SGQ signs non-binding MoU with SKI HongKong Limited
Our Brazilian niobium Investment, St George Mining (ASX: SGQ) announced today it has signed a non-binding Memorandum of Understanding (MoU) with SKI HongKong Limited, a leading global trader of steel materials including niobium.
We see this as a good early progress in the development of SGQ’s project.
These were the key terms of the MoU:
- Potential offtake deal where SKI may secure minimum 20% of niobium products from Araxa
- SKI to provide funding support for project development, potentially through investment in SGQ or pre-payment for offtake
- SKI to advise on product specifications and marketing of niobium to global clients
Importantly, this MoU allows SGQ to work with other strategic investors.
Earlier this month the company completed the acquisition of its project, which we think is excellently placed next door to the largest producer of niobium in the world - CBMM:
SGQ Niobium-REE acquisition approved by shareholders
More on niobium
Niobium is considered a critical mineral by the US, EU and other Western nations due to its highly concentrated supply chain and wide range of applications in batteries, electronics, magnets and defense technologies.
CBMM’s neighbour in Brazil supplies 80% of the global niobium market.
Prices have been increasing amidst this tightening market dynamic.
How does this impact our SGQ Investment Memo?
We see this as slightly mitigating development/delay risk as it shows early interest from a potential partner in SGQ’s future product.
Development/delay risk
Should any or all of the above risks materialise, SGQ could wind up stuck in “development purgatory” where newsflow dries up and the project remains stagnant for a prolonged period of time, hurting the share price. Additionally, if delays occur in terms of material newsflow, the market could turn on SGQ.
What’s next for SGQ?
With the project acquisition complete, we can now look ahead to a 5,000m drilling program at SGQ’s project:
Noting that only 10% of the project area drill tested, we’re hoping that this upcoming drilling will deliver some high grade niobium results that can help SGQ complete resource modelling.
