St George Mining charges ahead at Araxá rare earths and niobium project with $72.5m boost

• Major North American and European funds contribute $50 million in placement
• Gina Rinehart’s Hancock Prospecting adds $22.5m at $0.10/share, becoming substantial holder
• Funds to drive feasibility work and final investment decision for Araxá

Special Report: As China tightens export controls on rare earths and niobium, St George Mining has locked down a $72.5 million cash infusion to advance its Araxá rare earths and niobium project in Brazil.

St George Mining’s (ASX:SGQ) Araxá project is the largest and highest-grade carbonatite rare earth element (REE) resource in South America, representing a strategically important source of rare earths and niobium outside of China.

The project’s mineral resource estimate (MRE) includes six of the top 10 critical minerals on the US Department of Interior’s list, including samarium, lutetium, terbium, dysprosium, gadolinium and niobium.

With 40.6Mt at 4.13% total rare earth oxides and 41.2Mt at 0.68% niobium held within its MRE, Araxá is set to grow further.

SGQ is targeting an MRE expansion and upgrade with a major drilling program already underway, supported by fresh funding from investors.

‘Enormous potential’ recognised

St George Mining executive chair John Prineas said the company was delighted with the strong support received from both local and overseas institutional investors, who recognise the “enormous potential” of the high-grade Araxa project.

“We are also very pleased that Hancock Prospecting has chosen to increase its existing shareholding in St George and emerge as a substantial shareholder,” Prineas said.

“Hancock Prospecting is a company with significant experience in recognising the value in strategic commodities and backing successful critical minerals companies including MP Materials and Lynas Corporation – as well as having significant project execution and delivery experience for St George to leverage off in the future.”

Accelerating demand for rare earths

Last week, Beijing expanded export controls on critical minerals including rare earths and niobium.

Exporters are now required to obtain permission to export technologies used for rare earth mining, smelting and processing, with a particular emphasis on forbidding any military applications.

As China currently processes about 90% of the world’s rare earth minerals, and accounts for about 70% of total mining of the critical minerals, the export controls have sparked burgeoning demand for ex-China supply.

The US Department of Interior has identified niobium supply in particular as a strategic priority, as the loss of foreign supply is projected to cause the second-largest deficit in GDP of all critical minerals assessed.

Working towards a final investment decision

Prineas said Araxá’s Tier-1 location, existing infrastructure and access to renewable energy had made it a magnet for investors seeking ex-China supply.

“We believe the Araxá Project has the potential to be developed under an accelerated timeline to become one of the few next-generation rare earths and niobium producers worldwide, something investors are wanting to be part of,” he said.

“The new funding will bolster St George’s program of advancing the Araxá Project through feasibility study work and towards a financial investment decision.”

The $72.5 million cash injection will support an aggressive drilling program targeting resource expansion and an upgrade of Araxa’s JORC confidence level.

Once the program is complete, St George will move onto project permitting, metallurgical testwork, pilot plant development, and feasibility study work.

The fresh funding will also close out a deferred cash consideration payable to Itafos Inc.

“We thank existing and new shareholders for their support in St George and recognition of our efforts to deliver significant, sustained value from the Araxá Project,” Prineas said.

“We are excited about providing more updates as we advance this truly unique critical minerals opportunity.”

This article was developed in collaboration with St George Mining, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.