Name and Location
Steenkampskraal rare earths mine refurbishment project, Western Cape, South Africa.

Client
Great Western Minerals Group (GWMG).

Project Description
The Steenkampskraal mine is a former high-grade producer of rare-earth metals. Global demand for rare-earth metals, which are used in a variety of applications, including the manufacture of hybrid cars, is increasing, with 95% of the supply provided by China, which is limiting the rare-earth metals it exports.

The project envisions the building of a rare earths separation plant to process the mixed rare-earth chloride, to be produced at the Steenkampskraal mine, about 70 km north of Vanrhynsdorp, north of Cape Town.

The project will comprise three activities, as part of GWMG’s overall five-part integrated business model – the underground mine and future reprocessing of tailings; the mixed rare-earths chloride (RECl) plant; and a solvent extraction separation plant that will produce separated rare-earth oxides about a year after the RECl has started.

Value
Preproduction capital is estimated at $166.07-million.

Total capital expenditure is estimated at $185.7-million.

Duration
Construction started in early 2012.

Latest Developments
GWMG is seeking to conclude a toll processing agreement with a partner to restart its flagship Steenkampskraal rare earths mine sooner.

The turbulent capital markets have forced the company to seek the lowest-cost route to restart the old thorium mine.

GWMG says it has plans to construct a rare earths separation plant on site, but this will follow in a later phase once monazite mining has started. It is currently focused on reducing the capital required to restart the mine.

At the start of May, GWMG filed its prelimimary economic assessment (PEA) results for the project, which were announced in March.

The PEA confirmed GWMG’s internal projections of a high-grade and excellent distribution of the critical rare-earth elements.

The PEA highlighted a C$555-million after-tax net present value for the project, after applying a 10% discount rate and the 28% South African corporate tax rate.

The PEA also estimated a 66% internal rate of return and a two-and-a-half-year payback period, on an after-tax basis, from the start of underground mining for the project, which has an 11-year potential mine life.

The PEA was based on the latest resource estimate, which estimated 278 000 t of inferred mineral resources at an average grade of 15.2% total rare-earth oxide (TREO) and 176 000 t of indicated resources at an average grade of 18.2% TREO, each using a 1% TREO cutoff grade.

Key Contracts and Suppliers
DRA Mineral Projects (detailed design of chloride processing plant), East Rand Engineering Services (refurbishment of mine access decline, construction of headgear and winding house, as well as the installation of underground infrastructure services, such as ventilation services and underground stores) and Drillcorp Africa (contractor for the upcoming exploration and resource evaluation programme at Steenkampskraal).

On Budget and on Time?
GWMG’s refurbishment of the Steenkampskraal mine shaft and ancillary facilities is proceeding according to schedule.

Contact Details for Project Information
GWMG investor relations manager Dwight Percy, tel +1 306 659 4500, fax +1 306 659 4501 or email info@gwmg.ca.
DRA Mineral Projects, tel +27 11 202 8600, fax +27 11 202 8807 or email dra@drasa.co.za.
East Rand Engineering Services, tel + 27 11 826 1936.
Drillcorp Africa, tel +27 18 771 8100, fax +27 18 771 5156 or email exploration@masterdrilling.com.