Clean metals producer Latrobe Magnesium (ASX: LMG) has secured $3 million through a share placement to fast-track design and engineering work on a demonstration magnesium plant in Victoria’s Latrobe Valley.
The oversubscribed capital raising will see a total of 120 million ordinary shares issued to sophisticated, professional and institutional investors at a price of $0.025 each.
Investors will also receive a total 60 million attaching options exercisable within the next two years at $0.04.
The raising was managed by Melbourne boutique firm Peak Asset Management.
Design and engineering work
Funds from the raising will be used to finish design and engineering services for the plant, which are being conducted by engineering, procurement and construction management contractor Mincore.
Latrobe has spent approximately $2.5 million to date on the demonstration plant.
The remaining $42.5 million capital cost will be funded by the raising and a combination of cornerstone investors and a state government grant (totalling $14 million); research and development rebates and project financing ($23.1 million); and the anticipated exercising of the options in 2023 ($2.4 million).
Proceeds from the raising will also be put towards completion of an early works program at the Tramway Road site and allow Mincore to prepare major equipment packages for tender early next year.
Latrobe is developing a 3,000 tonnes per annum production plant using a world-first patented extraction process designed to extract and sell magnesium metal and cementitious material from industrial fly ash, which is currently a waste stream from the nearby Yallourn brown coal power station.
The company has completed a feasibility study validating its proprietary hydromet-thermal reduction extraction process and construction is expected to start in the new year, with first production targeted for 12 months later.
Once the plant has been in operation for a year, work will commence on expanding its capacity to 40,000tpa.
Latrobe plans to sell the refined magnesium under long-term contracts to customers in Australia, Japan and the US.
Two cornerstone investors have already been locked in to receive magnesium and supplementary cementitious materials samples within the next month so they can finalise their investment in Latrobe before the new year.
The new plant is expected to help position Latrobe as a low carbon dioxide emitter and low-cost supplier of magnesium.
It will capitalise on its status as the only ASX-listed company with exposure to the metal.
Green metal market
Magnesium (commonly referred to as green metal) is the lightest of all structural materials and the eighth most abundant element on earth.
It is fully recyclable and has the best strength-to-weight ratio of all common structural metals, which has seen it increasingly used in the automotive, aviation, industrial and technology industries.
The magnesium produced by Latrobe will be 75% lighter than steel, 33% lighter than aluminium and stronger than both.
Latrobe said the product would be able to deliver superior dimensional stability as well as high impact and dent resistance; high dampening capacity and low inertia (making it suitable for parts that undergo frequent and sudden changes in motion direction); and better corrosion resistance than carbon, steel and some aluminium alloys.
Currently, Australia imports all of the 8,000t of magnesium it utilises per year in the manufacture of car parts, laptop computers, mobile phones and power tools.