Latrobe Magnesium Secures $10 Million Funding to Launch World's First Magnesium Production From Coal Fly Ash
Latrobe Magnesium (ASX: LMG) has successfully raised $10 million through a combination of institutional placement and a fully underwritten entitlement offer, positioning the company to complete its groundbreaking 500 tpa magnesium demonstration plant. This Latrobe Magnesium coal fly ash project represents a significant innovation in sustainable mineral production.
The funding package arrives at a crucial time for the company as it prepares to demonstrate the world's first commercial-scale magnesium production from industrial waste materials, specifically coal fly ash from brown coal power generation.
Strategic Capital Raising Ensures Completion of Revolutionary Plant
Latrobe Magnesium has secured $6 million from institutional and professional investors through a placement, complemented by a fully underwritten, non-renounceable entitlement offer set to raise an additional $4 million. The capital raising received strong support, highlighting growing market recognition of magnesium's critical mineral status and LMG's pioneering role in sustainable production.
The funds will be strategically deployed to:
- Complete the 500 tpa magnesium demonstration plant
- Procure, install and commission minor piping and electrical bulk materials
- Support two months of steady-state magnesium production
- Provide necessary working capital
"We are very pleased with the strong support for this equity raising, evidenced by the increased demand for magnesium, a critical mineral, from both the domestic and international markets. It is pleasing to see the market recognise the importance of LMG as the world's first producer of magnesium from brown coal fly ash," said CEO David Paterson.
World-First Technology Transforms Waste into Critical Minerals
Latrobe Magnesium stands out in the critical minerals landscape with its patented extraction process that transforms industrial ash – typically a waste product from brown coal power generation – into high-value magnesium metal and cementitious material.
The Latrobe Magnesium coal fly ash project has already achieved a significant milestone, having successfully produced magnesium oxide at its Demonstration Plant. Full commissioning is expected in the first quarter of 2026, representing a major advancement in sustainable resource recovery technology.
This innovative approach exemplifies circular economy principles by:
- Recycling power plant waste tailings
- Preventing landfill disposal of industrial waste
- Establishing a low COâ‚‚ emission production method for critical minerals
Strategic Growth Pathway to Commercial Production
Latrobe Magnesium has mapped a clear growth trajectory beyond the demonstration phase:
- Demonstration Plant (500 tpa): Current focus – completing commissioning and proving commercial viability
- Commercial Plant (10,000 tpa): Targeted for completion in the second half of 2027
- International 'Mega' Plant (100,000 tpa): Being developed in Sarawak, Malaysia
Furthermore, the company has secured its commercial future with a distribution agreement for its planned 10,000 tpa production. A USA-based distributor stands ready to handle the offtake under long-term contracts, providing confidence in the project's commercial viability.
Understanding Magnesium's Strategic Importance
Magnesium possesses the best strength-to-weight ratio of all common structural metals, making it increasingly valuable in high-performance applications. The metal's unique properties have driven growing demand from:
- Automotive industry: Lightweight components to improve fuel efficiency
- Aerospace sector: Critical for weight reduction in aircraft
- Medical applications: Used in implants and medical devices
- Electronics manufacturing: Essential for lightweight, durable components
As global industries prioritise weight reduction for efficiency and sustainability, magnesium's market significance continues to increase, positioning LMG advantageously in this growth sector.
The Magnesium Production Process
The Latrobe Magnesium coal fly ash project utilises a unique combined hydrometallurgical and thermal reduction process to extract magnesium metal from industrial waste. This innovative approach involves:
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Feedstock preparation: Brown coal fly ash, typically considered waste material from power generation, is processed as the primary input.
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Extraction process: Using LMG's patented technology, the magnesium compounds are separated from other components in the fly ash.
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Metal production: Through specialised refining techniques, the extracted material is converted into pure magnesium metal.
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Secondary products: In addition to magnesium, the process yields valuable cementitious material as a by-product, further enhancing the economic and environmental benefits.
This process represents a significant technological advancement in resource recovery, turning what was once considered waste into a valuable critical mineral. The technology positions LMG at the forefront of sustainable mineral production methods globally.
Funding Structure and Timeline for Investors
The funding package consists of two main components:
1. Institutional Placement ($6 million)
- Issue of approximately 261 million new shares
- Priced at $0.023 per share (14.8% discount to last traded price)
- 19.6% discount to the 15-day VWAP
- Settlement scheduled for October 17, 2025
2. Entitlement Offer ($4 million)
- One new share for every 15 existing shares
- Priced at $0.023 per share (matching placement price)
- Fully underwritten by Shaw and Partners
- Record date: October 16, 2025
- Offer opens: October 21, 2025
- Offer closes: November 4, 2025
Eligible shareholders will have the opportunity to apply for up to 100% in excess of their entitlement, enabling existing investors to increase their holdings at the discounted price.
| Source of Funds | Amount ($M) | Use of Funds | Amount ($M) |
|---|---|---|---|
| Placement | 6.0 | Magnesium Plant Production | 6.0 |
| Rights Issue | 4.0 | Working capital and Offer costs | 4.0 |
| Total | 10.0 | Total | 10.0 |
Why Investors Should Watch Latrobe Magnesium
The Latrobe Magnesium coal fly ash project presents a compelling investment proposition for several key reasons:
- First-mover advantage: World's first producer of magnesium from brown coal fly ash
- ESG excellence: Recycling industrial waste while producing critical minerals
- Clear commercialisation pathway: From demonstration to 100,000 tpa production
- Secured distribution: Established offtake arrangements for commercial production
- Growing market: Increasing demand for lightweight metals in multiple industries
- Circular economy champion: Turning waste products into valuable resources
"The Placement has also been a fantastic opportunity to diversify our shareholder register with some institutions ahead of a significant period of growth for the company. The next 12 months promise to be an exciting time for us," added CEO David Paterson.
What's Next for the Project?
With funding now secured, Latrobe Magnesium stands at an important inflection point. The company can proceed with completing its demonstration plant, proving the commercial viability of its technology, and preparing for larger-scale production in the coming years.
As global industries intensify their focus on sustainable sourcing of critical minerals, Latrobe Magnesium's innovative approach to producing essential metals from waste streams positions it uniquely in the resources sector.
The Latrobe Magnesium coal fly ash project exemplifies how innovative thinking can transform environmental challenges into economic opportunities. By converting what was once considered waste into a valuable resource, LMG is pioneering a new approach to critical mineral production that could deliver both environmental benefits and significant shareholder value.
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