Mr. Marc LeVier reports

GREAT WESTERN MINERALS REPORTS THIRD QUARTER 2014 RESULTS

Great Western Minerals Group Ltd. (GWMG) is releasing its financial results for the third quarter ended Sept. 30, 2014, and providing an update on the company's activities. All amounts are presented in Canadian dollars unless indicated otherwise.

Highlights and results:

• Third quarter revenue increased 53 per cent to $6.1-million over the prior-year period on strong alloy sales. Growth was driven by the company's enhanced production capabilities at its production subsidiary Less Common Metals Ltd. (LCM) and increased customer demand. Regulatory filings are progressing, and site preparation and site establishment planning have commenced at the SKK project.
• Confidential discussions with the company's bondholders regarding the potential restructuring of the convertible bonds and financing for the SKK project are continuing.
• Cash balance improved to $13.5-million as of Sept. 30, 2014, which reflects a significantly lower burn rate and favourable exchange rates.

Marc LeVier, company president and chief executive officer, commented: "We have curtailed all non-essential activities, and are only advancing initiatives that are required or will reduce capital and operating costs for the Steenkampskraal project. We believe our current financial position is sufficient to meet our near-term objectives and, by the end of 2014, we expect to have approximately $6-million to $7-million in cash. Discussions with our bondholders surrounding the potential restructuring of our convertible bonds are continuing, but the possible outcome and timing for completion of these discussions is not currently known."

Mr. LeVier added: "We believe we have an extremely viable rare earth project, and we are focused on advancing and derisking the project within the limitations of our current cash position. We expect that we can be in a solid position to move forward when financing is secured and the rare earth market solidifies."

Manufacturing services

Manufacturing services revenue increased $2.1-million, or 53 per cent, to $6.1-million in the third quarter of 2014, over the same period of the prior year on higher volumes and favourable exchange rates. The company sold 95 metric tonnes of alloys in the third quarter of 2014, compared with 75 metric tonnes of alloys in the third quarter of 2013, driven by strong customer demand. Future growth will continue to be dependent on the company's ability to obtain the necessary rare earth materials at competitive pricing. The company is working with its customers to identify sources of raw material to meet its short-term demands until the SKK project is developed and production is achieved. On a year-to-date basis, manufacturing services revenue was up 62 per cent to $18.8-million as the company sold 293 metric tonnes of alloys, compared with 199 metric tonnes of alloys in the comparable period of 2013.

Gross margin of $1.2-million was up slightly over the 2013 three-month period; however, as a percent of revenue, gross margin declined to 19.8 per cent, from 26.9 per cent. The margin contraction primarily reflects a change in product mix as a greater portion of the 2014 sales were from higher-volume, lower-margin products. Additionally, sales of specialty alloys, which traditionally is a higher-margin business, decreased year over year. For the first nine months of 2014, gross margin was $3.6-million, or 19.1 per cent of sales, compared with $3.2-million, or 27.6 per cent of sales, in the comparable 2013 period. Similar to the quarter, the change in margin reflects product mix.

The manufacturing services business reduced its loss from continuing operations in the third quarter of 2014 to $200,000, compared with a loss of $500,000 in the same 2013 period. On a year-to-date basis, the manufacturing services loss from continuing operations increased $700,000 to $1.6-million, primarily due to a change in the provision for a property lease.

During the 2014 second quarter, the company completed a sale of certain assets of its Great Western Technologies Inc. (GWTI) operation. Accordingly, the results of GWTI and cash flows of GWTI's operations have been separately presented as discontinued operations in the company's condensed consolidated interim statements of comprehensive loss and condensed consolidated interim statements of cash flows.

Steenkampskraal project

During the 2014 third quarter, the company expended $200,000 in expenses, primarily related to final billings surrounding the SKK feasibility study and various compliance matters in South Africa, compared with $1.4-million for various exploration and evaluation investigations during the third quarter of 2013. The significant decrease in expenses was a result of the company's focus on progressing only those activities that are either regulatory and compliance required or will help derisk the project.

Site preparation and site establishment planning have commenced, and the company continued to progress regulatory filings with the Department of Energy's national nuclear regulator, the Department of Mineral Resources and on the Department of Water Affairs integrated water use permit. In addition, the company is reviewing capital expenditure improvement opportunities and optimization testing in the lab on several aspects of the process flow sheet, as well as postfeasibility planning.

