Latrobe increases project financing facility to fund first year of magnesium demonstration plant
Latrobe’s 1,000tpa magnesium demonstration plant in Victoria is currently 30% complete.
Latrobe Magnesium (ASX: LMG) has negotiated a $3 million increase to its project finance facility, which takes the total loan to $26 million for its magnesium demonstration plant.
This $3 million in additional funding will provide working capital for the first year of operations at the 1,000 tonne per annum plant in Victoria.
Latrobe has also negotiated a more flexible drawdown profile under the facility to match projected cash flow requirements and help fund completion of the plant.
The change is expected to result in significant interest savings.
Share issue
Latrobe will issue 15 million ordinary shares under the facility as consideration for the lender agreeing to not change the interest rate despite a number of increases in the official rate since the facility was originally secured.
Consideration will also cover the lender’s agreement to not charge commitment fees on the undrawn amount of the facility.
Facility advances
Latrobe’s lender advanced $10 million of the funding facility in June 2022, with the remaining amount expected to be drawn this year.
The company will be issued with $7 million before month end, while three tranches of $3 million each will be drawn between May and August.
An initial amount of $10 million was due to be drawn by September 2022 but was deferred to match project expenditure, saving the company around $750,000 in interest.
Research rebate
Latrobe also claims a rebate on capital and certain operating costs of eligible plant expenditure for research and development purposes.
The company expects to claim around $17 million for 2023 and another $5 million for 2024, and will use the funds to repay the principal of its funding facility.
Approximately $1.5 million in rebates was been paid against the facility in 2022.
Construction progress
Latrobe has confirmed construction of the demonstration plant project is 30% complete overall, with engineering nearing 80% completion.
A total of 25 purchase orders have been issued, representing over 80% of all equipment packages.
Tenders for the procurement of condenser equipment and accessories, magnesium crown handling, compressed air systems, instrumentation and manual valves are expected to be finalised in the coming weeks.
Equipment purchase orders have been issued to preferred manufacturers in low-cost countries where additional value add could be secured with equipment packaged together and modularised off-site.