Great Western Minerals completes $3 million placement to fund acquisition of 20% stake in Rare Earth

Great Western Minerals (TSX-V:GWG, OTCQX:GWMGF) has closed a private placement of C$3 million of secured subordinated debentures.

The proceeds have been used to acquire 20.8% of the shares of Rare Earth Extraction of Stellenbosch, South Africa.

"Successfully closing this Debenture offering moves our company one more significant step down the path to being the first fully integrated Rare Earths producer outside of China,” Jim Engdahl, President and CEO of Great Western Minerals Group said this morning.

“The purchase of these shares of Rareco, alongside our previously signed Off-take agreement under which our Company can access 100% of the Rare Earth Products produced by Rareco and its subsidiaries from ore mined at Rareco's Steenkampskraal mine, keeps our Company right on track in the execution of our strategic plan."

The former producing Steenkampskraal Mine is a 474 hectare property located 70 kilometres north of the town of Vanrhynsdorp in the Western Cape Province of South Africa, approximately 350 kilometres north west of Cape Town. Infrastructure for the property is excellent, with access from paved and gravel roads, and with the property in close proximity to rail facilities and a sea port. There is also technical expertise and a trainable work force on hand. The property is permitted for mining until 2012, when the permit can be renewed for another 15 years, and in June this year, the company received a ‘new order’ mining right, a compulsory update from the previous ‘old order’ rights.

The main rare earth-bearing mineral at Steenkampskraal is monazite, and is hosted by an igneous intrusive dyke system (i.e. smaller igneous intrusions crossing the areas between larger igneous bodies). Historical data from precious work (non NI 43-101 compliant), shows the mineral deposit is tabular in shape, with a known strike length of 400 metres, traced down dip for 250 metres.

Thickness of the body ranges from 0.3 metres to 4 metres, and the average in-situ grade is 16.74% total rare earth oxide (TREO). This makes it one of the highest grade rare earth deposits known to exist. The main rare earth oxides within the project’s monazite mineralisation, are Cerium (approximately 47% of the total rare earth oxides found), Lanthanum (22%) and Neodymium (17%). The deposit also contains significant amounts of copper, gold and phosphate, which the company believes could be recovered as by-products. The company also notes that very little exploration work has been done on the property, with the deposit remaining open along strike and at depth.

In addition, historic underground mining operations deposited run-of-mine waste rock on the surface of the property, as well as tailings from the processing plant. Previous sample grades of the tailings and waste rock, indicate that historically both would qualify as resource tonnages for rare earth production. Furthermore, in addition to the remaining in-situ material, rock that was blasted but not hauled to surface also remains in place. Some of this rock was historically considered as low grade material and was used as ballast for the underground railroad track. Modern techniques could make this product more economically viable however, and so opens up further resource tonnage.

Another positive attribute of a mining operation at Steenkampskraal worth noting, is that the thorium content (with an historic in-situ grade of 2.5%) may provide another attractive by-product from the operation. RareCo has already 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 customer demands.