Hoidas lake rare earth project advances to prefeasibility
SASKATOON, July 31 /PRNewswire-FirstCall/ - Great Western Minerals Group Ltd. (TSX-V: GWG) The Company is very pleased to report that it has engaged Wardrop Engineering Inc. to lead an engineering team to complete a prefeasibility study, compliant with National Instrument 43-101F1, of the Hoidas Lake Rare Earth Project located in northern Saskatchewan. In addition to Wardrop, the team includes Golder Associates Ltd. and Melis Engineering Ltd. Wardrop will be responsible for updating the mineral resource estimate; selecting the mining method and developing the general mine plan; locating the processing plant and related plant services; transportation plans and routes; pre-production capital cost estimates; operating cost estimates; economic model development and defining the mineral reserve; evaluating the possible alternatives under the previous categories; and project implementation and recommendations. The social economic review, environmental management plan, permitting, geotechnical and rock mechanics considerations, waste management design and reclamation plans will be looked after by Golder Associates. Melis Engineering Ltd. is responsible for defining the processing method, conceptual flowsheet and consumables related to processing the Hoidas Lake material. This is a major step forward for the Hoidas Lake project in determining the economic viability of the project and proceeding to final feasibility and the production decision. The initial base case premise of the study will be construction of a 500 tonne per day mine and mill complex with a 20 year mine life. The Hoidas Lake property is located approximately 60 kilometres northeast of Uranium City, Saskatchewan, on the Black Bay Fault, a major structure that runs from the Hoidas Lake area to Uranium City. The property consists of 13 mineral claims totaling 10,188 hectares (25,000 acres) covering over 30 known rare earth showings situated within and along a 10,000 metre portion of the Black Bay Fault system. The only significant work to date, and the work on which the prefeasibility study will be based, is on the JAK Zone, just one of the known showings located near the northern end of the property. The JAK Zone has been tested with 85 core drill holes along 700 metres of strike length to a depth of 125 metres and remains open in both directions along strike and at depth. The drilling has defined multiple parallel and subparallel mineralized veins with significant width and grade. Based on assay results from the first 70 drill holes, Wardrop assigned a resource estimate of 553,000 tonnes grading 2.81% total rare earth oxide ("TREO") in the measured and indicated resource category and a further 812,000 tonnes grading 2.45% TREO in the inferred category. This estimate is being updated for the drilling completed earlier this year (see the July 27, 2006 news release for drill results) and the resource estimate for all categories is expected to increase significantly. The rare earth elements (REE) are a group of 17 elements comprised of yttrium, scandium and the lanthanide series of elements in the Periodic Table. The lanthanides include lanthanum (atomic weight 57) through to lutetium (atomic weight 71). Because of their diverse and unique catalytic, magnetic and optical properties, the REE, either individually or mixed, are used in a growing variety of applications. They are critical and strategic components of many high-technology applications that are used in digital technology, improving energy efficiency and reducing greenhouse emissions. For example, REEs are used in automotive catalytic converters to increase the effectiveness of the catalytic converter and reduce the amount of precious metal required in the converter. They are also used as additives to increase the efficiency of gasoline and diesel products. The miniaturization of consumer goods, like iPods, MP3 players and cell phones, owes much to the rare earth magnets used in these products. And a typical hybrid vehicle, like the Toyota Prius, can contain up to 20 kg of REEs between the NiMH rechargeable battery, the regenerative braking system and the permanent magnet electric motor. Currently, approximately 97% of the world's supply of REEs comes from China, with the majority of the lighter REEs (lanthanum, cerium, neodymium) coming from just one mine. China recently announced that it will start to restrict the export of REEs from mining operations. This policy will result in a dramatic decrease in the REE supply to buyers outside of China, while at the same time, world demand is increasing. This creates a situation where it is not only prudent, but critical, to develop REE sources outside of China. The value of rare earth oxides can vary significantly depending on the particular element and the purity level of the product. Recent pricing for "standard" 99% purity oxides, ranges from US$2 per kg for cerium to US$525 per kg for terbium. These prices can go significantly higher for higher purity oxides or metals. The Hoidas Lake rare earth mineralization has a higher proportion of the heavier, more valuable, REEs than comparable deposits. For example, 1 kg of rare earth oxide produced from Hoidas Lake, based on recent standard oxide pricing for 8 of the elements (for which regular pricing is available) would be valued at US$8.20 per kg. Producing higher purity or value-added products can garner higher prices that could increase that value by several times. Great Western Minerals Group Ltd. is pursuing a "mines to market" strategy with the goal of maximizing the value of the Hoidas Lake resource by producing value-added products targeted to specific industries and customers. Through its wholly-owned subsidiary, Great Western Technologies Inc., the Company is already operating specialty metal manufacturing plants in Troy, Michigan. These plants are manufacturing products like NiMH powders for rechargeable batteries, hydrogen storage materials for fuel cell use, and special alloys for the aircraft industry. By identifying these value-added markets and customers today, the Company is laying the ground work to successfully bring the Hoidas Lake deposit into production should the operation continue to prove economically viable through the feasibility study process. Jim Engdahl, President (The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the foregoing contents)
SOURCE Great Western Minerals Group Ltd.
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