Latrobe Magnesium Limited (ASX:LMG) has inked project loan documentation to the tune of $23 million with the initial drawdown of $10 million due on June 11 and funds will be channelled towards the continued construction of LMG’s demonstration plant.
Together with cash on hand and future funding from the exercise of LMG options at $0.04, the company says it has sufficient funds available to complete the construction of its demonstration plant.
Loan terms
The term of the loan is five years from the date of the first drawdown with a 12% per annum interest rate to October 31, 2023.
LMG intends to repay the debt before October 31, 2023, from the proceeds of R&D refundable tax offsets in the vicinity of $15 million and by refinancing the residual amount of the facility.
Production targeted for 2023
Construction is underway and the plant is on track to go into production in the first quarter of 2023.
Once the demonstration plant is operating in accordance with its design specifications, LMG hopes to develop a commercial plant with a capacity of 10,000 tonnes per annum, which is expected to generate in the order of $110 million in revenue and EBITDA of $42 million.
The commercial-scale plant will be one of the magnesium industry’s lowest carbon emitters in the world.
Project activities proceed apace, with design and engineering progressing to date beyond 36%, a milestone for the company, and tenders in for key long-lead-time equipment. The company expects to award contracts within the next two weeks.
Construction milestones
Detailed design and engineering is progressing on schedule. A Hazard and Operability Study (HAZOP) has been completed and regular risk reviews continue, ensuring ongoing development of mitigation plans and management of risks.
The company’s 3D modelling is well underway and engineering is in the procurement stage.
LMG has in the last month received tenders for the long-lead-time equipment items, including the spray roaster and reduction furnaces, which represent 30% of the total equipment purchases.
Presence in the region
Development of LMG’s stakeholder management and community engagement plan has commenced with a ramp up of communication with local stakeholders underway.
LMG has increased its presence in the community in anticipation of mobilising to site with sponsorship support recently provided to the local Morwell East Football Netball Club.
The company is looking forward to continuing to engage with the Latrobe Valley community as it builds a permanent presence in the region.