SGQ hits high grade rare earths outside of its resource

Our Brazilian niobium & rare earths Investment St George Mining (ASX: SGQ) just hit 13.5m of rare earths at an average grade of 12.34% from an auger drillhole…

And the hole ended in mineralisation… meaning there could still be a lot more rare earths at depth.

SGQ is currently drilling its rare earths/niobium project in Brazil - next door to the world’s biggest niobium mine owned by CBMM.

SGQ just closed a $5M capital raise and upsized its drilling program from the initially planned 3 rigs to a total of five drill rigs.

The drilling will be looking to upgrade SGQ’s already big project which has resource estimates of:

• 40.6Mt of Rare Earths at grades of 4.13% TREO (total rare earths oxide)
• 41.2Mt of Niobium at grades of 0.63%

Today’s announcement is exactly what we would have wanted to see from the first batch of auger drilling.

Mineralisation hit outside of SGQ’s resource area AND the hole ending in mineralisation which means there could be more rare earths when an RC/Diamond rig is taken out to this part of the project for deeper drilling.

We covered SGQ earlier in the week and said that we think SGQ can grow its resource by drilling at depth and extensionally to its resource.

Now we are seeing that happen.

Check out our SGQ note from Monday here: SGQ - USA signals interest in Brazil rare earths and niobium in potential new trade deal

Size could matter for SGQ

In our note from earlier in the week we said that as SGQ’s resource grows in size it could put the project on the radar of bigger players in the space looking for rare earths supply.

One that we specifically highlighted was the USA’s only rare earths producer - $16.7BN MP Materials.

MP just received a US$400M investment from the Pentagon - most of which would go into expanding MP’s magnet production facilities.

The catch though is that once MP’s magnet facilities are expanded - MP’s mine (the only one in the US) won’t be able to keep up with the rare earths supply the plant needs to operate.

MP will need to go out looking for new rare earths supply - which is hard to come by given China controls over 2/3rd’s of global supply.

(Source)

That’s where we think a winner could be a company like SGQ - even though its rare earths project is in Brazil and not inside the USA.

SGQ’s project ranks closely to the two biggest ex-China mines in the world - MP’s project in California and Lynas’ project in WA because:

1. It sits on the same type of geology (hard rock carbonatite-hosted rare earth deposit)
2. It has similar grades to Lynas’s project, and
3. It is similar in terms of size to MP Material’s project.

Here is how SGQ’s resource estimate ranks relative to MP Materials and Lynas’ assets - and we think that with some drilling SGQ’s resource could get even bigger (and those 5 rigs are going to help that cause):

(source)

What’s next for SGQ?

Drilling results 🔄

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.

So far 400 auger drill holes have been completed and RC drilling commenced.

The first 100 assays from this program are expected this month.

Beyond the drilling 🔄

Over the next 12-18 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 with a view of getting to economic studies in Q4-2025.
• Pilot plant trials - SGQ has an agreement in place with Latin America’s only permanent magnet maker. SGQ is 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 fairly soon. The main catalyst we are looking forward to is the re-starting of SGQ’s pilot plant so that product samples can be produced for potential strategics/offtake partners.
• Permitting - SGQ is targeting completion for permitting by Q4-2026.
• Finalise the remaining vendor payments - (US$6M due before the end of the year and US$5M due next year). Hopefully, SGQ can follow up on the $8M cornerstone investment it managed to get from Xinhai Group earlier this year.

(Source)