objective capital rare earth and minor metals investment summit: focus on rare earths: building the...
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Objective Capital Rare Earths, Speciality and Minor Metals Investment Summit Focus on Rare Earths: Building the Mine to Market Strategy 18 March 2010 by Gary Billingsley, Great Western MineralsTRANSCRIPT
RARE EARTHS, SPECIALITY & MINOR METALS INVESTMENT SUMMIT
THE LONDON CHAMBER OF COMMERCE AND INDUSTRY ● THURSDAY, 18 MARCH 2010www.ObjectiveCapitalConferences.com
Investment Conferences
1
9.55 – 10.20 Focus on Rare Earths: Building the Mine to Market StrategyGary Billingsley – Exec Chairman, Great Western Minerals
Objective Capital Investment ConferencesRare Earths, Specialty & Minor MetalsLondon, UKMarch 2010
TSXV: GWG
OTCQX: GWMGF
Safe Harbour Statement• Cautionary Note On Forward-Looking Statements
• Forward-looking statements include, but are not limited to, GWMG’s continued advancement of its mineral exploration and development programs. 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.
• 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.
• Disclaimer• 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.
Company Overview• About Great Western Minerals Group Ltd.
• Great Western Minerals Group Ltd. is a Canadian-based company pursuing a value-added, vertically-integrated, business model in the rare earth industry. Through its wholly-owned subsidiaries Less Common Metals Limited, located in Birkenhead UK, and Great Western Technologies Inc., located in Troy, Michigan, the Company produces a variety of specialty alloys for use in the rechargeable battery, permanent magnet and aerospace industries.
• On the mining side, the Company is actively developing several earth properties globally, including the former-producing Steenkampskraal Mine in South Africa, on which it holds an option to refurbish and bring back into production. With Steenkampskraal in production the Company will be able to source all the rare earth material required for its manufacturing operations internally.
Company Overview
• Mission • To become the first fully
vertically integrated rare earth elements (“REE”) producer in North America and a leader in the industry outside of China
>> 13 employees
>> 8 employees“GWTI” Troy, Michigan
>> 25 employeesBirkenhead, UK
Capitalization Overview
Shares Outstanding / Fully Diluted 240.0 mm / 266.3 mm
Share Price $0.20
52 week High / Low $0.46 / $0.04
Market Cap $48 mm
Cash on hand $ 8.0 mm
Debt $ 1.8 mm
Insider Holdings / Fully Diluted 1.9% / 12.0%
Institutional Holdings 5.6%
At March 15, 2010
TSXV: GWGOTCQX: GWMGF
Key Personnel
Gary L. Billingsley CA, P.Eng, P.GeoExecutive Chairman
James B. EngdahlPresident, CEO and Director
David KennedyC.Eng, MIMMM, Managing Director, Metals And Alloys
Audrey McMillan CAChief Financial Officer
John G. Pearson MSc. Geol., P.GeoVice-President, Exploration
Richard O. Hogan MSc. Eng.Vice-President, Operations
Dr. Baodong Zhao, PhDManager, Metallurgy
What are Rare Earth Elements?Periodic TableREE=Lanthanides
[ LREE ][ HREE ]
What are Rare Earth Elements?• Unique group of metallic elements • Unique chemical, catalytic, electrical,
magnetic, metallurgic and optical properties
• Used for wide range of applications• Neodymium, Dysprosium and
Terbium, are highest in demand
Sc - Scandium $1,750.00
Y - Yttrium 10.00
La - Lanthanum 7.10
Ce - Cerium 5.84
Pr - Praseodymium 27.50
Nd - Neodymium 30.00
Pm - Promethium Synthetic
Sm - Samarium 5.50
Eu - Europium 497.00
Gd - Gadolinuim 10.89
Tb - Terbium 460.18
Dy - Dysprosium 160.00
Ho - Holmium 35.00
Er - Erbium35.00
Tm - Thulium 790.00
Yb - Ytterbium 132.00
Lu - Lutetium 238.00
Rare Earths REO Price (USD/kg)*
*Asian Metal-February 24, 2010
What are Rare Earth Elements?
