Seeking Alpha Analyst Since 2010
TORONTO (miningweekly.com) – Great Western Minerals could more than double production at its South Africa rare earths project if it strikes a deal to extract the valuable elements from waste that companies including Exxaro Resources and Richards Bay Minerals generate from their titanium operations.
Great Western CEO Jim Engdahl said that his company was in talks with miners that produce monazite as a by-product to reprocess it, which could create an opportunity for both sides.
Monazite hosts both rare earths and radioactive thorium, and Great Western earlier this month won a licence to store radioactive materials at its Steenkampskraal mine in the Western Cape.
“The problem that the other mines have is that they do not have a licence to store and process thorium,” Engdahl told Mining Weekly Online.
“We have an opportunity to deal with a problem that other mines have, and turn that into an opportunity for them as well as us.”
Speaking in a phone interview, he said that TSX-listed Great Western was talking to “several” companies in this regard, declining to name them.
Exxaro Resources and Richards Bay Minerals, a joint venture that mining giants Rio Tinto and BHP Billiton own, are the biggest companies that produce monazite as a by-product in South Africa, from their titanium operations.
Neither company was available for comment on Thursday evening.
“It could add many, many years to the life of the project, and increase production by at least two times,” Engdahl said.
Great Western aims to start producing at Steenkampskraal in the first quarter of 2013, and in April already unveiled plans to double output to 5 000 t/y.
Earlier last month GWG not only released plans that would double their YOY production (approx 2700 will now be approx 5000) from the Steenkampskraal project, but they also cut the production timeline down to Q1 2013 which beats other estimates that were previously as far away as 2014-2016. According to this article, they could yet again double production if they complete a deal to purchase minerals from either of these two titanium that are left over from production.
GWG is making all the right moves and is a much better valuation than Lynas at this point. They are expanding their reserves and taking advantage of every opportunity that presents itself.
Lynas now faces a shareholder bid for asset:
THE contentious attempted sale by Lynas Corporation of a rich rare earth and metals deposit to a related party has taken a new turn, with two prominent dissident shareholders preparing an audacious bid to pinch the prized asset from under the nose of the miner’s chief executive, Nic Curtis.
Melbourne-based software millionaire Mark Suhr and the chairman of online recruitment website Seek, Bob Watson, are finalising a formal bid for the Crown and Swan deposit this week, capitalising on the dramatic collapse of the rare earth miner’s proposed deal with related party Forge Resources.
The lawyer acting for the two businessmen, Chris Curran, of Turner Freeman, said Lynas had backed itself into a corner by readily accepting Forge’s offer. He said the board would have trouble justifying a rejection of a similar or improved offer so soon after declaring the asset non-core and ready for sale.Advertisement: Story continues below
“We think Lynas have shot themselves in the foot there,” Mr Curran said. “If we put in a similar bid to the one before, they would be in a very awkward position to not approve it.”
The drama is likely to further aggravate Lynas’s major institutional shareholders, who had made clear they wanted no distractions from the rare earth miner’s core promise of bringing its prized Mt Weld rare earths deposit into production.
The planned $20.7 million sale of the Crown polymetallic deposit to Forge had attracted significant shareholder criticism over the asset’s valuation, conflict-of-interest concerns, and perceived inadequate disclosure of the financial benefit Mr Curtis stood to receive.
A 2007 Lynas investor presentation boasted of the Crown ore body’s ”over $50 billion metal content” and ”positive project value”. Lynas had continued to promote the deposit to investors until last year, before deciding the asset was ”non-core”.
Mr Curtis would have boosted his stake in Forge to close to 40 per cent if the deal had proceeded. He owns less than 1 per cent of Lynas.
With the corporate regulator’s attention roused, Lynas was forced to delay its shareholder vote, and was in the process of revising its disclosure documents before the deal was pulled.
Lynas said it decided to abandon the deal based on the feedback from its predominantly offshore major institutional shareholders. It is also understood institutional shareholders were concerned Mr Curtis would have been distracted with his involvement in Forge if the deal proceeded.
With no related-party concerns, the Suhr-Watson bid will not be required to be approved by shareholders. Mr Curran said the bid was “well advanced” and that a Lynas independent director had been “responsive” after being sounded out.
The two businessmen had been instrumental in generating shareholder momentum against the Forge deal. The deal has also triggered concerns over Mr Curtis’s influence on the Lynas board, prompting a push for more independent directors on the board.
Lynas management is understood to be furious with Mr Suhr, with one source insistent Mr Suhr had a history of destroying shareholder value.
Finance and share related issues are unacceptable when you are in a race to get into production in a market that has very few competitors. GWG is extremely undervalued and their IR department should be pushing for a reverse split to increase exposure and possibly uplist into the AMEX in the future.