Rare earths: not so rare but sought after


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Objective Capital's Global Resources Investment Conference 2011
Stationers' Hall, City of London
27-28 September 2011
Day 1- Session 3: Strategic metals – the resources everybody wants
Speaker: Gary Billingsley, Great Western Minerals Group

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  • China has less than 50% of the world’s RE reserves but are supplying 100% of the global demand-not sustainable in their view.It appears that the ROW has adequate resources for their needs.
  • From a handful of activeprojects a few years ago to over 300 today
  • Tougher export quotas have resulted in higher prices and outright panic in certain RE market segments.
  • Segments of RE demand: ie Why they are in demand.
  • Assumes Lynas, Molycorp, and GWMG meet stated production levels
  • Illustrates that the increase in demand comes from ChinaWill the ROW be importing into China in 2015?ExcessCe and La; Nd tight; shortage of Dy for magnets and Eu, Tb and Y for lighting
  • Outlines three main areas of GWMG corporate strategy
  • Note that outside China there are very few separators, metal makers or alloying plantsOutside China the supply chain between mine and end user has yet to be established
  • LCM has been a profitable manufacturer for many years and is well known and respected in the RE industry
  • Demand from current customers fuelling growth
  • GWMG will become a metal maker
  • Currently GWMG makes SmCo metal at LCM
  • GWTI is a strategic asset in the US RE supply chain
  • Former producer with mining permit
  • SKK is high grade with favourable metallurgy and Nuclear Authorization in place.
  • Separation expertise in place and on a fast track to production
  • The mine entrance before and during refurbishment; construction underway
  • Shows the flow of oxides through to alloy production at LCM
  • Good portfolio of exploration projects at various stages of development
  • Near term targets and goals within the mine to market strategy
  • Rare earths: not so rare but sought after

    1. 1. Rare earths: not so rare but sought after<br />Gary Billingsley – Great Western Minerals Group <br />
    2. 2. @Objectivelive<br />GLOBAL RESOURCESINVESTMENT CONFERENCE 2011<br />Lead sponsor:<br />Media partners:<br />Other sponsors & participating organisations:<br />
    3. 3. Rare Earths: Not So Rare, But Sought After…<br />September 27-29, 2011<br />Objective Capital<br />Global Resources Investment Conference<br />London and Edinburgh, UK<br />TSX.V: GWG OTCQX: GWMGF info@gwmg.ca www.gwmg.ca<br />
    4. 4. Safe Harbour<br />Cautionary Note On Forward-Looking Statements<br /><ul><li>"Forward-looking statements include, but are not limited to, statements regarding projected processing capacity, output and revenue, GWMG’s continued advancement of its mineral exploration, projects, processing operations and business plans. When using this presentation, the words “potential”, “anticipate”, “estimate”, “forecast”, “believe”, “expect”, “may”, “project”, “plan” and similar expressions are intended to be among the statements to identify forward-looking statements.“
    5. 5. Although GWMG believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Readers are advised to refer to GWMG’s current Annual Information Form available at www.sedar.com for a full description of risk factors.
