St George Mining’s (ASX:SGQ) Araxa Project is next to the largest niobium mine on Earth, and a big few months await

St George Mining (ASX:SGQ): Araxa keeps getting bigger

Thanks to its Araxa project, St George Mining is one of the few companies that can boast of a project right next to the world’s largest mine for its commodity.

Granted, niobium isn’t as well known as gold…but this is gradually changing. Just look at the fact that SGQ was able to raise $5m at a 13.1% premium to its 30-day VWAP just a few weeks ago. SGQ has more than doubled its market capitalisation and grown its 12-month trading volume more than 30-fold in the past 3 months. This is no accident.

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A way to play the niobium opportunity

First of all, because it is one of the few ASX stocks with exposure to niobium. Niobium is a metal traditionally used in High-Strength Low-Alloy (HSLA) steel to make it lighter and stronger, but is increasingly being used in lithium-ion batteries. There are very few current operating mines, one of which is the neighbouring mine that has a MRE of 896Mt at 1.49%. But there is an urgent need for more as demand growth has been more than 6% for more than two decades now.

Consequently, the few companies showing potential to stumble across a major resource attract investor excitement. The most prominent example is WA1 Resources (ASX:WAK) which re-rated from A$10m to over $1bn in 3 years given its Luni discovery. Looking at rare earths more generally, there is even further precedent for companies at a development stage to re-rate.

Arafura’s (ASX:ARU) Nolans Project is A$430m and it has a Measured and Indicated Resource of 34.9 Measured and Indicated Mt at a TREO grade of 3.2% and an NdPr grade of 0.69%. Moreover, the price of niobium has been strong, with quotations north of US$75 per kilogram in China in late 2024, much higher than the US$45 level of several years ago.

Araxa is an appealing project

Now, let’s look at SGQ’s Araxa project. It lies in Minas Gerais, Brazil, right next to the largest niobium mine in the world. St George has defined a total niobium resource of 41.2 million tonnes at 0.68% Nb2O5 (6,800ppm Nb2O5) comprising 1.9 million tonnes Measured, 7.37 million tonnes Indicated, and 31.93 million tonnes inferred. The company defined a total Rare Earths Resource of 40.6 million tonnes at 4.13% TREO (41,300ppm TREO). Araxa contains 280,000 tonnes of niobium oxide and 1.7 million tonnes of TREO.

For comparison’s sake, consider that Lynas’ Mt Weld mine has 106Mt @ 4.1% TREO. With Araxa already having 40.6Mt @ 4.13% TREO with just 10% of the project area prospected (and at no deeper than 100m), there is significant potential for a greater resource to be formed.

Other positive traits the project shares include its infrastructure (i.e. sealed roads and power), access to skilled labour, low sovereign risk, strong commercial interest, how the project is open in all directions and the potential for other rare earths like neodymium and praseodymium.

A major drilling campaign is underway

SGQ’s plan is to grow the resource and develop Araxa into a major niobium mine. In June 2025, it commenced a drilling campaign, the first since its acquisition of the project. The campaign will be 10,000m and comprise of a mix of auger, reverse circulation and diamond drilling. Drilling will test extensions of known mineralised zones and follow up on targets generated from previous exploration and ongoing geophysical work.

SGQ plans to send samples for lab assay analysis on an ongoing basis, so there should be no shortage of news flow for investors. Parallel to the drilling, the company is undertaking geophysical surveying to provide detail on the lateral and depth potential of the mineralised system.

Moreover, we expect global developments in the rare earths space to continue and these could also help SGQ’s cause with investors. Some in the recent months have been MP Materials (NYSE:MP) – the company that owns the USA’s only rare earths mine; receiving a multi-billion dollar investment from the Department of Defence (DoD) and Apple investing US$500m to support the establishment of a rare earths processing facility in the US.

Conclusion

Our friends at Pitt Street Research have modelled Araxa at an NPV of US$1,281.5m or A$2,066.9m in a base case scenario and US$1,978.6m or A$3,191.2m in an optimistic case. Pitt Street has suggested SGQ could realistically trade at 25% of its project NPV (up from 5% now). This would equate to $0.13-0.21 per share. If SGQ can continue to progress Araxa, this current market capitalisation will not last for long.

St George Mining is client of Pitt Street Research. Pitt Street directors own shares in SGQ.