St George Mining (ASX: SGQ) has entered into a binding conditional agreement to acquire all the issued capital of Itafos Araxá Mineracao E Fertilizantes S.A (Itafos Araxá), which owns 100% of the advanced niobium-REE Araxá Project in Minas Gerais, Brazil.
Araxá is located in the world’s premier – and dominant – niobium production region and benefits from access to infrastructure and a skilled workforce.
Drilling by previous explorers at the project has confirmed significant niobium and rare earths element mineralisation.
This acquisition propels St George into a position of becoming a significant player in the niobium market at a time of increased focus on future supplies of a mineral used to produce stronger and more durable steel.
The acquisition of Araxá also fully aligns with St George’s strategy to establish a portfolio of highly prospective critical minerals projects in Tier 1 mining jurisdiction such as Western Australia and, now, Minas Gerais in Brazil.
St George received firm commitments for a placement of shares to raise $21.25 million via the issue of 850,000,000 shares to institutional and sophisticated investors at an issue price of 2.5c a share. The placement will be completed in two tranches and require approval from St George shareholders at an upcoming meeting.
Funds raised will be used to pay for Araxá, St George’s inaugural drill program at Araxá and working capital.
Commenting on the Araxá deal, St George’s executive chairman John Prineas said:
“The Araxá project is located in the world’s ‘dress circle’ for niobium production and presents a tremendous opportunity for St George to become a global player in the niobium market.
“Extensive high-grade niobium mineralisation has already been discovered at the project – with more than 500 intercepts of niobium grades above 1% – providing a strong foundation for St George to quickly progress to potential resource definition. In addition to niobium, high-grade rare earths mineralisation has been confirmed by drilling over a widespread area.
“The high-grade mineralisation commences at surface and is open in all directions, with excellent prospects to substantially expand the known mineralised footprint. Significantly, less than 10% of the project area has been effectively drilled and there has been limited drilling beyond 50m from surface.
“Together with abundant high-grade mineralisation, the project’s strength is its location in an established mining district with potential to access infrastructure and labour – factors that are favourable for near-term development potential. CBMM’s flagship niobium mine abuts the south-east border of our project while Mosaic’s world-class phosphate mine is immediately to the south-west.
“Minas Gerais is a first-class mining jurisdiction and we are excited to be adding such a high-quality project in Brazil to our attractive exploration portfolio of critical minerals projects in Western Australia.
“We are delighted with the strong investor support for the Araxá acquisition with firm commitments received for our $21.25 million fundraising. This provides St George with a strong platform to leverage the advanced status of the project and continue on the path to being a globally significant player in the niobium and rare earths sector.
“We also look forward to welcoming Itafos Inc (TSX-V: IFOS), a global fertiliser company and the vendor of the Araxá project, as a new and substantial shareholder of St George on completion of the acquisition.”
The closing of the transaction is subject to the completion (or waiver) of certain conditions by November 3, 2024.
