Confirmation from the Australian Tax Office (ATO) that Latrobe Magnesium Ltd (ASX:LMG, OTC:LTRBF)’s research and development tax rebate of $12.5 million has been approved is set to improve the company’s balance sheet significantly.
The rebate for the year ending June 30, 2023 will be used to repay LMG’s debt liabilities.
LMG also estimates its research and development tax rebate for the year ending June 30, 2024 to be in the vicinity of $16 million.
The funds are expected to allow the company to clear all remaining debt upon receipt of the 2024 rebate.
Rebate for demonstration plant
LMG’s demonstration plant received two advance rulings from AusIndustry, confirming eligibility for a research and development tax rebate.
The second advance ruling, for LMG’s acid hydromet system, expired in 2022. The first was for LMG’s alkali approach.
In 2023, AusIndustry verified that LMG’s ongoing activities aligned with the original advance finding, supporting the registration of LMG’s rebate claim.
By June 30, 2023, LMG expended $22.8 million on the demonstration plant, expected to reach $50 million by June 30, 2024, with a rebate rate of 48.5%. additional activities are estimated to earn a $1.2 million rebate, and equipment leasing in November 2023 is expected to add $2 million, totalling an estimated $16 million rebate for 2024.
Repaying debt facility
As of June 30, 2024, LMG’s debt to R&D funding is estimated at $26 million.
The 2023 and 2024 tax rebates are expected to fully repay this debt, while LMG anticipates a $5 million rebate for the 2025 financial year.