Shares of Great Western Minerals Group (CVE:GWG) rallied Monday after the company said its rare earths processing unit, Less Common Metals (NYSE:LCM), is now in commerical production with its first rare earth alloy strip casting furnace.
The company's stock rose more than 8%, or 2 cents, to 26 cents this morning.
"Achieving commercial production with the new strip casting furnace at LCM is a very important milestone in GWMG's progress path as we complete one of the items we committed to achieve early in 2013," said president and CEO Marc LeVier.
"The new furnaces represent a platform for revenue growth within our business model. The investment that GWMG has made in LCM's production capacity is indicative of our confidence in the future of the rare earth alloy market."
The company said today that Less Common Metals sold and shipped, on a commercial basis, specialty alloys produced by its new strip casting furnace to three existing customers.
An additional order, scheduled for delivery in the first quarter of this year, was placed by one of the three customers for an increased quantity of alloy, it added.
The second strip casting furnace ordered by the unit was fully commissioned in China, as scheduled, last November and is now in transit to Less Common Metals' facilities in the U.K., with an estimated arrival time of late in the first quarter.
Installation, followed by the commissioning of the second furnace, is slated to start early in the second quarter.
Great Western has announced a series of management additions and changes in recent weeks in preparation for a new stage in the life of the company, as it aims to become a fully integrated rare earth producer.
Currently, the company is a rare earth processor, whose specialty alloys are used in the magnet, battery, defence and aerospace industries.
Its development program at its Steenkampskraal rare earth mine in South Africa is central to ensure a strong flow of feedstock for its downstream processing - the company intends to be one of the first to produce significant quantities of the more valuable heavy rare earth oxides, which are important materials for alloys.
Last month, it released an updated NI 43-101 compliant resource estimate at its Steenkampskraal project that showed indicated resources rose by more than double from the report last May, while inferred resources more than tripled.
The company also reported last week that as a result of an internal investigation into the activities of former project director Vincent Mora, suspicions have been raised about invoicing, purchasing and contracting, and have led to the ex employee's arrest.
Because irregularities were found during the company's review, Great Western filed a complaint and cooperated with the South African police to investigate the possibility of criminal activity.
The company, which is now conducting a review of compliance with its internal controls, said that police have now arrested Mora on suspicion of fraud and money laundering.
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