What are Rare Earth Elements?
What are Rare Earth Elements?
REEs Global Supply & Demand
Industry HighlightsREEs are Critical to Emerging Technologies
REEs are critical to GREEN TECHNOLOGYHybrid vehicles, wind power, pollution controlling catalysts, energy efficient lighting
Strong Projected Growth in Demand for REEs
Demand: expected to increase 70% by 2014CAGR: 15% from 2009 to 2014Strongest Sector: metal alloy and magnet applications
Supply Constraints Imposed by China
China currently accounts for 97% of the world’s total REE production.China is ACTIVELY CONTROLLING the MARKET with:Physical quotas on mining and exports, limits on the number of exporters, and tariffs of 15% to 25% on exports
Surge in REE Investment Activity by End-Users
Manufacturers investing in REE sources to secure supply:Mitsubishi, Sojitsu, JOGMEC, Mitsui, Toyota, etc.
Company HighlightsMine-to-Market Model •Already a DOWNSTREAM MANUFACTURER of RARE EARTH PRODUCTS
•Already supply 20% of the world demand for SmCo permanent magnet alloy•Already supply significant quantities of NdFeB permanent magnet alloy•Activelydeveloping several REE MINERAL PROJECTS
Speed to Market •The STEENKAMPSKRAAL MINE could be in production in 2012•Potential to be one of the FIRST PRIMARY REE PRODUCERS outside China
Metallurgy Expertise •Have IN-HOUSE METALLURGICAL EXPERTISE from mine-to-market
Company HighlightsDiversified •Geographically
•Distribution of REE content•Primary products and by-products
Supported by Large Industry Players
•Under LOI with Toyota Tsusho on HREE properties
Management Team •Highly experienced management and board, from discovery to mining to manufacturing
Global Rare Earth Projects
Thor Lake TSX:AVLKvanefjeld ASX:GGG
Nolan’s Bore ASX:ARU
Dubbo ASX:ALKMount Weld ASX:LYC
Dong Pao-Sojitsu/Toyota Vietnam
Steenkampskraal TSXV:GWG
Mountain Pass, CA Molycorp
Hoidas Lake TSXV:GWG Bayan Obo China
Potential Production by 2012 Potential Production by 2014
Only a limited number of Rare Earth deposits that have 2014 production potential
Our Project Locations
Hoidas Lake, SK 100% 96% 4%
A Global REE Presence
Douglas River, SK 100% 0% 100%
Benjamin River, NB 100% (1) 70% 30%
Canada % owned LREO HREO
Deep Sands 25% (2) 85% 15%
USA % owned LREO HREO
Steenkampskraal 100% (3) 92% 8%
South Africa % owned LREO HREO
(1) Entered into an option agreement with a third party to acquire a 100% working interest(2) Holds a 25% interest in REE contained in a heavy mineral sands project in Utah• Option on 100% of RE off take and ownership
Steenkampskraal MineWestern Cape, South Africa
In situ grade 16.74% TREO*
Highlights
30,000 tonnes TREO contained in resource*
Full Mining License; licensed to store thorium
New order mining right conversion in progress
Will supply 100% of LCM/GWTI RE needs
Exploration permit application made
Estimated capital cost: US$30 million/2,500 tpa REO
GWMG has option on 100% of RE and ownership
Access to local monazite sands may increase output
Production in 2012 is possible
*Historic data
Hoidas Lake ProjectSaskatchewan, Canada
M&I resource: 2.6 million tonnes @ 2.43% TREO (1)
Highlights
10km strike length/30+ RE occurrences
Less than 10% of the known zone drilled
Environmental baseline work complete
Metallurgical work based on QEMSCAN in progress
Target production date: 2014
Initial transportation study complete
Note (1) NI 43-101 compliant estimate
Deep Sands ProjectUtah, USA
170+ sq km of magnetite/monazite-bearing sand
Significant RE in surface sampling: to 0.8% TREO
Highlights
Completed 900+ drill holes over entire property
Assaying, compilation, interpretation in progress
Target: 500 million tonnes @ 0.25% TREO
Phase II: infill drilling and 43101 resource estimate
GWMG owns 25% of RE; ROFO on 75% of RE
Douglas River Project
High grade RE mineralization: 8.75% TREO
Saskatchewan, Canada
100% HREE including assays >1% Dy2O3
Very low radioactivity
Highlights
Related to high grade U deposits?
