Hoidas lake rare earth project advances to prefeasibility

Jul 31, 2006, 01:00 ET from Great Western Minerals Group Ltd.

    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.