Latrobe Magnesium Ltd (ASX:LMG) has negotiated a $3 million increase to its project finance facility, bringing total capital available to $26 million and providing additional working capital for the first year of operation of its planned demonstration plant.
LMG was also able to negotiate a more flexible drawdown profile under the facility to better match projected cashflow requirements, which the company expects to result in “significant” savings.
Latrobe will issue shares under the facility as consideration for the lender agreeing to hold a constant interest rate for the facility and agreeing not to charge commitment fees on the undrawn amount.
Magnesium extraction demonstration plant
Latrobe is developing its magnesium demonstration plant to use its world-first patented extraction process.
LMG intends to extract and sell magnesium metal and cementitious material from industrial fly ash, which is currently a waste resource from brown coal power generation at the Yallourn plant in Victoria.
Due to the innovative nature of its project, Latrobe expects to receive a large Research and Development (R&D) rebate upon completion of the plant at the end of 2024 in the order of $22 million, which would cover most of the current finance facility.
The demonstration plant is about 30% complete overall, with 83% of the equipment being awarded to contractors for delivery and a further 16% already tendered and under evaluation.
The company expects all equipment to be onsite by June 30 this year, at which point the plant will be dry commissioned.
Creating domestic supply
LMG plans to sell the refined magnesium under long-term contracts to USA and Japanese customers. Currently, Australia imports 100% of the 8,000 tonnes annually consumed.
Magnesium has the best strength-to-weight ratio of all common structural metals and is increasingly used in the manufacture of car parts, laptop computers, mobile phones and power tools.
LGM is targeting high environmental returns for the project by recycling power plant waste and avoiding landfill as a low CO2 emitter.
The company is basing its designs on the principles of industrial ecology, which seeks to create something closer to a circular economy by optimising the total materials cycle from virgin material to finished material, to component, to product, to waste product and to ultimate disposal.