Latrobe Magnesium Ltd (ASX:LMG) is transitioning from engineering and design to construction at its demonstration plant in Victoria's Latrobe Valley, while simultaneously implementing a magnesium oxide-based strategy that will bring production forward, supported by a Memorandum of Understanding (MoU) for product sales.
Progress has continued on the plant thus far with no health, safety or environmental incidents to date.
The company expects to receive $12.6 million for the year (ending June 30) in research and development rebates and has signed supply agreements with Coregas, part of the Wesfarmers (ASX:WES) Group of companies, for oxygen, argon and carbon dioxide supply, and Origin for its LPG needs.
Origin will also design and install a new storage facility (scheduled for completion in Q4 2023) and will exclusively manage and supply all LMG’s LPG requirements throughout the project.
Magnesium oxide strategy
LMG cited several challenges in completing the demonstration plant last month, including unprecedented cost pressures, a maintenance shutdown of a local power station and restricted labour resources.
In response to these challenges, the company has pivoted to prioritising equipment needed to produce magnesium oxide (MgO) as an initial product.
As the intermediate product produced before magnesium metal, MgO is a saleable product which provides the company with an opportunity to prove its patented process and generate revenue while the rest of the plant is commissioned.
The company is therefore targeting the delivery of ash handling, leaching, spray roasting and magnesite areas with slight modifications to flow sheet and installations to facilitate said delivery.
“This strategy will demonstrate LMG’s unique, world-first hydromet process can be operated successfully and prove to shareholders, investors, community and the government, and all stakeholders the true value of LMG’s intellectual property,” the company said in a statement.
Construction progress
LMG says it remains on schedule as per the previous month’s update but continues to encounter challenges that must be managed as they occur.
The company is still confident it will be able to produce first magnesium by March 2024, despite the switch to initial MgO production.
LMG has made solid progress in its civil construction goals:
- The filtration area is now complete
- The furnace automation area will be complete next month, which will be followed by rebar, formwork and pedestal formation.
- Remaining civil work involves small miscellaneous concrete foundations and pedestals.
LMG selected Mechanical Maintenance Solutions for its structural, mechanical and piping contract.
Up to 40 workers have been mobilised to site with further ramp-up expected for the remainder of the year.
Work is focused on facilitating assembly of the roaster vessel. Agitators have also been installed in the hydromet tanks and further work is being completed on piping, cable and supports through the Hydromet areas.
Finally, with the switch to initial MgO production, LMG is initiating a recruitment campaign to bring the initial operations workforce on board by the end of the year.