WGI Heavy Minerals eyes Sierra Rutile

Vancouver – WGI Heavy Minerals (WG-T) is planning to acquire the world’s largest and highest grade rutile deposit, the Sierra Rutile mine in Sierra Leone, western Africa.

The company has a letter of intent (LOI) to purchase Titanium Fields Resources and U.S. Titanium, owners of Sierra Rutile, for about US$90 million from Jean-Raymond Boule, Gondwana (Investments) and Patricia Parvin. The purchase price outlined in the LOI will be met by one-third each WGI common stock, convertible notes and cash.

Sierra Rutile operated from 1979 until 1995, when civil unrest and armed conflict in the country caused its closure. Prior to ceasing operations, the mine produced about 25% of the world’s rutile and a significant amount of ilmenite. The mine was also the largest source of tax revenue for Sierra Leone, its largest private sector employer and top foreign export earner.

The industrial mineral rutile, along with ilmenite, are feedstocks for the production of titanium dioxide pigments used in paint, paper and plastics.

In the year prior to cessation of operations, the mine generated revenues of about US$60 million and operating cash flow of US$23 million. Since suspension of production in 1995, over US$110 million of rehabilitation, care and maintenance, and debt servicing has been undertaken to keep the infrastructure intact.

Democratic elections and relative political stability in Sierra Leone over the past couple years has prompted a plan to restart operations. Investment guarantees and commitments of about US$55 million have been secured from U.S. and European Government foreign loan agencies.

The initial phase involves the rehabilitation and refurbishing of the dredge, facilities and development of the ore bodies by late-2005. Production is slated to commence in 2006 at a planned 110,000 tonnes rutile and 20,000 tonnes ilmenite annually.

Upon successful operations, a planned Phase II expansion program will see the addition of a second dredge, upgrades to power generating facilities and an increase in annual output to about 210,000 tonnes rutile and 45,000 tonnes ilmenite.

The 580 sq. km. mineral leases covering the mine have historically reported proven and probable reserves of 278 million tonnes grading 1.43% recoverable rutile. An additional resource of 185 million tonnes of 1.2% recoverable rutile has been outlined. These reserve/resource figures are not compliant with National Instrument 43-101 reporting parameters.

WGI Heavy Minerals is a major producer of garnet from operations in Idaho and India. Garnet is used in electronics, water filtration and as an abrasive.

WGI reports 23.9 million shares outstanding and has recently traded in the $8.00 per share range.