Latrobe reports on-track development of demonstration magnesium plant
Once the 1,000tpa magnesium demonstration plant has successfully operated, Latrobe will expand capacity to 10,000tpa.
Activities at Latrobe Magnesium’s (ASX: LMG) proposed demonstration plant in Victoria remain on schedule with over 50% of total engineering completed and half of the equipment packages tendered to the market.
The company’s June quarterly report confirmed process engineering is now 75% complete, with deliverables such as piping and instrumentation diagrams being continually revised to incorporate updated vendor information.
Civil engineering teams are finalising earthworks and concrete drawings as part of the civil works package which is due to go to tender, while electrical and instrumentation teams are preparing equipment packages for switch rooms and control system hardware.
Latrobe has 18 major equipment packages issued to the market and another seven in development, representing 66% of packages to be tendered.
Supply chain disruptions
Latrobe reported its demonstration plant project is facing the same challenges which are impacting industry as a whole, namely supply chain disruptions brought about by the global pandemic, a shortage of personnel, and increasing costs as a result of inflation and instability in Europe.
The company is trying to minimise the impact by moving fabrication activities to regions where resources are more readily available.
The spray roaster package is being shifted from Europe to Vietnam, to recover schedule and mitigate inflationary cost pressures, while work on the second reduction furnace will be relocated to Malaysia.
Additional inspection teams will be put in place at the new locations to ensure quality is maintained and the project remains on track and budget.
Project funding
In June, Latrobe drew down the first $10 million advance of a $23 million project loan from specialist lender RnD Funding.
The drawdown allowed it purchase the spray roaster and reduction furnaces, which represent approximately 33% of direct equipment purchases for the project.
The second $10 million advance is due to be drawn by September.
Pre-feasibility study
In July, Latrobe started a project pre-feasibility study for a second magnesium metal project with a production capacity of 100,000 tonnes per annum.
The two-part study has been awarded to global mining consultant Bechtel, and will involve evaluation of investment options to maximise value and a forward work plan for the feasibility study phase.
The first part of the study is expected to be completed by the end of August, with the second part due by December.