    6. 6. GWMG shall not be liable or responsible for any claim or damage, directly or indirectly, special or consequential, incurred by the user arising out of the interpretation, reliance upon or other use of the information contained in this presentation.</li></ul>4<br />
    7. 7. World Mine Production and Reserves(tonnes REO)<br />Source: USGS Mineral Commodity Summaries, January 2011<br />5<br />
    8. 8. Global RE Exploration 2011<br />Approximately 200 of 302 Global REE Exploration Projects Shown Below:<br />Source: TMR, GWMG<br />6<br />
    9. 9. Chinese Export Quota History (tonnes REO)<br />1. Adjusted to reflect 12 month allocation<br />2. Includes ferro-alloys of rare earths (RE > 10%)<br />Sources: Chinese Ministry of Commerce, IMCOA<br />7<br />
    10. 10. Forecast Demands for 2015 (tonnes REO)<br />Source: IMCOA<br />8<br />
    11. 11. Global 2015 Supply/Demand Imbalance<br />Shortage, Surplus, Large surplus<br />Source: IMCOA<br />9<br />
    12. 12. 2015 Regional Imbalances<br />Source: IMCOA<br />Shortage, Surplus, Large surplus<br />*not including Er, and Ho-Lu<br />10<br />
    13. 13. GWMG Strategy: Mines to Markets<br /> 1. Processing: <br />Producing Rare Earth metals and alloys at Less Common Metals (LCM) in the U.K.<br />Producing alloys at Great Western Technologies Inc. (GWTI) in Michigan<br />Separating RE in South Africa<br />2. Mining: <br /><ul><li>Steenkampskraal Mine in South Africa in production 2013</li></ul>3. Exploration: <br /><ul><li>GWMG actively exploring and developing properties in North America and South Africa</li></ul>9<br />
    14. 14. GWMG Corporate Structure<br />Canada<br />100%<br />100%<br />100%<br />Various %<br />75%<br />Rareco<br />Great Western <br />GQD<br /> Rare Earth<br /> Materials Co. Ltd.*<br />LCM<br />Exploration<br />GWTI<br />74%<br />JV Separation Plant, SA<br />*details being finalized<br />SKK<br />(Steenkampskraal)<br />Hoidas Lake<br />Douglas River<br />Red Wine, Canada<br />Birkenhead, U.K<br />Troy, Michigan<br />USA<br />Former-producing Steenkampskraal Mine, SA<br />12<br />
    15. 15. GWMG Integrated Production Model<br />MAGNET MAKERS<br />ALLOY SALES<br />LCM/GWTI ALLOY PROD’N<br />RE METAL SALES<br />METAL MAKING<br />REO SALES<br />SEPARATION<br />BY-PRODUCT SALES<br />PROCESSING<br /><ul><li>A rare earth mine alone is not of much use to a magnet maker
    16. 16. Enterprise profitability increases with each stage of processing</li></ul>MINING<br />EXPLORATION<br />13<br />
    17. 17. 1<br />PROCESSING: World Class Today at Less Common Metals<br /><ul><li>Located in Birkenhead, England
    18. 18. LCM, a world class producer trading globally:
    19. 19. European Union 60%
    20. 20. Japan, China including Taiwan 30%
    21. 21. United States 10%
    22. 22. Focused on Permanent Magnet industry
    23. 23. Supplies 20% of the world’s Samarium Cobalt Alloy
    24. 24. Significant supplier of NdFeB alloys
    25. 25. Supplies US and EU Aerospace Industry with special alloys
    26. 26. 20 years of high quality, profitable production
    27. 27. LCM products end up in Swiss watches, EU Aerospace and Guidance Systems, electric hand tools, and Automobiles</li></ul>14<br />
    28. 28. Global Expansion for LCM<br />100% capacity expansion driven by forecast demand from major customers in Europe and Japan seeking NdFeBalloy (note agreements with Aichi Steel Corp. & VAC)<br />New state of the art facility now being developed to increase capacity to 2,000 tonnes per annum RE alloy production<br />First special casting furnace ordered and scheduled to have saleable product by second half 2011-2nd furnace in 2012<br />First phase of metal-making to be located at LCM<br />Processing capacity matches REE distribution of planned output from Steenkampskraal for La, Nd, Pr. Sm, Dy<br />15<br />
    29. 29. Producing Metals and Alloys<br /><ul><li>LCM and GWT will consume RE oxides, metals and fluorides for metal and alloy production
    30. 30. LCM currently operates a co-reduction process for converting samarium oxide to samarium cobalt metal alloy and we will rebuild facilities to produce samarium metal.
