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Additional information

Additional	Information
Market:	TSX-V
Sector:	General Mining
Epic:	GWG
News:	Latest news
Web Site:	Great Western Minerals Group
Other Articles:	09-07-201009-06-201003-06-2010

Great Western Minerals Group: Bridging Energy & Technology through Mining

Great Western Minerals Group Ltd. (TSX.V: GWG), (OTCQX: GWMGF) is a Saskatchewan, Canada based junior exploration company and manufacturer of specialty REE-based products with six rare earth exploration and development properties in North America and an option to participate in the development of a significant property in South Africa. The most advanced projects are the 100%-owned Hoidas Lake Rare Earth Project, located in Northern Saskatchewan, and the Steenkampskraal Project in South Africa.

Mine-to-Market Strategy - Great Western has a unique mine-to-market (M2M) strategy where on the mine side Great Western explores for, and will ultimately develop, properties to supply rare earth elements (REE) for its own use, as well as to other end users who currently rely solely on foreign sources. On the market side, Great Western through its wholly-owned subsidiaries, Great Western Technologies Inc (GWTI) and Less Common Metals (LCM), have the proven capability to create value added products for blue-chip, global end users in the aerospace, automotive, industrial, and high-technology markets:

•    Great Western Technologies Inc. is a wholly owned subsidiary and a leading production facility in North America for hydrogen storage materials and specialty alloys manufacturing in the Rare Earth Elements (REE) market. REE are a collection of seventeen chemical elements in the periodic table that are and will continue to advance green technologies by improving planet health for future generations. Rare earth elements (REEs) are used in many alternative energy technologies such as wind power generation, fuel cells, rechargeable batteries, hydrogen storage, and permanent magnets used in electric and electric-hybrid vehicles. REEs also have many industrial uses in magnets and as catalysts and are used in cutting-edge technologies such as super-alloys for the aerospace and defense industries.

•    Less Common Metals Ltd., a second wholly owned subsidiary, is a world leader in the manufacture and supply of rare earth based alloys and high purity metals focused on the permanent magnet industry. With considerable experience in the production of materials to tight compositional tolerances and controlled microstructures, LCM offers an innovative and highly flexible approach to a wide range of material requirements.

These capabilities give Great Western an extraordinary commercial advantage. Shareholders of GWG are investing in a diversity of assets - from exploration for new resources to the creation of value added products with an established customer base.

Investment Thesis

Among the analyst community for rare earth minerals, Great Western is considered one of the few players that has a real chance of becoming a producer in the next 2-3 years. That puts them in very select company. 
REE users have an impending rare earth element shortage, which should benefit Great Western. Industry giants across a wide range of sectors are extremely concerned about the impending shortage of REE. Those giants need REE to maintain leadership in their respective sectors. China currently controls the REE sector as the primary supplier to the global industry, producing over 97% of the world's supply of REE. By 2014, the demand for REE is projected to exceed supply as China is expected to consume all that it produces. Lack of access to secure supply could be economically crippling for many global industries that rely on REE.

Great Western is well financed having completed in January 2010 an $8 million placement which was conducted by Pope & Company.  Great Western sold 28.75 million units at a price of 28 cents per unit. Each unit consists of one share and one-half share purchase warrant with an exercise price of 50 cents. Before the private placement, Great Western had C$8.9 million in sales for the nine months ended 9/30/09 compared to C$4.4 million for the nine months 2008 period, C$32 million in assets and C$26 million in equity as of 9/30/09. This is a very solid base for the Company to grow into economic expansion.

Current Properties

•    Hoidas Lake – Great Western’s initial REE project is located 50km northeast of Uranium City in Northern Saskatchewan. At Hoidas, the overall Measured and Indicated resource estimate was recently increased by 123 percent to 2.561 million tonnes from the previous 1.15 million tones. President and CEO Jim Engdahl commented:  “This reinforces our belief that this could be a much larger deposit since we have drilled a relatively small portion of the property. Once we receive the results of our ongoing metallurgy we will be able to complete the remaining items for the preliminary economic assessment report."

•    Steenkampskraal Rare Earth Mine - In January 2009, Great Western entered into an option agreement with Rare Earth Extraction Co. Ltd. (“Rareco”) of Stellenbosch for 100% of all rare earth material produced, Rareco & GWMG intend to  refurbish, re-commission, and operate the currently abandoned Steenkampskraal underground mine in the Western Cape, South Africa. This could be the first rare earth mine in production outside of China. Infrastructure is excellent, with access to the site by paved and gravel roads and close proximity to rail and sea-port; the governments are pro-development, and there is technical expertise available as well as a trainable work force. The main rare earth-bearing mineral is monazite. The deposit also contains significant amounts of copper, gold and phosphate which could be recovered as by-products.

•    Deep Sands – This project of REE-enriched mineral sand is located in west central Utah. “It is anticipated that subsequent to an additional work program, the process will provide sufficient data to complete an NI 43-101 compliant resource estimate, suitable for a preliminary assessment report and move toward a feasibility study. It is expected that if this project continues to move forward, then the feasibility study will require three phases of drilling, permitting, and extensive metallurgical testing, over a period of 2-4 years,” Great Western said.

