St George Mining Ltd (ASX: SGQ) shares have returned from their trading halt with a bang.
At the time of writing, the ASX rare earths stock is up 30% to a multi-year high of 15 cents.
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Why is this ASX rare earths stock rocketing?
Investors have been bidding St George Mining shares higher today for a couple of reasons.
One is a broad rally in the rare earths industry after the US responded to China's curbs on rare earths exports.
Another catalyst has been the big news that the ASX rare earths stock has received firm commitments from institutional investors to raise $72.5 million via a placement at 10 cents per new share.
This comprises a $50 million placement led by major North American and European funds and a $22.5 million strategic placement to Gina Rinehart's Hancock Prospecting.
St George Mining is raising capital to advance the rare earths and niobium focused Araxa Project in Brazil. It notes that funding will be applied towards an upgrade of the mineral resource estimate, project permitting, metallurgical test work, feasibility study work, and deferred cash consideration payable to Itafos Inc.
The Araxa Project
The Araxa Project is the largest and highest-grade carbonatite-hosted rare earths elements (REE) resource in South America and the second-highest grade REE resource in the Western world.
This certainly is a nice spot to be in. The company highlights that niobium supply security is at risk. It points out that the US Department of Interior assessed that loss of foreign supply of niobium would cause the second-biggest deficit in US GDP by all critical minerals, which highlights the strategic importance of the world-class niobium resource at Araxa.
In response to the news, the ASX rare earths stock's executive chairman, John Prineas, said:
We are delighted with the strong support received from local and overseas institutional investors who recognise the enormous potential of our high-grade rare earths and niobium project at Araxá. We are also very pleased that Hancock Prospecting has chosen to increase its existing shareholding in St George and emerge as a substantial shareholder.
Hancock Prospecting is a company with significant experience in recognising the value in strategic commodities and backing successful critical minerals companies including MP Materials and Lynas Corporation – as well as having significant project execution and delivery experience for St George to leverage off in the future.
We believe the Araxá Project has the potential to be developed under an accelerated timeline to become one of the few next-generation rare earths and niobium producers worldwide, something investors are wanting to be part of.
