Great Western Minerals Group announces an increase in the mineral resource estimate on Steenkampskraal rare earth deposit, South Africa

TSX Venture Symbol: GWG
OTCQX: GWMGF

CUSIP: 39141Y 10 3

SASKATOON, Jan. 21, 2013 /CNW/ - Great Western Minerals Group Ltd. ("GWMG" or the "Company", TSX:V - GWG)  today announced that its updated National Instrument 43-101 resource estimate and technical report (the "NI 43-101 Report") shows a significant increase in the mineral resource (both Indicated and Inferred categories) compared to the Company's previously released NI 43-101 report of May 18, 2012.

The updated NI 43-101 Report, which has been prepared by Snowden Mining Industry Consultants Inc. ("Snowden") for the Company's Steenkampskraal rare earth property located in the Western Cape of South Africa, is dated effective December 15, 2012 and will be filed and available under the Company's SEDAR profile at www.sedar.com within 45 days.

Highlights:

• A mineral resource estimate of 32,000 metric tonnes of total rare earth oxides plus yttrium oxide ("TREO") under the Indicated category and 42,100 metric tonnes of TREO under the Inferred category, each using a 1% TREO cut-off grade (the "Resource Estimate").
• The new results demonstrate the success of GWMG's exploration programs at Steenkampskraal with a 114% increase in the Indicated Resource and a 218% increase in the Inferred Resource as compared to May of 2012.
• The drilling program continues at Steenkampskraal with goals of: expanding the Resource Estimate; increasing the confidence in the geological model, upgrading the categories of reported resources; providing technical data for mine planning; and to check for mineralisation in those areas of the property where the concentrator and other infrastructure facilities will be located.
• The core logging and assay results of 55 completed drillholes remain to be evaluated and reported in a future update.

Resource Estimate

This Resource Estimate, which incorporates and supersedes that reported on May 31, 2012, indicates a significant increase in tonnage of the deposit primarily as a function of increased drilling along strike to the East (as shown in Table 1, below).  The Resource Estimate includes the historic mine area (the "Monazite Mine Area"), the exploration areas to the east and west of the past producing Monazite Mine Area (the "EXP Area") and the upper and lower tailings dams.

Table 1: Updated Mineral Resource Estimate for Steenkampskraal at a 1% cut-off grade (as of October 31, 2012)

(1)  For the updated Resource Estimate, "tonnes" and "grades" were rounded to 3 significant figures. Apparent errors may occur due to rounding.

(2) "LREO" means lanthanum (La2O3), cerium (CeO2), praseodymium (Pr6O11), neodymium (Nd2O3) and samarium (Sm2O3).  "HREO" means europium (Eu2O3), gadolinium (Gd2O3), terbium (Tb4O7), dysprosium (Dy2O3), holmium (Ho2O3), thulium (Tm2O3), ytterbium (Yb2O3) lutetium (Lu2O3) and yttrium (Y2O3).

The additional drilling completed since May of 2012 has provided significantly more density measurements which has yielded an increase in the calculated average specific gravity of the deposit from 3.23 g/cm³ to 3.50 g/cm³.

Table 2 shows a summary of individual REO results for the in-situ Mine and EXP Areas, which were the focus of the updated Resource Estimate.  Complete Resource Estimate results for individual REOs will be available in the NI 43-101 Report once filed on SEDAR.

Table 2: Updated Mineral Resource Estimate of REO Percentage for the Mine and EXP Areas at Steenkampskraal using a 1% cut-off grade (as of October 31, 2012)

GWMG President and Chief Executive Officer Marc LeVier said, "The substantial increase in TREO tonnage from this Resource Estimate update significantly improves the economic potential of the Steenkampskraal Monazite Project. The resource update reported today will be incorporated into the Preliminary Economic Assessment that is being prepared concurrently.  We expect the Steenkampskraal analysis will be bolstered further with the upcoming addition of a minimum of 55 drillholes for which assay work is currently in progress."

Geology and Mineralization

The Steenkampskraal mineralization consists of a narrow, shallow and irregular dipping (from 10^o to 60^o to the south), pinch and swell monazite vein which is exposed at surface as an east-west striking body (the "MMZ"). It has an average thickness of about 1.0 metre ("m"), varying from less than 20 centimetres ("cm") to 9.5m. The vein has been traced for a strike-length of just over 1,050m and a known southerly down-dip extension of up to 150m. The Resource Estimate covers a strike length of about 920m.  The vein structure exhibits good lateral and vertical continuity.  Mineralization is open on strike in both directions and down-dip below a depth of 130m along most of the strike length explored to date.

