Great Western arranges $80-million bond financing

Vancouver — Great Western Minerals Group (GWG-T) has secured US$80-million in a bond financing as it works to open its flagship rare earths mine in South Africa and build or upgrade several processing facilities.

The US$80 million bond financing bears an 8% interest rate, will be due in five years, and will be convertible into Great Western shares at 66¢ a share. The conversion rate is a 20% premium to the company’s closing price when it announced the financing and roughly in line with where the company was trading in early February. Agents have the option of increasing the size of the offering by US$10 million a least two days prior to the closing of the offering.

Great Western CEO Jim Engdahl stated that the financing should enable to company to complete a technical report and construct mixed rare-earth chloride and separation plants for its flagship, 74%-owned Steenkampskraal project in South Africa.

The company plans to have a compliant resource out on the past-producing Steenkampskraal mine in the first half of this year and then start mining operations in the second half. Great Western is currently working to refurbish the mine shaft and facilities in preparation for production.

In January Great Western announced a joint venture with Ganzhou Qiandong Rare Earth Group to build a rare earth separation plant near Steenkampskraal, with the hydrometallurgical and solvent exchange processing plant expected online by then end of the year.

The company also continues to upgrade the facilities at its Less Common Metals subsidiary in England, where it recently completed the first pour from a new rare earth furnace. The company’s intention is to have Steenkampskraal supply material for the LCM plant as well as its Great Western Technologies operation in Troy, Michigan as part of a greater strategy of becoming an integrated rare earth company.

While announcing the financing the company also gave notice that Engdahl would be stepping down as CEO of Great Western as the company starts making the transition to producer. The company has yet to announce a successor.

Great Western’s share price closed unchanged at 55¢ on the news with 5.3 million shares traded. As of late February the company had 413.2 million shares outstanding or 508 million fully diluted. The company had $5.3 million in cash at the end of September and completed a $17.2-million placement in November.