SGQ signs downstream deal to upgrade magnet rare earths

Our rare earths and niobium Investment St George Mining (ASX: SGQ) just signed a strategic alliance with Brazilian nano materials company Nanum Nanotecnologia.

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The deal is centered around the cerium and lanthanum components of SGQ’s rare earth resource.

Cerium is the most abundant of rare earth elements and has many uses including in catalytic converters used in vehicle exhaust systems, in iron, magnesium and aluminium alloys, and in certain magnets and electrodes.

(Cerium makes up about 49% and lanthanum about 25% of SGQ’s current resource).

SGQ together with Nanum will develop tech to separate out the cerium and lanthanum early in the separation process.

IF it works, it means the remaining rare earth product gets significantly upgraded - potentially a three-fold increase in the NdPr and heavy rare earth concentration.

So instead of selling a mixed rare earth product where ~74% is lower-value cerium and lanthanum, SGQ could potentially deliver a product where NdPr makes up ~80% of the final rare earth oxide.

Ultimately, that would make the product SGQ sells a lot higher value.

And instead of the cerium going to waste, Nanum - which has cutting-edge nanotech processing for cerium - takes it off SGQ's hands and turns it into a commercial nanocerium product.

How we think today’s news fits in the SGQ story

SGQ's project currently has a 70.91Mt at 4.06% TREO resource - the largest and highest-grade carbonatite-hosted rare earth deposit in South America.

At the moment, the size/scale and grade rival that of the two cornerstone assets of $15.5BN MP Materials and $21BN Lynas Rare Earths:

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SGQ’s already proven its asset is big - now its working on demonstrating the rare earths can be processed into end products that are useful in critical supply chains.

SGQ already has a direct line into the US defence supply chain through its MoU with REAlloys - the Ohio-based US government magnet supplier that services the National Defence Stockpile, the Defence Industrial Base, and the Nuclear Industrial Base.

REAlloys is testing SGQ's rare earth product right now. IF that converts to a binding offtake, it could cover up to ~40% of SGQ's future rare earth concentrate production, going straight into US defence magnets.

Today's Nanum deal adds another layer - by upgrading the NdPr concentration in SGQ's product, it makes the final output even more attractive for partners like REAlloys who specifically need magnet-grade feedstock.

We think that success across both testing programs (with Nanum and REAlloys) is all happening at the right time.

From December 31, 2026 the US Pentagon procurement rules will effectively ban the use of rare earth magnet materials sourced from China in US defence platforms. (source)

That means companies like Lockheed Martin, Northrop Grumman, and the rest of the US defence industrial base need to source NdPr and heavy rare earths from non-Chinese supply chains.

Right now, China controls ~90% of global rare earth refining and ~70% of mined production. (source)(source)

So IF the processing can be proven - we think SGQ’s asset could position itself as an alternative supply option for those looking for non-chinese supply.

We covered the types of groups that may be interested in SGQ’s resource in our last note here: SGQ: New upgraded resource: 75% bigger at 70.91Mt @ 4.06% TREO (and 0.62% niobium) - with drilling ongoing…

What's next for SGQ?

Drill results from Araxá expansion drilling 🔄

SGQ has 4 rigs turning 24/7 — with 44 expansion holes completed that aren't yet in the current resource.

We're watching for results that confirm big extensions at depth and in all directions.

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 want to see news from SGQ’s partnership with Nanum and REAlloys. SGQ has confirmed there are talks with more downstream partners and offtake partners, plus multiple strategic investors.
• 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 the government were underway to expedite these (source). Recently, SGQ confirmed a scoping study for a niobium mine and feasibility studies for rare earths were underway. (source) The economic study is due in H1.
• 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.

Met testwork results from the pilot plant are expected in H1.

• Permitting - SGQ is targeting completion for permitting to progress throughout 2026 with 2 mining concession applications and 1 exploration permit.

(source)