MINING: Promising Signs For W Cape Mine
Recent Western Cape Business News
GREAT Western Minerals Group (GWMG), the Canadian listed mining company that is hoping to profitably resurrect the Steenkampskraal rare earth deposit near Van Rhynsdorp, has managed to raise a hefty $90 million in fresh funding (around R675 million) by issuing convertible bonds to investors.
The successful fund raising follows recent news of encouraging underground sampling programme at Steen-kampskraal.
Readers will remember that Steenkamps-kraal came to prominence in the late nineties when Somerset West-based mining group Rare Earth Extractions (Rareco) secured a lucrative silica supply deal with glass giant Consol. Unfortunately, a dispute around the quality of the silica supply saw Rareco closing up shop and moth-balling Steen-kampskraal.
Rareco, which owns three-quarters of Steen-kampskraal, was bought by GWMG, almost two years ago in a deal that valued the company at R150 million.
There have been questions around the attempts to re-open Steenkampskraal, but these have been increasingly muted at GWMG steadily progresses towards full-scale mining.
Last month GWMG president and CEO Jim Engdahl said the receipt of the fresh funding would allow the company to continue the development of the Steen-kampskraal project in a way that positioned GMWG as an ‘early mover’ in the rare earth sector outside of China.
“To have successfully raised gross proceeds of US $90 million in today’s global financial climate illustrates significant investor confidence in the ability of GWMG to execute its business plan and become our own rare earth supplier to our own downstream manufacturing plants.”
GWMG’s specialty alloys are used mainly in the battery, magnet and aerospace industries.
At the end of May GWMG released ‘assay’ results used for confirmation of historical data at Steenkampskraal – including underground channel sampling, drilling core holes targeting the historic mine workings, drilling the two tailings dams, and rock dump sampling through small excavations.
Engdahl said Steen-kampskraal continued to produce very high grade rare earth assay results. “We are very pleased that the results to date have continued to meet or exceed the historical data on which GWMG made its decision to acquire the Steenkampskraal project.”
He said equally important was the fact that the distribution of rare earth elements (critical to GWMG’s downstream operations) have proved to be even higher than the historical data had indicated.
“We consider this to be a strong indication of the potential for a robust project at Steenkamps-kraal.”
The highlights of the tested distribution to historical data showed the neodymium resource improved by 7%, samarium by12%, dysprosium by 45% and terbium by 175%.
GWMG has initially focused its attention on the refurbishment and the planned re-commissioning of the Steenkampskraal mining operation with the aim of launching full operations in the first quarter of 2013.
A number of milestone achievements on the road to full scale mining have been notched up already. These include an agreement with Ganzhou Qiandong Rare Earth Group of China to build a rare earth separation plant in proximity to GWMG’s Steenkampskraal operation and contracting DRA Mineral Projects for the detailed design of the Steenkampskraal pro-cessing plant.
Perhaps the biggest step towards the production phase was the appointment of GWMG stalwart David Kennedy as CEO of Rareco with the overall responsibility for the development, commissioning and operation of the Steenkamps-kraal rare earth mining operation.
Kennedy’s progress will be all the more closely monitored by the local mining community (who might be thinking they missed out on a gem here) now that the sampling programme showed positive results.
Last year the design of the mine and processing facilities at Steenkampskraal was upgraded to allow for capacity to produce approximately 12 000 tons per annum of rare earth chloride solutions. The chloride solution will be sent to the solvent extraction separation facility capable of producing about 5 000 tons of rare earth oxides per year - double the 2 700 tons per year capacity originally envisaged by GWMG.
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