St George Mining (ASX: SGQ) has signed a deal with global service provider Shandong Xinhai Mining Technology & Equipment to co-develop the advanced Araxá niobium-rare earth elements project in Brazil.

Under the terms of the partnership, Xinhai will provide St George with advice on metallurgical testing, mineral processing options, plant design and project construction as part of a fixed-price engineering, procurement and construction (EPC) proposal.

It will also assist St George in arranging optimal, non-dilutive funding for the EPC contract, including exclusive distribution and marketing rights for 80% of the niobium offtake sold by St George into the Chinese market.

Fast-track project

St George executive chair John Prineas said the engagement of Xinhai would boost the company’s in-country team focused on fast-tracking the high-grade project.

“Xinhai has an impressive track record of delivering high-quality processing plants in expedited timeframes and with competitive pricing [and] its depth of expertise across the entire spectrum of mine development disciplines means it can design and deliver optimal project solutions,” he said.

Xinhai has completed more than 500 EPC contracts, many of which have featured mine-construction and -operation management services, while providing services to more than 2,000 mines in over 100 countries.

“Our ability to attract industry-leading partners such as Xinhai reflects the near-term development potential of the Araxá project and the favourable mining jurisdiction of Minas Gerais, which offers potential for expedited permitting approvals.”

Equity raising

Xinhai has also committed to investing $8 million in a $20m equity raising St George is launching in support of the project’s acquisition.

St George subsidiary Niobium Dragon agreed to acquire the Araxá project in August from US-based phosphate and speciality fertiliser company Itafos Araxá Mineração e Fertilizantes SA.

Araxá is backed by a long history of commercial niobium production in the region, as well as access to infrastructure and a local workforce, plus in-country management and government support for expedited project approvals.