$ST GEORGE MINING LTD(SGQ.AU)$ Niobium-REE acquisition approved by shareholders
Reasons to like SGQ’s acquisition:
1. Niobium is a critical mineral. Governments want it, SGQ has it.
80% of the global niobium supply is controlled by one company CBMM. Niobium sits as the second highest risk metal on the critical materials list for both the EU and the US for supply concentration.
2. SGQ is capped at $55M post acquisition, much smaller than listed peers.
Post acquisition SGQ will be capped at A$55M (at 2.5c/share). Peers that have made niobium discoveries include WA1 Resources ($842M) and Encounter Resources ($249M). SGQ can also be compared to peers that have defined Rare Earth Element projects including Brazilian Rare Earths ($550M) and Meteoric Resources ($210M).
3. Existing discovery with 500 intercepts above 1% niobium.
Compared to other companies that are in the exploration stage, SGQ already has a niobium discovery. This provides a strong foundation for SGQ to quickly progress towards a JORC resource through more drilling of its own.
4. Money flowing into companies developing niobium projects.
Because of the importance of niobium, and its concentrated supply chain, large swathes of capital is pouring into other companies that are developing niobium projects. WA1 and Encounter Resources are two of the most successful stories on the ASX, both discovering niobium in WA.
5. Project sits next door to the largest niobium producer in the world.
SGQ is next door to CBMM, which supplies 80% of the global niobium market. SGQ’s project sits on the same geology as CBMM.
6. Only 10% of the project has been drilled (exploration upside).
To date, only 10% of SGQ’s project has been drilled with most of the drilling only down to ~50m depths. The high-grade mineralisation commences at surface and is open in all directions, leaving open the possibility for this discovery to grow even bigger.
7. Rare earths, with high grade TREO.
SGQ’s project also contains ultra high grade rare earths with TREO grades >10% in 10-60m intercepts. SGQ’s project sits on the same type of geology (carbonatites) as Lynas’ giant Mount Weld rare earths mine.
8. Project located in the same state in Brazil as Latin Resources.
The project is located in the Minas Gerais state of Brazil, a state that we have visited and home to one of our best ever Investments, Latin Resources. Latin Resources grew from $0.03 to over $0.40 off the back of a giant lithium discovery. The region is very mining friendly with good access to infrastructure and power.
9. Project acquired from a forced seller.
The vendor of the asset (Itafos) is a TSX listed phosphate producer and is currently going through a de-leveraging process trying to reduce debt. SGQ is picking up an asset that Itafos likely sees as non-core because of the business’ phosphate focus and a lack of bandwidth to bring another mine into production.
Modify on 2024-10-14 20:03
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