Latrobe Magnesium (ASX: LMG) has taken out a $23 million loan to fund ongoing construction of its demonstration magnesium production plant in Victoria’s Latrobe Valley.
The company signed the documents this week with specialist lender RnD Funding Pty Ltd, with the first $10 million tranche scheduled for early next month.
A further $10 million will be drawn in September and a standby line of $3 million will be available early next year to cover any project cost overruns.
Latrobe said its cash at hand and future funding from the exercise of Latrobe options at $0.04 each will provide it with sufficient funds to complete construction of the 1,000 tonnes per annum plant in the first quarter of the new year.
Once the plant is operating to design specifications, the company intends to develop a commercial plant with a 10,000tpa capacity which is expected to generate around $110 million in revenue and $42 million in EBITDA (earnings before interest, taxation, depreciation and amortisation).
The commercial plant is expected to be one of the lowest carbon dioxide emitters across the global magnesium industry.
Latrobe said detailed design and engineering of the demonstration plant was on schedule, with progress moving beyond 36%.
A hazards and operability study (HAZOP) has been completed and regular risk reviews continue to ensure ongoing development of mitigation plans and management of risks.
3D modelling has advanced past the 30% design review milestone at this point of schedule and the procurement stage has commenced with equipment packages being developed.
In the past month, Latrobe has received tenders for the plant’s spray roaster and reduction furnaces, which have been identified as long lead-time items.
They represent 30% of total equipment purchases and orders will be placed with the winning tenderers before June.
Latrobe’s project team will issue equipment packages for briquetting plant, filtration, automation, thickeners, agitators and non-metallic tanks this week and is in the process of preparing and issuing an additional 20 equipment packages over the next month.
Civil contracts have been awarded for the construction of car parks and a security gatehouse to allow contractors to mobilise to site.
An earthworks civil package is under development for tender to the market.