Latrobe Magnesium Secures USD 2M Funding as MgO Production Validates Process

Sustained MgO Production Validates Process and Opens Commercial Pathway

Latrobe Magnesium Limited (ASX:LMG) has marked a significant operational milestone with a two-week continuous production campaign at its Hazelwood North Demonstration Plant in Victoria, yielding approximately 20 tonnes of high-grade magnesium oxide (MgO). This run followed the resolution of earlier mechanical issues and confirmed the stability of the company’s proprietary hydrometallurgical extraction process using brown coal fly ash.

The MgO produced met targeted commercial specifications, with X-ray diffraction assays showing about 90% magnesium compounds, alongside 5% calcium oxide and 5.5% calcium chloride. Notably, the residual calcium oxide is expected to reduce costs in the forthcoming briquetting process by lowering the need for supplementary burnt lime. This quality confirmation underpins confidence in the transition to magnesium metal production planned for later this year.

LMG has already made initial commercial sales of MgO ahead of the plant’s planned shutdown for Phase 1B upgrades, marking the first revenue generation from the Demonstration Plant. The company also produced by-products including char and iron oxide, now entering customer validation trials to assess their commercial potential.

Phase 1B Installation Targets Magnesium Metal Production in Second Half 2026

In late March, LMG commenced installation and commissioning of pyrometallurgical equipment essential for producing magnesium metal at an initial capacity of 500 tonnes per annum. Phase 1B includes briquetting and reduction furnace systems, with commissioning activities progressing through equipment positioning, fabrication of access platforms, and major electrical cable installations.

The project benefits from retaining the existing skilled workforce from Phase 1A, which is expected to smooth the commissioning process. The Demonstration Plant is currently in a planned shutdown to facilitate these upgrades, with magnesium metal production targeted for the second half of 2026.

Non-Dilutive USD 2 Million Prepayment Strengthens Funding for Phase 1B

LMG secured a USD 2 million (approximately AUD 2.82 million) non-dilutive prepayment from its US distribution partner Metal Exchange LLC (MX), received in early April. This funding will support Phase 1B delivery and is structured to be recovered via a margin-sharing agreement on future magnesium metal sales, preserving positive cash economics for LMG during the recovery period.

Metal Exchange’s president, Trevor Hansen, highlighted the partnership’s focus on supply chain resilience and expanding Western magnesium production capacity. The absence of US import tariffs on Australian-produced magnesium metal is expected to enhance LMG’s competitiveness in the US market, which currently lacks domestic primary magnesium production and relies heavily on imports predominantly from China and Russia.

This funding follows earlier announcements of the prepayment and aligns with the company’s broader strategy to secure non-dilutive capital, as well as government support from entities such as Export Finance Australia and the US Export-Import Bank for its larger scale projects. The company continues to pursue additional funding avenues, including grants and commercial contracts.

Progress on Larger-Scale Plants and Legal Matters

The Stage 2 Commercial Plant feasibility study, targeting 10,000 tonnes per annum, remains ready for execution pending funding availability, with no material changes this quarter. Meanwhile, Latrobe Magnesium Sarawak, the company’s wholly owned Malaysian subsidiary, continues regulatory engagement and preparatory work for the 100,000 tonnes per annum international project, with no significant developments reported.

On the legal front, there were no material updates in the ongoing proceedings with Mincore Pty Ltd. The company is preparing its evidentiary case for court presentation, with further updates expected in future reports.

Cash Position and Financial Overview

As of 31 March 2026, LMG held $1.3 million in cash, with the Metal Exchange prepayment received shortly after quarter end. The company reported a net cash outflow of $775,000 from operating activities during the quarter and invested $2.45 million in property, plant, and equipment, reflecting ongoing capital expenditure on Phase 1B.

LMG also generated an estimated $3.6 million R&D rebate from activities in the latter half of 2025, supporting its financial position. Contracts for land sales are progressing toward settlements later this year, potentially providing additional liquidity.

These developments build on the company’s recent US$2 million non-dilutive prepayment and the successful high-grade MgO production campaign that set the stage for magnesium metal production.