St George Mining Ltd (ASX: SGQ) shares are having a great session on Tuesday.
In early trade, the ASX mining stock rocketed over 30% to a 52-week high of 4.5 cents.
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Why is this ASX mining stock rocketing?
Investors have been scrambling to buy the mineral exploration company's shares on Tuesday after it announced a promising acquisition.
According to the release, St George Mining has entered into a binding conditional agreement to acquire Itafos Araxa Mineracao E Fertilizantes for a total of US$21 million. It is the owner of the advanced niobium-rare earth elements (REE) Araxa Project in Minas Gerais, Brazil.
The company advised that the Araxa Project Project is immediately adjacent to, and within the same carbonatite complex as, the niobium mine of CBMM that produces approximately 80% of the world's niobium.
Niobium is a critical metal with unique properties that make it essential as the world transitions to a low-carbon economy.
The primary niobium product is Ferroniobium (FeNb, ~65% Nb), which accounted for 105,000 tonnes of sales in 2022 according to WA1 Resources Ltd (ASX: WA1). This represents approximately 90% of niobium product sales.
Ferroniobium is primarily used as a micro alloy in the steel industry to improve the mechanical properties of steel. But there's also niobium pentoxide (Nb2O5), which WA1 highlights as a key growth market.
'A tremendous opportunity'
St George Mining's executive chairman, John Prineas, was very pleased with the deal. He said:
The Araxa Project is located in the world's 'dress circle' for niobium production and presents a tremendous opportunity for St George to become a global player in the niobium market. Extensive high-grade niobium mineralisation has already been discovered at the Project – with more than 500 intercepts of niobium grades above 1% – providing a strong foundation for St George to quickly progress to potential resource definition. In addition to niobium, high-grade rare earths mineralisation has been confirmed by drilling over a widespread area.
Strong drilling results
The ASX mining stock revealed that historical drilling at the Araxa Project has defined extensive high grade niobium, REE, and phosphate mineralisation.
This includes more than 500 intercepts of high-grade niobium, as well as ultra-high grades up to 8% Nb2O5, 33% TREO and 32% P2O5.
Importantly, the mineralisation is commencing from the surface and is open in all directions.
In light of this, management believes there is "outstanding opportunity for St George to define a globally significant niobium-REE resource."
Capital raising
St George revealed that it has received firm commitments from investors to raise new funds of A$21.25 million to put towards acquisition costs, exploration expenses, and working capital.
These funds are being raised at the dirt cheap price of 2.5 cents per new share. This represents a discount of 44% to the ASX mining stock's intraday high on Tuesday.
