Latrobe Magnesium Ltd has negotiated a reduction in the interest rate to 12% on its $23 million project finance facility with RnD Funding Pty Ltd following the acquisition of 320 Tramway Road, Hazelwood North.
The reduced interest rate on the finance facility is a function of the additional security available to RnD Funding following the Tramway Road property purchase for $4.5 million.
Depending on the timing and amount of research and development (R&D) tax refunds, the effective interest rate on the project finance facility to October 31, 2023, may be closer to 10%.
Loan repayments
LMG is currently budgeting loan repayments from R&D tax refunds arising under its R&D tax incentive entitlements, in the order of $12-$15 million in the period to October 23, 2023, with no early repayment penalties.
Refinancing
Whilst the legal term of the project finance facility remains five years from the date of the first drawdown, LMG intends to refinance the remaining balance of the loan after repayments from R&D tax refunds, as soon as it is cost-effective to do so.
Based on current funding indications, LMG has received, LMG expects it will be able to refinance the remaining balance of the debt facility around October 2023 at an interest rate of circa 6% per annum, once confirmatory operating data from its 1,000 tonnes per annum initial plant has been generated over a six-month period.
Latrobe’s plant
LMG is developing a magnesium production plant in Victoria's Latrobe Valley using its world-first patented extraction process to extract and sell magnesium metal and cementitious material from industrial fly ash, a waste stream from the Yallourn brown coal power generation.
LMG has completed a feasibility study validating its combined hydromet/thermal reduction process that extracts the metal.
Construction is estimated to start on site on its initial 1,000 tonne per annum magnesium plant in first quarter of 2022 with production commencing up to 12 months later in the fourth quarter of 2022.
The plant will then be expanded to 10,000 tonnes per annum magnesium shortly thereafter.
Further plant capacity expansion will be considered once the 10,000 tonnes per annum is operating successfully.