Great Western Minerals picks up 25% interest in rare-earth property in Utah

Rare earth elements may not be as sexy as gold or silver, but they are quietly powering everything from IPODs and flat-screen televisions to hybrid cars, digital cameras and cell phones.

Rare earth elements are used in tiny, ultra-powerful magnets that operate a huge range of electronic devices such as micro motors and disk drives. Rechargeable batteries using rare earth elements are also starting to replace cadmium and lead batteries.

Toyota Motor Corp. uses rare earth elements to build its environmentally friendly Prius model. Rare earth elements are used within the cars battery system and in its electric motor.

Automakers are using rare earth elements to make car windshields that protect drivers from ultra-violet rays, and three or four companies are experimenting with rare earth elements to make freon-free refrigerators.

China produces 97% of the worlds rare earth elements, and 60% of that comes from one mine in Inner Mongolia.

Facing rising demand at home, China cut its exports of rare earth elements this year by 30% and has also added duties to some rare earth products, notes Jim Engdahl, president of Great Western Minerals (GWG-V).

Whats more, anyone who wants to purchase rare earth elements from China has to set up value-added facilities there, Engdahl says. Some companies do that because that is their only source and they are forced into it, he explains. Its an economic twist that China puts on it to provide more domestic growth.

Engdahl says more and more companies are looking at rare earth elements as global demand continues to race ahead, but the field of companies searching for them remains fairly small. Companies active in this sector include Avalon Ventures (AVL-V), Rare Element Resources (RES-V), Lynas Corp. (LYC-A) and Arafura Resources (ARU-A).

Demand currently outstrips supply by about 10,000 tonnes per year. And that demand gap will only widen, he predicts, even with all the mines presently planned or that will be going into production over the next few years.

That was one of the reasons behind Great Western Minerals decision to acquire an interest in a rare earth-bearing property in Utah from Titan Mining Group.

Under the agreement announced on August 29, Great Western Minerals will pay Titan US$4.3 million for an immediate 25% stake in the rare earth elements on the property and will have the exclusive right to explore for rare earth elements on the site.

The 17,094 hectare property is located near Salt Lake City in Juab County, which at one time, the company says in a press release, was considered to be one of the richest mining districts in the United States.

In Toronto, shares in Great Western Minerals rose 4.48% on the news, closing 1.5 cents higher at 35 on 67,000 shares traded.