Latrobe Magnesium locks in A$8.5m to push toward first metal production

A$8.5m raising funds the next technical test

Latrobe Magnesium Limited (ASX:LMG) has secured firm commitments for A$8.5 million, giving the magnesium developer cash to finish the most immediate test of its strategy: completing the pyrometallurgical section of its Latrobe Valley demonstration plant and running a campaign to produce magnesium crowns by the end of 2026.

The raising combines a A$5.1 million placement of about 339 million shares with a fully underwritten A$3.4 million non-renounceable entitlement offer. Both are priced at A$0.015 a share. That represents a 6.8% discount to LMG’s five-day volume-weighted average price, although the placement was struck at a 9.2% premium to the 15-day VWAP.

Demonstration plant takes priority

LMG plans to direct A$3.8 million to Phase 1B completion, including the furnace, retort assembly, briquette plant and automated loading equipment. A further A$1.7 million is earmarked for the magnesium crown commissioning campaign and site running costs, while A$1.3 million will fund long-lead items for the subsequent refinery stage.

The company says its hydrometallurgical circuit has already produced 20 tonnes of magnesium oxide at about 90% quality over a sustained two-week campaign. The pyrometallurgical plant is described as 70% complete. The next milestone is more demanding: demonstrating safe and reliable operation of the automated system in a four-week campaign intended to produce crowns containing more than 98% magnesium.

South Carolina option receives initial funding

Only A$500,000 of the raising is allocated to commercial plant studies, including the initial work on LMG’s proposed 50 kilotonne-per-year South Carolina facility. The company has identified a preferred site and is negotiating land and infrastructure arrangements, while a non-binding US$15 million letter of support remains conditional on LMG securing a further US$15 million for the feasibility study.

That project is therefore still an option rather than a funded construction decision. LMG’s indicative timetable targets feasibility study completion in early 2028, a final investment decision in March 2028 and first production in April 2030. The company also flags unresolved requirements including site acquisition, rezoning, permits, engineering work, financing and binding offtake agreements.

Dilution and balance-sheet pressure remain

The capital raising will increase shares on issue from about 3.415 billion to approximately 3.982 billion if fully completed, before any relevant option exercises. A shareholder who takes up their entitlement but does not receive additional shortfall shares will still be diluted by about 8.51% from the placement; a shareholder who does not participate in the entitlement offer could face aggregate dilution of up to 14.23%.

LMG also plans to pay Long State A$191,429 to settle the swap component of its earlier funding arrangement. Long State is selling its remaining LMG shares through a secondary-market trade and will retain no shareholding, while LMG says it does not intend to use the facility as an equity funding source going forward. The company’s proposed A$4.5 million FY27 research and development tax rebate is embedded in the funding plan, but the rebate remains an estimate rather than cash already received.

Commissioning now carries the story

The raising removes one immediate funding hurdle, but it does not convert LMG into a producer. The crucial evidence will be whether the crown campaign runs safely, on budget and at the expected quality, followed by funding for the refinery and a sustained ash-to-ingot operating campaign. The larger US ambition will require a much more substantial financing package after the current study work.