Steenkampskraal Mine South Africa

The former-producing Steenkampskraal Mine is located approximately 70 km north of the town of Vanrhynsdorp, population 4,000, in the Western Cape Province of South Africa and is approximately 350 km north and west of Cape Town. Infrastructure is excellent, with access to the site by paved and gravel roads and close proximity to rail and sea-port; the governments are pro-development, and there is technical expertise available as well as a trainable work force.

The 474 hectare property is permitted for mining until 2012 when the permit can be renewed for another 15 years. However, recent legislation requires that the “old order” mining right be converted to a “new order” mining right and the application to do this was submitted in April 2009. Issuance of the "new order" was received June 3rd, 2010 viewed by the company as a milestone event in completing the companies " Mine To Market: business model.

In January 2009, the Company announced that it had entered into an option agreement with Rare Earth Extraction Co. Ltd. (“Rareco”) of Stellenbosch, South Africa, to refurbish, re-commission, and operate the currently abandoned Steenkampskraal Mine. In addition, the agreement allows GWMG the right to acquire exclusive access to 100% of the rare earth elements mined there.

Under the terms of the agreement, GWMG has paid Rareco an amount of ZAR1,000,000 (approximately C$140,000) for this option. 

Subject to other due diligence now underway, GWMG and Rareco will negotiate a Supply Agreement under which 100% of the rare earth ore mined and processed will be made available, by Rareco, to GWMG, for a ten-year period, after which a new Supply Agreement can be negotiated.

Location Map

Geology and Mineralization

The Steenkampskraal monazite deposit occurs in a sequence of highly metamorphosed crystalline gneisses of the Roodewal Suite: charnokites, leuco-tonalites, tonalites and enderbites. These rocks are a pale-coloured, competent host rock in which the gray-brown pegmatite ore body occurs. The lode itself is dark gray to brown, fine-grained and massive. It has a sharp contact with the wall rock, from which it stands out boldly.

Minerals present in the ore body include the monazite, which is a rare earth phosphate, quartz, apatite and magnetite with small amounts of zircon, pyrite, chalcopyrite, galena and ilmenite. The monazite is the source of the rare earths. At an average in situ grade of 17% Total Rare Earth Oxide (“TREO”), Steenkampskraal remains the highest grade rare earth deposit in the world. The other economic mineral in the ore is chalcopyrite, which results in the ore averaging 0.8% copper and 0.5 grams of gold per ton.

The monazite-bearing ore body is tabular in shape with an undulating form and a thickness varying from 30 cm to 90 cm. The strike is mainly east to west and the lode has a strike length of 400 m. The lode dips to the south and has only been traced down dip for a distance of 250 m with limited exploration. The angle of the dip is mainly between 20° and 30°, although there are areas where the ore body is nearly horizontal and other areas where the dip exceeds 60°.

The ore body is locally irregular, breaking into inter-fingering lenses in the wall rocks. These lenses are generally accompanied by a broader mineralized lode and wall rock mineralization. Some additional ore, not included in the reserves, may occur in this manner.

Faults cut the known extent of the ore zone in two places with throws of 2 m and 10 m; apart from this, there is little structural disturbance and the wall rocks are competent.

Historical Results

The Steenkampskraal mine originally operated through a subsidiary company of Anglo American Corporation from 1952 to 1963, making a monazite concentrate that was sold mostly for its thorium content rather than its rare earth content, and was the largest thorium source in the world during the years 1951 to 1963. In 1989, Rareco acquired the mine with the intention of becoming a rare earth elements producer. However, the fundamentals for the REE sector deteriorated significantly during that time, as China took control of the global rare earth industry, and mining became less attractive than in the current environment. Therefore, the operation was put on hold until recently.

Independent review of the project was conducted by Dr Felix Mendelsohn in 1996, at the request of Rareco. These independent resource estimates indicate a recoverable resource of approximately 30,000 tonnes TREO, including rock already broken in underground stopes as outlined in the table below.

It is important to note that the independently developed data does not represent an NI-43-101 compliant reserve or resource. As such, a Qualified Person has not done sufficient work to establish any mineral resource, and this data should not be relied upon to assume any NI-43-101 compliant reserve or resource. GWMG is treating this data as a guideline only for developing the work programs necessary to bring results into compliance with NI 43-101.

Historic underground mining operations deposited run-of-mine waste rock on the surface of the property in addition to tailings from the processing plant. Sample grades of the tailings and waste rock indicate that historically both would qualify as resource tonnages for rare earth production. In addition to the remaining in-situ material, is rock that was blasted but not hauled to surface. Some of this rock was historically considered as low grade material and was used as ballast for the underground railroad track used to support the mined rock being hauled to surface.

Mineral Resource Summary, based on historic data:

The following table presents the distribution of rare earth oxides within the project’s monazite mineralization based on historical data and recompiled by Rareco:

Another positive attribute of a mining operation at Steenkampskraal, is that the thorium content (with an historic in-situ grade of 2.5%) may provide an attractive byproduct from the operation. Rareco has received expressions of interest from third parties in recovering the thorium from the operation. Using existing proven technology, Rareco believes that it can extract the thorium during the production of the final mixed rare earth chloride concentrate to meet any and all customer and environmental requirements. According to current plans, the extracted thorium will be mixed with concrete and stored in designated areas within the underground mine. The thorium can then be recovered through a simple acid digestion process if, as and when required.

The current rare earth resource is sufficient to supply GWMG’s manufacturing facilities with sufficient REO for more than 10 years operating at full capacity.

Current Work

There has been no recent exploration or development work by Rareco or GWMG on the property. All current efforts are going into continued due diligence and negotiations surrounding an offtake arrangement and the form of GWMG's interest in the project.

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