SGQ hits extensions to the biggest rare earth resource in South America
Our rare earths and niobium Investment St George Mining (ASX:SGQ) just released another batch of assay results from its project in Brazil.
SGQ’s project already has the following resources:
- 40.6Mt of Rare Earths at grades of 4.13% TREO (total rare earths oxide)
- 41.2Mt of Niobium at grades of 0.63%
Which makes it currently the largest and highest-grade carbonatite-hosted rare earth deposit in South America…
… and the second highest grade REE deposit globally in the Western world.
Today’s results along with all of the previous drilling results put out over the last few months are telling us that resource could get even bigger…
We have already seen SGQ hit more rare earths 1km to the east and 230m to the west of the existing resource footprint. (source) (source)
We hope this round of drilling leads to a big upgrade in the size/scale of SGQ’s project.
Drilling is ongoing 24/7 on the project with three diamond rigs - so we should see a lot more results come out over the coming weeks too.
(source)
Here are the results from today which showed more mineralisation at depth (and ending in mineralisation):
(source)
And here is a birds eye view of the results to date overlaid with the existing resource (in yellow):
Ultimately, we are hoping to see SGQ take its project resource up to a size/grade where it becomes too hard to ignore relative to the assets owned by the majors MP and Lynas…
Here is how SGQ’s asset compares to the assets held by MP and Lynas right now:
(Source)
We think the institutional appeal of SGQ’s asset comes from the potential size and grade the resource could have by the time its current drilling program is completed.
We also noticed the commentary on magnet suitability today…
Another thing we noticed in today’s announcement was the commentary around the “favourable Magnet Rare Earths Profile” being confirmed in the drilling to date.
SGQ’s latest batch of drill results all confirm a “high proportion of magnet rare earths“ where the Neodymium, Praseodymium (NdPr) ratio consistently sits around ~20% (and as high as 29%) - which SGQ says makes it “magnet making material”.
(source)
This part of the announcement doesn’t really move the needle with the investment community - but we think its something that any strategic parties OR potential offtakers will be looking at closely.
We note SGQ signed an MoU with US based magnet materials and magnet producer REAlloys a few months ago. (Source)
And REAlloys was given issued a non-binding Letter of Interest (LOI) from the US Export Import Bank (EXIM) for up to US$200M to “support the development of processing and magnet manufacturing facilities in North America and the U.S”.
REAlloys produces high-performance magnets for “US Protected Markets” including the:
- US National Defense Stockpile (NDS),
- US Defense Industrial Base (DIB),
- US Nuclear Industrial Base (NIB),
- Robotics, Electric Aviation and Critical Infrastructure Industries and
- for US Partner Countries with Defense Treaties, Alliances & Agreements.
(Source)
REAlloys aside, we think the big rare earth miners could also be looking at the technical details in SGQ’s announcement.
We note the US national champion MP Materials has earmarked billions for “10xing its magnet facility” - they are literally calling it “the 10x Facility”.
Aside from sounding cool, and delivering much-needed US onshore processing capacity, it will also create a big hungry plant which is (as the Wall Street Journal reported) going to need feedstock which MP’s current mine just isn't able to provide:
(Source)
Then there is the ASX listed Lynas Resources, who just raised $750M and said it was considering doing deals downstream with the cash raised...
(Source)
In May, the Lynas CEO flagged an interest in development assets in Brazil, and “plans to work with early-stage developers to help bring their mines online”...
(Source)
Of course, no one knows exactly what Lynas and MP will do but we are hoping at least one of them has at the very least “watchlisted” SGQ and is paying attention.
It would definitely make sense for the two to be watching SGQ because SGQ’s project is hosted in the same type of geology as the two projects they mine (hard rock carbonatite-hosted rare earth deposit).
And now MP, Lynas and SGQ all share a common major shareholder - Gina Hancock…
What’s next for SGQ?
Drilling results 🔄
Drilling is still ongoing on site (24/7) - here is a picture from a recent announcement showing the night shift crew drill the asset:
(Source)
In the short term the main thing we want to see are drill results.
Ideally we see big extensions at depth and to the north/east/west of SGQ’s current JORC resource estimate, which initial results like those today have shown.
(Source)
Beyond the drilling 🔄
Over the next 12 months, a lot of the catalysts for SGQ could come at hard-to-forecast times:
- Updates on downstream processing strategy - We want to see SGQ define its downstream rare earths strategy. We are especially looking forward to an update in relation to the US.
- Start working on development studies - SGQ has already commenced environmental, geotechnical and development studies for the project.
- Pilot plant trials - SGQ has signed an agreement with CEFET to jointly collaborate on a new Pilot Plant trial that will build on the prior 9 month trial from 2012-13 which successfully produced rare earth product at over 99% purity and recoveries of 86% TREO.
SGQ is also participating in the “MAGBRAS Initiative” - a program that has major automakers like Stellantis working toward building Brazil’s first permanent magnet-making facility.
- Metwork and sample production - SGQ should have results from this in the pipeline with the creation of the St George Technical Centre. The main catalyst we are looking forward to is the re-starting of SGQ’s pilot plant with development of this underway with the agreement signed with CEFET to host and jointly collaborate. This will allow for product samples to be produced for potential strategics/offtake partners.
- Permitting - SGQ is targeting completion for permitting by Q4-2026.
(Source)
