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Great Western Q1 Revenues Rise On Strong LCM Unit Performance

Great Western Minerals Group (CVE:GWG) (OTCQX:GWMGF) announced late Wednesday first quarter results, with financial performance exceeding that of the prior year period.

For the quarter that ended March 31, the integrated rare earths company posted revenues of $4.47 million, compared to $4.23 million for the previous year period.

Great Western Minerals Group (GWMG) combines upstream resource exploration and extraction at its Steenkampskraal mine in South Africa with downstream metals processing facilities in the US and UK. Its specialty alloys are used in the battery, magnet and aerospace industries.

"The financial performance of GWMG overall, and the performance of Less Common Metals in particular, has once again surpassed that of the same period of the prior year," said president and CEO Jim Engdahl.

"Increased LCM revenues are indicative of its strong market position. The continual increase in LCM's gross margin, EBITDA [earnings before interest, taxes, depreciation, and amortization] and earnings are indicative of a continual focus on productivity.

"These operating results position GWMG very well as the company continues down the path of full integration."
GWMG posted gross margins of $1.79 million, up from $1.29 million in the same quarter of 2011.

The company reported a narrower loss of $3.05 million, or $0.007 per share, smaller than the loss in the same quarter of 2011 of $4.85 million, or $0.014 per share.

Manufacturing revenues from the company's processing facilities, Less Common Metals Limited (NYSE:LCM) and Great Western Technologies, represent a 5.7 per cent increase over the first quarter of 2011.

Gross margins on manufacturing operations represent a 38.2 per cent increase over the same period of 2011.
The company's development program at Steenkampskraal is central to ensure a strong flow of feedstock for its downstream processing. GWMG 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 rare earth company, which eventually plans to be its own supplier as well as creating a supply certainty for global customers, has several operational targets this year, including the refurbishment of the mine shaft at Steenkampskraal in the first half of this year.

Great Western is on track for this target, 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.

Gross margins for LCM's first quarter increased 34.4 per cent to $1.89 million, compared to $1.41 million in the first quarter of 2011.

EBITDA for the first quarter at LCM increased 41.5 per cent to $871,926, compared to $616,198 a year earlier.

Revenues for LCM were "significantly over budget", at $4.29 million, versus $4.07 million in the same quarter of 2011.

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.

The company's shares were up 1.27 per cent Thursday, trading at $0.40.