St George Mining (ASX: SGQ) has swooped on the niobium-rich Araxá rare earths project in the Brazilian State of Minas Gerais, picking it up for US$21 million (AU$33 million) from Toronto-listed fertiliser specialist, Itafos.
Sitting 5km south of the town of Araxá and 1000km north-west of Rio de Janeiro, the project boundary adjoins the high-grade CBMM mine that produces 80 per cent of the world’s niobium.
And ASX investors were clearly taken by the move, pushing the company’s share price up more than 32 per cent to a high of 4.5c during this morning’s intraday trading session, from an overnight close of 3.4c – and on its second-biggest one-day trading volumes since its 2010 listing.
The acquisition involves an initial cash payment of US$10 million (AU$15.35 million) at closing, with deferred payments totalling US$11 million (AU$16.88 million) during the course of the next 18 months. St George will also issue 10 per cent of its equity in new shares, options and performance rights to Itafos.
The transaction is expected to close by late next month or early in October, pending shareholder approval and other customary conditions.
The deposit lies within the 5km-wide Barreiro carbonatite intrusive complex – a dome-shaped feature formed about 87 million years ago. The geological structure forms part of a suite of alkaline carbonatites and kimberlites along the azimuth 125-degree lineament, itself a significant feature in Brazil that extends 2000km from Rondonia in the north-west to Rio de Janeiro on the coast.
Historical drilling at the Araxá deposit has defined extensive high-grade niobium, rare earths and phosphate mineralisation. Notable results include more than 500 intercepts featuring niobium grades of more than 1 per cent, ranging up to ultra-high grades of up to 8 per cent niobium, 33 per cent total rare earth oxides (TREO) and 32 per cent phosphate, with mineralisation starting from the surface and remaining open in all directions.
Making life easier for St George, Araxá is an established mining district with existing infrastructure such as roads and power and the project benefits from a proven route to market and access to a skilled workforce.
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. Significantly, less than 10% of the project area has been effectively drilled and there has been limited drilling beyond 50m from surface. CBMM’s flagship niobium mine abuts the south-east border of our project, while Mosaic’s world-class phosphate mine is immediately to the south.
St George Mining executive chairman John Prineas
To partially fund the deal, St George has secured promises from investors to raise AU$21.25 million, which will also be used to cover exploration expenses and working capital.
Following the acquisition, the company plans to start a 5000m diamond drilling program in a bid to confirm historical drill results and explore further along strike and at depth. It is also aiming to deliver a resource estimate by the first half of next year.
St George’s acquisition of the Araxá niobium-rare earths project appears to mark a significant step in a strategy designed to help it become a leader in the critical minerals sector. With strong investor backing and a clear plan for development, the company appears to be well-positioned to capitalise on the growing global demand for niobium and rare earths.
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