Integrated approach & South Africa opportunity


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Objective Capital's Rare Earths, Speciality & Strategic Metals
Investment Summit 2012
Ironmongers' Hall, City of London
13-14 March 2012
Speaker: Gary Billingsley, Great Western Minerals

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Integrated approach & South Africa opportunity

  1. 1. RARE EARTHS, SPECIALITY& STRATEGIC METALSINVESTMENT SUMMIT Integrated approach & South A Africa opportunity Gary Billingsley – Exec Chair rman, Great Western Minerals GrouppIRONMONGERS’ HALL, CITY OF LONDON ● TUESDAY-WEDNESDAY, 13-14 MA ARCH
  2. 2. Integrated Approach and South A Africa OpportunityGary Billingsley, Executive Chairman y g y,Objective CapitalRare Earths, Specialty & Strategic MetalsInvestment Summit14 March 2012, London15 March 2012, Edinburgh TSX.V: GWG OTCQX: GWMGF inf
  3. 3. Safe HarbourS f H b Cautionary Note On Forward-Looking Statements • "Forward looking statements include, but are not lim Forward-looking include mited to statements regarding projected processing to, capacity, output and revenue, GWMG’s continued advancement of its mineral exploration, projects, processing operations and business plans. When u 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.“ • Although GWMG believes that its expectations refleected in these forward-looking statements are reasonable, reasonable such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. R Readers are advised to refer to GWMG’s current Annual Information Form available at f a f ll description of risk f t I f ti F il bl t d for full d i ti f i k factors. • GWMG shall not be liable or responsible for any cla or damage, directly or indirectly, special or aim consequential, consequential incurred by the user arising out of th interpretation reliance upon or other use of the he interpretation, information contained in this presentation. 3
  4. 4. GWMG HighlightsGWMG is on track to become a leading fully integrated rare earth producerand processor outside of China, with a s sustainable competitive advantage.A fully integrated rare earth company:• Increasing importance of ex-China source es• From production at Steenkampskraal to a sales (LCM and GWTI) alloy• Ownership of value chain = higher expect profit margins for GWMG and security ted of supply for customersFlagship Steenkampskraal mine - a uniq project with significant potential: que• Main Zone historic estimates contained [RREO] grades of 16.74%(1), total [REO] grade of 11.6%(1) g• Favorable distribution of heavy rare earth of approximately 8%(1) of total REO hs• Historic mineralization (and mine working remains open along strike and at depth gs)Great Western - a comprehensive strateg gy:• Restart production, build a mixed rare ear chloride plant at Steenkampskraal and production rth Steenkampskraal, a separation plant near Steenkampskraal l• Significantly expand alloy production capa at LCM acity 3 (1) Based on historical non-NI 43-101 1-compliant data. See Cautionary Note on Forward-Looking Statements.
  5. 5. Global Rare Earth Dem mandKey elements of anticipated global demand for R Rare Earth Oxides: 2010 D and 2015 D Dema d Demand I d Increase (Tonnes) (Tonnes)Permanent Magnets 26,000 26 000 40,000 40 000 54%NiMH Batteries, Catalysts 22,000 36,000 64%Phosphors 8,500 12,500 47%Chinese Demand 70,000 120,000 71%By 2015, the most significant surpluses of REOs will include: 2015 s Supply exceeds demand by y:Lanthanum 13%Cerium 26%Praseodymium 45%Samarium 144%By 2015, the most significant shortages of REOs will include: s Demand exceeds supply byy:Europium 33%Terbium 42%Dysprosium 48%Erbium 50% Sources: IMCOA 5
