St George Mining (ASX:SGQ) is set to raise AU$20 million via the placing of 1 billion shares priced at AU$0.02 apiece, according to a Tuesday filing with the Australian bourse.

Participants will also receive one free attached option exercisable at AU$0.04, expiring two years after the date of issue, the filing said.

Proceeds will be used to acquire and drill the Araxa project located in Brazil, as well as for costs related to completing the acquisition, the filing added.

The acquisition of the project is expected to close by early March, following a general meeting of the company's shareholders in mid-February, the company said.

Shares of the mining firm plunged 20% on market close after earlier hitting a six-month low.