Hi
@RenomanI agree heartily.
Given the capex of the first 100,000tpa plant (
$915m capex) and the criteria to be a joint venture partner, I believe they have to be very carefully selected. Nevertheless, as the PFS for the 100,000tpa plant is expected this year and the PFS will have to estimate logistics, feedstock source, power source, base terms, etc, we should have a much better idea of the JV partner this year.
Based on the following:
“LMG announces it will
complete a prefeasibility study on a 100,000 tpa magnesium plant u
sing ferro nickel slag as its feedstock
in 2022 to supply the growing magnesium market. The plant will be
located next to a renewable energy facility.”
Investment Presentation December - 2021"The current estimate for the capex of the 100,000 tpaplant is $915M with working capital of $85M meaning a
total funding commitment of $1B.
"
Equity contribution being sought from a joint venture partneris $200M for a 50% interest in the project. LMG will provide$100M."
"The project funding is estimated to be $700M
backed by anappropriate level of offtake agreements."
"
A suitable joint venture partner will be one who alsocommits to an offtake agreement for magnesium at asuitable floor price."
"A licence royalty will be payable from the Project to LMG for theuse of its hydromet technology"
"The energy source is expected to be from a renewable sourceand therefore its CO2 emissions will be close to zero."
Therefore, the criteria for a Joint venture partner includes the following:1. Overseas (Stated over and over again in presentation and reports for a long time)
2. Feed stock = Ferro nickel slag in close proximity (So either a joint partner with a Nickel producer who desires an integrated project or the project sited within reasonable haulage from a source of ferro nickel slag)
3. Located within workable distance of renewable energy (Otherwise the goal of net zero Co2 cannot be achieved)
4. Have $200,000,000 equity to contribute for a 50% stake in the magnesium. (NOT50% the royalties payable to LMG for the licence of their hydromet technology).
5. Are a magnesium trader or user (Have to commit to an offtake agreement)
I think it unlikely to find a joint venture partner that produces nickel and also is a magnesium trader but you cannot rule it out as the JV partner may want to diversify and integrate, as I have said before.
One thing I am very sure about is that the first 100,000tpa plant
will not be located in Germany with RWE.
1. RWE's Hambach site is
fly ash2. RWE's mine at Hambach is in the throws of terrible publicity and environmental protests (Not good for LMG)
The project will unfold over time and LMG have put a great schedule together which I believe is attainable. The first 1,000tpa plant at Latrobe will be beginning of benchmarking and further projection as the tweak the demonstrate an industrial scale.
We need news, otherwise people move money to make money. Being stranded in a stock not commutating frequently is a trial.
The next news should be about the first $10,000,000 project funding for the 1,000tpa plant. The funding was due to be release to LMG by yesterday. In addition, we should have an update of the plant procurement and installation schedule. Very soon I hope.
Regards
Ken
