Clean metals producer Latrobe Magnesium (ASX: LMG) has announced its intention to buy a property in Victoria that it has been leasing for the last eight months for $4.5 million.
The company today said it has exercised its option to buy the 11-hectare property at 320 Tramway Road, Hazelwood North from DG & J Di Fabrizio Steel Fabrications for the fixed price agreed to in its current three-year lease.
Latrobe commenced the lease on 1 April 2021 and noted the option to acquire the property during this lease period in its initial announcement.
The company told the market today that the Di Fabrizio family has accepted that the purchase consideration will be paid by $2.25 million in cash and $2.25 million in Latrobe shares at $0.10 each, equating to 22.5 million Latrobe shares.
The timing for the issue of the shares will be subject to Latrobe refreshing its issuing capacity at its upcoming annual general meeting in January 2022.
Proximity to infrastructure
The Hazelwood North property contains structures spanning 14,000 square metres in the form of an administration building and several large industrial buildings that are 12m high.
Latrobe said the structures are “ideal” to house the company’s magnesium demonstration plant as well as its future expansions.
The site is located close to rail, the freeway, gas and water pipelines, in addition to a new solar power development which has been passed by the Latrobe City Council and is in the permitting stage with the Victorian Government.
“Given Latrobe can connect to this solar power development, its magnesium and other products will produce zero or very little carbon emissions,” Latrobe chief executive officer David Paterson said.
“The purchase of the site allows the company to plan its future expansions, obtain appropriate business insurance, save rent through the construction phase and benefit from its own site improvements.”
Mr Paterson also thanked the Di Fabrizio family for their “patience and support during the last nine years required to develop the Latrobe Magnesium project”.
Latrobe is planning to construct a 10,000-tonne-per-annum magnesium processing demonstration plant at the Hazelwood North property with production anticipated in 2024.
The company has future plans to expand the plant to 40,000tpa by 2025.
Next year, it will also conduct a pre-feasibility study on a 100,000tpa magnesium plant, recycling ferro nickel slag.
Last month, Latrobe announced it had completed an $11.5 million placement aimed at fast-tracking construction of the demonstration plant.
The company also plans to acquire $20 million in debt funding for the project.