Mineralogical investigations indicate that the vein is composed predominantly of the mineral monazite, which accounts for more than 91% of total rare earth elements, with lesser amounts of rare earth element-bearing allanite, thorite, and xenotime.  Alteration minerals are dominated by quartz, Fe-chlorite, magnetic Fe-oxide minerals, ilmenite, and sulphides including chalcopyrite, pyrite and galena.  Vein material at Steenkampskraal contains from 0.4% to 46% TREO with the average grade typically dependent on the amount of diluting materials (such as quartz, feldspar, magnetite and sulphides) within the vein structure.

Exploration 

The historic Steenkampskraal mine has been partially rehabilitated by GWMG and all three access levels and most of the old workings are open to geological and geotechnical investigations.  Evaluation and exploration work from September 2011 to December 2012 consisted of surveying, mapping 67 underground channel samples and199 HQ and NQ surface drillholes totalling 23,305.31m within the Mine and the EXP Areas.  In addition, GWMG undertook evaluation drilling and sampling of the historic tailings dams. The rock dump has also been sampled, but has not yet been included in the resource estimates.

The May, 2012 estimate reported on 40 initial evaluation and metallurgical drillholes from the Monazite Mine Area, the first two exploration drillholes in the EXP Area, and sampling of the tailings dams.  Subsequent to this investigation, an additional 157 HQ and NQ size core holes were completed in the EXP Area.  Of these, EXP Area drillholes STKEXP-003 to STKEXP-105 have been added to the geological model and Resource Estimate which form the basis for the current NI 43-101 Report.  Drillhole survey information, intercept thicknesses, lithological descriptions, density measurements, scintillometer readings, and assay results for drillholes STKEXP-003 to STKEXP-067 are included in the current NI 43-101 Report, as well as similar information for drillholes STKEXP-068 to STKEXP-105 (other than assay results) which were received after the  data cut-off date.

Of the 105 exploration drillholes (STKEXP-001 to STKEXP-105) reviewed by Snowden, 27 did not intersect the MMZ. The reported "misses" represent either drilling beyond the vein boundaries, or local areas of non-mineralization within the "pinch and swell" vein system. Drillhole fence lines are oriented along down-dip lines perpendicular to strike on nominal 25m to 50m line spacing, and 25m collar centers.    The western, eastern and down-dip extensions of the MMZ remain open to date.  Drillholes STKEXP-106 to STKEXP-159 will be included in a future report.

Quality Assurance / Quality Control ("QA/QC")

Caracle Creek International Consultants (Pty) Ltd ("CCIC") examined the assay data of the blanks, certified reference materials, and field duplicates to assess the reliability of the overall assay dataset, and to assist in the determination of the robustness of the resource estimation that has been carried out using the assay results. Addition of quality control samples for all core, channel and tailings samples amounts to 30% representing approximately 10% each for blanks, duplicates, and standard references.  It was concluded by CCIC in general, that the addition of reference material and blanks to the Steenkampskraal sample batches was sufficiently adequate.

The validated database for the Resource Estimate includes information on 569 samples from 145 diamond drillholes of which 88 drillholes contained assay data using a September 2012 data cut-off date.  Drill holes that did not contain assay data were included as they provided lithological information for the wireframe modelling and radiometric data was used for potential grade interpolation. The database also included information for 223 samples from a total of 67 underground channel sections and 270 tailings samples.

Table 3: Comparison of May 2012 and current databases used for the in-situ Resource Estimate

Limited Grade Estimation using the Scintillometer / TREO% Relationship

REE-bearing minerals at Steenkampskraal have associated thorium and uranium content and subsequent radioactivity.  Radiation measurements in counts per second using a Terraplus RS-125 Gamma Ray Spectrometer were acquired for all samples that were submitted for assay from 127 drillholes and 32 out of 67 channel samples.

There is a strong positive association (correlation coefficient of approximately 0.95) between TREO grade from assay results and radioactivity as defined using detailed scintillometer measurements.  The linear formula generated by the correlation was subsequently applied to obtain an indicative TREO% in all drillholes that have been sampled, have radiometric measurements, and are awaiting assays.

