I have puttogether a few points that I think are interesting.
It’s anotherlong post but I hope you will glean some thoughts.
- My writings in black
- Quotes in black italics with major points highlighted in yellow
- References in blue
I have replaced the name of two source with (Little Hats) – wink, and (Pro and active)wink. HC does not like either of these types of links. There are a lot of links provided and some I think you will find very interesting. If HC removes some parts of the link, a quick Google search using the majority of the words in the link should find them.
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1.0 10,000tpa+ plant funding opportunities
David Paterson - “Because you’ve got to remember, umm the Government just recently put 2 billion dollars into a fund to finance critical raw materials, that’s lithium, magnesium, nickel and we’ve been approved by that fund to date. So, it’s a matter of umm (Kerry Stevenson – “So you can access, so Latrobe can access part of that fund?”) David Paterson – “Correct, at very favorable rates, umm so it’s a matter of us getting up, proving our 1000 tonne that the data is correct.”
Little Hats (wink) - Interview -December 13, 2021
“Togetherwith the Government’s National Battery Strategy and Electric Vehicle Strategy, Australia’s wide range of critical minerals resource projects now have a clearframework and future vision.” “There are a range of supports to boost thedevelopment of the sector, and encourage continued innovation and research anddevelopment, including the $1billion Value Adding in Resources Fund, to work alongside the $2 billion Critical Minerals Facility, as part of the Government’s National Reconstruction Facility.”
“LMGwill be looking to secure some of its future funding for its 10,000+ tpa plant ffrom these facilities.”
Quarterly Activities Report - 30 September 2022
Anexample:
“AustralianVanadium Limited (ASX: AVL) has been awarded a A$49 million grant under the Australian Government’s Modern Manufacturing Initiative Collaboration Stream towards the development ofthe Australian Vanadium Project near Meekatharra and Geraldton, to create anAustralian green fueled vanadium industry.”
(I thinkthe example above is comparable with LMG’s position and aspirations. AVL’sshare price is currently 2.9c with a market cap very close to LMG’s)
“LMG hasasked for a $10M deposit against magnesium sales from one of its offtake providers to assist inthe cost of expansion”
Melbourne Mining Club Presentation – March - 2022
I’m prettysure the offer came from Japan)
“AMCJ isone of the largest titanium and magnesium trading house in Tokyo committing toa minimum 4,000 tonnes per year. It is also willing to provide funding to LMG to expand its plant.(Advanced Material Corporation of Japan)”
LMG’s Magnesium Market Update – 18th November 2021
DavidPaterson
“So,we’ve been speaking to some Government instrumentalities that basically control the critical minerals fund and they’re just watching and their saying, ok David, prove that those number are right, prove that the numbers in the 10,000tonnes is correct and e.g. The process is correct and we’ve got the funding for you to do that.”
KerryStevenson – “Oh wow, ok”.
Furtheron….David Paterson “ They know us well, we’ve gone through the sort of pre-approval process, its now a matter of ”ok, prove that that demon plant works and that you get the results you believe you’re going to get and that really is what it comes down to, that triggers straight into the 10,000 tonne, so it’s all about, the big milestone as I see it, is the first one, of course the first one works, the second one works and that gets you into the third stage, but it’s all about the demo plant.”
Little Hats Interview - November 1, 2022
And foodfor thought…….
EU urges Europeanbanks to step up funding for critical minerals (Worth a read)
And….
US agrees to fund Australian critical mineralsprojects
There looksto be plenty of opportunities to fund the 10,000tpa+ plant without necessarily having further debt. Between offtakes, funding support offers from offtake agreements, Stateand Federal Government programs, R&D rebates and other support potential from USA and EU, we may have more offers than enough.
The last quarter of this year could likely see funding approvals from many directions, when the demonstration plant delivers upon expectations.
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2.0 Re-rate expectations
Stage 1(1,000tpa) = Demonstration Plant
(Demonstratingthe Hydromet process – NOTa commercial plant)
Demonstrationplant commencing production June 2023.
