• St George Mining signs up Chinese steelmaker Liaoning Fangda for potential development of Araxá niobium-rare earth project
  • MoU covers potential offtake for at least 20% of niobium and funding support for the project
  • Fangda, a fast growing global steelmaker, will also provide technical advice for mine development and construction as it expands its production capacity

 

Special Report: St George Mining’s high-grade Araxá niobium-rare earth project has received a vote of confidence from major Chinese steelmaker Liaoning Fangda, which entered into a memorandum of understanding relating to its potential development.

Under the MoU, the two parties will consider commercial agreements that may include:

  • Fangda securing a minimum 20% of potential niobium products from the project
  • The Chinese company providing funding support for development of Araxá through investment and/or pre-payment for offtake; and
  • Technical advice for mine development and construction.

Fangda’s interest in the Brazilian project is hugely positive for St George Mining (ASX:SGQ) as the Chinese company produces ~20Mt of steel products per year, ranks 16 amongst the world’s steel producers, and is expanding capacity to 50Mtpa – a move that could propel it into the ranks of top five steelmakers.

As a major steelmaker, Fangda is also a major consumer of niobium, which is used in high-strength steel products used in construction, bridges, ships, automobiles and heavy mining equipment.

“The relationship with Fangda – through potential financial and technical support as well as mine development – is another key milestone in de-risking the project,” SGQ executive chairman John Prineas said.

“The global niobium sector has only three primary producers – the global leader being CBMM, with its flagship project located immediately adjacent to the Araxá project.

“With extensive near-surface niobium mineralisation already confirmed by historical drilling at the Araxá Project – including more than 500 intercepts of +1% Nb2O5 – as well as access to existing regional infrastructure, St George is continuing to position itself to be the next global player in niobium.

“St George’s ability to attract global giants like Fangda speaks volumes to the potential of the Araxá project and also recognises the high-performance in-country management established by St George to drive project development.”

 

Potential offtake

The potential offtake agreement might include Fangda being granted the exclusive right to purchase 20% of niobium products from Araxá for an initial five-year term with the option for a further five-year extension.

Pricing for the offtake will be based on a market-linked reference price.

SGQ notes the MoU is non-binding and allows it to pursue additional partnerships with other strategic investors.

Araxá has already been de-risked with more than 500 intercepts of high-grade niobium (>1% Nb2O5) and rare earths with grades up to 8% Nb2O5 and 33% TREO reported to date.

Earlier this month, the company reached an agreement with Brazilian science agencies EMBRAPII and SENAI to develop a new and sustainable process to maximise the recovery of niobium and REEs from the project in the mining state of Minas Gerais.

While 60% of the costs will be borne by the Brazilian agencies, SGQ will have the exclusive right to commercialise the intellectual property developed by the technical co-venture for 10 years with no royalty or other fee payable to the two agencies.

 

 

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.

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