Near Cluff Lake and Shea Creek
Under LOI with Toyota Tsusho Corp
99% of RE in Xenotime; known recovery process
Benjamin RiverNew Brunswick
Close to all infrastructure near Bathurst, NB
Phosphate based-30% HREE by proportion
Initial drill program complete: analysis in progress
Under LOI with Toyota Tsusho Corporation
Highlights
Our ProjectsBalance Between LREE and HREE
Douglas River 41.81 99
Project Value REO US$/kg (1) HREO%
Benjamin River 25.05 30
Thor Lake (AVL) 26.15 20
Note (1) Pricing from Asian Metal as at February 24, 2010, distributions from publicly available data
Deep Sands 18.19 15
Hoidas Lake 16.23 4
Nolans Bore (ARU) 15.65 2
Mt. Weld (LYC) 14.42 2Steenkampskraal 13.96 8
Baotou (Bao Steel) 12.26 1Mt. Pass (Molycorp) 10.54 0
Bear Lodge (RES) 14.62 2
Upcoming Milestones
Douglas River
2010
Benjamin River
Deep Sands
Hoidas Lake
Steenkampskraal
Q1 Q2 Q3 Q4
Receipt of Toyota sampling results and participation decision
Phase I ExplorationReceipt, Compilation and Interpretation Phase I work
Phase II Exploration
Receipt, Compilation and Interpretation Phase I results
Determine Phase II exploration program from Phase I results
Phase II Exploration
Completion of metallurgy and transportation study
Completion of pre-feasibility study
Determine Phase II exploration program (if any) from Phase I results
Phase II Exploration
Receipt of converted New Order Mining Permit?
Finalize off-take arrangement; arrange mine finance; construction schedule
Mine Construction
Why do we own manufacturing?• Significant revenue multiplier in downstream operations• Direct Relationship with end users• Unparalleled metallurgical and marketing expertise outside of China• Increased margins that protect the mining side from price fluctuations
• LCM established and significant producer of Permanent Magnet Alloys
• Revenue in 2009 $12 million/$1.6 million EBITDA
• GWTI sees potential in recently completed contract for the US Department of Defense to develop a set of aluminum based high strength alloys
• Now operating close to profitability
What do we manufacture?• GWTI
• Permanent magnet alloys: heat treat NdFeB• Aluminum alloys (RE containing for aerospace industry)• Alnico alloys for alnico permanent magnets• NiMH battery alloys• Hydrogen storage alloys• NiMH battery electrodes• Sputtering targets
• LCM•Sm-Co permanent magnet alloy (supply 20% of world demand)•NdFeB permanent magnet alloys•Other magnet alloys•Specialty metal products
Market Cap ComparisonTarget Minerals
HREE LREE Rare Metals
Other Minerals
Other Corporate Attributes
Shares (1) outstanding
Price as of Mar 4 in C$
Market Cap Ratio of Mkt Cap to GWG
Market Data
78,504,448 $2.54 $199,401,298 3.78
Value-added Prod. Facilities, Production Revenue, Global Customer
Base, Accelerated Mining Potential, LOI with End-users
AVL
40,000,000 $2.82 $112,800,000 2.14QUC
26,339,736 $3.63 $95,613,242 1.81RES
240,000,000 $0.22 $52,800,000 1.00GWG
129,917,140 $0.37 $48,069,342 0.91CCE
86,475,198 $0.35 $30,266,320 0.57UCU
Note (1) Shares Outstanding is based on company’s website data
Investment Highlights• Potentially one of the first primary producers of
REE outside of China through our REE option in South Africa.
• The only fully integrated mine-to-market REE operator outside of China
• Unique blend of experience through all phases of the REE production cycle from exploration through manufacturing
• Already have a client base of global industrial companies
Phone [email protected]
THANK YOU