Financials
• $39mcapex
• $10mrevenue
• EBITDA break even
• 8.2 tonsof CO2 / ton of Mg
November 2022 IMARC Presentation
“it’s amatter of us getting up, provingour 1000 tonne that the data is correct.”
Little Hats - Interview - December 13, 2021
And...
Question from KerryStevenson
“Do youthink the market actually saying well, until the demonstration plants up and running, lets justwait and see, do you think that there’s a certain trepidation there?”
Answer fromDavid Peterson
“I think from an Institutionalperspective, yes. We have a lot of people interested in our process andwhat we’re doing and they all like the story and there saying ok, make the story real, and what makesit real is the demonstration plant. That I think then we will get/be re-rated at thatpoint in time.”
Interview with Little Hats 28th June 2022
And...
“I thinkthe demonstration plantwill prove our process works, that will be a very good uplift in our share price, because the others (10,000tpa+, etc) will flow”“so it’sall about, the bigmilestone as I see it, is the first one, of course the first one works,the second one works and that gets you into the third stage, but it’s all about the demo plant.”
Little Hats Interview - November 1, 2022
The re-rateafter the demonstration plant is commissioned and is proving its metrics, issomething that I have talked about many times over the last two years. Manyhave said that they believe the demo plant success is already factored into thecurrent sp. I strongly disagree and see the demonstration plant having to provea great deal before institutional investors and major partners start to getserious.
Thetransition period between the operating and proven demonstration plant, and thecommencement of construction of the 10,000tpa+ plant, will be a period oftremendous excitement and opportunity imo.
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3.0 10,000tpa+Plant offtake
Offtake forALL the production of the 10,000+tps plant accounted for
MEC is a minimum of 8,000tpa and AMJC is a minimum of 4,000 tpa = 12,000tpa minimum.
“The10,000 tpa plant is expected to generate in the order of $110m in revenue andEBITDA of $42m in 2024. Theofftake for this production is complete with LMG ‘s two distributors inthe USA and Japan”
Melbourne Mining Club Presentation – March – 2022
“I thinkas we reported last time, we had 28,000 tonnes of demand asked of us and of course the 10,000 tonnes wehave already sold through our distribution network, so that we haveoff-take agreements for that and were getting further enquiring over and abovethat amount. It’s not a problem selling the magnesium, we have to now justprove that we can make it, our Hydromet system works and which we are veryconfident in and then we can do an automatic expansion process.”
Interview with Pro and active 18th May 2022
The offtakebeing fully accounted for the 10,000tpa+ plant may be obvious to many but whatI am hinting at and has been intimated by LMG, is the likelihood of greaterexpansion of the plant is very likely.
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4.0 Location ofthe 10,000+tpa plant
"Sothe demonstration plant works, then we go to our 10,000 tonne, which we'retalking about a commercial scale plant that a 100 million cost/capex and we getthat up and operational by December 2024. We have enough area, we have our land at 320Tramway Road which is a brown fields site, which is all ready to go now andinsert our smaller demonstration plant and we build the 10,000 plant on the same site"
Little Hats Interview - November 1, 2022
Thequestion was asked if the 10,000tpa+ plant would be on the same site as the1000tpa demonstration plant, the answer is yes. Then a question if LMG wouldneed to build new buildings. I don’t think so but cannot prove that. Allindicators so far are that the existing buildings are sufficient but we mayhave to wait for the 10,000 tpa+ plant BFS to find out.
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5.0 More aboutMetal Exchange Corporation (MEC)
“MetalExchange Corporation is the flagship of a growing, global family of companiesfocused in aluminum and other nonferrous materials. Founded in 1974, we areprivately held, headquartered in St. Louis, MO, and have six US manufacturingfacilities, as well as sales offices throughout the US and international sales offices inboth Shanghai and Zurich.”
https://metalexchangecorp.com/who-we-are/
MEC have anoffice in Europe (Europe imports ~160,000tpa magnesium)
EUROPEOFFICE - Friedhelm Grobler
+41 (0) 43456 3810
https://metalexchangecorp.com/wp-content/uploads/2016/11/Metal-Exchange_Product-sheet_2.pdf
And...
