St George Mining (ASX:SGQ) is conducting a $20 million capital raising to fund acquisition costs for the Araxá Niobium-Rare Earth Element Project in Minas Gerais, Brazil.
GBA Capital is acting as lead manager and bookrunner to the placement.
The Araxá Project, comprising three permits, is held by Itafos (CVE:IFOS) subsidiary Itafos Araxá Mineracao E Fertilizantes. The company has signed a cooperation agreement with the State of Minas Gerais for expediting regulatory approvals for the project.
On 6 August 2024, St George entered into an agreement with Itafos whereby privately held Niobium Dragon would acquire all of Itafos’s shares.
Under the acquisition, St George will pay US$10 million ($16 million) cash and deferred cash payments of US$6 million, nine months after closing the transaction and an additional US$5 million 18 months after closing.
The closing of the transaction, which is expected to occur between late February and early March, is subject to completing certain conditions by 15 March. These conditions include St George conducting a $20 million capital raise and securing shareholder approvals.
Under the placement, investors will be able to subscribe for shares at $0.02 per share. Subscribers will also receive one free attaching option for every two shares subscribed for, exercisable at $0.04 within two years.
The funds will be used for paying the first US$10 million installment and an inaugural drilling program at Araxá, as well as working capital and acquisition costs.
Araxá is considered a de-risked asset with potential for high-grade niobium and rare earth mineralisation, which has been confirmed by drilling and a long history of niobium production in the region.
The company reports “high-grade” mineralisation begins from surface, with more than 500 intercepts of niobium greater than 1% and rare earths with grades up to 8% niobium pentoxide and 33% total rare earth oxide.
St George notes that the project has access to infrastructure and workforce, as well as first-rate in-country management and government support for expedited project approvals.
St George Mining is focused on developing critical mineral projects in Brazil and Western Australia.
Write to Aaliyah Rogan at Mining.com.au
Images: St George Mining
