SGQ starts drilling its rare earth and niobium project in Brazil

St George Mining (ASX: SGQ) just kicked off a drill program on its rare earth/niobium project in Brazil.

SGQ’s project is right next door to CBMM, which is operating the world’s biggest niobium project - producing ~80% of all global niobium supply.

SGQ’s project currently has two resources:

1. Rare earths - 40.6Mt of rare earths at grades of 4.13% TREO (total rare earths oxide)
2. Niobium - 41.2Mt at niobium grades of 0.63%, and

Now SGQ is drilling to try and upgrade those resources…

SGQ will have three rigs on site for a 10,000m drill program that is expected to run over 12-16 weeks.

Assays from the drilling are expected on a 4-week rolling basis.

Here is a 2D view of where SGQ will be drilling (the yellow section is the current resource, the holes surrounding it are where SGQ will be drilling):

Here is a 3D overview of the drilling, which gives a good sense of what SGQ is going after:

We also noticed SGQ say it would be doing project wide aeromag to refine drill targets - so we should get a much better look at where the sweetspots for SGQ are inside the next few weeks.

SGQ’s resource is already very big

SGQ’s current resources are already very big.

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

From a size perspective, SGQ’s resource is just under 1⁄4 of the size of Australia’s biggest niobium name ~$1BN WA1 Resources.

As for SGQ’s rare earths project - 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 A$8.6BN capped Lynas Rare Earths, who owns the producing Mount Weld project in WA.

And in terms of size, SGQ has the same tonnages as A$6.9BN MP Materials which is producing from its project in the USA.

Comparing it to a developer - SGQ has a higher grade relative to A$430M Arafura.

Here is how SGQ ranks side by side against Lynas, Arafura and MP Materials:

(Source)

SGQ’s project can get a lot bigger. What’s the exploration upside?

SGQ’s project hasn't been drilled for years and has had almost no work done on it during the current positive market sentiment for niobium.

Which is why we think SGQ can add a lot of value to the project with the drill bit.

At the moment, almost all of the JORC resource is limited to depths of ~100m and drilling has been on only ~10% of the project area:

SGQ expects all of the current drilling to be completed, reported and the projects resources upgraded inside 2025.

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.

First batch of assay results should be out within the next 4-6 weeks (based on guidance from today’s announcement).

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 is due in ~9 months and then another US$5M in ~18 months.
• Start working on development studies - SGQ has mentioned some of these workstreams are already underway.
• Updates on downstream processing 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 - SGQ is working with the same consultants that worked on Sigma Lithium and Latin Resources projects (two large lithium players in the same region of Brazil, Minas Gerias). Permitting targeted for full completion by Q4, 2026.