St George Mining Ltd (ASX: SGQ) shares are starting the week with a bang after returning from a trading halt.
In morning trade, the ASX mining stock is up 40% to 3.5 cents.
Why is this ASX mining stock rocketing?
Investors have been fighting to get hold of the niobium explorer's shares this morning after it released an update on its proposed acquisition of the advanced, high-grade niobium-REE Araxa Project in Minas Gerais, Brazil.
According to the release, the company has become aware of "misinformation circulating in online chat rooms and social media regarding Araxa."
It notes that this misinformation "claims that an active tailings dam is located within the Project area and that significant high-grade mineralisation discovered at the Project is beneath the tailings dam."
However, it advised that this information is "false and not correct."
The response
The ASX mining stock advised that Companhia Brasileira de Metalurgia e Mineracao (CBMM), which supplies more than 80% of the world's niobium from mining operations near the project, operated a tailings dam (Dam B4) until 1985 on tenement 832.150/1989 that forms part of the project.
However, this is not where the drilling intercepts are located, so has no bearing on its project expectations. It explains:
The significant niobium intersections at the Project – being more than 500 intercepts of greater than 1% Nb2O5 – that St George will use to underpin a potential maiden JORC compliant mineral resource are located on tenement 831.972/1985. Any JORC compliant mineral resource will not extend into the tenement that hosts historical Dam B4, located on tenement 832.150/1989. No other tailings dams – neither historical nor presently active – are within the Project area or proximal to the Project.
Advice from highly credentialled, independent technical consultants indicates that an open-pit mining operation could be established on tenement 831.972/1985 with no impediments posed by the rehabilitated Dam B4.
The ASX mining stock also advised that it believes the location of Dam B4 will not impact open-pit mining operations at the project. It adds:
Subject to completion of final geological studies, we believe an open-pit mining operation will be possible. The potential for establishing an open-pit mine was considered by independent engineering firm and dam specialists, Terracota Consultoria e Projetos in a report prepared for Itafos in 2021. The conclusion was that the implementation of open-pit mining would not change significantly any of the dam safety factors. A further detailed geotechnical study will be required to progress to a mining operation. This study is underway and is being conducted by Walm Engenharia.
Judging by the way St George Mining's shares are rocketing today, it seems that the market is more than satisfied with its response.
