Latrobe Magnesium Limited · ASX:LMG
Latrobe Magnesium — Investor Presentation (September 2012)
23 slides from Latrobe Magnesium's investor presentation, Sep 20, 2012
Slide 1: Broker's Presentation
For personal use only Latrobe Magnes um Broker’s Presentation September 2012 David Paterson ASX: Chairman LMG
Slide 2: Presentation
Latrobe Presentation Magnes um For personal use only 1. Corporate background 2. LMG opportunity 3. LMG process 4. LMG current activities 5. Timelines and milestones 6. Financial overview 2
Slide 3: Valuation Fundamentals and Performance
1. Corporate Background Latrobe Magnes um For personal use only Valuation Fundamentals and Performance • Shares issued 741 million at 1.5 cents Market Capitalization $11m • Shares price history 2009 High 1.5 cents Low 0.3 cents 2010 High 3.6 cents Low 1.1 cents 2011 High 4.2 cents Low 2.2 cents 2012
Slide 4: People
1. Corporate Background Latrobe Magnes um People For personal use only Directors and Staff David Paterson Executive Chairman Kevin Torpey Director & mining consultant John Lee Non executive director Philip Bruce Non executive director Jim Siemon Project director Consultants CSIRO - both
Slide 5: Brief History
1. Corporate Background Latrobe Magnes um For personal use only Brief History Listed on Australian Stock Exchange (LMG) in 2002. Dealing with Latrobe Valley fly ash for over 10 years. Tested every proven magnesium process technology. Breakthrough with Ecoengineer’s hydromet process some 2.5
Slide 6: LMG opportunity
2. LMG opportunity Latrobe Magnes um For personal use only 75% of fly ash waste converted into: % • Magnesium 10 • Cementitious Material 60 • Char 5 ---- 75 ---- In addition, 10 to 15 tonnes of carbon credits created per tonne of Mg depending upon feed stock composition. 6
Slide 7: Magnesium uses
Latrobe 2. LMG opportunity Magnes um For personal use only Magnesium uses % • Steel desulphurisation 25 • Alloy in aluminium can production 45 • Motor car parts for strength & 30 weight savings ----- 100 === New China uses - planes and trains New Korea uses - consumer products (laptops, mobile phone
Slide 8: Magnesium metal production
Latrobe 2. LMG opportunity Magnes um For personal use only Magnesium metal production • 2000 210,300 tons • 2009 653,000 tons • 2011 809,000 tons • 2016 projected production 950,000 tons • 2021 projected production 1,370,000 tons Average annual growth in the range between 6% to 7% 8
Slide 9: Magnesium sources in 2011
Latrobe 2. LMG opportunity Magnes um For personal use only Magnesium sources in 2011 (tons) • China 660,000 83% • Russia 37,000 • USA 44,000 • Israel 28,000 • Kazakhstan 20,000 • Brazil 16,000 • Other 4,000 ---------- 809,000 ---------- 9
Slide 10: Magnesium Pricing
Latrobe 2. LMG opportunity Magnes um For personal use only Magnesium Pricing Note: US magnesium price was approx 50% above the FOB China Price for this period. 10
Slide 11: Magnesium cost and demand factors
Latrobe 2. LMG opportunity Magnes um For personal use only Magnesium cost and demand factors: • China operating costs between US$2,500 to US$3,100 per tonne • China rising costs of inputs - FeSi, fuel & labour • USA anti dumping duties on China Mg • Mg substitution with Al - cost factor between 1.33
Slide 12: Conventional magnesium processes
Latrobe 2. LMG opportunity Magnes um Conventional magnesium processes For personal use only • Feedstock is traditionally a MgCO3 either dolomite, magnesite or brine. • Process is either thermal (83% of world production) or electrolysis. • Thermal - modular, smaller production & lower capital cost -
Slide 13: LMG business parts
Latrobe 3. LMG process Magnes um For personal use only LMG business parts • Access to brown coal fly ash with sufficient MgO. • Use of proprietary Hydromet technology. • Construction expertise contracted for the thermal reduction process and its modernisation. • Availability of existing infrastructu
Slide 14: Unique and proprietary process
Latrobe 3. LMG process Magnes um Unique and proprietary process For personal use only • Process is a combination of its unique patented hydromet process with the proven thermal reduction process been in operation since 1941. • Hydromet process uses standard industrial reagents to remove impurities f
Slide 15: Process attributes
Latrobe 3. LMG Process Magnes um For personal use only Process attributes • Simplified proven technology responsible for 83% of world’s magnesium production. • Can economically produce small quantities of magnesium. • Production can be expanded on modular basis. • Much lower capital cost compared to
Slide 16: 3. LMG process
Latrobe 3. LMG process Magnes um For personal use only 16
Slide 17: Current Activities
Latrobe 4. LMG Current Activities Magnes um For personal use only Current Activities Undertaking tasks to complete the Adjustment Study: • Verifying the process assumptions used in the PFS; • Reviewing capital and operating costs, in particular, civil and infrastructure site costs with Beijing Tiefo
Slide 18: Key Dates
Latrobe 5. Timelines & Milestones Magnes um Key Dates For personal use only • Oct 2011 completed pre-feasibility study on a 10,000 t/a plant. • Apr 2012 signed Chinese technology cooperation agreement. • Sept 2012 expand the range of fly ashes - RWE and Yallourn. • Dec 2012 finalise agreements for f
Slide 19: Key Assumptions per tonne of Mg
Latrobe 6. Financial overview Magnes um For personal use only Key Assumptions per tonne of Mg 1. Revenue Streams A$/tMg Magnesium 3,890 Cementitious Material 650 Carbon Credits 230 Char 50 Total 4,820 2. Operating Costs Ferrosilicon 2,000 Labour 840 Natural Gas 670 Hydromet & Feed stock 440 Other Co
Slide 20: Chinese Comparison
Latrobe 6. Financial overview Magnes um For personal use only Chinese Comparison China LMG forecast USA Pricing – US$/tonne US$/tonne US$/tonne Current Magnesium price 3,250 3,750 4,500 Aluminium Price at 1.5 multiple 2,170 2,500 3,000 Magnesium metal substitution for aluminium takes place between 1
Slide 21: Financial Parameters
Latrobe 6. Financial overview Magnes um For personal use only 5,000 40,000 Financial Parameters tonnes tonnes A$/tonne A$/tonne Magnesium revenue 3,840 3,840 Net Cash operating costs (3,420) (2,800) -------- -------- Operating surplus 420 1,040 ==== ==== Capex A$40M A$230M NPV at 12% discount factor
Slide 22: Other Opportunities
6. Financial overview Latrobe Magnes um For personal use only Other Opportunities LMG has a confidentiality agreement with RWE, in Germany where the annual fly ash produced from one mine would be sufficient to produce 35,000 tonnes of magnesium. Additional brown coal lignite deposits have been ident
Slide 23: Disclaimer
Latrobe Disclaimer Magnes um For personal use only • This presentation may contain forward looking statements that are subject to risk factors associated with the magnesium business. • It is believed that the expectations reflected in these statements are reasonable but they may be affected by a var
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