Legal Battle and Funding Pressure Loom as Latrobe Magnesium Advances Demonstration Plant

• EPA Victoria extends Pilot Project Licence to February 2027
• Demonstration Plant operations to begin August 2025 targeting steady-state production
• Sale of surplus land at Tramway Road site expected to generate up to $5 million
• Pursuing $19.39 million counterclaim against Mincore with mediation due in Q3 2025
• Secured $3.5 million capital raise to fund production ramp-up and feasibility studies

Licence Extension and Production Kickoff

Latrobe Magnesium Limited (ASX, LMG) has received a crucial extension to its Pilot Project Licence from the Environment Protection Authority Victoria, now valid through to February 2027. This regulatory green light paves the way for the company to commence operations at its Hazelwood North Demonstration Plant, with staff scheduled to begin work on August 4, 2025. The company aims to achieve steady-state production of magnesium oxide and related byproducts within the same month, marking a significant milestone in validating its proprietary extraction technology.

Commercial and International Expansion Plans

Beyond the Demonstration Plant, Latrobe Magnesium is advancing feasibility studies for a 10,000 tonnes per annum commercial plant, with construction and commissioning of Phase 1B slated for early 2026, contingent on funding approvals. The company is also progressing plans for a much larger 100,000 tonnes per annum international plant in Sarawak, Malaysia, having secured a 250MW hydropower allocation; a vital component for sustainable operations. These developments underscore LMG’s ambition to scale its magnesium metal production significantly over the coming years.

Asset Monetisation and Capital Raising

In a strategic move to bolster its financial position, LMG is finalising the sale of approximately 4.3 hectares of surplus land at its Tramway Road site, expected to generate up to $5 million. Although a conditional market-price offer was declined, ongoing private negotiations with multiple interested parties suggest a successful sale could close by year-end. Complementing this, the company raised $3.5 million through an institutional placement and a fully underwritten share purchase plan earlier this year, funds earmarked to support production ramp-up and feasibility studies.

Legal Proceedings and Risk Management

Latrobe Magnesium is actively pursuing a $19.39 million counterclaim against Mincore Pty Ltd for breach of contract and negligence, with court-ordered mediation scheduled for the third quarter of 2025. This legal dispute represents a material risk but also a potential financial upside if resolved favorably. The company continues to manage this alongside its operational milestones, reflecting a balanced approach to growth and risk mitigation.

Funding Outlook and Market Positioning

Despite a cash balance of $2.4 million at quarter-end and available financing facilities, LMG’s current funding covers approximately 1.6 quarters of operations, prompting ongoing efforts to secure additional government grants domestically and internationally. The company’s engagement with the US Department of Defense and inclusion in the Commonwealth Government’s Industry Growth Program highlight its strategic positioning within critical mineral supply chains. Magnesium’s growing demand in automotive, aerospace, and electronics sectors further underpins LMG’s long-term commercial prospects.

Bottom Line?

As Latrobe Magnesium ramps up production and navigates legal challenges, its next moves on funding and commercial contracts will be pivotal.

Questions in the middle?

• Will the Demonstration Plant achieve steady-state production as scheduled in August 2025?
• What is the likely outcome and timeline of the $19.39 million counterclaim mediation against Mincore?
• How will the sale of surplus land impact LMG’s near-term liquidity and funding runway?