Great Western Minerals Group Reports First Quarter 2013 Results and 2013 Outlook

SASKATOON, May 15, 2013 /PRNewswire/ - Great Western Minerals Group Ltd. ("GWMG" or the "Company") (TSX.V: GWG / OTCQX: GWMGF), a leader in the manufacture and supply of rare earth-based alloys and high purity metals with a low cost, high-grade critical rare earth asset (the "Steenkampskraal Project" or "SKK"), today provided an update on the Company's activities and financials through March 31, 2013, as well as its strategy and outlook.

First Quarter and Recent Highlights

• Revenue for 2013 first quarter was $3.5 million, down from $4.5 million during the prior-year period, but an increase of $0.7 million, or 26%, from the sequential fourth quarter of 2012.  Company revenue was primarily attributable to its production subsidiary Less Common Metals Limited ("LCM")
• Operating loss decreased $2.2 million from the prior year primarily due to a $5.7 million gain on the conversion option to the Company's convertible debt
• Preliminary Economic Assessment ("PEA") on SKK released during the quarter
• Exploration expenditures and focus will be on SKK Project, while other project expenditures are being significantly curtailed
• Company had $43.9 million in cash as of March 31, 2013

"We are making progress as we implement initiatives aimed at supporting our strategy which is to expand our opportunity as a metal and alloy producer by developing a secure source of rare earth elements through our SKK project," stated Marc LeVier, President and CEO.  "We are also focused on reducing general overhead expenses, reducing exploration expenses and funding only required activities that support our objectives. We plan to reduce our burn rate to conserve our cash and spend on activities that de risk our project, all with the intent of achieving our goals."

Manufacturing Services

Mr. LeVier noted, "We expanded our manufacturing capacity at our LCM facility located in Ellesmere Port, U.K., with the installation of our new strip cast furnace and also began installation of our second strip cast furnace, which we expect to complete in the second quarter of 2013.  Importantly, the facility move and equipment will more than double our previous capacity."

Manufacturing services revenue decreased by $1.0 million, or 21.7%, for the first three months of 2013 compared with the same period in the prior year while gross profit dropped by $0.6 million, or 35.0%. The decrease in revenue was due to a combination of lower volume and price, as average prices for alloys have decreased by approximately 16% year-over-year.

For the first three months of 2013, LCM sold 55 metric tonnes of alloys compared with 67 metric tonnes of alloys for the same period in 2012.  The decrease in volume was attributable to an overall softening in the rare earth alloy market.  The Company anticipates the volume of alloys to increase during 2013 as certain qualification programs are currently ongoing with key customers.  Overall, the Company expects alloy sales volumes to be greater than 2012 levels, due to the growth in the strip cast alloys market and LCM's new strip cast furnace.

In the short-term, the growth of the Company's revenue from LCM may be limited by its ability to obtain the necessary rare earth materials to produce products at LCM and Great Western Technologies Inc.  Once the SKK Project has commenced production, the Company expects this limitation to be removed.

Steenkampskraal Project (SKK)

During the quarter ended March 31, 2013, the Company expended $2.4 million on various development exploration and technical reports, including the completion of an updated resource estimate, the completion of the PEA, the commencement of an expanded drill program of an estimated 65 holes (9,400 meters) of which 33 holes (4,692 meters) were completed. The Company is awaiting assay results.  The aeromagnetic and aerogeophysics surveys were also initiated in the first quarter.  Comparatively, in the first quarter of 2012, the Company expended $2.2 million predominantly on development drilling, engineering evaluation work and technical studies.

At SKK, the mine rezoning from agricultural to mining has been completed for the duration of the new order mining right.  At the Vredendal site, the location of a proposed separation facility, the environmental impact assessment (Basic Assessment Report or BAR) has been submitted to authorities, and is currently in a revision and review stage.

During the first quarter of 2013, the Company announced the initial results of the PEA indicating the following:

• $555 Million after-tax net present value applying a 10% discount rate and a 28% South African corporate tax rate
• 66% after-tax internal rate of return
• 2.5 year estimated project payback period, on an after-tax basis, from start of underground mining production.
• 11 year potential life of mine

The NI 43-101 compliant technical report containing the results of PEA was filed on SEDAR website on May 1, 2013.

The Company intends to continue further exploration of the mineral resources at the SKK Project and perform additional design work and metallurgical testing in order to finalize the design of the Rare Earth Chloride ("RECl") Plant.  The PEA has assisted the Company in evaluating its timing and funding requirements for the SKK Project.  Based on the timelines in the PEA, production of mixed RECl is projected to commence within 24 months of the completion of required project financing, at a design capacity of approximately 5,000 tonnes per year of contained Rare Earth Oxides.

The Company is currently evaluating a variety of funding options as well as alternatives to reduce capital outlays.  This includes evaluating toll separation alternatives to defer certain upfront capital costs and shorten timelines. Until such time as the funding is secured, the Company will manage its current cash position to best support the progress of the SKK Project.

