Great Western Minerals Group Ltd.

Great Western Minerals Group Ltd.

January 31, 2007 14:01 ET

Great Western Minerals Group Ltd.: Significant Increase in Hoidas Lake Resource Estimate

SASKATOON, SASKATCHEWAN--(CCNMatthews - Jan. 31, 2007) - Great Western Minerals Group Ltd. (TSX VENTURE:GWG) (PINK SHEETS:GWMGF):

The Company is very pleased to report that it has received the updated Resource Estimate on the Hoidas Lake Rare Earth Project from Wardrop Engineering Inc. ("Wardrop") based on data from the additional 14 drill holes completed in spring 2006. The estimate is in compliance with National Instrument 43-101 of the Ontario Securities Commission and updates the estimate originally reported in the Resource Model and Technical Report released in March 2006 (see news release dated March 28, 2006).

The 2006 drill program was designed to upgrade the Inferred resource to the Measured and Indicated categories and this program was highly successful in that the Measured and Indicated resource increased 108% to 1,150,000 tonnes from 553,000 tonnes with a slight increase in grade to 2.362% total rare earth elements including yttrium ("TREE + Y") from 2.341% TREE + Y.

Updated Resource Estimate

The resource model is based on 84 core holes located along a strike length in excess of 700 metres. These core holes, some of which extend to a depth of 150 metres, total 7,761 metres of drilling and provide 2,628 assayed samples. The rare earth mineralization is open along strike and at depth.

The resource estimate used ordinary kriging, nearest neighbour, and inverse distance interpolation methods, with the ordinary kriging values used for reporting. Based on preliminary economics generated by the Company, a cut-off grade of 1.5% TREE + Y was applied for summary reporting purposes. The resource model uses the assay data provided by the Company, but Wardrop carried out additional independent testing.

The tabulated resource data for the Hoidas Lake JAK Zone as calculated by
Wardrop is as follows:

Category Cut-Off Grade Tonnes TREE + Y TREO(1) + Y2O3
WT.% TREE + Y WT.% WT.%
Measured 1.5 80,000 2.115 2.534
Indicated 1.5 1,070,000 2.380 2.852
Total 1,150,000 2.362 2.830

Inferred 1.5 371,000 2.154 2.581

(1) Total Rare Earth Oxide-calculated from TREE for comparison purposes.

For information purposes, using a 0.5% TREE + Y cut-off grade results in a Measured and Indicated resource estimate of 1,650,000 tonnes grading 1.985% TREE + Y (2.379%TREO + Y2O3). A 2.0% cut-off grade results in a Measured and Indicated resource estimate of 785,000 tonnes grading 2.645% TREE + Y (3.169% TREO + Y2O3).

Preliminary Economic Assessment

This significant increase in the Measured and Indicated resource categories raises the confidence level in the resource estimate forming the basis for the Preliminary Economic Assessment Study currently in progress under the direction of Wardrop. The base case is a 500 tonne per day mining operation producing between 3,000 and 5,000 tonnes of TREO + Y2O3 per year. This represents approximately 10% of US demand for rare earth elements in a market which the United States Geological Survey estimates at US$1 billion annually.

A key factor in determining the value of an REE deposit is the distribution of the individual REE within the deposit. The total grade does not tell the whole story. The distribution of in-demand, higher-value elements is more important than total grade. Hoidas Lake, for example, contains a higher proportion of neodymium (21.89%) than other deposits, giving an average TREO value of approximately US$11,000(2) per tonne compared to a US$7,100(2) per tonne TREO value at Bayanobo, China (with a 15.40% neodymium proportion) and a US$5,700(2) per tonne TREO value at Mountain Pass, California (with a 12.00% neodymium proportion). Neodymium, a key element in the permanent magnets used in many high-technology applications, is currently the driving force in the rare earth industry and prices have risen dramatically (over 50% in the last 6 months) with increased demand. These average values can be increased significantly through value-added processing.

Great Western Technologies Inc.

As part of the Company's "mine to market" vertically-integrated strategy, it operates specialty metal manufacturing facilities in Troy, Michigan through a 100%-owned subsidiary, Great Western Technologies Inc. ("GWTI"). The highly-motivated staff at GWTI is focused on developing the market for high-margin specialty alloys using REE for various high-technology industries. Recent production has included hydrogen storage materials for the automotive industry, special alloys for the aerospace industry, powders for the rechargeable battery industry and powders for the permanent magnet industry. The work at GWTI can significantly add to the value of production from Hoidas Lake should the mining operation prove feasible.

Jim Engdahl, President

(2) Source: Lynas Corp. January 8, 2007 pricing

CUSIP: 39141Y 10 3

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Contact Information

  • Great Western Minerals Group Ltd.
    Gordon Dent
    (306) 668-0701
    Great Western Minerals Group Ltd.
    226 Cardinal Crescent
    Saskatoon, SK S7L 6H8