  6. 6. Global RGl b l Rare Earth Sup l E th S pplyKey locations of current REE Reserves a Production include (in tonnes): and Reserve es ProductionUnited States 13,000,000 0Australia 1,600, 1 600 000 0China 55,000,000 130,000Global Total (Includes Others) 114,000, 114 000 000 134,000 134 000The history of the Chinese export quota is as follows: as Quota (Tonnes) % Chang Over Prior Year ge2005 65,6092006 61,821 - 6%2007 60,074 - 3%2008 56,939 - 5%2009 50,145 , -12%2010 30,258 -40%2011 , 30,184 -0.2%2012 Same as 2011 ------ Sources: IMCOA 6
  7. 7. GWMG Corporate Stru ucture Gre t G eat Westtern Mine erals Gro oup Lt . tdVarious % 100% 100% 75% 100% 100% North (Planned) GQD American Rareco Marketing Joint LCM GWTI Exploration Co. Venture 74%Hoidas LakeDouglas River Tax Effective Steenkampskraal Birkenhead, Troy,Red Wine SKK Location Region U.K MichiganBenjamin River ( (Steenkampskraal) p ) B.E.E. BEE (26%) 7
  8. 8. GWMG Management Team M t Gary Billingsley Jim J Engdahl David Kennedy C.A., P.Eng., P.Geo. P.Eng., MIMMM EXECUTIVE CHAIRMAN PRESIDENT & CEO P CEO RARECO CEO, Russell Grant Vern Kiss V Mike Der Mik D B.Sc. Tech. B.Comm., LL.B. B.A., LL.B. B SENIOR V.P., CORPORATE V.P., CORPORATE V BUSINESS DEVELOPMENT COUNSEL DEVELOPMENT D Jim Davidson John Pearson Richard Hogan R M S PG M.Sc., P.Geo. B. Comm., C.A. M.S Eng. Sc. V.P., EXPLORATION V.P. FINANCE, V.P OPERATIONS P., CHIEF FINANCIAL OFFICER Brent Jellicoe Dr. D Ian Higgins Dr. Baodong Zhao B.Sc., P. Geo. Ph. D., MIMMM M.Eng., Ph.D. , P.Eng. DIRECTOR,INT L DIRECTOR INT’L DIRECTOR, DIRECTOR METALS D MANAGER, EXPLORATION AND ALLOYS A METALLURGY 8
  9. 9. GWMG’s Fully IGWMG’ F ll Integra d Model ated M d lGWMG’s fully integrated model adds a sustainable competitive advantage Exploration • Drilling Results & Mine Development Plan Mining • Ore Mixed Chloride Production • Concentrate and Mixed Rare Earth Chloride Solvent Extraction Separation • Individual Rare Earth Oxides Metal Making g • High Purity Rare Earth Metals g y Alloy P Production • Magnet alloys, super-alloys & other end-user metal alloys Ind dustry Product Manufacturing • Industriall, Consumer & Military End Products 9
  10. 10. GWMG: M i t i i ControlGWMG Maintaining C t l• Mining: • GWMG owns 74% of the SKK miniing operation • GWMG owns 100% of the SKK min output ne• Mi d Chloride Production: Mixed Chl id P d ti • GWMG owns 100% of chloride pro oduction plant• Solvent Extraction Separation: • GWMG owns 75% of separation plant, 100% of oxide production through GWMG market ting company • Marketing company has chloride se eparated on a tolling basis, retaining 100% GWMG control• Metal Making: • GWMG owns 100% of metal makin that buys ng GWMG produced oxides d d id• Alloy Production: • GWMG owns 100% of LCM and GWTI that manufacture alloys from GWMG ow y wned metal 1 0
  11. 11. Mixed Chloride Solvent Alloy Exploration E l ti Mining Production Extraction Separation ProductionGWMG Exploration Priorities:Steenkampskraal:•Complete National Instrument 43 101 techn 43-101 nical report report.•Confirm historical data and expand size of r resource.Hoidas Lake:•Update previously completed NI 43-101.•Continue to work on metallurgy to evaluate gyproduction potential.Douglas River, Benjamin River, Red Wine e:•Continue early stage exploration, focused o heavy exploration onrare earth elements.•Focus on exploration activities t generate rare earth f d t k F l ti ti iti to t th feedstockfor future supply to GWMG alloy processing operations. 11
  12. 12. Mixed Chloride Solvent AlloyExploration Mining Mi i Production Extraction Separation ProductionSteenkampskraal Background:•Former operating thorium mine.•Excellent infrastructure with paved Excellent and gravel roads.•In close proximity to rail and sea port In sea-port.•474 hectare property permitted to current mining requirements.•One of the highest grade RE deposits: 16.7 74% REO (based on historical non-NI 43-101-compliant data supplied b Rareco and reviewed by by GWMG management).•Exploration potential.•Nuclear License allows thorium processing, extraction, storage , and handling. 12
