St George Mining Limited [ASX:SGQ]
Healthcare & Biotechnology
Strategic Resource Base of Niobium and Rare Earths Positioned for Growth
We initiate coverage on St George Mining (ASX: SGQ) with a fair valuation of A$0.14, representing a 475% potential upside from the latest share price of A$0.024. St George has transformed its fortunes by acquiring the Araxá niobiumREE Project in Minas Gerais, Brazil in February 2025. The project is located adjacent to, and within the same carbonatite complex as, CBMM's niobium mine, which produces around 80% of the world's niobium. St George has recently defined a globally significant maiden JORC-Compliant Mineral Resource Estimate for Araxá, comprising 41.2 Mt at 0.68% Nb₂O₅ for 280 kt of niobium oxide and 40.6 Mt at 4.13% TREO for 1.7 million tonnes of Total Rare Earth Oxide (TREO). The company has swiftly assembled an on-site team of niobium experts, primarily former CBMM executives, to expedite the development of the Araxá Project.
Globally Significant Resource Base in the Right Location
The maiden MRE for Araxá includes high grades of TREOs, featuring commercially significant magnetic rare earth elements comparable to the grades and sizes of the largest global REE plays, such as Lynas (ASX: LYC), MP Materials (NYSE: MP), and Arafura (ASX: ARU). In addition, The Measured and Indicated niobium grade in Araxá's MRE stands at 0.99%, placing it among the highest-grade niobium deposits worldwide. Araxá’s location near CBMM’s niobium mine provides it with established infrastructure in the area. Leveraging the talent pool trained at CBMM's niobium mine, St George has quickly assembled a robust team of on-site experts at Araxá, including former CBMM executives and a former Brazilian Mines Minister, to ensure smooth project delivery. The team has over 80 years of combined experience in niobium mining and processing in the Araxá region.
Tight Markets for Niobium and REEs to Fuel St George’s Growth
Niobium and REEs are listed as critical minerals by most developed countries due to their essential role in defence and advanced technologies. Despite their significance, the supply chain for these minerals is highly fragile. The global niobium supply relies on just three producers, with CBMM accounting for 80% of the market. Meanwhile, China dominates the REE sector, producing about 60% of global REEs and managing 90% of processing capacity, which poses security risks for other nations. Efforts by governments to diversify the REE supply chain beyond China present opportunities for companies like St George, which have high-grade, globally significant REE deposits outside of China. The Araxá Project, with its high-grade niobium deposit and favourable project logistics, creates a real opportunity for St George to be the next niobium producer to come to market.
Valuation range of A$0.12–0.16 per share
We have valued SGQ at A$0.12 per share in a base-case scenario and A$0.16 per share in a bull-case scenario using an NPV-based valuation methodology. The potential catalysts for a re-rating of SGQ’s share price include successful metallurgical study results Araxá as well as potential upgrades to the maiden MRE at the project. Potential successful test results showing high recovery rates of niobium and REEs will indicate the operational and commercial viability of the Project and will guide future feasibility studies. The key risks to our investment thesis include volatility in commodity prices, execution delays and funding risks. St George will need to make additional payments of US$11m to the Araxá Project's vendor. See page 29 for more explanation on potential risks and catalysts.