SGQ partners with Brazilian state on rare earths processing hub

Our rare earths and niobium Investment St George Mining (ASX: SGQ) just signed an agreement to assess a NEW processing centre in the state of Minas Gerais in Brazil.

SGQ's 100% owned Araxá project is the largest high-grade carbonatite hosted rare earths resource in South America.

It sits on the same hard rock geology as the two biggest Western producers, $15BN MP Materials and $16BN Lynas.

AND directly next door to CBMM, the private company that produces ~80% of the world's niobium.

So with the resource drilling coming along nicely and studies for development underway, today SGQ announced a local processing initiative:

(source)

Today's agreement, called a Protocol of Intent, is with the Lima & Pergher Group (a Brazilian chemical and industrial company, through its START division) and the State of Minas Gerais.

The state is supporting the initiative by helping with licensing procedures, promoting relationships with suppliers and service providers, and backing applications for state tax incentives.

(So moves like this getting the state involved is generally a good sign while you are looking to get other things approved, like environmental permits which SGQ got underway earlier this week.)

The aim is a processing hub that takes rare earths feedstock from projects in the state (including SGQ's Araxá) and refines it into magnet-making materials.

The bigger goal with this is a fully domestic Brazilian mine-to-magnet supply chain, feeding end-users like MagBras, which is building Brazil's first rare earth magnet-making facility.

(back in late 2024 SGQ announced a partnership with Magbras and then last year supplied test ore to them)

The centre would sit inside START's industrial complex at Uberlândia, one of the largest chemical operations in Brazil, with infrastructure and a skilled workforce already in place.

Here is a concept of hope that would look:

(source)

For now the agreement is a framework to assess the centre's potential.

SGQ and START will consider forming a new company to jointly own and operate the centre, targeting operations by 2030 (subject to a definitive agreement, licensing and a final investment decision).

(source)

The rare earths bottleneck usually isn't the mining, it's the separating and processing, so we like seeing SGQ move early on the midstream.

As we mentioned earlier, It comes just two days after SGQ kicked off permitting for Araxá which we covered here.

SGQ’s resource continues to grow and rigs are still spinning

All of this builds on SGQ's resource upgrade from earlier this month, which came in at 111.2Mt at 3.57% TREO (total rare earth oxides) and 0.57% niobium.

We covered that in a deep dive article here: SGQ: 155% increase, higher grade. Now for the share price to catch up to its bigger peers...

This is now getting in the same conversation as both Lynas and MP Materials, and drilling is still ongoing:

(source)

This upgrade included a 155% increase in the higher-confidence Measured and Indicated part of the resource

So with 68% of that resource now sitting in the Measured and Indicated categories, the studies also underway have plenty of resources to work with.

(source - our article on JORC resources)

A higher confidence resource estimate matters because it's typically what the larger institutional investors look for when thinking about development financing for a project.

(the more certain a company is in its orebody, the less risky it is for a financier to back)

See our educational article on resource categories here: What is a JORC resource? How does a company define a resource? 🎓

What’s next for SGQ?

Drilling results 🔄

SGQ is currently drilling its project 24/7 with five diamond rigs - focused mostly on its discovery to the east of its current resource.

SGQ expects to have a maiden JORC resource out on that project in Q4-2026. (source)

(source)(source)

Beyond the drilling 🔄

Over the next 12 months, a lot of the catalysts for SGQ could come at hard-to-forecast times:

• Updates on downstream processing strategy - We want to see SGQ define its downstream rare earths strategy. We are especially looking forward to an update in relation to the US. SGQ recently extended its agreement with US magnet producer REalloys, who SGQ is aiming to supply feedstock to (source). SGQ has confirmed there are talks with more downstream partners and offtake partners, plus multiple strategic investors.
• Work on development studies - SGQ has already commenced environmental, geotechnical and development studies. SGQ has economic studies due on its deposit in Q3-Q4 2026. (source)
• Pilot plant trials - SGQ has signed an agreement with CEFET to jointly collaborate on a new Pilot Plant trial that will build on the prior 9 month trial from 2012-13 which successfully produced rare earth product at over 99% purity and recoveries of 86% TREO.

The pilot plant is expected to begin in H2 and should allow for product samples to be produced for potential strategics/offtake partners.

SGQ is also participating in the “MAGBRAS Initiative” - a program that has major automakers like Stellantis working toward building Brazil’s first permanent magnet-making facility.

• Permitting - SGQ is targeting completion for permitting to progress throughout 2026 with 2 mining concession applications and 1 exploration permit.

(source)