St George Mining Ltd (ASX:SGQ) has entered a binding conditional agreement to acquire a 100% interest in the Araxá niobium-rare earth elements (REE) project in Minas Gerais, Brazil, the world’s leading niobium-producing address.
This acquisition will expand St George's portfolio of quality exploration and development projects focused on critical metals for the clean energy future.
The announcement to the ASX this morning generated heightened investor interest in the stock, sending the share price up more than 32% to $0.045 per share, which equals the company's 12-month high.
St George has outlined a number of attractive features of the Araxá project, including its high-grade mineralisation established during historical drilling, world-class location in Minas Gerais, its strong foundation to deliver a globally significant niobium-REE resource and its enviable development potential.
High-grade mineralisation
Historical drilling at the project has defined extensive high-grade niobium, REE and phosphate mineralisation.
There have been more than 500 intercepts of high-grade niobium, of greater than 1% niobium pentoxide (Nb2O5); and ultra-high grades up to 8% Nb2O5, 33% total rare earth oxide (TREO) and 32% phosphorus (P2O5).
The mineralisation commences from surface and is open in all directions.
"A strong foundation"
St George Mining executive chairman John Prineas said, “Extensive high-grade niobium mineralisation has already been discovered at the project – with more than 500 intercepts of niobium grades above 1% – providing a strong foundation for St George to quickly progress to potential resource definition.
“In addition to niobium, high-grade rare earths mineralisation has been confirmed by drilling over a widespread area. The high-grade mineralisation commences at surface and is open in all directions, with excellent prospects to substantially expand the known mineralised footprint.
“Significantly, less than 10% of the project area has been effectively drilled and there has been limited drilling beyond 50 metres from surface.”
World-class location
The project is immediately adjacent to, and within the same carbonatite complex as, the niobium mine of CBMM — the world's largest producer of niobium, providing more than 80% of the world's supply.
Barreiro carbonatite complex showing St George’s Araxá Project as well as the adjacent CBMM niobium mine and the Mosaic phosphate mine.
Highlighting the world-class location of the project, Prineas said, “The Araxá Project is located in the world’s ‘dress circle’ for niobium production and presents a tremendous opportunity for St George to become a global player in the niobium market.
“Together with abundant high-grade mineralisation, the project’s strength is its location in an established mining district with potential to access infrastructure and labour – factors that are favourable for near-term development potential.
“CBMM’s flagship niobium mine abuts the southeast border of our project, while Mosaic’s world-class phosphate mine is immediately to the southwest of our project.
“Minas Gerais is a first-class mining jurisdiction and we are excited to be adding such a high-quality project in Brazil to our attractive exploration portfolio of critical minerals projects in Western Australia.
The project’s location in an established mining district with existing infrastructure (roads and power), proven route to market and access to workforce, present enviable development potential.
The project also provides an “outstanding opportunity” for St George to define a globally significant niobium-REE 2012 JORC mineral resource estimate (MRE).
The acquisition
St George has entered into a binding conditional agreement to acquire all the issued capital of Itafos Araxá Mineracao E Fertilizantes S.A, the owner of the Araxá Project, with a transaction closing date by November 3, 2024, subject to certain conditions.
St George has received firm commitments from institutional and sophisticated investors for a placement at $0.025 per share to raise new funds of $21.25 million that will be applied towards acquisition costs, exploration expenses and working capital.
Prineas added, “We are delighted with the strong investor support for the Araxá acquisition with firm commitments received for our $21.25 million fund raising. This provides St George with a strong platform to leverage the advanced status of the project and continue on the path to being a globally significant player in the niobium and rare earths sector.
“We also look forward to welcoming Itafos Inc, a global fertiliser company and the vendor of the Araxá Project, as a new and substantial shareholder of St George on completion of the acquisition.”
Looking ahead
Once the acquisition is complete, St George intends to undertake a diamond drill program focused on further confirmation of historical drill results, exploration along strike of known high-grade mineralisation and testing the depth extent of mineralisation.
This inaugural drill program will comprise up to 5,000 metres of diamond drilling and will commence as soon as practicable after drilling approvals and land access arrangements are finalised.
Funding for the drill program will be provided from the capital raising to be approved by a shareholder meeting expected to be held in mid to late September 2024.
Results from the new drilling together with historical results will be used to complete a JORC 2012 MRE, which is targeted for H1 2025.
The inaugural drill program will also provide bulk samples for metallurgical studies to further identify the metallurgical properties of the Araxá mineralisation and assess optimal processing methods for a potential mining operation.
St George will plan further drill programs to fully scope the extent of mineralisation at the project area after results of the initial program are reviewed.
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