Latrobe Magnesium Ltd (ASX:LMG, OTC:LTRBF) is set to receive what it describes as a “transformational” capital injection, with firm commitments to raise $12 million through an institutional placement and a further $6 million through a non-renounceable entitlement offer.
Funds will be used for the final structural works and commissioning of the company’s Demonstration Plant in the Latrobe Valley of Victoria, Australia, using its patented magnesium extraction process.
The company intends to produce magnesium metal and cementitious material from industrial fly ash, which is currently a waste resource from Yallourn brown coal power generation.
"Strong support"
“We are very pleased with the strong support for this equity raising, evidenced by demand from both the domestic and international markets,” Latrobe Magnesium managing director David Paterson said.
“It is pleasing to see the market recognise the importance of LMG as the world’s first producer of magnesium from brown coal fly ash.
“The support from both new and existing investors is a testament to our team, patented process and the positive macroeconomic outlook for magnesium.
“This equity raise will help fund our Demonstration Plant to produce a magnesium metal and saleable by-products, demonstrating the commerciality of our full flowsheet.
“In conjunction with the final engineering of the Demonstration Plant to produce magnesium metal ingots, we are advancing plans surrounding the 10,000-tonne-per-annum Commercial Plant, with a bankable feasibility study to commence shortly which will inform the Final Investment Decision planned for calendar year’s end.”
Funding from the capital raise will also support the final engineering effort, ahead of achieving steady-state magnesium metal production of 1,000 tonnes per annum, and the research and development currently being undertaken alongside the CSIRO.
Diversifying register
“The placement has also been a fantastic opportunity to diversify our shareholder register ahead of a significant period of growth for the company.
“The next 12 months promise to be an exciting time for us, and we are very appreciative of the continued support of our existing shareholder base and, therefore, want our existing retail shareholder base to have the chance to participate on the same terms as institutional investors through the entitlement offer.”
The offer was also supported by LMG’s own directors and management, who collectively subscribed for $650,000 new shares in the placement, subject to shareholder approval.