•    Douglas River – This property consists of three claims (totalling 1,405 hectares) approximately 21 km south of the former Cluff Lake Uranium mine and approximately and 420 km NW of La Ronge SK, Canada. The project is enriched in Dysprosium, the most sought after REE by the Japanese magnet manufacturers. The planned exploration program includes geological mapping, trenching, soil and lithogeochemistry in order to identify drill targets.

•    Benjamin River – This phosphate-based, heavy rare earth element-enriched project is located approximately 53 km west of Bathurst, New Brunswick, Canada. Access to the property is via paved highway and logging road. Additional infrastructure includes a railroad within 10 km, ports within 50 km, and power lines also within 2 km. The heavy rare earth elements, such as dysprosium, are critical to the production of high temperature permanent magnets used in hybrid vehicles.

In July, 2009, Great Western signed a Letter of Intent with Toyota Tsusho Corporation to examine the merits of jointly conducting exploration and development activities on the Company’s Douglas River and Benjamin River exploration projects. Great Western continues to make progress with its exploration projects, expecting the analysis of the recent drilling program at the Benjamin River property in northern New Brunswick to be completed by the end of March 2010, and planning further sampling, mapping, and drilling at the Douglas River project in 2010.

Value-Added Processing Facilities

Great Western Technologies Inc. (GWTI) is a leading production facility in North America for rare earth materials, powders, and custom vacuum-grade specialty alloys. GWTI provides research and development, process development, consulting, and innovative products and services to clients worldwide. By developing a customized approach to each client's processing needs, GWTI offers advanced solutions that lead to a better final product.
GWTI was awarded a U.S. Defense Advanced Research Projects Agency (DARPA) contract in September 2009 to develop a set of aluminum-based, high strength alloys for the aerospace sector. This project is nearing completion, and GWTI is pleased with product quality to date. GWTI is also seeing increased demands from its existing customers as well as from new customer relationships developed over the last 12 months.

Less Common Metals Ltd. (LCM) is a world leader in the manufacture and supply of rare earth based alloys and high purity metals. The Company is a profitable, leading global manufacturer and supplier of rare-earth-based alloys, high purity metals, and ultra-high-purity indium. LCM has established excellent long term relationships with a wide range of blue chip customers who operate in technically demanding industries such as automotive, aerospace, nuclear and defense. LCM manufactures approximately 20% of the estimated global consumption of samarium-cobalt permanent magnet alloy, which is estimated at 1,000 tonnes per annum (tpa).

REE Industry Overview

The major consumers of REE are Southeast Asia (Japan (22%), Korea, Thailand, China (60%)) and the USA (9%). The USA currently imports nearly 100% of its REE requirement. The gross value of REE production worldwide is estimated at US$1.8 billion. According to the USGS, the trend is for a continued increase in the use of REE in many applications, especially automotive catalytic converters, permanent magnets, and rechargeable batteries. Demand for REE is expected to grow from 132,500 tonnes in 2008 to 207,500 tonnes in 2013. One of the key drivers for the increased demand is the hybrid vehicle markets. The three major manufacturers of hybrids are Toyota, Honda and Ford. General Motors is also advancing into the electric vehicle market with the introduction of the Chevy Volt. The battery sector is also a big user of REE. Nickel-Metal Hydride (NiMH) alloys are a vital component in the rechargeable battery units of hybrid vehicles. The REE content of a NiMH battery for hybrid vehicles is now estimated to be about 20 kg, most of which is Lanthanum mischmetal. The rapid growth in demand for Neodymium-Iron-Boron (NdFeB) magnets has exceeded 15% per year. The permanent magnets used in the motor and generators in hybrid vehicles require between 1.5 kg and 4 kg of sintered NdFeB per vehicle. In the newer models of hybrid vehicles, the REE content is now estimated to be approximately 30 kg per vehicle, due to the increased number of motors and other magnetic devices used in the vehicles.

In the global REE exploration sector there are only a handful of active private or publicly-traded companies. These include Avalon Ventures Ltd. (Canada), Lynas Corporation Ltd. (Australia), and Arafura Resources Ltd. (Australia). Molycorp Minerals LLC is a major, private company that recently purchased a proven primary REE resource - the Mountain Pass rare earth operation in California. China is a significant producer of many REE products but LCM remains well ahead of the capabilities of any of the Chinese alloy producers.

Prospects for the Future

Great Western Minerals Group and its value-added production facilities of Less Common Metals and Great Western Technologies are in the unique position of establishing themselves as global leaders in developing a rare earth industry outside of China. The global fundamentals point to an impending shortage of rare earth elements, which could potentially jeopardize the technological leadership held by many of the existing industry end users. Through the successful implementation of the Company’s mine-to-market strategy, Great Western Minerals can establish itself in a leadership role and meet much of the demand for rare earth elements for many years to come.

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