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Great Western Minerals to bid for Rareco this week
December 7, 2010 / 6:32 PM / 7 years ago

Great Western Minerals to bid for Rareco this week

* Great Western to pay $0.45/share for Rareco

* Will gain 74 pct stake in South Africa rare earth mine

* Sees profitability by 2013

TORONTO, Dec 7 (Reuters) - Great Western Minerals GWG.V said on Tuesday that it will make a formal offer to buy all outstanding shares in Rare Earth Extraction Co Ltd, or Rareco, by the end of the week in its bid to gain majority ownership in a promising rare earth mine.

Last month, Canada’s Great Western said it intended to buy all the shares in the South African miner that it doesn’t already own for 3 rand (45 cents) each.

At stake is a 74 percent share in the Steenkampskraal rare earth mine in South Africa, which will produce a high grade mix of rare earths.

Great Western currently owns 20.8 percent of Rareco and has an agreement for 100 percent offtake from Steenkampskraal. There are 37.8 million shares outstanding in Rareco.

Over 95 percent of rare earths, used in technologies like smartphones and wind turbines, are produced in China. The Asian nation recently cut exports of rare earths for the second half of 2010 by 70 percent.

This has led to a push to develop rare earth mines and processing facilities outside of China.

Great Western, which owns rare earth alloy processing facilities in Britain and the United States, said it is the only junior firm to have proven rare earth processing capabilities.

“We’re the only one that has the downstream alloy production right now,” said Chief Executive Jim Engdahl. “We’re the only one in the world.”

The Saskatoon, Saskatchewan-based company currently buys separated rare earth oxides from China to process into alloys and metals. Its customers are technology firms.

Engdahl said he expects Great Western to be profitable by 2013, after Steenkampskraal comes into production.

In an interview with Reuters last month, Engdahl said Great Western would build a C$15 million ($14.9 million) separation facility in South Africa to process rare earth concentrate from the mine.

Shares of Great Western rose 2.41 percent to 42.5 Canadian cents on Tuesday on the TSX Venture Exchange.

$1=$1.01 Canadian Reporting by Julie Gordon; editing by Rob Wilson

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