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Latrobe Magnesium will use $4.2 million from placement to operate demonstration plant

Published 24/05/2023, 12:26 pm
Updated 24/05/2023, 01:00 pm
© Reuters.  Latrobe Magnesium will use $4.2 million from placement to operate demonstration plant

© Reuters. Latrobe Magnesium will use $4.2 million from placement to operate demonstration plant

Latrobe Magnesium Ltd (ASX:LMG) will use $4.2 million raised in a placement to help operate its 1,000 tonnes per annum magnesium demonstration plant under development in the Latrobe Valley of Victoria.

The placement to sophisticated, professional and institutional investors was strongly supported and the company will issue 70 million ordinary shares to investors at an issue price of 6 cents on May 29, 2023.

These shares will be issued within the company’s existing capacity under the ASX Listing Rule 7.1.

Patented extraction process

Latrobe Magnesium is developing a magnesium production plant in the Latrobe Valley using its world-first patented extraction process.

It intends to extract and sell magnesium metal and cementitious material from industrial fly ash, which is currently a waste stream from the Yallourn brown coal power generation.

A feasibility study has validated LMG's combined hydromet/thermal reduction process that extracts the metal.

Production expected next quarter

Construction started on site in July 2021 on the initial 1,000 tonnes per annum plant and production is expected by September 30, 2023.

Most of the equipment is expected to be on-site by June 30, 2023, with dry commissioning completed.

Wet commissioning followed by load commissioning and then full commissioning will be completed in the third quarter, finishing on September 30, 2023.

Plant expansion

LMG plans to expand this plant to 10,000 tonnes per annum shortly thereafter with production expected 15 months later.

The current budget estimate for the demonstration plant is $41.7 million and as of May 23, 2023, the company had spent $18.4 million. The remaining cost of $23.3 million will be funded as follows:

LMG intends to use the $4.3 million surplus from this budget for working capital to operate the demonstration plant and provide funding for geotech work required to be carried out by GHD on the Yallourn landfill.

The GHD work is necessary to determine a JORC reserve on the amount of fly ash that can safely be removed from the Yallourn landfill.

This resource calculation will determine LMG’s ability to increase the scale of production of its expanded 10,000 tonnes per annum plant.

The funding will allow LMG to start the planning and approval processes for the expanded plant.

Sufficient fly ash

LMG believes that Yallourn will produce sufficient fly ash from now until closure in 2028 to operate a 10,000 tonnes per annum magnesium plant for 20 years.

Further plant capacity expansion will be determined once the body of geotech works has been carried out later this year.

The plant will be in the heart of Victoria’s coal power generation precinct, providing immediate access to feedstock, infrastructure and labour.

Environmental benefits

This project is at the forefront of environmental benefit – by recycling power plant waste, avoiding landfill and is a low CO2 emitter. LMG adopts the principles of an industrial ecology system.

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.

Read more on Proactive Investors AU

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