St George locks in $20m funding for Brazilian rare earth project

St George Mining has taken a significant step towards becoming a globally important critical metal producer having raised $20m from new and existing shareholders, earmarked for the acquisition of its high-grade Araxá niobium-rare earth (REE) project in Brazil, adjacent to CBMM’s world-leading operations in Minas Gerais.

In a binding agreement, both St George and Canadian-listed Itafos Araxá Mineracao E Fertilizantes - the vendor of the project - have varied the original agreement signed in August to delay deal closure until March. 

The change now allows St George to seek shareholder approval for the acquisition and for a two-part placement of one billion shares at 2c a share, representing 44 per cent of the expanded capital.

As a sweetener, the company is also offering one new 2-year option for every two new shares being subscribed for, with an exercise price of 4c a share.

Under the original agreement the acquisition terms included an initial payment of US$10 million (A$16 million) at closing, with payments totalling a further US$11 million (A$17.5 million) deferred for 18 months.

According to the company the Araxá project boasts massive potential, with drilling results confirming extensive niobium and rare earth oxide (TREO) mineralisation. The project’s top shelf credentials have been highlighted with intercepts showing some stellar grades of up to eight per cent niobium and 33 per cent TREO.

Notably, the orebody appears to start from surface allowing for a very low-cost, low strip ratio mining operation and includes hits of 43m running at 1.5 per cent niobium and a section of 30m grading 16.9 per cent TREO within a bigger 60m intercept running at 11.1 per cent TREO from the surface.

 A slightly deeper, albeit still shallow hit of 45m grading 14.4 per cent TREO from 15m including a 7.5m wedge at 31.5 per cent TREO from 40m has given the company a glimpse of the massive upside potential.

St George Mining executive chairman John Prineas said: “The successful capital raise recognises the de-risked nature of the Araxá Project – with extensive high-grade niobium and rare earths mineralisation already confirmed by drilling – at a time when these critical metals are highly sought after globally by industry and governments alike.”

Since first announcing the deal in August, management says it has been working flat out laying the foundations to progress and leverage the advanced mining project by signing a co-operation agreement with the State of Minas Gerais to speed up the development approvals.

The company has also signed partnership agreements to potentially process the Araxá concentrate downstream and has confirmed its ecological responsibilities by appointing an industry-leading environmental consultant. 

To complete its preparations, St George says it has now also assembled a high-quality, in-country team with more than 40 years’ combined experience in the niobium business.

Niobium - a metal now listed on global critical supply lists - has found itself in increasing demand during the past 10 years as the world moves inextricably towards renewable energy. 

Used predominantly as anode material in rechargeable batteries, it is also employed as an alloy metal to harden steel. Its resistance to extreme heat and cold also makes it an extremely useful metal in the production of jet engines and oil and gas pipelines.

By providing more than 90 per cent of the world’s supply, Brazil has become a powerhouse of niobium production. Apart from recent discoveries of the metal in the West Arunta region of Western Australia by companies such as ASX-listed WA1 resources and Encounter Resources, it seems that the south American country will have the market sewn up for quite some time.

Coupled with Brazil’s dominance and expertise in niobium production, the proximity of St George’s Araxá’s project to CBMM’s established infrastructure and flagship mine - which produces 75 per cent of global production in its own right - puts the company in the box seat to also potentially becoming a major force in the industry.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au