizing a NITON XRF Analyzer with a rigorous QA/QC program which includes systematic insertion of blanks, standards and duplicates with one half of the duplicate analysis sent to SGS Laboratories for analysis to verify the results of the NITON analysis.
Great Western Technologies Inc (GWTI): GWTI continues with its strategy to increase its customer base of high volume users of specialized products. GWTI also continues to investigate strategic partnerships, business relationships and research opportunities with other related facilities and end users. With GWMG's recent acquisition of Less Common Metals, this provides tremendous synergies for both GWTI and LCM in exploiting the potential for both facilities. Additional information about Great Western Technologies can be found at www.greatwesterntech.com .
Less Common Metals Ltd (LCM), Birkenhead, UK: GWMG recently acquired LCM, a profitable, private company with excellent long- term relationships with many blue-chip market-leading customers across a wide range of industries including automotive, aerospace, alternative energy, nuclear energy, and defense.
The annual production capacity of LCM's plant is approximately 1,100 tonnes and the plant is very well positioned to increase production to meet the demand for rare earth alloys from key clients. This ability to increase production will play a significant role in the implementation of GWMG's "mine to market" business model should the Hoidas Lake rare earth deposit, and the Company's other REE-related projects including Deep Sands, be successfully brought on-stream to provide the raw material for rare earth metals and alloys. Additional information about LCM can be found at www.lesscommonmetals.com .
Jim Engdahl, President and CEO of Great Western Minerals Group said, "The Company has been very active on many fronts, including financing, acquisition and exploration activities. We are pleased with the progress we have made, and we remain excited about the potential for the Company and the sector in view of the accelerated global demand for REE. The markets have been challenging but the fundamentals continue to work in our favor. Those fundamentals are expected to remain strong for the foreseeable future with REE prices forecast to double over the next 3 years."
Engdahl adds, "A key success factor in our mine-to-market strategy is the recent acquisition of Less Common Metal Ltd which, along with Great Western Technologies, provides a strong foundation for our integrated model. This has also enhanced GWMG's credibility with many of the end users as they continue to show strong interest in developing a relationship with REE producers outside of China. Now, with an important financing underway, we can better focus on our exploration and development plans to become a global supplier of rare earth elements and related products."
Gary L. Billingsley, P.Eng., P.Geo., is the Qualified Person responsible for reviewing the contents of this release.
Great Western Minerals Group Ltd. is a Canadian-based company exploring for, and developing, strategic metal resources for the global markets. Pursuing a vertically-integrated business model, the Company's wholly-owned subsidiaries of Less Common Metals Ltd. located in Birkenhead UK, and Great Western Technologies Inc., located in Troy, Michigan, produce a variety of specialty alloys used in the battery, magnet, aerospace and nuclear industries. These "designer" alloys include those containing copper, nickel, cobalt and the rare earth elements.
Jim Engdahl, President
Cautionary Statement on Forward-Looking Information: 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) are based upon the opinions, expectations and estimates of management of the Company 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. Readers are cautioned not to place undue reliance upon forward-looking information. Although the Company 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.
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