During the first nine months of 2014, the company expended $2.3-million on various technical and engineering studies, and mine planning activities to assist in the completion of the feasibility study, as well as continued regulatory and compliance requirements. Comparatively, in the first nine months of 2013, the company expended $6.1-million on similar various technical studies, mine site exploration and evaluation investigations.

Liquidity

The company continues to take a prudent approach to expense management and has significantly reduced its monthly cash outlays, following various operational efficiency initiatives and the completion of the SKK feasibility study. The cash and cash equivalent position at Sept. 30, 2014, was $13.5-million, compared with $13.1-million at June 30, 2014, and $23.6-million at the end of 2013. The increase from the sequential second quarter reflects improved working capital management and favourable exchange rates on foreign currency cash balances.

Subsequent to the end of the third quarter, on Oct. 6, 2014, the company made its semi-annual interest payment of $3.6-million (U.S.) to service its convertible bonds.

Qualified persons

Victor-Mark Fitzmaurice, PrEngM, engineering (mining), managing director of Rare Earth Extraction Co. Ltd. and Steenkampskraal Monazite Mine (Pty.) Ltd., is the qualified person (as defined in NI 43-101) responsible for supervising the preparation of the technical content of this news release.

       CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
                               (in Canadian dollars)

                     For the three months ended   For the nine months ended
                                       Sept. 30,                   Sept. 30,
                             2014          2013          2014          2013
                                        revised                     revised

Sales                $  6,116,876  $  3,967,856  $ 18,836,983  $ 11,602,716
Cost of materials       4,907,420     2,901,013    15,261,105     8,391,814
                     ------------- ------------- ------------- -------------
Gross margin            1,209,456     1,066,843     3,575,878     3,210,902
                     ------------- ------------- ------------- -------------
Operating expenses
General and
administration            555,796       814,805     1,805,091     3,430,734
Wages and benefits      1,299,674     2,078,190     4,462,350     5,335,341
Stock-based
compensation                  394       169,969        67,535       741,224
Professional fees         906,132       499,449     1,609,121     1,676,866
Investor relations         29,622        53,052       104,173       175,127
Occupancy                 388,911       516,604     1,841,737     1,408,764
Depreciation and
amortization              414,884       287,471     1,315,335     1,008,404
Exploration and
evaluation                243,820     1,397,386     2,294,913     6,178,854
Impairment of
property, plant
and equipment                   -             -       425,288       153,487
Exchange (gain)
loss                    3,118,983      (511,315)    3,007,156       501,398
                     ------------- ------------- ------------- -------------
Total expenses          6,958,216     5,305,611    16,932,699    20,610,199
Other
Interest expense
and finance costs      (3,865,288)   (3,256,342)  (11,450,386)   (9,194,025)
Interest income             3,613        62,449        30,615       138,263
Gain on conversion
option                     29,418       174,331             -     6,917,840
Other income
(expense)                   7,943         5,610       (52,294)       15,984
                     ------------- ------------- ------------- -------------
Loss before income
taxes                   9,573,074     7,252,720    24,828,886    19,521,235
Income tax recovery             -             -             -       115,155
                     ------------- ------------- ------------- -------------
Net loss from
continuing
operations              9,573,074     7,252,720    24,828,886    19,406,080
Discontinued
operation
Loss from
discontinued
operation, net of
tax                         3,352       184,950       161,573       503,451
                     ------------- ------------- ------------- -------------
Net loss                9,576,426     7,437,670    24,990,459    19,909,531
Other comprehensive
income (loss)
Items that may be
reclassified to
profit and loss
Translation
adjustment               (392,337)      (48,641)      256,836    (2,186,691)
Discontinued
operation
cumulative
translation
adjustment loss
reclassified to
loss                            -             -       334,659             -
                     ------------- ------------- ------------- -------------
Other comprehensive
income (loss)            (392,337)      (48,641)      591,495    (2,186,691)
                     ------------- ------------- ------------- -------------
Total comprehensive
loss                 $  9,968,763  $  7,486,311  $ 24,398,964  $ 22,096,222
                     ============= ============= ============= =============
Per-share amounts
Basic and fully
diluted loss per
share from
continuing
operations           $      0.023  $      0.018  $      0.059  $      0.047
Basic and fully
diluted loss per
share from
discontinued
operation            $      0.000  $      0.000  $      0.000  $      0.001
                     ------------- ------------- ------------- -------------
Basic and fully
diluted loss per
share                $      0.023  $      0.018  $      0.059  $      0.048
                     ============= ============= ============= =============

We seek Safe Harbor.