Great Western Minerals Reports First Quarter 2014 Results

SASKATOON, SK--(Marketwired - May 15, 2014) - Great Western Minerals Group Ltd. ("GWMG" or the "Company") (TSX VENTURE: GWG) (OTCQX: GWMGF), a leader in the manufacture and supply of rare earth element-based metal alloys and holder of a low cost, high-grade critical rare earth element mineral property in the Western Cape province of South Africa (the "Steenkampskraal Project" or "SKK"), today reported its first quarter financial results through March 31, 2014, and provided an update on the Company's activities. All amounts are presented in Canadian dollars unless indicated otherwise.

Highlights and Results:

• First quarter revenue increased 112% to $7.2 million over the prior-year period on strong alloy sales as a result of enhanced capabilities. Company revenue was attributable to its production subsidiary Less Common Metals Limited ("LCM")¹.
• SKK feasibility study results released
• Monthly cash outlays continued to decline
• Company had $20.8 million in cash as of March 31, 2014

Marc LeVier, Company President and CEO, commented, "The Company's primary focus has been on the SKK feasibility study. Now that it is complete and the project funding requirements have been well-defined, we have intensified our efforts on the financing front. Importantly, the Company has managed its cash position to best support the progress of the SKK project, which includes the curtailment of all non-essential services. In the near-term, beyond the financing, our focus at the SKK project will be on certain regulatory and compliance work. At LCM our focus will be the continued fulfillment of customer orders as efficiently and profitably as possible."

Manufacturing Services

Manufacturing services revenue was $7.2 million in the first quarter of 2014, a $3.8 million, or 112%, increase over the same period of the prior year as higher volumes and favorable exchange rates more than offset declining alloy prices. In the recent quarter, the Company sold 107 metric tonnes of alloys compared with 55 metric tonnes of alloys in the first quarter of 2013. The increase reflects higher customer demand given the new strip cast furnaces that were fully commissioned at LCM during the past year. Growth will continue to be dependent on the Company's ability to obtain the necessary rare earth materials at competitive pricing. Once the Steenkampskraal Project has commenced production, the Company expects this limitation will be removed.

Gross margin for the quarter improved to $1.3 million from $1.1 million in the first quarter of 2013; however, as a percent of revenue, gross margin declined period-over-period to 17.6% from 32.2%. The margin contraction reflects lower alloy prices and a reduction in the amount of sales of specialty alloys during the period, which are traditionally at higher margins. The manufacturing services segment generated a loss of $0.2 million in the first quarter of 2014 compared with relatively breakeven results for the 2013 period.

Subsequent to March 31, 2014, the Company completed a sale of certain assets and liabilities of its Great Western Technologies Inc. ("GWTI") operation. In exchange for a payment of approximately US$752,000 from GWTI, the purchaser acquired all the property, plant and equipment and inventory of GWTI and assumed the US$1.2 million in restoration liabilities associated with the GWTI operation. In addition, the purchaser provided employment to the GWTI employees and has assumed GWTI's lease obligations.

¹ The GWMG Board of Directors approved the closing and redundant asset liquidation of Great Western Technologies Inc. ("GWTI") on March 20, 2014. Revenue from GWTI has been removed from the manufacturing services revenue and form part of the discontinuing operations as disclosed in the Company's financial statements.

Steenkampskraal Project

During the first quarter of 2014, the Company's focus was on various technical and engineering studies, mine planning activities, and working with its independent consultants to enable the completion of the SKK feasibility study. The Company expended $1.3 million during the quarter on those activities compared with $2.3 million for various exploration and evaluation investigations, including the final phase of infill drilling, during the first quarter of 2013.

On May 8, 2014, the Company announced the results of the SKK feasibility study indicating the following highlights:

• $274 Million after-tax net present value applying a 10% discount rate
• 50% after-tax internal rate of return
• 3.3 year estimated payback period
• 13-year life of mine
• Initial capital expenditures of $118.8 million with post commercial production capital expenditures of $51.5 million

The National Instrument 43-101 compliant technical report containing the results of the feasibility study and the reserves estimate is expected to be filed on the SEDAR website on or before June 22, 2014.

As part of the feasibility study, the Company determined that toll separation is presently the appropriate method to achieve separated REO from the mixed rare earth material produced by the Steenkampskraal Project. This strategy will reduce certain upfront capital costs and shorten timelines to obtain separated REO production, and also will remove certain technical risks involved with commissioning a separation plant. In early April 2014, the Company entered into a non-binding memorandum of understanding with an internationally recognized provider of REE separation services and is currently working toward a comprehensive toll separation agreement for future SKK production.

The Company is actively pursuing financing options for the development of the Steenkampskraal Project. Until such time as the funding is secured, the Company will manage its' current cash position to best support key lines of progress at the Steenkampskraal Project.

Liquidity

The Company's cash and cash equivalent position at March 31, 2014 was $20.8 million compared with $23.6 million at the end of 2013. The Company continues to take a prudent approach to expense management and has significantly reduced its monthly cash outlays following various operational efficiency initiatives.

On April 7, 2014, the Company made its fourth semi-annual interest payment of US$3.6 million to service its convertible bonds and the first from funds not held in escrow. All future interest payments will be sourced from available cash. The Company believes that its current capital level will allow it to perform certain regulatory and compliance work, and make its scheduled interest payments for 2014.

Qualified Persons

Victor-Mark Fitzmaurice, Pr. Eng. M. Engineering (Mining), Managing Director of Rare Earth Extraction Co. Limited and Steenkampskraal Monazite Mine (Pty) Ltd. and Brent C. Jellicoe, B.Sc. (Hon.), P.Geo., Chief Geologist for Steenkampskraal Monazite Mine (Pty) Ltd., are the Qualified Persons (as defined in NI 43-101) responsible for supervising the preparation of the technical content of this news release.

Teleconference and Webcast

The Company will host a conference call and webcast to review its results, key market initiatives and business strategy on Friday, May 16, 2014 at 11:00 a.m. ET. A question-and-answer session will follow.

The conference call can be accessed by calling (201) 689-8471. The live listen-only audio webcast can be monitored on the Company's website at www.gwmg.ca, where it will be archived afterwards, along with a transcript once available.

A telephonic replay will be available from 2:00 p.m. ET the day of the teleconference until Friday, May 23, 2014. To listen to the archived call, dial (858) 384-5517 and enter replay pin number 13579887.

About GWMG

Great Western Minerals Group Ltd. is a leader in the manufacture and supply of rare earth element-based metal alloys. Its specialty alloys are used in the battery, magnet and aerospace industries. Produced at the Company's wholly-owned subsidiary, Less Common Metals Limited in Ellesmere Port, U.K., 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 South Africa. The Company also holds interests in three rare earth exploration properties in North America that are not active.

The Company routinely posts news and other information on its website at www.gwmg.ca.

Email inquiries can also be made to info@gwmg.ca.

Neither the 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; the assumptions and estimates in the Feasibility Study of the Steenkampskraal Project proving to be accurate over time; the construction, commissioning and operation of the proposed monazite processing facility within estimated parameters; mine refurbishment activities; reliance on third parties to meet projected timelines and commencement of production at Steenkampskraal; reliance on third parties to separate mixed rare earth materials; 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 the United Kingdom, 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, including those estimated in the preliminary economic assessment of the Steenkampskraal project; risks associated with the uncertainty of resource estimates; 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; 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; political risks inherent in South Africa; 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 Annual Information Form available at www.sedar.com.

TABLES FOLLOW.