Latrobe Magnesium Secures Transformational A$18M Equity Raising

Latrobe Magnesium Limited (ASX: LMG) announced a transformational A$18 million equity raising on 30th May 2024, securing firm commitments from several new and existing institutional and professional investors. This pivotal move is set to advance LMG’s pioneering project of producing magnesium from brown coal fly ash, positioning it as a key player in the energy sector.

Equity Raising Details

Latrobe Magnesium (LMG) has raised A$12.0 million through an institutional placement and an additional A$6.0 million via a fully underwritten entitlement offer. The funds will be crucial for final structural works and commissioning of the Demonstration Plant, finalizing engineering for steady-state 1ktpa magnesium metal production, and ongoing R&D efforts with CSIRO.

Placement and Entitlement Offer Details

The Placement involves issuing approximately 267 million new shares at $0.045 per share, representing a 19.6% discount to the last traded price. The Entitlement Offer, fully underwritten by Ord Minnett, will also offer shares at the same price and aims to raise A$6.0 million. Notably, LMG’s directors have committed A$500,000 to the placement, demonstrating strong insider confidence in the company's future.

Key Dates (Source: LMG ASX Announcement)

Here's a quick rundown of the key dates related to this equity raising:

- Trading Halt: 28 May 2024

- Trading Resumes: 30 May 2024

- Record Date for Entitlement Offer: 6 June 2024

- Entitlement Offer Opens: 12 June 2024

- Entitlement Offer Closes: 3 July 2024

Strong Market Support

David Paterson, Managing Director of LMG, expressed his excitement over the robust market support for this equity raising. "We’re thrilled to see both domestic and international markets recognizing the potential of LMG as the world’s first producer of magnesium from brown coal fly ash. The strong backing from investors underscores the confidence in our team, patented process, and the promising macroeconomic outlook for magnesium."

Source: $LMG ASX Announcement

Commercial Plant Progress and Investment Highlights

Commercial Plant Progress: LMG has commissioned a 1ktpa Demonstration Plant, with plans to advance to a 10ktpa Commercial Plant, backed by offtake agreements for 100% of its capacity. The company is also looking ahead to develop a 100ktpa plant in Sarawak, Malaysia, benefiting from the region's low-cost and renewable energy resources.

LMG isn't just stopping at magnesium. The company plans to produce other valuable products from its feedstock, including supplementary cementitious materials (SCM), iron oxide, agricultural lime, and char. These additional products are expected to generate about 25% of the company's revenue, significantly de-risking LMG’s 'life-of-mine' revenue and turning it into a multi-commodity producer with a diverse customer base, all at no incremental cost of production.

Magnesium is recognised as a critical mineral by the governments of Australia, the USA, Japan, the UK, and the EU. In 2022, China was responsible for over 90% of the global magnesium supply, creating a significant concentration risk. The global magnesium market is forecast to grow rapidly through to 2032, driven by demand from multiple sectors, particularly the auto-manufacturing industry, where magnesium helps reduce vehicle weight and emissions. Western governments are strongly supporting the onshoring of magnesium manufacturing.

In May 2024, LMG successfully produced Australia’s first sustainable MgO using its unique hydromet processes. Following this milestone, LMG has commissioned its 1ktpa Demonstration Plant, which will be followed by a 10ktpa Commercial Plant, with offtake agreements already signed for 100% of its capacity. Beyond that, the company plans to develop a 100ktpa plant in Sarawak, Malaysia, leveraging a low-cost and renewable energy location.

Strategic Use of Funds

The capital raised will drive the completion of the Demonstration Plant, enabling the production of magnesium metal and saleable by-products. This initiative will showcase the commercial viability of LMG’s process and support the final engineering phase for producing magnesium metal ingots. Additionally, plans for a 10,000tpa Commercial Plant are progressing, with a Bankable Feasibility Study set to begin shortly, guiding the Final Investment Decision expected by year-end.

About Latrobe Magnesium

Latrobe Magnesium is leading the way in innovation with its magnesium production plant in Victoria's Latrobe Valley. Using a patented extraction process, LMG aims to extract and sell magnesium metal and cementitious material from industrial fly ash, a by-product of Yallourn brown coal power generation. The demonstration plant is on track to be fully commissioned in the third quarter of 2024, with plans for a commercial plant with a capacity of 10,000tpa magnesium by early 2026.

Conclusion

Latrobe Magnesium’s equity raising marks a significant milestone for the company, providing the necessary funds to advance its innovative magnesium production project. This not only highlights LMG’s commitment to sustainable practices but also positions it as a leader in the industry. The support from investors underscores the confidence in LMG’s vision and the promising future of magnesium production from brown coal fly ash.

The most recent trading price for LMG shares was $0.48 as of 30th May 2024.