Latrobe Magnesium sharpens US plant plan with US$2.7 billion NPV case

US$1.3 billion mid-case anchors South Carolina project

Latrobe Magnesium Limited (ASX:LMG) has put more detail around the proposed 50 ktpa magnesium metal plant in South Carolina, retaining a US$1.1-1.5 billion capital range and a mid-case estimate of US$1.3 billion. The company says its headline project economics are unchanged, with an NPV10 range of US$1.4-2.7 billion and an unlevered internal rate of return of 18-26% across its stated magnesium price range of US$5,000-7,500 per tonne.

The central price reference is US$7,050/t, described by LMG as spot, while the mid-case valuation assumes US$1.3 billion of capital expenditure and operating costs of US$3,300/t. The estimate is not yet a construction-ready cost base: it is Class V, includes a 40% contingency, and has been derived from a 100 ktpa International Plant pre-feasibility study prepared by Bechtel, adjusted for scale, location, inflation and construction timing.

Feedstock optionality extends beyond initial plant life

Feedstock security is one of the firmer elements of the proposal. LMG’s binding 20-year memorandum of understanding with Société Le Nickel, part of the Eramet group, provides optionality to increase offtake to 600 ktpa. LMG says that volume would cover the feedstock requirement for the project’s assumed 30-year economic life, beginning with first production targeted for 2030.

SLN also holds an existing ferronickel slag stockpile of approximately 28 million tonnes, according to LMG’s calculation from the smelter’s production data. The company says it intends to negotiate further expansion optionality for a second 50 ktpa train in the United States, although that is a future discussion rather than an established project commitment.

Funding remains the next major hurdle

LMG has not fixed the funding mix for a project carrying a billion-dollar-plus price tag. It expects to negotiate final investment decision funding during the feasibility study, weighing project finance, project-level equity, offtake finance and contributions from LMG. The company also points to equity and financing pathways through US federal and state government bodies, including incentives received from South Carolina.

That funding structure is deliberately unresolved. LMG says it has about 18 months before its planned FID milestone to balance financing cost, risk and flexibility, while the capital estimate narrows. The filing therefore provides a clearer framework for the project, not evidence that financing or FID has been secured.

The sensitivity table shows how exposed the valuation remains to execution and market assumptions. A 5 ktpa change in production rate is associated with a US$310 million NPV impact, while a one-percentage-point change in the discount rate produces a US$360 million impact. Magnesium price, silica price, capital cost and operating cost also move the valuation materially, with the company warning that simultaneous changes could have a larger effect than the individual sensitivities shown.