    31. 31. LCM is developing a fused salt electrolysis process for oxides from South Africa to produce lanthanum, neodymium and praseodymium metal
    32. 32. LCM is developing a process to produce dysprosium, terbium and yttrium metal using calciothermicreduction of rare earth fluorides</li></ul>16<br />
    33. 33. Samarium Cobalt by Co-Reduction<br />17<br />
    34. 34. World Class at Great Western Technologies<br /><ul><li>Located in Troy, Michigan, USA
    35. 35. Strategic asset for revitalization of the Rare Earth industry in the United States
    36. 36. Working with DARPA on aerospace “Super Alloy” R+D
    37. 37. Versatile production capacity including:
    38. 38. Permanent magnet alloys
    39. 39. NiMH alloy for rechargeable batteries
    40. 40. “Super Alloy” production for aerospace materials
    41. 41. Hydriding capability for solid-state hydrogen-storage alloys, both rare earth and transition metal types</li></ul>18<br />
    42. 42. 2<br />MINING: Steenkampskraal SA History<br />Former operating mine located 70 kilometers north of Vanrhynsdorp in the Western Cape Province of South Africa<br /><ul><li>Excellent infrastructure, access to the site by paved and gravel roads
    43. 43. Close proximity to rail and sea-port
    44. 44. Pro-development governments with strong interest in Rare Earth industry
    45. 45. 474 hectare property
    46. 46. Mining permit received June 2010; National Nuclear Regulator (“NNR”) approvals received May 2011</li></ul>19<br />19<br />
    47. 47. Mining: Steenkampskraal Attributes<br /><ul><li>One of the highest grade RE deposits known at 16.74% REO
    48. 48. Significant supply of mined feedstock already at surface
    49. 49. Favourable Metallurgy: The technology for REE extraction from Monazite is well established allowing for more rapid approval of process and plant design
    50. 50. Minimum 10-year mine life
    51. 51. Nuclear License allows storage of radioactive material including thorium
    52. 52. Low capital cost
    53. 53. Planned exploration program has a high probability of increasing the known resources on and near the property</li></ul>20<br />
    54. 54. Steenkampskraal Strategy Execution<br />Feasibility/EPCM work well underway <br />Discussions in progress for accessing additional monazite from 3rd parties that can be processed at Steenkampskraal<br />Agreement reached with GanzhouQiandong Rare Earth Group Ltd. (“GQD”), an experienced separator and metal maker, to construct and operate a separation plant in South Africa under a joint venture<br />Discussions in progress for offtake of material not required by LCM/GWTI<br />Mill/Separation plant construction targeted to commence Q1 2012 with completion by Q4 2012<br />GWMG goal is first commercial SteenkampskraalREO production of in Q1 2013<br />21<br />
    55. 55. MINING: Steenkampskraal SA<br />22<br />
    56. 56. 2013: Projected Processing Outputs (metric tons REO)<br />*Based on Rareco Historical Resource<br />Estimate – not 43-101 compliant<br />23<br />
    57. 57. 3<br />EXPLORATION: GWMG Projects<br />GWMG Exploration Projects:<br /><ul><li>Hoidas Lake, Saskatchewan, Canada
    58. 58. 2009 NI 43-101 shows 2.5 million tonnes Measured & Indicated
    59. 59. Enriched in Nd
    60. 60. Significant progress on metallurgy; mini pilot plant test in progress
    61. 61. Being evaluated for 2015 production
    62. 62. Douglas River, Saskatchewan, Canada
    63. 63. 100% HREE + Y in xenotime</li></ul>Joint Venture Projects:<br /><ul><li>Red Wine REE Project with Search Minerals, Labrador, Canada
    64. 64. 35%+ HREE + Y</li></ul>Heavy Rare Earth/Permanent Magnet Focus<br />24<br />
    65. 65. GWMG Corporate Strategies/Goals<br />Processing:<br /><ul><li>Undertake 100% expansion of Less Common Metals in two phases
    66. 66. Continue to establish GWTI as an important part of the RE supply chain in the USA
    67. 67. Begin construction of leaching plant and separation plant in South Africa Q1 2012</li></ul>Mining:<br /><ul><li>Complete mine refurbishment and commence mining/stockpiling Q1 2012
    68. 68. Achieve commercial production in Q1 2013
    69. 69. Conclude arrangements for 3rd party material and evaluate expansion of Steenkampskraal production</li></ul>Exploration:<br /><ul><li>Continue to advance Hoidas Lake project in Canada
    70. 70. Continue exploration of HREE-enriched projects
    71. 71. Increase resource at Steenkampskraal</li></ul>25<br />
    72. 72. GWMG Corporate Strategies/Goals<br />Corporate:<br /><ul><li>To be among the very first fully integrated suppliers of RE</li></ul> oxides, metals and alloys outside of China<br /><ul><li>To continuously identify expansion opportunities
    73. 73. To create certainty of supply for existing and potential customers</li></ul>26<br />
    74. 74. GWMG Overview<br />27<br />