Hi@Val1@Pippo17I really like your questions.Sorry for the...

Hi
@Val1
@Pippo17


I really like your questions.
Sorry for the delayed response, I was otherwise preoccupied.

Here is my argument for the 10,000 PLUS tpa plant. It may sway your opinion and increase your optimism.

It is a long winded response as I wanted to set out the factors in play for funding the 10,000tpa plant.
My writing is a small epistles and I apologise for its length.

I firmly believe with strong conviction, that is fully supported by research, that the 10,000tpa PLUS expansion to higher volume is fully achievable. The offtake of the entire volume to be produced from our first commercial production plant, is fully covered by MEC's agreement, Australian import of 8,000tpa magnesium and the agreements in place with the Japanese company AMCJ.


Evidence

Investment Presentation – December - 2021

“LMG has received enquiries for the supply of 20,000 plustpa of magnesium”

https://www.latrobemagnesium.com/investor-center/announcements

The offtakes in place are extremely important and volumes sought by purchasers will be available.

16 January 2023, Sydney Australia:
"Latrobe Magnesium Limited (ASX:LMG) has signed an upgraded exclusive distribution agreement with Metal Exchange Corporation (MEC) to sell the majority of its magnesium into North, Central and South America and the Caribbean markets. The contract will deliver excellent prices to LMG due to a US anti-dumping duty payable on magnesium imports from China. This 2019 initial agreement between the parties has been upgraded because of LMG’s current expansion plans to its demonstration plant and expanded 10,000+ tpa capacity. "

Notice a few things in this paragraph.
The agreement now includes:

• First, it is a signed agreement with MEC (A contract)
• A minimum firm commitment of 8,000 tpa of magnesium;
• A minimum initial term with a rolling annual renewal;
• A minimum floor price for the purchase of the magnesium.

To sell the majority (Any magnesium that is not included as ‘the majority,’ is still in enormous demand and able to be sold easily.

The agreement with Japan still stands, and don't forget the Japanese offer of financial support to partly fund the 10,000tpa plant.

We don't know but the agreement may still be on the table to support the 10,000 plus tpa plant, in order to secure part of pre-paid offtakes for both the 10,000 Plus (15,000, 20,000 or more tpa) and the 100,000tpa plant). What am trying to say, but struggling to put into words is, demand is so great and opportunities for pre-paid offtake agreements so available that once the demo plant proves its process and outcomes, many options should be on the table.

Once the demonstration plant is up and running, proving systems, science, process and operational parameters, things begin to change. Once there is verifiable proof of magnesium quality, processing efficiency, technology reliability and reduction of Co2, there will be a game changer for funding opportunities. (All in my opinion)

"LMG has a signed binding offtake agreement with Metal Exchange Corporation (MEC) and memorandum of understanding with Advanced Material Japan Corporation (AMJC).Quarterly Activities Report - 30 September 2022“LMG will be looking to secure some of its future funding for its 10,000+ tpa plant from these facilities.”

Quarterly Activities Report - 30 September 2022
“LMG will be looking to secure some of its future funding for its 10,000+ tpa plant from these facilities.”

In response to a question I asked David in an email about the liklihood of 10Million in pre-payment of magnesium fromthe 10,000tpa plant:
“It has been asked for and agreed with management but requires Board approval.”


When would this be likely to happen? IMO, once the demonstration plant demonstrates its success in producing magnesium, efficiencies, Co2 reduction, etc.

Government Funding Opportunities

Transcribed by me from an Interview with Kerry Stevenson - 2021 – Little Hats (wink)

“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 favourable rates, umm soit’s a matter of us getting up, proving our 1000 tonne that the data is correct.”

“Together with the Government’s National Battery Strategy and Electric Vehicle Strategy, Australia’s wide range of critical minerals resource projects now have a clear framework and future vision.” “There are a range of supports to boost the development of the sector, and encourage continued innovation and research and development, including the$1 billion Value Adding in Resources Fund, to work alongside the $2 billion Critical Minerals Facility, as part of the Government’s National Reconstruction Facility.”

David Paterson

“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 10,000 tonnes is correct and e.g. The process is correct and we’ve got the funding for you to do that.”

(Kerry Stevenson – “Oh wow, ok”).

Further on….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.” (THE BIG MILESTONE!)

“it’s amatter of us getting up, provingour 1000 tonne that the data is correct.”

“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.”

“I thinkthe demonstration plantwill prove our process works, that will bea 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.”

And there's more (No Stake knives)

We cant forget the SCM's that contribute ~40% to LMG's 10,000PLUS tpa plants revenue.

Investment Presentation - December - 2021

• Victoria has no local supplier of SCM and traditionally imports 100% of their 250,000 to 300,000 tpa use.

• The 10,000 tpa demonstration plant will potentially allow for ~41,000 tonnes of SCM to be produced as a by product to the Magnesium production. This will allow LMG to build demand for its product prior to its expansion.

David has discuss with me that sale of the SCM's are well accounted for. With a few solid contracts, there could be pre-payments included here.


Final considerations

LMG’s Plant Expansion 3/11/2021

“It is expected that the funding for this expansion of some $75M will be financed through 100% magnesium offtake agreements.

https://www.latrobemagnesium.com/investor-center/announcements


What are all the opportunities to fund the first commercial plant?

• Pre-paid offtake agreements
• Government funding
• Debt
• CR
• JV

Will there be a CR, a JV or loans?
I do not think so. There is enough evidence to suggest that the funding for the 10,000 PLUS tpa plant is fully covered.



All in my opinion and of course, do your own research.


Kind regards

Ken