In the absence of chemical assays, it is Snowden's considered opinion that because of the strong relationship between the scintillometer measurements and the TREO grades at Steenkampskraal, the application of the TREO-radioactivity correlation is sufficiently reliable to estimate "calculated and inferred" grades for the drillholes missing assay values at a low to moderate level of confidence, and that these values are suitable for use in the estimation of an Inferred Resource.

Modelling and Estimation Method

The mineralized zone wireframe, representing the MMZ, was generated using Leapfrog™ software after much verification work, based on drill intersections of the MMZ and guided by the available geological information.  All of the assay intervals falling within the MMZ were composited to the dominant sample length of 0.5m.

Establishment of Block Models and Variography Analysis

The interior of the MMZ wireframe was populated with blocks measuring 10m by 10m by 0.5m using Datamine™ Studio version 3 software.  Sub-blocking was used to provide for a more accurate volume determination; the smallest dimension for sub-blocks being 1.25 m by 1.25 m by 0.1 m. No rotation of blocks was applied as the strike and dip of the monazite was honoured through the small dimensions of sub-blocking.

Variograms were generated for each of the rare earth oxides ("REOs") as well as yttrium, thorium and uranium, and only using the assay data from the MMZ.  Spherical, two structured, directional variogram models were used.  Down-hole variograms were calculated and modelled to determine the nugget variance for the variogram models. The data occurring within the MMZ wireframes were combined for the three main zones to generate more robust variograms.  The nugget, determined from the down-hole variogram, ranges from 28% to 35% of the total variance of the data. The variograms showed well developed structure and long ranges.

The combined block model (unclassified and depleted) comprises 8,358 indicative value estimated blocks out of 40,702 total blocks.  None of the blocks estimated using the indicative data are reported as part of the Indicated Resource.

Grade Interpolation Parameters

Block grades for the individual REOs, yttrium, thorium and uranium were estimated using ordinary kriging. Four domains were delineated based on the location of major faults, and a small area of complexity characterized by bifurcation or interleaving of several monazite veins.  The zones were estimated separately and individual block models combined for classification.

TREO%, LREO% and HREO% values, which were calculated for reporting by combining the estimated grades of the individual REOs, were also estimated in the block model as a check to ensure the preservation of the total package and for validation, but these were not reported.

The final block model was a combination of two estimates; initially using composited assay data to estimate the blocks, and secondarily using the composited assay data as well as composited radiometric generated indicative grades (from drill holes where mineralization was logged and sampled but awaiting assays).

Density values were estimated into the block model using the Inverse Distance ("ID") estimation method.  ID was used because there were insufficient drillholes with density values to form structured variograms.

The block model was depleted for 'past production' using current survey information pertaining to the underground development and mined-out areas.  This ensured that stopes and development workings were not included in the Resource Estimate.

Previous Resource Estimate for Tailings Dams

The Resource Estimate restates the resources in respect of the tailings dams, the results of which remain unchanged from the May 2012 estimate.  A gridding approach was used to sample the tailings dams with sample holes at 10m spacing over the extent of the two tailings dams. Samples were collected on a per metre basis using a "Shelby tube" that was manually driven into the tailings to the base of the pile. The larger of the tailings dams contained material up to 2m thick and the smaller dam up to 4m thick. Sample material from each station, and each metre depth, were divided in a three level riffle-splitter to make representative sub-samples for independent grade analysis by SGS Canada and metallurgical studies by Mintek Analytical Services Division. This procedure was subject to the same QA/QC as for the drill core.  The database of the tailings dams comprised information from 270 drill samples.

Qualified Persons

The NI 43-101 Report was prepared by Mr. Ivor Jones, (BSc. Hons), MSc, FAusIMM, CP Geo., the Group General Manager of Geosciences with Snowden.  He contributed to and supervised the Resource Estimate for the main monazite deposit as well as the tailing dams.  Mr. Jones consents to the inclusion in this news release of the matters based on his information in the form and context in which it appears. Mr. Jones has sufficient experience relevant to the type of deposit under consideration and to the activity which he is undertaking to qualify as a Qualified Person as defined under NI 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and supervised the preparation of the contents of the Resource Estimate section of this news release.

