St George Mining has locked in a jumbo $60 million capital raising to accelerate development at its world-class Araxá rare earths and niobium project in Brazil.
The fresh funding package has landed just days after the company tabled a suite of impressive metallurgical results pointing to a simple processing route.
Management says it received firm commitments for a two-tranche placement, with the offer price of 10 cents per share attracting strong support from high-quality institutional investors.
In a powerful endorsement of the Araxá story, St George’s biggest shareholder, Gina Rinehart’s Hancock Prospecting, has committed $20 million to the raising. The backing comes hot on the heels of Hancock’s headline-grabbing A$1.4 billion investment in Elon Musk’s SpaceX, a stake that has already netted the mining magnate a cool 50 per cent profit in just two days.
The 10-cent placement price represents a modest 9.1 per cent discount to the previous closing price and a mere 3.5 per cent discount to the company’s 5-day volume-weighted average price of 10.4 cents per share.
New shares under tranche one will be issued within the company’s existing placement capacity, with settlement expected to occur on 23 June, while completion of tranche two is subject to shareholder approval, slated for early July.
Once completed, Hancock will hold an estimated 10.5 per cent interest in St George.
St George Mining executive chairman John Prineas said: “We are delighted with the strong support received from new and existing institutional investors who recognise the compelling development potential of our Araxá Project. The world-class resource at Araxá has potential to be developed under an accelerated timeline – with high-grade mineralisation starting from surface and favourable project logistics.”
The new funds will be used to progress development of the company’s high-grade Araxá project in Minas Gerais, Brazil, a region renowned for its world-class carbonatite-hosted rare earths and other critical metals deposits. Those critical metals include niobium, for which Brazil produces the lion’s share of the global supply.
St George has been running hard at Araxá, delivering a massive resource upgrade in March that outlined a JORC-compliant 70.91 million tonnes grading a notable 4.06 per cent total rare earth oxides (TREO) and 0.62 per cent niobium pentoxide.
The deposit boasts a high-grade core, with the measured portion of the resource weighing in at a solid 8.02 million tonnes at an even higher 5.23 per cent TREO and 1.06 per cent niobium pentoxide.
According to the company, a remarkable 95.8 per cent of that resource sits within 100 metres of the surface in soft, weathered clays, suggesting it could be a simple, low-cost “free-digging” open-pit operation.
Meanwhile, St George has been systematically navigating all of the pre-development requirements to de-risk the project.
Just last week, the company announced a suite of stellar results from initial beneficiation testwork on a five-tonne bulk sample of near-surface material. Simple flotation produced a high-grade niobium concentrate of 39.6 per cent niobium pentoxide with a respectable 54.3 per cent recovery.
Perhaps just as impressively, a rare earths concentrate grading 15.7 per cent TREO was produced from the tailings of the niobium flotation circuit, hinting at a potential dual-commodity revenue stream from a single processing flow sheet.
St George’s drill rods have also been turning furiously, including through night shifts, with an ongoing 10,000-metre-plus campaign consistently delivering the goods.
The company’s recent expansion drilling outside the current resource area returned a spectacular 100.6m hit grading 4.82 per cent TREO and 0.64 per cent niobium from surface.
That intercept also contained higher-grade sub-intervals, including 25.5 metres assaying 6.55 per cent TREO and 1.17 per cent niobium pentoxide from 15m depth, and an 11.9-metre section going 9.19 per cent TREO and 0.90 per cent from 50.1m.
In another intriguing development, St George’s exploration has uncovered a significant new zone of high-grade mineralisation at its East Araxá discovery, about one kilometre east of the main resource. Follow-up drilling there has confirmed a significant intercept of 48m at a stunning 5.71 per cent TREO from just 2m downhole.
With the mineralisation at the main deposit remaining open in all directions and a new high-grade discovery in its back pocket, the project appears to have plenty of blue-sky potential.
Now, with a major funding deal in the bag, St George’s foot is hovering over the accelerator pedal. The company’s next steps include a month-long niobium flotation pilot plant program, scheduled to begin next month, ahead of a larger-scale pilot plant capable of processing up to 300kg of ore per hour, slated to be operational by year’s end.
With its giant and still-expanding high-grade, near-surface resource, an emerging clear processing pathway and now additional capital to drive development, St George appears to be rounding a key corner at Araxá.
As the company moves to prove up the project’s economics, the question may soon shift from what it has already defined to just how much bigger this Brazilian giant could become.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Doug Bright
