REE Charts

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Participant Questions and Paraphrased GWMG Responses

Is the feasibility study that is underway for Steenkampskraal a bankable feasibility study?
It is a full bankable feasibility that includes an Environmental Impact Assessment and NI 43-101-compliant resource estimate.

Will you look at placing the separation elsewhere besides South Africa?
The plan at this point is to put the plant in South Africa in reasonable proximity to the Steenkampskraal mine.

What is the status of the Steenkampskraal development process?
The primary issue today is the Work Program approval from the National Nuclear Regulator in South Africa, under our existing Nuclear License. Receiving this will enable GWMG to commence rehabilitation work at site and move ahead with our planned exploration project at site.

Why do you need a bankable feasibility study if equity financing is not required?
GWGM is actually looking at that issue at the moment. The potential availability of other options such as debt financing or an offtake partner may reduce the CapEx sufficiently that a full feasibility is not required. If that does prove to be the case, then we will look at how to curtail the costs and time associated with a full feasibility.

If you have over 300 million shares out now, why not just dilute by another 50 million if that will enable you to move quickly?
We are very cognizant of the need to move as quickly as possible. Much of the market does not like the dilution idea so we are balancing those two interests – minimizing any dilutive measures while moving ahead at the fastest possible pace.

Why is GWMG’s share price so low when your company is ahead of most others in development?
The rare earths sector is very complex. Because of that there are many elements to it, relative to other mining sectors, and so it is a particular challenge to assist the market in fully grasping all the relevant factors. But we continue to work at that.

Why don’t you move the furnace purchase at LCM ahead so as to increase your cash flow?
The bottleneck is the purchase and installation process, not the money to buy it. We would move it ahead if it were possible from an installation standpoint.

Why is the market not reacting better to GWMG’s emphasis on the downstream value of an integrated business model?
Again, this is a complex business. Moreover, it’s very new and so, it’s not surprising that GWMG has to do much in the way of educating the market about what the important elements are.

What is happening to the costs of rare earth inputs?
These continue to rise, in some cases, exponentially. We foresee a continuation of that price increase scenario going forward.

Would a name change help the company to increase its share price and move ahead with a TSX listing?We have taken a look at a name change for the company. If we think it will help we will move on it. That is separate and apart from the TSX listing issue, however. But having a listing on TSX is also one of the issues we are evaluating.

Does GWMG own any exploration rights that involve copper in California and Nevada?
No, it does not.

Is Japan’s electricity shortage having an impact on the rare earths market?
In the short term, there will be a bit of a dip in demand as some plants closed temporarily due to the disaster than occurred in Japan. In the longer term, it will likely increase demand for alternate energy products such as wind turbines and that will help the rare earth industry.

Does Silmet being acquired by Molycorp mean they are now the same as the GWMG integration model? That is, is LCM the same as Silmet?
The two companies, Silmet and Less Common Metals, are actually in quite different areas of the rare earths market.

What is the reaction of your customers to increased rare earth pricing?
They have fully expected what they are seeing in the way of RE pricing. It is important to note that they are, on balance, less concerned about price increases than they are about supply certainty.

Will Toyota re-enter the picture with GWMG?
It is always possible. GWMG had discussions with Toyota in the past, and they are a significant customer. We are actually engaged in discussions with a number of our large customers in regard to looking at new ways to work together or, in some cases, enter into strategic joint ventures.

Will recycling of RE’s reduce the market?
It may have a minor impact but that will likely be more than offset by the fact that there is a continue stream of new applications for rare earths entering the market.

Has GWTI gained any traction in the battery market?
There has been a limited impact to date in terms of sales, but we can say the number of inquiries continues to increase.
Of the three financing options for Steenkampskraal – joint venture financial partner, offtake partner or debt – which would represent the quickest path?
There is no single option that is necessarily faster than the next. We are moving ahead and continue to look at all three. If it does prove out, however, that one option becomes the quickest development mechanism, then that increases the likelihood that that particular approach will be adopted.