Liquidity Position

The Company's cash and cash equivalents were $43.9 million at March 31, 2013, exclusive of $7.3 million held in escrow to service bond interest payments due in April and October of 2013. The cash position decreased by approximately $8.2 million from December 31, 2012.  The Company's use of cash in operations for the three month period ended March 31, 2013 was $6.5 million compared with $7.4 million for the same period in the prior year.

The Company expects capital expense requirements other than those related to the SKK Project to begin to decrease as it completes the investments in LCM.

General and administrative expenses increased 14.4%, or $159 thousand, from the prior-year period, primarily attributable to increased travel associated with the Company's extensive review of its sites and operations.  It is anticipated that these expenses will be reduced in the near future.

Jim Davidson, VP of Finance and Chief Financial Officer stated "We are looking at all our expenditures and will carve out or defer any expenditures that are not on the critical path or required for regulatory compliance in an effort to reduce our cash burn rate. We anticipate lowering the burn rate in the second half of 2013."

Qualified Persons

Brent C. Jellicoe, B.Sc. (Hon.), P.Geo., Director of International Exploration for GWMG, is the Qualified Person (as defined under NI 43-101) responsible for supervising the preparation of the technical content of this news release.

Teleconference and Webcast

GWMG will host a conference call and webcast May 16, 2013 at 11:30 a.m. ET.  During the call, management will provide an update on GWMG's first quarter results and update on strategies and outlook for 2013.  A question-and-answer session will follow.

The GWMG conference call can be accessed by calling (201) 689-8471.  The live listen-only audio webcast can be monitored on the Company's website at www.gwmg.ca, where it will be archived afterwards.

A telephonic replay will be available from 2:30 p.m. ET the day of the teleconference until Thursday, May 23, 2013.  To listen to the archived call, dial (858) 384-5517 and enter replay pin number 413981.  A transcript will also be posted on the Company's website, once available.

About GWMG

Great Western Minerals Group Ltd. is leader in the manufacture and supply of rare earth-based alloys and high purity metals with a low cost, high-grade critical rare earth asset. Its specialty alloys are used in the battery, magnet and aerospace industries. Produced at the Company's wholly-owned subsidiaries, Less Common Metals Limited in Ellesmere, U.K. and Great Western Technologies Inc. in Troy, Michigan, these alloys contain transition metals including nickel, cobalt, iron and other rare earth elements. As part of the Company's vertical integration strategy, GWMG also holds 100% equity ownership in Rare Earth Extraction Co. Limited, which controls the Steenkampskraal monazite mine. In addition to an exploration program at Steenkampskraal, GWMG also holds interests in four rare earth exploration and development properties in North America.

The company routinely posts news and other information on its website at www.gwmg.ca.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement
Certain information set out in this News Release constitutes forward-looking information.  Forward-looking statements (often, but not always, identified by the use of words such as "expect", "may", "could", "anticipate" or "will" and similar expressions) may describe expectations, opinions or guidance that are not statements of fact and which may be based upon information provided by third parties. Forward-looking statements are based upon the opinions, expectations and estimates of management of GWMG as at the date the statements are made and are subject to a variety of known and unknown risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. Those factors include, but are not limited to the assumptions and estimates in the preliminary economic assessment of the Steenkampskraal project proving to be accurate over time; the construction, commissioning and operation of the proposed monazite processing facility and separation facility within  estimated parameters; mine refurbishment activities; reliance on third parties to meet projected timelines and commencement of production at Steenkampskraal; risks related to the receipt of all required approvals including those relating to the commencement of production at the Steenkampskraal mine, delays in obtaining permits, licenses and operating authorities in Canada, South Africa and China, environmental matters, water and land use risks; risks associated with the industry in general, commodity prices and exchange rate changes, operational risks associated with exploration, development and production operations, delays or changes in plans, including those estimated in the preliminary economic assessment of the Steenkampskraal project; risks associated with the uncertainty of resource estimates; health and safety risks; uncertainty of estimates and projections of production, costs and expenses; risks that future Steenkampskraal and region exploration results may not meet exploration or corporate objectives; the adequacy of the Company's financial resources and the availability of additional cash from operations or from financing on reasonable terms or at all; political risks inherent in South Africa and China; risks associated with the relationship between GWMG and/or its subsidiaries and communities and governments in Canada and South Africa, radioactivity and related issues, dependence on one mineral project; loss of, and the inability to attract, key personnel; the factors discussed in the Company's public disclosure record; and other factors that could cause actions, events or results not to be as anticipated. In light of the risks and uncertainties associated with forward-looking statements, readers are cautioned not to place undue reliance upon forward-looking information. Although GWMG believes that the expectations reflected in the forward-looking statements set out in this press release or incorporated herein by reference are reasonable, it can give no assurance that such expectations will prove to have been correct. Except as required by law, GWMG does not assume any obligation to update forward looking statements as set out in this news release. The forward-looking statements of GWMG contained in this News Release, or incorporated herein by reference, are expressly qualified, in their entirety, by this cautionary statement and the risk factors contained in GWMG's Annual Information Form available at www.sedar.com.

SOURCE Great Western Minerals Group Ltd.