Latrobe Magnesium moves closer to start of production at Stage 1 demonstration plant

Latrobe Magnesium (ASX: LMG) will progress its demonstration plant in Victoria’s Latrobe Valley towards continuous operation of magnesium oxide production in September, with revenue from sales expected in the near term.

The company completed the commissioning stages of the plant during the June quarter, successfully producing magnesium oxide with more than 80% purity to meet the required quality specifications.

Meanwhile, the plant construction is nearing practical completion and an official handover to operations personnel will transition the facility to continuous operations during which the company will target a production capacity of 1000 tonnes per annum.

Punch list items

A dedicated construction and commissioning team completed 164 of a total 180 identified punch list items during the quarter.

These included modifications to minor equipment and piping; installation of additional instrumentation; completion of access structures; dismantling of scaffolding; and other post-trial equipment replacements.

The remainder of the punch list — which includes warranty issues and improvements to the processing plant — is expected to be completed in the coming weeks.

Outstanding tasks include spray roaster insulation works; final spray roaster epoxy painting and coating; agitator replacement and optimisation; the installation of new recycle and bypass piping to optimise process efficiency; reconfiguration of piping to reduce the risk of blockages; labelling of valves, instrumentation and piping; and installation of additional instrumentation such as flowmeters and control valves to enhance operability.

The modifications are expected to rectify challenges encountered during the commissioning trial and enable more stable operations at the plant.

Employment opportunities

Latrobe has planned two forums to outline employment opportunities for the local Latrobe Valley community.

The company is proceeding with the recruitment of management personnel to ensure systems and processes are in place before the restart of operations.

Human resources works are expected to ramp up over the next four weeks to ensure the new team is onboard and trained in time for production to commence.

Plant funding

Capital costs for the demonstration plant will be partly funded by an $18 million raise during the quarter which took the form of a $12 million share placement and $6 million entitlement offer.

The placement saw the issue of 267 million shares at $0.045 each while the fully-underwritten offer issued a further 133 million shares.

Proceeds will also be used for research and development activities, operating and corporate costs and working capital.

Commercial plant sites

Latrobe has continued to investigate potential sites for a Stage 2 10,000tpa commercial plant.

A consultant has been engaged to perform a multi-criteria analysis (MCA) site location assessment to better determine the options, processes and timing involved in securing the optimal location.

Site selection is pre-requisite to commencing a feasibility study for the commercial plant.

Latrobe said it would explore a partial sale of land where the demonstration plant is located, as well as a sale-and-leaseback arrangement with the funds used to finance the feasibility study plus Stage 2 mine planning and test work.

In June, the company was granted access to 0.45 square kilometres of land by the Bintulu Development Authority in Malaysia for a Stage 3 100,000tpa international magnesium megaplant within the Samalaju Industrial Park in Sarawak.