How close is GWMG to a decision on the construction of a separation plant?
We are using the end of May 2011 as a target for that decision.

Do you expect the separation plant will encounter significant environmental issues?
Those are being addressed in the feasibility process. The fact that radioactive materials are involved, such as thorium, means that environmental issues are very much an issue that we will deal with, but those issues relate to processing at the Steenkampskraal site, and are not related to the separation facility. These types of environmental issues are familiar to Canadian producers, and the expertise to deal with it is available.

Will your separation plant take any RE materials from other companies or projects in the region?
We are certainly taking a look right now at the potential for accessing raw materials from other projects or properties. We can scale up a separation plant in a modular manner so we could still expand to accommodate that even after we start operations.

If you do take RE’s from other companies in your separation plant does that mean you will set up a separate company for it?
Setting up a new company is one option. Or we could run it fully within GWMG. We will consider all of the available options.

What do you think the likelihood is that GWMG will be taken over?
This is always possible. But, GWMG is continuing to execute its game plan and we have no intention of just sitting back and acting like a takeover target. We believe, of course, we are seriously undervalued, and the best way to increase our valuation is to execute our plan for being fully integrated.

Is LCM stockpiling RE input materials?
Certainly they do for some types of rare earths, that is, the ones needed in the production of alloys for LCM and GWTI customers. This has ensured we can continue to supply our customers.

What would the price have to be for shareholders to be OK with a takeover bid?
That would be determined by shareholders. But again, we as a management group would not support any pricing that does not reward our shareholders.

What is the exploration plan for Steenkampskraal?
We plan to commence exploration at site as soon as the Work Program approval is received from the National Nuclear Regulator in South Africa. We will evaluate the results to determine whether the currently anticipated 2,700 tonnes REO per year production can be increased.

What are the odds of an exploration program increasing the size of the “resource”?
We continue, at this point, to work from historical data only, but we are clearly comfortable enough with the prospects of success to invest in it.

Are there any safety measures that are out of the ordinary for mining at Steenkampskraal?
A primary issue is the handling of radioactive materials at this mine. That is an area in which Canadian companies tend to have strong backgrounds given their proximity to the uranium mining sector.

How many African Nationals are involved in the mining operations today?
There are no mining operations underway at present at Steenkampskraal.

What percentage of the mining workforce will be African Nationals?
It is not possible to predict that with certainly at this point but GWMG is committed to working with the Black Economic Empowerment organization that was established by Rareco to ensure that African Nationals are fully involved in the project.

How do you assess the current and future political situation in South Africa?
Political processes, being what they are, continue to produce signals that register on the risk gauge. But, it is important to note that the Government of South Africa has been extremely supportive of the types of mining and investment that companies such as GWMG bring in.

What is the target date for having the separation plant in operation?
We have said publicly we anticipate production in mid-2013 which will coincide with separation operations. We are looking for ways to speed up that time line.

Is the design completed for the separation plant?
We expect to establish that decision process by the end of May 2011.

Has the contractor been decided for the separation plant?
We also expect that decision to be made by May 2011.

Will the separation plant be in South Africa or elsewhere?
At this stage, we expect it will be built in South Africa.

Who does LCM buy RE inputs from today?
The RE inputs are purchased out of China at this point.

Why don’t analysts understand the downstream value of RE companies and rely, instead, on the mining portion only?
This is a complex business, with many components. On top of that, the sector is relatively new, so it is not surprising that it takes a while for the market to fully comprehend the many elements to the entire story about the sector, as well as that of GWMG.

How long do you believe it will take for analysts to better understand the GWMG story?
GWMG believes this will occur as our company continues to meet the benchmarks we have set out over the next year, just as we have surpassed many benchmarks in the past twelve months, and we see small signs that at least some analysts are starting to better understand the sector.