SGQ raises $5M & upscales drilling to five rigs

Our Brazilian rare earths-niobium Investment St George Mining (ASX: SGQ) just raised $5M at 3.8c per share.

AND with the extra cash is upscaling its current drill program.

SGQ will now be drilling with two additional diamond drill rigs - bringing the total to 5 rigs running concurrently…

SGQ also said that it was assessing opportunities to go into downstream partnerships in the US for rare earths processing…

(Source)

Just last week we saw the Pentagon in the US invest US$400M into MP Materials directly.

We also saw tech giant Apple do a US$500M deal with the company.

One thing that stood out to us from the deal with the Pentagon was the planned expansions to MP’s rare earths magnet facilities in the US:

(Source)

As highlighted above, that facility will need more raw materials, and as mentioned there are very few sources of spare capacity globally that isn't in China.

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 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.

It's a bit of a stretch to say that the Pentagon or the US government will come for SGQ’s project , but we think it's more of a possibility MP Materials starts looking around the world at quality assets like SGQ’s.

Here is how SGQ’s resource ranks relative to MP Materials and Lynas’ assets - and we think that with some drilling SGQ’s resource could get even bigger:

(source)

Right now SGQ has two 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%

This resource only covers 10% of the total project area... and hasn’t been tested at depths beyond ~100m.

With this round of drilling SGQ is looking to upgrade those estimates.

So far 40 auger drill holes have been completed with RC drilling commencing on Friday.

This is a wide-spread drill program to test spaces 500m apart - the goal is to get an idea of the geology, which will inform the larger RC drilling program.

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

We are interested in these auger drill holes to the east of the project, we want to see if there is any near-surface mineralisation for SGQ:

Overall, we want to see SGQ grow its resources at depth and extensionally:

SGQ’s resource relative to industry majors -

SGQ’s project is right next door to the largest operating niobium mine in the world owned by CBMM.

At the moment, SGQ’s resource has higher grades than 2/3 of the world’s biggest producing niobium mines.

And from a size perspective, SGQ’s resource is just under 1⁄4 of the size of Australia’s biggest niobium name WA1 Resources.

As for SGQ’s rare earths resource - it is one of the largest, highest grade hard-rock rare earth resources in the world.

SGQ’s resource is carbonatite hosted (hard rock) which is well understood.

SGQ’s resource has similar grades to Lynas Rare Earths, who owns the producing Mount Weld project in WA.

And in terms of size, SGQ has the same tonnages as MP Materials which is producing from its project in the USA.

Here is how SGQ ranks against Lynas and MP Materials:

(source)

Hopefully SGQ’s sphere gets bigger after this round of drilling and starts to draw more market attention to the project.

What’s next for SGQ?

Drilling results 🔄

In the short term the main thing we want to see are drill results.

The first 100 assays from the auger drilling program are scheduled for this quarter, with another 300 assay results to follow after.

Ideally we see big extensions at depth and to the North/East/West of SGQ’s current JORC resource.

Beyond the drilling 🔄

Over the next 12-18 months, a lot of the catalysts for SGQ could come at hard-to-forecast times:

• Progress on strategic investors/offtake partners - hopefully SGQ can follow up the $8M cornerstone investment it managed to get from Xinhai Group - a global mining services provider - as part of its last raise.
• Finalise the remaining vendor payments - (US$6M due before the end of the year and US$5M due next year).
• Start working on development studies - SGQ has mentioned some of these workstreams are already underway.
• Updates on downstream processing venture - SGQ is also working on a downstream processing process for niobium/rare earths products. This could be an additional upside if SGQ manages to make any material progress on this front.
• 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.
• Permitting - Permitting targeted for full completion by Q4, 2026.