MINING: Rareco Mine In Business Again
Recent Western Cape Business News
ONE of the most painful Cape mining sagas ever to dis(grace) the JSE involved a Somerset West-based company called Rare Earth Extractions, which had great ambitions to mine rare minerals and metals at Steenkampskraal near Van Rhynsdorp.
To cut a long yarn short, Rareco was listed on the JSE in 1994 but took an awfully long time – as junior mine companies are apt to do – to get anywhere near actually mining for rare earths.
By around 2000 things were looking somewhat more optimistic for Rareco, and by 2001 the first products (silica, as it happened to be) was ready for delivery to clients.
Things looked even better when blue chip glass maker Consol signed a supply contract with Rareco.
Sadly, though, this great moment quickly turned to tragedy when Consol called off the deal, citing quality problems with the early consignments of silica.
After initial outrage and outcry, Rareco was suspended on the JSE and sunk quietly away.
At the end of 2010, though, CBN picked up some interesting news that Canadian mining group Great Western Minerals Group (GWMG) offered to buy out all shareholders in Rareco for 300c/share.
This surprising offer gives long forgotten Rareco an enterprise value of around R150 million.
GWMG is a rare earths processor that specialises in alloys used in the battery, magnet and aerospace industries.
According to the GWMG website, the company sees the Rareco acquisition as part of an integration strategy, aimed at making the company the first fully integrated rare earths producer outside China.
What’s even more surprising is that GWMG seems very optimistic about the Steenkampskraal rare earth operation.
The group’s website states enthusiastically: “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 website shows plans to refurbish, re-commission, and operate the currently abandoned Steenkampskraal Mine.
It is not clear at this point what GWMG will spend on getting Steenkampskraal up to the mining production phase.
The Steenkampskraal mine was originally operated through a subsidiary company of Anglo American Corporation from 1952 to 1963. At that stage it produced monazite concentrate that was sold mostly for its thorium content rather than its rare earth content.
Rareco acquired the mine in 1989. GWMG’s website points out an independent review of the project was conducted by Felix Mendelsohn in 1996.
These independent resource estimates indicated a recoverable resource of approximately 30 000 tonnes rare earth ore.
GWMG also reckons that another positive attribute of a mining operation at Steenkampskraal is that the thorium content may provide an attractive by-product from the operation.
Apparently Rareco has already received expressions of interest from third parties in recovering the thorium from the operation.
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