Continental Aluminium is part of the Metal Exchange Corporation family of companies
“ContinentalAluminum is a key supplier of alloy ingot to the auto industry and a variety ofdie casters as well as deox products to the steel industry. Headquartered inNew Hudson, MI, our relative location to the steel and automotive industries in and around Detroithas allowed us to become a key supplier to a wide variety of customers.”
https://metalexchangecorp.com/who-we-are/family-of-companies/
And...
Pennex Aluminium is also part of the Metal Exchange Corporationfamily of companies
“Pennex Aluminum is part of the Metal ExchangeCorporation.MEC founded in St. Louis in1974, Metal Exchange Corporation has grown from a regional aluminum scraptrading company to a global trader and manufacturer of nonferrous metals.”
http://www.pennexaluminum.com/
http://www.pennexaluminum.com/markets/transportation/automotive/
MetalExchange Corporation (MEC) has wider capabilities than I initially thought. The inclusion of Continental Aluminium and Pennex Aluminium and their significant role within the MEC family of companies makes them far more than just a 'supplier of aluminium and magnesium'. Through the MEC familiy there is production of complex aluminium castings, extrusion, sheeting, fabrications, billetting, aloy blending and testing, etc, where magnesium playes a major role.
Tesla IsReady to Invest $3.6 Billion For 2 Factories at Nevada Complex - January28, 2023
https://www.inventiva.co.in/trends/tesla-is-ready-to-invest-3-6-billion/
6.0 What happenedto the German connection (RWE)?
Hambach Project (RWE) History - Follow the dates and the changes in language
“LatrobeMagnesium (ASX:LMG) and partnerRWE Power have completed a concept study over their magnesium extractionproject, in Germany, concluding it is economically viable.”
"LatrobeMagnesium Limited (LMG) signed a term sheet with RWE Power AG for thedevelopment of a new magnesium plant in Germany, with up to 30,000 tpa ofproduction. The magnesium will come from brown coal fly ash from coal mined atRWE’s Hambach mine and processed through their supercritical brown coal power stationnear Cologne, Germany."
2018 LMG AGM Presentation
“RWEPower AG and LMG have identified the brown coal fly ash from RWE’s Hambach mineas being the most suitable to commercially extract magnesium.”
2019 LMG Annual Report
“In thenext quarter, LMG will produce a large sample of supplementary cementitiousmaterial from its beneficiated RWE fly ash so that the Verein DeutscherZementwerke e.V. in Düsseldorf may analyse the product to ensure it meets EUStandards. This confirmatory work will take about 3 months to complete. LMG andRWE Power will then be in a position to proceed to enter into a collaborationagreement to development the project.”
Quarterly Activities Report – 30th September 2019
“LMGhave a number of opportunities to license their IP to various brown coal (RWEPower & EP Coal) and ferro nickel producers worldwide.”
(N.B.: Now, brown coal fly ash and ferro nickelslag)
2020 LMG Investment Presentation December
"Itwill also be looking to complete a prefeasibility study on a 100,000 tpa plantusing ferro nickel slag as its feedstock."
“Thesurplus working capital of $2M will be used to assist with the funding of thefeasibility studies for the 10,000 tpa plant in the Latrobe Valley and the100,000 tpa plant overseas.”
(N.B.: Generic ‘Overseas’, not mentioningGermany or fly ash any longer?)
2021 LMG Investor Presentation December
“LMGannounces it will complete a prefeasibility study on a 100,000 tpa magnesiumplant using ferro nickelslag as its feedstock in 2022 to supply the growing magnesium market.The plant will be located next to a renewable energy facility.”
(N.B.: No mention of fly ash, Germany or RWE?)
