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TheStreet Open House

Building A “Mines To Markets Company”: Q&A With Great Western Minerals


Image courtesy of Great Western Minerals Group

Overview of Site Koppie at Steenkampskraal.

With both investors and manufacturers constantly seeking out new sources of rare earth supply, more and more companies are ramping up their efforts to commence production. Rare Earth Investing News (REIN) sat down with Marc LeVier, the newly appointed president and CEO of Great Western Minerals Group (TSXV:GWG), a company engaged in becoming an integrated rare earth producer. 

Great Western Minerals Group (GWMG) holds 100-percent equity ownership in Rare Earth Extraction Co. Limited, which in turn owns a 74-percent equity interest in the Steenkampskraal (SKK) mine in South Africa. The company also has interests in four active rare earth exploration and development properties in North America.

REIN: First, congratulations on the new appointment, Marc. As the new CEO of GWMG, what are your short-term goals for the company?

ML: To meet all GWMG employees at all levels at each location and to gain a top-down review of the various company functions to better understand the immediate goals and needs of the company. I plan to ensure that the project at SKK continues to progress and achieve the milestones set by the board, while ensuring that the design and plan of operation for producing rare earth products at SKK is optimized and efficient. I will also make myself available to investors and ensure GWMG continues to provide effective communication on objectives and progress and return value to their investment.

REIN: GWMG is focused on developing the past-producing SKK mine in South Africa. Can you describe the aims/goals of this project?

ML: SKK moves our company toward being a fully integrated rare earth producer. That's unique positioning for any rare earth company outside of China and we intend to be an early mover. Once the mine is producing and the mixed chloride plant and separation plants are in production, we will be the “mines to markets” company we always intended to be.

REIN: Let's talk more about the deposit. Historical estimates show a total of about 30,000 tonnes of recoverable total rare earth oxides. Can you put that into perspective compared to say, Molycorp's (NYSE:MCP) Mountain Pass mine or Frontier Rare Earths (TSX:FRO), which is also developing an REE deposit in South Africa? When can investors expect to see an updated NI 43-101 compliant resource estimate?

ML: The SKK is a smaller-tonnage, but higher-grade rare earth deposit than almost any other outside of China. Importantly, the expected output from SKK matches up very well, notably with neodymium and praseodymium, with the requirements of our already producing alloy-manufacturing plant, Less Common Metals (LCM). It is an excellent fit and positions our company and its fully integrated model extremely well. Further, we are working on an updated NI 43-101 resource estimate that will be included in our preliminary economic assessment. Image courtesy of Great Western Minerals Group

Headgear and Winder House at Steenkampskraal.

REIN: Is this project large enough to make an impact on the REE market in terms of prices?

ML: There are two answers to that question. First, as an early mover, we believe we have the potential to be a participant before the glut of light rare earth elements (REEs) that the market is anticipating takes hold. Second, our integrated model doesn't require us to be the largest-volume mine. Our margin opportunities come with being our own supplier, which should impact our input costs positively, as well as with being able to provide certainty of supply to our LCM customers, some of whom, it's worth noting, have been with us for upwards of 20 years.

REIN: You had senior management roles with Newmont Mining (NYSE:NEM) for over 20 years, including the post of director of metallurgical research and development. As you know, the metallurgy of rare earth deposits can sometimes be quite complicated. Can you comment on the composition of the SKK deposit and how difficult it will be to separate out minerals, including thorium?

ML: As you know, I am in a learning phase on this project. However, what I do know is that the mineralogy dictates the process and finer tweaks and adjustments needed in order to optimize recovery. Each deposit is different and requires the same level of testing and examination in order to obtain successful results. That is true of base metals, precious metals, iron ore and REEs. The overall effort is the same and based on similar fundamentals, chemistry and physical characteristics. Additionally, I am learning that we have a fine group of engineers with excellent experience in REEs, and we intend to build on these skills and experiences and add to them. With regards to thorium, we believe there are conventional process conditions that will allow us to separate thorium efficiently. Our studies are ongoing.

REIN: The company's flagship asset is located in South Africa — an area that is constantly under the media spotlight. There have been calls from the country's main political party's youth league for mines to be nationalized. Is this a concern for GWMG, and if so, how does the company plan to counter these concerns?

ML: It is very important to note one thing — SKK is over near the west coast of South Africa, far from the highly politicized environment near Johannesburg — where the vast majority of reports of conflict occur. GWMG has an excellent relationship with the communities and individuals around our mine site and in Vredendal, a nearby town. GWMG extends the same degree of respect and cooperation with our neighboring communities that we have experienced in our work there. Additionally, there are many examples of business success in South Africa and we believe the country is committed to supporting the businesses that are crucial to its continued growth and success as a nation. Image courtesy of Great Western Minerals Group

Exploration at Steenkampskraal.

REIN: In addition to the exploration program at SKK, GWMG also holds interests in four active rare earth exploration and development properties in North America. Can you describe the potential of these projects and how they fit into the company's overall plans?

ML: We are always looking for the next source of supply. As GWMG creates certainty of supply for our LCM customers (by having the SKK REE source up and running), we believe that will lead to further downstream sales opportunities. We view exploration projects as key in that regard. Even if the company does move to spin these off, as we have announced is being evaluated, we plan to maintain an offtake agreement that will secure ourselves a source of supply, just as it would give those projects a market. It's a good deal for both if that strategic option is followed.

REIN: What steps is GWMG taking to ensure that it stays ahead of competitors vying for a supply of REEs?

ML: The development of SKK is priority number one. Then comes our exploration plans. As we do that, our staff at LCM, it needs to be remembered, have a 20-plus-year history of dealing with their Chinese suppliers. Even though it causes some sleepless nights worrying about sufficient supply, we are treated well, even in times of shortages.

REIN: GWMG differs from a number of other REE companies in that it focuses on three core components (exploration, mining and processing). What is the reasoning behind this strategy, and how does it set GWMG apart from its competitors?

ML: We believe, and our company has believed from the very outset, that is where the money is. As we close the loop on our fully integrated business model, we expect this strategy to work well for our shareholders. This will not happen overnight and there has been a tremendous effort of dedication, commitment and vision by both founders and investors. We believe the company is effectively transitioning from an exploration company to a mining and production company, and that it is well positioned to succeed. Image courtesy of Great Western Minerals Group

Exploration core logging at Steenkampskraal.

REIN: With a number of western firms advancing projects aimed at breaking the Chinese monopoly on REE production, do you feel that GWMG's projects will attract investor interest moving forward? Why?

ML: Firstly, our business model was a groundbreaker. It must be pretty good, as we have seen others try to emulate it. Second, we are making steady progress and remain convinced we will be an early mover outside of China.

ML: We are working under the assumption that prices will be fairly stable at least through the medium term. But again, the GWMG value proposition lies within the ability to be our own supplier, at lower cost and with greater certainty, than was the case in the past.

REIN: Thank you for taking the time to speak with us.

ML: Thank you.

 

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