News Release

TSX Venture Symbol: GWG
USA OTC Symbol: GWMGF
CUSIP: 39141Y 10 3

January 12, 2007

Explanation for Cancellation of Previously Proposed Stock Dividend

There have been investor inquiries about the Company's ("GWG") cancellation of a stock dividend it announced at the time of the Initial Public Offering ("IPO") of Great Western Diamonds Corp. ("GWD"). This news release is to clarify why the stock dividend was cancelled, as well as GWG's plans with respect to its shares in GWD (9,500,001 shares, representing 25.3% as of Dec 31, 2006).

History

GWD was formed in 2002 when it became clear that the funds required to explore and develop a large Saskatchewan-type kimberlite were many times that required for developing GWG's own core project-the Hoidas Lake rare earth deposit. The decision was made to form a pure diamond company. At the time there was little interest from the market in mineral exploration and it took until early 2004 before an agent was found that would take GWD public. At the time, the proposal was to include a stock dividend of shares in GWD to GWG's shareholders in conjunction with the IPO (see news release dated April 16, 2004). However, due to a lack of interest from investors in the IPO, the initial agreement with the agent expired. It wasn't until early 2005, and the success of underground sampling in Fort a la Corne by other parties, that investor interest in an IPO reached a level that would ensure its success.

Current Events

Due to subsequent developments, the stock dividend announced in 2004 was cancelled. Because the original agency agreement had expired, new terms for an IPO had to be negotiated with the agent that did not include a dividend in conjunction with the IPO (see news release dated March 22, 2005). The results from underground sampling at Fort a la Corne, and the resultant increase in the market capitalization of the companies working there, completely changed the financial and technical environment for companies developing diamond-bearing kimberlites in Saskatchewan. It became clear to mining analysts and corporate finance groups that there was very real potential for an economic diamond deposit in Saskatchewan.

Corporate finance advisors involved in the IPO advised to structure it so that GWG retained its interest in GWD, to allow GWG to benefit from holding on to what was now perceived to be a potentially significant asset. As well, GWD would benefit by reducing the number of free-trading shares in the market, post-IPO. Based upon market behavior for the shares of both GWG and GWD since, management believes that that advice was good, and that they made the right decision for both companies.

Future

Management wishes to make clear that it views its investment in GWD as having the potential to become a significant asset to GWG as development of the Candle Lake kimberlites progresses and as GWD expands its diamond exploration property portfolio. Current events in the Fort a la Corne kimberlite field make the reality of an economic kimberlite in Saskatchewan a distinct possibility.

GWD is currently engaged in an aggressive exploration and mini-bulk sampling program on Pipe C29/30 on the Candle lake project. They also have an excellent portfolio of grassroots diamond exploration properties. GWG management is confident that as results from work programs come in, the asset potential of its interest in GWD will be realized and that asset will become extremely beneficial in other project development such as financing construction at Hoidas Lake.

James Engdahl
President and CEO

For further information contact Gord Dent at (306) 668-0701. All email inquiries should be made to info@gwmg.ca info@gwmg.ca (website: www.gwmg.ca ) Direct mail: Great Western Minerals Group Ltd., 226 Cardinal Crescent , Saskatoon , SK S7L 6H8

(The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the foregoing contents)