Great Western Minerals (GWG.V) - PEAR delayed to include more fruitful opportunities Comment by Objective Capital , Mar 28, 2008 Questions?
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Great Western continues work on its preliminary economic assessment report (PEAR) for the Hoidas Lake rare earth elements project in northern Saskatchewan. The report will be delayed from the initial timeline, as the company and its consultants are examining several alternatives in the development plan, including the possibility of increasing the mining rate to 1,000 tonnes per day. Great Western received a draft report last autumn and expected the final version by the end of March.
Advanced metallurgical work is one key to completing the report. The company is investigating the optimum ways to extract rare earth elements from the allanite and apatite host rocks. The studies include methods to minimise acid consumption, the production of sulphuric acid locally, variations in the grinding and processing of the ore and potential recovery of phosphate as a salable byproduct, given its price has tripled to US$1,000 per tonne. Once the metallurgical work is complete, Great Western can finalise its power, transport and other infrastructure costs into the final report.
Objective's view:
The original plan called for a 500-tonne-per-day mine, but a rate of 1,000 tonnes per day would enhance the economics significantly. To accommodate such an increase, the company is in the midst of a drilling programme that could increase the existing mineral resource significantly. Over 5,200 metres of drilling has been completed and the programme should wrap up late in April. Assays are expected during the late summer, suggesting the PEAR will be delayed until at least the third quarter.
We believe an expanded scale of a Hoidas Lake mine and the metallurgical and operating efficiencies currently under examination could improve the underlying economics of the project. There is a commensurate risk that the additional work will delay the potential commencement of production, lessening the opportunity to capitalise on the currently robust market for rare earth elements. On balance we believe the parameters of the Hoidas Lake project remain in line with our earlier valuation of Great Western Minerals.
