Latrobe Magnesium takes step to acquire site for 50,000tpa US plant

• LMG signs non-binding LOI for 250-acre South Carolina site at US$5m, with minimal upfront funding required
• Site offers rail, port and highway access, utilities and room to double planned capacity
• Land acquisition progresses alongside US$30m funding negotiations, offtake and feasibility preparations

Special Report: Latrobe Magnesium has taken a major step towards establishing a primary magnesium plant in the United States, signing a letter of intent to acquire a strategic industrial site in South Carolina.

The agreement is designed to minimise upfront funding requirements and follows LMG’s September 15 announcement of the 50,000 tonnes per annum US project

Identifying a site with established transport links and nearby utilities is an important early step as Latrobe Magnesium (ASX:LMG) prepares engineering and feasibility work.

The company has entered into a non-binding letter of intent with the Colleton County Economic Development Corporation to acquire approximately 250 acres of heavy industrial-zoned land at the Colleton Megasite for US$5 million.

No payment is required under the non-binding LOI. A US$500,000 deposit would become payable within 10 business days of signing a definitive purchase agreement and remain refundable during due diligence.

LMG intends to fund the remaining US$4.5 million from US$30 million in project-level feasibility funding, which is under negotiation. This structure limits the immediate cash requirement as the company works towards securing the larger funding package.

For a project of this scale, the ability to progress a preferred site without a large immediate outlay gives LMG time to complete due diligence and negotiate the infrastructure arrangements on which development will depend.

Rail, port and highway access

The Colleton Megasite is near Walterboro, about 55 miles by road from the Port of Charleston.

The property adjoins the Salkehatchie railroad and LMG is working with Palmetto Railways on a preliminary rail layout that could connect the plant with the port.

LMG is also negotiating access to a dedicated pier at Charleston to receive ferronickel slag, the proposed plant’s feedstock.

Interstate 95 is four miles away, giving the site access to a major transport corridor along the US eastern seaboard.

A 115kV electricity line reaches the site, an eight-inch gas pipeline is about 3.5 miles away, and water and wastewater services are available through the City of Walterboro.

Utility providers have indicated adequate capacity, although connections and requirements remain subject to verification during due diligence.

The location also offers access to a workforce of about 800,000 within an hour’s travel.

Room to double production

The 250-acre parcel is intended to accommodate the initial 50,000tpa plant, including feedstock handling, storage, rail loading and supporting infrastructure.

LMG expects to negotiate an option over adjoining land, potentially providing room to double production to 100,000tpa. That expansion capacity is a useful feature of the site as the company assesses longer-term demand.

“Signing this LOI for the Colleton Megasite is a major step for our US Project. The site gives us rail, interstate and port connectivity and the room to expand,” LMG CEO Rob Stein said.

“We thank Colleton County and the South Carolina Department of Commerce for their strong support. We now move quickly into due diligence and negotiation of the definitive agreement, alongside our port, utilities, offtake and funding workstreams.”

US customers and feedstock

The proposed South Carolina operation would use LMG’s patented process to recover magnesium from industrial by-products.

The US currently has no domestic primary magnesium production, leaving manufacturers reliant on imports.

China produces about 90% of the world’s primary magnesium. That concentration of supply adds significance to LMG’s plan to establish US production for industries including automotive, aerospace and defence.

Magnesium is also used in aluminium alloys and titanium production.

Prospective customers for Latrobe’s project have signed non-binding offtake LOIs covering 32,000tpa of magnesium, equivalent to 64% of the proposed plant’s initial capacity.

A binding 20-year MoU with Eramet subsidiary Société Le Nickel covers the plant’s anticipated ferronickel slag requirements.

With prospective customers and a feedstock arrangement already identified, the land agreement gives LMG a location around which to develop plant design, transport logistics and utility connections.

Deposit and purchase timetable

The US$500,000 deposit would be paid into escrow after execution of the definitive purchase agreement. It would remain refundable during due diligence.

The deposit would become non-refundable if LMG elects to proceed, subject to agreed exceptions. That decision follows the period in which the company can assess the site and its infrastructure requirements.

LMG intends to fund the deposit and initial due diligence through financing associated with its Australian land holdings.

The US$4.5 million balance is expected to come from a proposed US$30 million feasibility funding package, which has not yet been secured.

LMG aims to sign a definitive agreement within 60 business days. Due diligence would then run for 120 days, with one possible 60-day extension.

Completion remains conditional on satisfactory due diligence, financing, permits, approvals, incentives and infrastructure arrangements.

Settlement is expected during the feasibility study, before a final investment decision.

This article was developed in collaboration with Latrobe Magnesium, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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