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Highlights
- St George Mining (SGQ) seeks $20 million to fund the acquisition of Araxá Niobium-Rare Earth Element Project.
- Funds will support Araxá acquisition and the company's future drilling operations.
- The acquisition is in collaboration with Itafos (CVE:IFOS) and is set to close between February and March 2024.
St George Mining (ASX:SGQ) has announced plans to raise $20 million to facilitate the acquisition of the Araxá Niobium-Rare Earth Element Project located in Minas Gerais, Brazil. The funds are essential to covering acquisition costs and support the upcoming operational steps for this strategic project. GBA Capital is working as the lead manager and bookrunner for this capital raising initiative.
The Araxá Project is currently owned by Itafos (CVE:IFOS), through its subsidiary, Itafos Araxá Mineracao E Fertilizantes. St George has entered into an agreement with Itafos, where Niobium Dragon, a privately held entity, will purchase all shares of Itafos in exchange for $10 million USD in cash, with additional deferred payments of $6 million and $5 million after specified periods.
This acquisition hinges on the completion of certain conditions, including the $20 million capital raise and obtaining necessary shareholder approvals. The deal is projected to conclude by late February or early March 2024, subject to these conditions being met by March 15.
As part of the capital raise, investors will have the opportunity to subscribe to shares at $0.02 each. Each share purchased will come with one free attaching option for every two shares, exercisable at $0.04 within two years. These funds will be crucial for the first $10 million installment on the acquisition and will aid in financing an inaugural drilling program at Araxá. The raised capital will also cover working capital and further acquisition-related costs.
The Araxá Project is viewed as a promising, de-risked asset. Its location has a well-established history of niobium production and confirmed potential for high-grade niobium and rare earth mineralization. Drilling results from the region show “high-grade” mineralization, including more than 500 intercepts of niobium exceeding 1% and rare earth oxides with grades of up to 8% niobium pentoxide and 33% total rare earth oxide.
St George Mining remains optimistic about the Araxá Project’s strong infrastructure and workforce. The region also benefits from first-rate local management and government support, which accelerates project approvals. The company is focused on expanding its operations in both Brazil and Western Australia, with an emphasis on critical mineral exploration.
The raising is part of St George's efforts to strengthen its portfolio of critical mineral projects, setting the stage for potential growth in an industry with increasing global demand.