2022 LMG AGM Presentation January
“LMGannounces it will complete a prefeasibility study on a 100,000 tpa magnesiumplant using ferro nickelslag as its feedstock in 2022 to supply the growing magnesium market.The plant will be located next to a renewable energy facility.”
Melbourne Mining Club Presentation - March - 2022
I think youget my point, no mention of RWE, Germany or fly ash for the 100,000tpa plant.RWE is on the backburner. The change from fly ash to ferro nickel slag wasobvious but the pull away from RWE was bit by bit and not as obvious.
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7.0 Possible reasons for LMG distancing itself fromRWE
Whenconsidering the relationship between LMG and RWE there are a few points to beconsidered.
LMG areheavily hanging their hat on their Environmental, Social, and Governance credentials (ESG). The ESG credentials of LMG have been developed to position LMG in a unique way and form a foundation of the LMG promise, i.e. Jobs, local community engagement, local industry engagement, Australian patent, removing waste, dealing with environmental contamination, filling the void left by power plant closure and employment opportunities, Co2 reductions, use of renewables, Australia first, etc, etc.
“Latrobe Magnesium gears up to deliver ESGcredentialled clean metals production plant”
The RWE Hambach mine has been in the media numerous times due to massive protests regarding two seperate issues.
1. The clearing of forests for the mine expansion
2. The closing down and demolition of German towns in order to expand the mine
The RWEHambach (Tagebau) mine is the largest open-pit mine in Germany, with anapproved maximum size of 8,500 hectares.
https://en.wikipedia.org/wiki/Hambach_surface_mine
The Hambachmine supplies Lignite(Brown Coal) to at least 4 power stations, Niederaussem, Neurath, Frimmersdorf, and Goldenberg. On Google maps there are about 8 RWE power stations that could possibly be run from Lignite from Hambach. The amount of fly ash would be incredible within a 200 km radius.
“Policeofficers spray activists during a protest against the expansion of Germany'sutility RWE's Garzweiler open-cast lignite mine to Luetzerath”, Germany, January 14, 2023.REUTERS/Christian Mang
“Germanyplans to destroy this village for a coal mine. Thousands are gathering to stopit”
https://edition.cnn.com/2023/01/14/europe/lutzerath-germany-coal-protests-climate-intl/index.html
www.youtube.com/watch?v=gM-KJs5ip5U
https://www.dw.com/en/german-court-clearing-hambach-forest-treehouses-illegal/a-59124937
RWE and the Hambach mine are not reallygood for LMG to sell it's ESG credentials and so I think RWE are off the list fornow. For LMG to be fully accepted for its ESG credentials, it must keep a close eye on who it forms partnerships with, imo. RWE would only detract from LMG's, Environmental, Social, and Governance credentials, certainly not enhance them.
8.0 Hazelwood FlyAsh?
“We hada false start with one of them, it closed down ‘Hazelwood’, back in 2016. We had an agreement with thembut then that was effectively terminated, so then we started withYallourn and that’s where we’re at today”
The Market Herald Interview 12th Nov 2021
Questionfrom Kerry Stevenson – Little Hats
“Can yougo up from 10,000, could you go 20,000, 30,000 or is 10,000 your max on thatparticular one?”
Answer fromDavid Paterson
“Wecould, it will just be a decision at the time. We could go to 20, if then wegot hold of the Hazelwood ash dam, there’s another 5 million tonnes we know ofin the Hazelwood ash dam butthat would probably have to be in Government hands and not in Engie’s hands(Engie with 72% share ownership to this day) because we’ve had disagreement, well notdisagreements, we’ve had issues with them before.”
Interview with Little Hats 1st Nov 2022
Would Hazelwoodfly ash make a difference in production?
“InYallourn, its all different, in Yallourn we make five other products(by-products) in Hazelwood we make three (by-products), because of what’s inthe fly ash.”
Interview with Little Hats 1st Nov 2022Anyway, a few tidbits to consider and some you may not have known.
All the best to holders
Regards
Ken
I have puttogether a few points that I think are interesting....
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