SGQ raises $72.5M - Gina Rinehart comes in as SGQ’s new major shareholder

Our niobium/rare earths Investment St George Mining (ASX: SGQ) just raised $72.5M… from “major North American and European funds”... AND

Gina Rinehart’s Hancock Prospecting - who took $22.5M of the raise.

Hancock (who was adding to their position here) will now be substantial shareholders in SGQ holding at the very least ~6% of the stock.

Hancock (and Gina) know the rare earths industry really well…

They are invested in both MP Materials and Lynas Rare Earths - the two biggest western producers of rare earths in the world.

Currently MP Materials is capped at $21BN and Lynas at $20BN and Gina’s holding in both of these is over $1BN.

SGQ’s project is 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.

Hancock (Gina) coming onto SGQ’s register is a good signal to us of the potential in SGQ’s project.

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SGQ’s resource currently sits at:

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

SGQ is drilling right now with multiple rigs on site - looking to upgrade that resource before the end of the year.

How does SGQ’s project fit into US rare earths macro?

Late last week we saw China further expand its ‘rare earth export controls’ adding to the list dozens of items relating to refining technology and adding rules that will require foreign producers to comply with key areas.

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As a result of these further moves from China, US President Trump also hit back threatening higher tariffs.

With no signs of this situation de-escalating, it is a sign that the US will have to look at alternate supply sources, where we think South America will come into play to provide additional supply security.

We wrote about this in our weekender: Silver hits new high as Rare Earths heat up

We think SGQ’s recent MoU REAlloys, a “leading US government (rare earth) magnet supplier” could be related to all of this.

REAlloys is an integrated magnet materials & magnet producer for high-performance “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.

Under the terms of the MoU, REAlloys will take SGQ’s rare earth product and test different processing techniques to see if it is suitable for magnet making…

Clearly a project in Brazil is considered when US companies are looking for rare earth feedstock around the world.

SGQ also noted today that the Araxa rare earths project hosts 6 of the top 10 metals on the US Critical Minerals list.

These include niobium, samarium, lutetium, terbium, dysprosium and gadolinium.

Here is the full graphic from today’s announcement which is ranked by US$ value of potential loss to GDP through foreign trade disruptions (basically what China has been implementing with its rare earth export bans…):

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How is SGQ going to use the cash raised?

First of all, SGQ has multiple rigs on site and is drilling to upgrade its resource with a 10,000m drill program, this includes 3 diamond drilling rigs.

SGQ expects to upgrade its resource before the end of the year.

SGQ will also be working on project permitting, metallurgical test work, feasibility studies and to pay for the project under the terms of the acquisition.

One thing we are looking forward to is seeing SGQ ramp up its government supported collaboration to construct a pilot plant for its project which we covered here.

The results of the prior pilot plant were positive and ran over a continuous 9 month study.

This produced rare earth oxalates at >99% purity (with overall recoveries of 86% TREO and successful removal of radionuclides (thorium, uranium), so we wait to see if those numbers can be improved upon and at a larger scale with feedstock form the Araxa Project.

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.

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 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.
• Finalise the remaining vendor payments - (US$6M due before the end of the year and US$5M due next year). With the funds raised today, we now don’t need to worry about the source of these payments.

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