Latrobe Magnesium brings first metal within reach as Phase 1B nears completion

Phase 1B moves within reach of first metal

Latrobe Magnesium Limited (ASX:LMG) has taken its Victorian demonstration plant to the most consequential stage yet: Phase 1B is now 95% installed and 35% commissioned, with the company still targeting its first magnesium metal crowns above 98% purity by the end of 2026. Installation accelerated from 33% complete at the end of June to 90% at 30 September, before reaching 95% on 16 October.

The remaining work is concentrated around commissioning and final installation. Vacuum testing is progressing across the retort and condenser assemblies, while the ball mill and briquetting systems are ready for wet commissioning. Fire protection installation has been completed and tested, and Rockwell Automation personnel are supporting the company’s five-stage commissioning process. Key reagents have arrived and recruitment, training and procedure finalisation are under way.

The project remains within its original A$6.1 million budget, with forecast spend to completion broadly aligned with the A$3.8 million allocated to Phase 1B in the recent raising. That financing, which was covered in the A$8.5 million equity raising, was intended to support the final construction and commissioning push. LMG reported no recordable safety incidents during the quarter and weekly HSE compliance above 97%.

Cash has improved, but refinancing remains central

LMG ended September with A$3.4 million in cash and cash equivalents, up from A$1.1 million three months earlier, after A$6.6 million of net financing inflows. The improvement came as operating cash outflows rose to A$1.2 million and investing outflows reached A$3.1 million, largely reflecting the faster pace of Phase 1B construction.

The balance sheet still carries a significant constraint. Total financing liabilities stood at A$15.0 million, including a secured RnD Funding facility carrying interest of 24% a year to maturity in June 2027, while the quarterly cash flow report showed no unused finance facilities and estimated funding of about 2.9 quarters at the reported operating cash burn.

LMG is relying on several future sources of liquidity. It has extended its fully underwritten A$3.4 million non-renounceable entitlement offer to 5pm AEDT on 26 October, while contracts to sell two Hazelwood North lots are expected to generate about A$2.8 million. The company has also lodged an A$11.8 million refundable R&D Tax Incentive claim, although the Australian Taxation Office has not yet assessed it and the final amount may differ. The offer extension was reported after entitlement offer deadline extension, with the revised deadline now forming part of LMG’s near-term funding timetable.

South Carolina plan adds scale and execution risk

Alongside the Victorian commissioning effort, LMG is advancing a proposed 50 ktpa primary magnesium plant in South Carolina. The company says it has a binding 20-year memorandum of understanding with Société Le Nickel for ferronickel slag feedstock, is negotiating a dedicated pier at the Port of Charleston and has identified a preferred site with rail and interstate access.

Non-binding letters of intent cover 32 ktpa of potential offtake, equivalent to about 64% of the proposed nameplate capacity. Metal Exchange LLC has indicated a minimum 25 ktpa, with Meridian Lightweight Technologies at 5 ktpa and Twin City Die Castings at 2 ktpa. LMG intends to convert those interests into binding agreements alongside project financing.

The project remains at an early and conditional stage. LMG is negotiating US$30 million of project-level funding to reach a final investment decision, including a feasibility study targeted to start by the end of the first quarter of 2027. A US$15 million letter of support is non-binding and conditional on matching finance, due diligence and definitive documentation. The company’s US$1.1 billion to US$1.5 billion capital estimate is a Class 5 estimate, while the headline NPV and return figures come from a preliminary economic assessment rather than a pre-feasibility or feasibility study. The earlier South Carolina funding support was likewise conditional, leaving the larger development dependent on further financing and approvals.

Other projects remain stalled or conditional

LMG’s proposed 10 ktpa Victorian commercial plant remains on hold while the company works with regulators on a pathway through recent financial assurance amendments. In Malaysia, the proposed Sarawak plant still awaits approval to import ferronickel slag, with the relevant question now subject to government-to-government communication between Malaysian and New Caledonian authorities.

The immediate test is therefore narrower than the scale of LMG’s long-term ambitions: whether the final installation steps convert into saleable magnesium metal before cash, debt and refinancing requirements become more pressing. The next hard evidence will come from commissioning completion, first production and the company’s ability to turn its expected tax refund and asset-sale proceeds into balance-sheet relief.