Why is this ASX mining stock soaring 30% today?

st George Mining Ltd. Stocks (ASX:SGQ) are having a great session on Tuesday.

In early trade, the ASX mining stock climbed more than 30 per cent to a 52-week high of 4.5 cents.

Why is this ASX mining stock soaring?

Investors rushed to buy shares of the mining exploration company on Tuesday after it announced a promising acquisition.

According to the statement, St George Mining has entered into a binding conditional agreement to acquire Itafos Araxa Mineracao E Fertilizers for a total consideration of $21 million. It owns the advanced Araxa niobium and rare earth elements (REE) project in Minas Gerais, Brazil.

The company said the Araxa project is immediately adjacent and located in the same carbonatite complex as the CBMM niobium mine which produces approximately 80% of the world’s niobium.

Niobium is an essential metal with unique properties that make it critical to the global transition to a low-carbon economy.

The main 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 mainly used as a microalloy in the steel industry to improve the mechanical properties of steel. But there is also niobium pentoxide (Nb2O5), which WA1 highlights as a key growth market.

“A great opportunity”

John Prineas, Executive Chairman of St George Mining, said he was very pleased with the agreement. He said:

The Araxa Project is located in the global ‘vicious circle’ of niobium production and represents a tremendous opportunity for St George to become a global player in the niobium market. Significant high-grade niobium mineralisation has already been discovered at the project – with over 500 intercepts grading greater than 1% niobium – providing a strong basis for St George to rapidly progress towards defining potential resources. In addition to niobium, high-grade rare earth mineralisation has been confirmed by drilling over a wide area.

Solid drilling results

The ASX mining stock has revealed that historical drilling at the Araxa project has defined extensive high-grade niobium, REE and phosphate mineralisation.

This includes over 500 high-grade niobium intercepts, as well as ultra-high grades up to 8% Nb2O5, 33% TREO and 32% P2O5.

It is important to note that the mineralization starts from the surface and is open in all directions.

In light of this, management believes that there is “an exceptional opportunity for St George to define a globally significant niobium-REE resource.”

Capital raising

St George has disclosed that it has received firm commitments from investors to raise A$21.25 million in new funding for acquisition costs, exploration expenditure and working capital.

The funds are being raised at a paltry 2.5 cents per new share, representing a 44 per cent discount to the ASX mining stock’s intraday high on Tuesday.