St George Mining (ASX: SGQ) has entered into a non-binding memorandum of understanding with SKI HongKong Limited in relation to the advanced, high-grade Araxá niobium-REE project in Minas Gerais, Brazil.
St George is finalising arrangements for the 100 per cent acquisition of the Araxá project and the MoU is conditional on that acquisition being completed.
The MoU sets out a framework for ongoing collaboration between St George and SKI in relation to development of Araxá. The parties will consult with each other on marketing, offtake and financing opportunities with the aim of agreeing a road map for progressing the project through feasibility studies and a financial investment decision for development.
St George and SKI will negotiate and consider potentially entering into a range of commercial transactions and offtake opportunities relating to niobium products including:
- offtake arrangements, whereby SKI may secure a minimum 20 per cent of potential niobium products from the project;
- the provision of funding support to St George for the development of the project including through an investment in St George and/or pre-payment for offtake; and
- marketing rights for niobium products including technical advice on product specifications and product marketing to global clients.
SKI is one of the leading trading houses in steel materials with a focus on niobium, manganese and chrome. In niobium, SKI has particular industry leading expertise and is a major supplier of niobium products to a range of end-consumers in China and globally.
“We are delighted to have executed the MoU with SKI, which we believe can be the start of a productive and successful, long-term relationship,” executive chairman John Prineas said.
“SKI’s decision to partner with St George highlights the longer-term strategic significance of the Araxá project as a potential globally significant supplier of niobium products.
“SKI is an impressive strategic partner for St George, based on its substantial trading track record in steel materials and its particular industry leading expertise in niobium products.
“SKI’s objective is to secure a long-term reliable supply of high-quality niobium products against the market background of fast-growing global demand for niobium as well as geo-political issues that may restrict access to this highly rated critical metal.
“The MoU provides a framework for collaboration on technical and financial matters to advance development of the project. The support of SKI is a major milestone in de-risking the project by further enabling opportunities to expedite development.
“St George’s ability to attract global partners like SKI speaks volumes to the potential of the Araxá project.”
The parties will consider and negotiate a potential binding partnership agreement within nine months of signing the MoU. During this period, St George and SKI will consult closely on key project development parameters including product mix and global marketing arrangements.
St George will aim to produce sample niobium products in H1 2025 – using the pilot plant currently at the project – in line with specifications to be agreed with SKI, and for product testing by SKI and certain of its clients.
On 8 October 2024, St George shareholders voted overwhelmingly in favour of the acquisition of Araxá and an associated equity raising. Final steps to complete the acquisition are in progress. In anticipation, St George has assembled a highly experienced team in Brazil to oversee the first stage of on-the-ground exploration work, which is due to commence before the end of this year.
