SGO

Hot Copper sent out a blast about Saint George Mining (ASX: SGQ) so I decided to have a look. The blast was about their latest results with SGO trumpeting their rare earths and Niobium find and comparing it to Mt Weld (Australia) and Mountain Pass (California, right next to Dateline Resources).

On the face of it, the results look amazing, but the share price didn't budge. In fact, it even dropped a smidge yesterday. What's going on?

Well, niobium isn't a rare earth, but it is used in superalloys, so their announcement was confused and confusing. This doesn't reflect well on management, nor on the company that wrote the announcement.

A little more research shows that the find was in the very fast-moving REE district in Brazil, where there is yet to be a processing facility, so shipping is a serious issue. And while a facility is being built, there is a real lack of expertise to run it. Almost all of that expertise is at Mt Weld, Mountain Pass and China.

As the real estate guides say: Location, location, location.

Then I went across to WA1 resources (ASX: WA1) as they also have niobium. Here's the thing: SGO has described their find as world-class at 0.75% niobium, and but may be. BUT WA1 has been infill drilling (drilling between existing deposits) and uncovered results that go up to more than 9% niobium.

Ok, now I'm getting a handle on all this.

Coolio. That's why the share price didn't move, the announcement focused on the wrong rare earths and just didn't excite anyone outside existing shareholders. One of these shareholders suggested that SGQ was the next WA1, but basic research disputes that. 

The grades (as mentioned) are massively different.

SGQ has over 3 billion shares on offer, WA1 has only 74 million. Ona share-for-share price comparison, that puts SGQ shares at 38 cents (don't say WOW yet). Now adjust by a (conservative) factor of 4 to allow for the difference in grades and SGQ is a 9.5 cents, and yesterday their share price was 9.7 cents (I checked after I did the calculation).

WA1 has very strong Australian government support. SGQ is just starting that journey.

It is important to note that even after WA1's stunning results were announced, their share price didn't move.

Perhaps niobium is not where punters should be. Perhaps the announcement should have focused on the other rare earths instead. And the blame for that error lies firmly with management.