SGQ receives state government support for Brazilian rare earths project

Our rare earths and niobium Investment St George Mining (ASX: SGQ) has just received further state government support for its rare earths and niobium from its project in Brazil.

SGQ’s project 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.

SGQ is drilling the project right now with three diamond rigs and one RC rig - which we are hoping leads to material resource upgrades in the near future.

Today SGQ announced that the State of Minas Gerais has signed a preferential tax regime for SGQ, exempting equipment and materials for the Araxa Project from state goods tax (up to 18%).

These tax exemptions apply to equipment for both pilot and full-scale industrial plants, which is good because a little while ago SGQ announced it was preparing for a pilot plant.

We covered the news of the initial part of this agreement back in October here, which also detailed the local collaboration with CEFET university to construct a pilot plant and research facility

SGQ had already established a joint venture with CEFET which will include the creation of the “St George Technical Centre” for a “large-scale pilot plant” at the Araxa Campus.

So with the exemptions and support now in place, hopefully we will start to hear some updates on progress as an operating pilot plant would be a significant proof of concept of the project and its rare earth mineralisation.

Rare earths are notoriously tricky to get the processing side dialed in and SGQ does have an advantage here by having a high grade, carbonatite resource.

Today's update demonstrates strong local backing for SGQ's vision of creating a rare earths production and becoming part of domestic supply chains for critical minerals in Brazil.

The tax concessions and support could have a vastly positive impact on the economic study for potential mining operations, potentially accelerating the project's timeline, especially if permitting can be accelerated.

What else is SGQ up to?

SGQ is drilling with 3 rigs on site and is expecting to put out a resource upgrade this quarter, with drilling expected to continue throughout 2026.

As mentioned at the beginning, SGQ’s project 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%

As it currently sits, this is where SGQ’s resource already sits, noting the only 2 near it on the chart are already operating mines and we would expect SGQ to increase in tonnage soon from the resource update due:

(Source)

Results of high grades and lengthy (in the range of 100m and more) intercepts have been released regularly, with the most recent results coming last week.

We covered these results here, where the hits released were mainly infill from inside the existing resource and included 135.2m @3.37% total rare earths (TREO) and 0.58% niobium from surface,

This contained within a higher grade portion of 38.8m @4.40% TREO and 0.61% niobium.

Here is a diagram of the resource area and where SGQ has been consistently seeing these kind of intercepts:

(source)(source)(source)(source)

What’s next for SGQ?

Drilling results 🔄

From the recent drilling announcement, “Expansion and resource definition drilling continues 24/7 with three diamond core rigs and one RC rig – with the drill campaign extending into 2026 indefinitely; 31 drill holes at the laboratory with assays pending” (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 12-18 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.
• Work on development studies - SGQ has already commenced environmental, geotechnical and development studies, which were mentioned as continuing here and in the most recent quarterly, that negotiations with government were underway to expedite these (source).
• 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)