Great Western Minerals may develop phosphate as byproduct at Hoidas Lake

Hoping to cash in on spiking fertilizer prices, Great Western Minerals Group (GWM-V) is evaluating whether to develop phosphate as a byproduct at its Hoidas Lake rare earth elements property in northern Saskatchewan.

One of the main rare-earth-bearing ore minerals is the phosphate mineral apatite, the principal ore of phosphorous used in fertilizer.

Certain phosphate-based products, such as diammonium phosphate, have sold for more than $1,000 per tonne. In the first quarter of last year, prices averaged about $250 a ton.

“We actually looked at this a few years ago when we were first looking at Hoidas Lake but at the time phosphate prices were in the $200-$300 per tonne range so it wouldn’t have been economic but that situation has changed dramatically with both phosphate and potash so it has become an economic consideration now,” says Great Western Minerals’ executive chairman, Gary Billingsley.

Phosphate values at Hoidas Lake range from a minimum grade of 0.05% to a maximum grade of 40.9%, with a mean or average value of 17.7%, according to the company’s 2007 National Instrument 43-101 resource estimate.

Great Western is now completing a preliminary economic assessment report on Hoidas Lake and hopes to have the final process design in place by late this summer. By the end of the fall it hopes to run about 15 tonnes of material it has prepared through its pilot plant.

“If we can make concentrate that is valuable enough to ship down to Saskatoon for processing that’s a huge step for us,” Billingsley says. The concentrate would then be processed for both phosphate and rare earth elements.

Great Western plans to further evaluate the phosphate content of its Hoidas Lake project, 50 km northeast of Uranium City, from the drill results of its winter program and from its upcoming summer drill program.

Over the last year fertilizer producers have become the darlings of Wall Street. Minnesota-based Mosaic Co. (MOS-N), the world’s largest phosphate producer, has seen its stock surge to US$118 per share today from an average of U$32 last year. CF Industries (CF-N), another phosphate producer, has watched its fortunes soar from US$43 per share last year to about US$126 today.

With fears of world food shortages and sky-high energy prices, fertilizer prices are likely to climb even higher.

China recently announced that it would hike tariffs on exports of fertilizers and raw materials by between 100% and 135% between April 20 and September 20. Xinhua, the Chinese news agency, quoting the Ministry of Finance, reported that it is the second time this year that China has raised the duty on fertilizer exports.

China is the world’s largest exporter of urea, a nitrogen product. With fertilizer in such high demand globally, China wants to keep more of it for domestic use.

Prices for potash and other fertilizers were flat for 15 years and rose gradually this decade before spiking sharply starting in late 2006.

Great Western is currently trading at about 20 a share.

It has a 52-week trading range of 17.5-42 and has 112.3 million shares outstanding.

In addition to its exploration projects, Great Western is developing a vertically integrated business model through its Michigan-based subsidiary, Great Western Technologies, which produces specialty alloys for use in the battery, magnet and aerospace industries. These alloys include those containing copper, aluminum, nickel, cobalt and rare earth elements.