Latrobe Magnesium Ltd (ASX:LMG, OTC:LTRBF) has raised A$3.06 million in a placement to sophisticated and professional investors with funds to provide working capital to operate the 1,000 tonnes per annum magnesium demonstration plant in the Latrobe Valley of Victoria.
Funds will also ensure that there are no further delays in the construction of the demonstration plant and the commissioning of its magnesium oxide production.
61 million shares to be issued
The placement will see the company today issue a total of 61 million ordinary shares to investors at an issue price of A$0.05 with these shares to be issued within the company’s existing capacity under the ASX Listing Rule 7.1.
Demonstrating their confidence in the company’s magnesium strategy, directors and senior management have subscribed for A$700,000 of the total A$3.06 million shares.
These shares will not be issued to directors until they are approved by shareholders at the company’s next general meeting.
Plant budget
LMG’s current budget estimate for the 1,000 tonnes per annum demonstration plant is A$41.7 million.
As at December 20, 2023, the company had spent A$37 million on the plant with the remaining cost of A$4.7 million to be funded as follows:
LMG said that the surplus A$3.5 million would provide working capital to operate its demonstration plant at which commissioning is targeted to commence at the end of next quarter.
The last draw of the A$3 million of project finance is only capable of being drawn once the ATO has paid the 2023 rebate to LMG’s financier.
About the plant
Latrobe Magnesium is developing a magnesium production plant in the Latrobe Valley using 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 Yallourn brown coal power generation.
Construction has started on the initial 1,000 tonnes per annum magnesium plant with a commercial plant to then be developed with a capacity of +10,000 tonnes per annum magnesium.
Environmental benefits
LMG’s project is at the forefront of environmental benefit – by recycling power plant waste, avoiding landfill and as a low CO2 emitter. As such, LMG adopts the principles of an industrial ecology system.
The company plans to sell the refined magnesium under long-term contracts to USA 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.