  13. 13. Mixed Chloride Solvent Alloy yExploration Mining Mi i Production Extraction Separation ProductionSteenkampskraal Project Steps Complete in 2011: ed•June: Launched mine site refurbishment.•June: Hired Extraction, Processing Plant maanagers.•July: Acquired 100% of Rareco.•July: Heads of Terms with GQD for Separa ation plant.•July: Contracted Processing plant design t July: team.•August: Hired Monazite expert.•August: Appointed Director of International Exploration Exploration.•August: Mine site refurbishment on schedule.•September: S l t d ill contractor f explor ti S t b Select drill t t for l ration.•November: Appointed Kennedy as Rareco C CEO.•November: Appointed Kabaah as Mine Man nager.•December: Executed planned exploration program. g•December: Refurbished mine shaft and facilities. 13
  14. 14. Mixed Chloride Solvent Alloy yExploration Mining Mi i Production Extraction Separation ProductionSteenkampskraal Current Project Steps 2 2012:January:•Completed and signed Solvent Extraction S Separation plant JointVenture.•Finalized first phase of drill program designe to confirm historical eddata and expand resource resource.February:•Complete design work for Mixed Chloride P Production plant plant.•Launched second phase of Steenkampskra drill program to test aalextension of mineralized vein system. t i f i li d i t•Refurbishment of mine shaft continues in ad dvanced stages.•Site preparation work continues in advanced stages. d•Separation p p plant design and environmental work progressing at g p g gscheduled pace. 14
  15. 15. Mixed Chloride Solvent AlloyExploration Mining Production Extraction Separation Production Steenkampskraal decline entrance February 2011 Entrance to decline August 2011 Decline refurbishment materials arrive at site September 2011 Top 45 feet of decline concrete work complete September 2011 15
  16. 16. Mixed Chloride Solvent AlloyExploration Mining Production Extraction Separation Production Drilling activity at Steenkampskraal October 2011 Drill core from Steenkampskraal exploration October 2011 Rails readied for shaft refurbishment November 2011 Mine shaft being refurbished December 2011 g 16
  17. 17. Mixed Chloride Solvent AlloyExploration Mining Production Extraction Separation Production Site prep adjacent to mineralized rock dump January 2012 Fleet of equipment at Steenkampskraal January 2012 Final rails for shaft refurbishment January 2012 Mine shaft refurbishment nearing completion February 2012 17
  18. 18. Alloy Exploration Mining Mixed Ch hloride Solvent Extraction Production Producction SeparationPlans for Mixed Chloride Production Plan nt:•To be located at Steenkampskraal mine site e.•Design work i process th D i k in through DRA Mi rals. h Miner l•Design upgraded to allow capacity of 12,000 tonnes 0per annum of rare earth chloride solution.•Beneficiation: • Produces a mineral concentrate • Crushing milling, and concentration te Crushing, milling echnology • To use gravity, magnetic, and flotation techniques. n•Removal of thorium in the processing stage e•Leaching: • T produce a li id chloride. To d liquid hl id • Using mineral concentrate, produces a liquid sulphate, nitrate, or chloride (RECl3) of mixed ra earths. are 18
  19. 19. Mixed Chloride Alloy Exploration Mining Production Solvent Production ExtractionPlans for Separation Plant: Separation•Heads of Terms signed with Ganzhou Qiand dong Rare EarthGroup (GQD) July 25 2011 25,•Final Agreement for separation plant signed and announced dJanuary 10, 2012 with highly experienced GQ 10 QD•New joint venture company, Great Western GQD Rare EarthMaterials Co. Ltd. (GWGQD) has been creat ted: • 75% GWMG ownership • 25% GQD ownership • GWMG Board control position p•GWGQD to be responsible for the design, m manufacture,construction,construction commissioning and operation o ofseparation facility. • To be located in proximity to Steenkammpskraal mine site site. • Plans call for capacity expansion from 2,700 t.p.a. to m 5,000 t.p.a. once operational. 19
