)(OTCQX:GWMGF) Thursday announced it has satisfied the escrow release condition on its $90 million convertible bond financing, for the development of its Steenkampskraal project in South Africa.
In early April, Great Western announced it had closed the convertible bond financing and with release conditions met, the remaining funds net of US$10.8 million that remained in escrow to satisfy interest payments, will be released immediately to the company.
In order to satisfy the release condition, Great Western said it was obligated to have Caracle Creek International Consulting provide escrow a confirmation letter stating that at least 20,000 metric tonnes of total rare earth oxides (TREO), in the sum of the measured, indicated, and inferred resource categories using a one per cent cut-off grade, are present at Steenkampskraal.
The company said the letter indicates the presence of at least 26,600 metric tonnes of TREO under the inferred resource category.
"We are extremely pleased to be able to deliver, as scheduled, the confirmation letter that enables the release of funds from the offering," Great Western's president and CEO Jim Engdahl said.
"With these funds in place, we are positioned to continue with the development of the Steenkampskraal operation, including the continuation of exploratory drilling that we anticipate will further increase the resource calculation."
The company noted that the confirmation letter is based on geological and assay information limited to the immediate area of the historic mine developments at Steenkampskraal. These include, recent resource confirmation drilling, the first phase of underground channel sampling, structural mapping and underground mapping of mineralization.
The company said it expects to file an NI 43-101 report on the Steenkampskraal property on or before May 31, 2012.
Not included in the letter, but anticipated to be incorporated into the NI 43-101 report, are results from recent sampling of mineralization in the up-dip and down-dip extremities of the historic mine area, the two tailings dams, and the rock dump, Great Western said.
The program at Steenkampskraal is central to ensure a strong flow of feedstock for the company's downstream processing.
Great Western 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.
The company is on track for both these targets, as well as for the launch of mining activities by the end of 2012, and the construction of a mixed chloride plant and separation plant near Steenkampsraal in the first half of 2013.
At its LCM processing operation in the UK, the company completed the first pour with its new strip casting furnace at the end of January, and in late March, the company placed an order for a second strip cast furnace, allowing alloy manufacturing capacity to double when the second furnace arrives and is commissioned later this year.
The second strip cast furnace will increase the total production capacity of LCM to approximately 2,000 tonnes per annum of rare earth alloys.
The company is boosting capacity in preparation for its rare earth production coming online, and as demand for the metals grows.