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Latrobe Magnesium advances magnesium demonstration plant development aided by Mincore and CSIRO

Latrobe's demonstration plant development is progressing well, made more relevant by magnesium supply shortages caused by Chinese policy crackdowns. The company has moved to bring forward expansion of the production plant, due to the current hightened state of the magnesium market.

Latrobe Magnesium advances magnesium demonstration plant development aided by Mincore and CSIRO

Latrobe Magnesium Limited (ASX:LMG) has made broad progress developing its magnesium demonstration plant in partnership with Mincore engineering consultants, completing early site works and continuing to dial-in the design and engineering aspects with the help of Mincore and the CSIRO.

Alongside aiding in the design of the plant, Mincore has commenced the tendering of the smelter equipment package to the market, entering discussions with five pre-approved companies.

Engineering works

Mincore and LMG have awarded early site works for fencing, surveying, the reinstatement of electrical works and the refurbishment of the administration building at 320 Tramway Road. These works have now all been completed.

Mincore has been supporting LMG alongside CSIRO as the company tests new technologies to improve the existing processes, build prototypes and complete plant trial runs with varying operating parameters and conditions.

Company funding

During the last quarter, Latrobe reduced the capital cost estimate of its 1,000 tonne per annum demonstration plant to $39 million. The project finance facility has a $3 million standby facility should the capital cost exceed the estimate.

The remaining cost also includes a $3 million contingency. The extra funds will be used for working capital and to assist with the financing of the studies required for the 10,000 tonnes per annum and 100,000 tonnes per annum plants.

In the quarter LMG received a research and development tax rebate of $814,413. The company also raised $14.5 million over two heavily oversubscribed placements, leaving the company with just over $10 million in cash and about seven quarters worth of available funding.

China supply squeeze

On September 17, 2021, Chinese authorities ordered the closure of 18 magnesium plants in Shaanxi, with a further 30 other plants reduced to 50% capacity from September 17 to the end of December 2021.

Shaanxi produces approx. 65% of the world’s production, meaning that the supply of magnesium to the rest of the world was severely affected.

Consequently, the magnesium price trebled, and magnesium users have been looking for alternative major suppliers, which currently do not exist.

Due to this situation, LMG has opted to bring forward the development of its 100,000-tonne-per-annum plant using ferro nickel slag as its feedstock.

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