Snowden was assisted by Dr. John Hancox, Pr.Sci.Nat., of Caracle Creek International Consulting (Pty) Limited of Johannesburg. Dr. Hancox provided geological interpretations and the drillhole and underground channel sampling database for the Resource Estimate. Dr. Hancox has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Qualified Person as defined under NI 43-101 and supervised the preparation of the contents of the geology, exploration, and data assurance sections of this news release. Dr. Hancox consents to the inclusion in this news release of the matters based on his information in the form and context in which it appears.

Brent C. Jellicoe, B.Sc. (Hon.), P.Geo., Director of International Exploration for GWMG, is the Qualified Person responsible for supervising the preparation of the technical content of this news release.

About Great Western Minerals Group Ltd.

Great Western Minerals Group Ltd. is engaged in becoming an integrated rare earth producer. Its specialty alloys are used in the battery, magnet and aerospace industries. Produced at the Company's wholly owned subsidiaries Less Common Metals Limited in Ellesmere, U.K. and Great Western Technologies Inc. in Troy, Michigan, these alloys contain transition metals including nickel, cobalt, iron and rare earth elements. As part of the Company's vertical integration strategy, GWMG also holds 100% equity ownership in Rare Earth Extraction Co. Limited, which controls the Steenkampskraal monazite mine. In addition to an exploration program at Steenkampskraal, GWMG also holds interests in four active rare earth exploration and development properties in North America.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statements

Certain information set out in this News Release constitutes forward-looking information.  Forward-looking statements (often, but not always, identified by the use of words such as "expect", "may", "could", "anticipate" or "will" and similar expressions) may describe expectations, opinions or guidance that are not statements of fact and which may be based upon information provided by third parties. Forward-looking statements are based upon the opinions, expectations and estimates of management of GWMG as at the date the statements are made and are subject to a variety of known and unknown risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. Those factors include, but are not limited to, risks associated with the uncertainty of resource estimates, in particular those relating to Inferred resources;  risks relating to estimating grades, in particular where interpolation is used to estimate grades; the successful and timely completion of its preliminary economic assessment at Hoidas Lake; the successful and timely completion and the results of its preliminary economic assessment of the Steenkampskraal project; the construction, commissioning and operation of the proposed monazite processing facility and separation facility and mine refurbishment activities; the adequacy of the Company's financial resources and the availability of additional cash from operations or from financing on reasonable terms or at all; reliance on third parties to meet projected timelines and commencement of production at Steenkampskraal; risks related to the receipt of all required approvals including those relating to the commencement of production at the Steenkampskraal mine, delays in obtaining permits, licenses and operating authorities in Canada, South Africa and China, environmental matters, water and land use risks; risks associated with the industry in general, commodity prices and exchange rate changes, operational risks associated with exploration, development and production operations, delays or changes in plans; health and safety risks; uncertainty of estimates and projections of production, costs and expenses; risks that future Hoidas Lake or Steenkampskraal and region exploration results may not meet exploration or corporate objectives; political risks inherent in South Africa and China; risks associated with the relationship between GWMG and/or its subsidiaries and communities and governments in Canada and South Africa, radioactivity and related issues, dependence on one mineral project; loss of, and the inability to attract, key personnel; the factors discussed in the Company's public disclosure record; and other factors that could cause actions, events or results not to be as anticipated. In light of the risks and uncertainties associated with forward-looking statements, readers are cautioned not to place undue reliance upon forward-looking information. Although GWMG believes that the expectations reflected in the forward-looking statements set out in this press release or incorporated herein by reference are reasonable, it can give no assurance that such expectations will prove to have been correct. Except as required by law, GWMG does not assume any obligation to update forward-looking statements as set out in this news release. The forward-looking statements of GWMG contained in this News Release, or incorporated herein by reference, are expressly qualified, in their entirety, by this cautionary statement and the risk factors contained in GWMG's Professional Securities Market listing particulars available at www.sedar.com.

Cautionary Note For US Investors Concerning Estimates of Indicated and Inferred Resources

This press release uses the terms "Indicated" and "Inferred" resources.  United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred" mineral resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred mineral resources may not form the basis of feasibility or other economic studies except in limited circumstances and with specific notification to the reader.  United States investors are cautioned not to assume that all or any part of any mineral resources will ever be converted into mineral Reserves (as defined under NI 43-101). United States investors are also cautioned not to assume that all or any part of an Inferred mineral resource exists, or is economically or legally mineable.

SOURCE Great Western Minerals Group Ltd.