  20. 20. Mixed Chloride Exploration Mining Production Separation Alloy ProductionHighlights of Less Common Metals:• Trading g g globally: European Union 60%, J p , China, y p , Japan, , Taiwan 30%, United States 10%• Focused on permanent magnet industry• Significant supplier of NdFeB alloys• Supplies 20% of world’s Samarium Coba Alloy world s alt• 20 years of high quality production• Operates both co-reduction and specializ casting O zed techniques for producing rare earth alloys s• Expanding existing facility and Installing n new processes for production of rare earth metals p 20
  21. 21. Mixed Chloride Exploration Mining Production Separation Alloy ProductionLCM Expansion:• 400% capacity expansion driven by full s support of major customers from Europe and Japan seeki NdFeB alloy. ing• New state of the art facility leased in sam locale as existing y me g plant.• First special casting furnace now installe and being ed commissioned.• Second furnace order in process• First phase of metal-making to be located at LCM d• Objective is to process all GWMG output of Nd, t Pr, Sm and Dy at LCM or GWTI• The fully integrated model, demonstrate increase in alloy ed capacity and secure supply chain will fur p y pp y rther solidify already y y strong customer relationships. 21
  22. 22. Mixed Chloride Exploration Mining Production Separation Alloy ProductionGWTI Highlights:• Located in Troy, Michigan, USA y g• Strategic asset for revitalization of the Ra Earth industry in are the United States• Has undertaken work related to U.S. stra ategic initiatives in the rare earth sector• Versatile production capacity including:• Permanent magnet alloys P t t ll• NiMH alloy for rechargeable batteries• “Super Alloy” production for aerospace m materials• Hydriding capability for solid-state hydrog y g p y y g gen-storage alloys, g y both rare earth and transition metal types s 22
  23. 23. Projected O t tP j t d Outputs – Selected Elements l t d El t* Hypothetical model based on standard Monazite REO distribution, assumes approximately 5,000 t.p.a. available To Off-Takes, Off-Takes REO Production* To LCM REO Market (Tonnes) (Tonnes) ( (Tonnes) ) Lanthanum 1,084.0 77.0 1007.0 Cerium 2,334.0 2 334 0 2.0 20 2332.0 2332 0 Praseodymium 250.0 166.0 84.0 Neodymium 834.0 834 0 834.0 834 0 0.0 00 Samarium 125.0 74.0 51.0 Dysprosium D i 34.0 34 0 34.0 34 0 0.0 00 Yttrium 250.0 0.1 249.9 TOTAL OF ALL 15 ELEMENTS 5,015.9 1,185.4 3830.5 (Tonnes) (T ) 23
  24. 24. GWMG Milestones Mil tGWMG focuses on major milestones:• Early 2012: Complete refurbishment of mine shaft and ancillary surface facilities• Early 2012: Operate at expanded furnace e capacity at LCM• 1st Half 2012: Complete NI 43-101 at Steenkampskraal• 2nd Half 2012: Launch mining operations at Steenkampskraal• December 2012: Complete Mixed Chlorid p de Production Plant• Early 2013: Complete Separation Plant• 1st Half 2013: Begin production with minin mixed ng, chloride production and separation separation. 24
  25. 25. GWMG Overview O i Shares Outstanding / Fully Diluted 413.2 413 2 mm / 508 0 mm 508.0 (as at February 22, 2012) Share Price (as at March 09, 2012) $0.57 52 week High / Low (March 09, 2012) $0.98 / $0.39 Market Cap (as at March 09, 2012) $217.4 Million Cash on hand (as at September 30, 2011) $5.3 Million Insider Holdings / F ll Dil t d ( t ) I id H ldi Fully Diluted (est.) 1.9% 12.0% 1 9% / 12 0% Institutional Holdings (est.) 36% 25