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St George Mining Ltd: THE INVESTMENT CASE
INVESTMENT OVERVIEW

St George Mining flags nickel sulphide’s importance to electric vehicles

The company is addressing UK investors this week and Australian nickel market players later this month.
St George drills up nickel
INVESTMENT OVERVIEW: SGQ The Big Picture
St George has discovered nickel-copper sulphides on Australia's west coast

St George Mining Ltd (ASX:SGQ) highlighted the value of its nickel sulphide assets to the Australian market ahead of its LME Week appearance in London today.

The company’s executive chairman John Prineas will speak to Proactive Investors’ Stocktube presenter Andrew Scott later this week in the financial centre after fronting the European investment community today at the London Metals Exchange event.

READ: St George Mining reveals powerful conductors from downhole surveys

Later this month, the major shareholder and chairman will address at Australian Nickel Conference at the Pan Pacific Perth hotel in Perth on October 23.

St George shared its LME Week presentation with the market today, calling itself “Western Australia’s next big nickel sulphide story”.

The company said its nickel-copper sulphide discovery in WA, drilling to expand its resource potential and an upswing in the nickel price had led to a major re-rating of St George.

St George's assets northeast of the Western Australian Goldfields lie along the Ida Fault.

St George's assets northeast of the Western Australian Goldfields lie along the Ida Fault.

A nickel-copper sulphide discovery

St George called its Cathedrals Belt discovery northeast of Western Australia’s Goldfields at shallow depths “Australia’s latest nickel-copper sulphide discovery”.

The high-grade, polymetallic deposit was found in massive sulphide mineralisation just 30 metres from surface and also included cobalt and platinum group elements (PGEs).

A highlighted intersection included 7.5 metres grading 3.9% nickel, 1.74% copper, 0.12% cobalt and 3.32 g/t PGEs from 57.8 metres, including 3.15m at 6.36% nickel, 2.92% copper, 0.20% cobalt and 5.03g/t PGEs from 61.81 metres.

Cathedrals Belt is home to St George’s Stricklands, Investigators and Cathedrals discoveries at the Mt Alexander project which consists of five exploration licences granted 120 kilometres south-southwest of Agnew-Wiluna Belt which hosts many world-class nickel deposits.

Nickel-copper sulphides occur over a 4.5km strike of the Cathedrals Belt, with definition and deeper drilling underway.

READ: St George Mining shares ride higher on further high-grade nickel-copper hits at Mt Alexander

The Cathedrals, Investigators and Stricklands nickel-copper-cobalt-PGE discoveries are on an exploration licence held in joint venture by St George and Western Areas Ltd (ASX:WSA).

St George has 75% of the JV and is its project manager.

Western Areas will hold on to its 25% non-contributing interest until a decision to mine.

St George is undertaking another drilling program at Mt Alexander and raised $2.7 million from sophisticated and institutional investors in June for its December-half drilling efforts.

An electric vehicle

Demand for electric vehicle inputs

St George has flagged the importance of nickel sulphide — class 1 nickel — to producing electric vehicle (EV) batteries which could not be made with class 2, nickel pig iron inputs.

The company today highlighted an expected 1 million tonne deficit of nickel sulphide by 2025 would lead to an expected price pressure on the battery input.

Nickel prices closed down to US$12,539 a tonne last week.

BHP approved new nickel-mining developments in WA around the Diggers and Dealers Mining Forum conference in August.

The major miner expects 90% of nickel sulphide will be sold for use in batteries by next year to meet EV battery manufacturer demand.

READ: St George Mining drilling update confirms down plunge mineralisation

St George pointed to UBS’ Miner’s Price Review of June which argued demand for the batteries was emerging faster than had been expected while inventory levels fell which it argued indicated a “scramble for nickel metal”

The Western Australian company shared a number of articles by respected Western Australian business journalists Brad Thompson, in the Australian Financial Review, and Stuart McKinnon, in The West Australian, that highlighted efforts to meet future demand for nickel.

Award-winning journalist McKinnon’s coverage flagged mergers-and-acquisition activity and a project buy-up, with St George arguing these were evidence of efforts to secure nickel supply amid a tightening market.

The activity included US private equity player Black Mountain Metals’ significant buy into Poseidon Nickel Ltd (ASX:POS) (FRA:NYG1) and deal to snap up Panoramic Resources Ltd’s (ASX:PAN) (FRA:YM1) (OTCMKTS:PANRF) closed Landfranchi nickel mine near Kambalda in the west coast state for $15 million.

Black Mountain has an office in Perth’s CBD as it pursues class 1 nickel sulphide opportunities in WA.

St George had a drilling plan investors backed earlier this year.

St George's drill plan paid dividends.

Capital structure

St George’s top 10 shareholders hold 19% of the company, with its top 20 having 27%.

Directors have a 6% stake in the company which has 298,116,211 shares, according to the presentation it released today.

There are 24,579,714 listed options (ASX:SGQOB) in the company, which have a 20-cent exercise price and expire on September 30, 2020.

More than 3,500 shareholders have a stake in the company, including institutions in Australia and abroad, and high-net-worth and retail investors.

Among these are the company’s top shareholders — Impulzive with 4.5%, City Natural Resources (LON:CYN) (3%), chairman Prineas (4.4%) and Oceanic Capital (3%).

The company had a market capitalisation of $37.26 million on the Australian Securities Exchange today, closing the day at Friday’s 12.5-cent closing price after about 102,200 shares changed hands.

St George had $4 million cash on September 30.

Executive team and board

Chairman Prineas has more than 25 years experience in mining and the banking and legal sectors that serve the resources industry.

He was previously chief operating officer and Australia country head of Dresdner Bank in Sydney and began his career as a lawyer at Allen, Allen & Hemsley for clients and commercial transactions in Australia and the Asia-Pacific.

St George technical director Tim Hronsky has more than 25 years as a geologist in the international exploration and mining industry, 15 years of those with Placer Dome Inc.

Chartered accountant and non-executive director Sarah Shipway serves as St George’s company secretary and has a strong background in advising listed exploration companies.

READ: St George Mining resumes drilling at emerging Mt Alexander Project

Technical consultant Charles Wilkinson has 32 years experience as a mining industry geologist, including 16 years with WMC Resources where his roles included exploration manager for BHP snap-up’s nickel business in Australia.

Consultant Dr Jon Hronsky, the chairman of the Centre for Exploration Targeting in WA, also advises the company and was previously mineral exploration strategy-and-generative-services manager at BHP Billiton.

Nickel sulphide exploration geophysical consultants Newexco are also part of St George’s team of advisers, after being Sirius Resources NL’s advisers on Nova-Bollinger deposit and Western Areas consultants on the Spotted Quoll and Flying Fox deposits.

St George Mining executive chairman is speaking at LME Week this week and will give a presentation at the Australian Nickel Conference in Perth on October 23.

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