Latrobe Magnesium Limited, with the assistance of GHD Pty Limited, has completed its pre feasibility study released last month. Since then, LMG and Clarke and Marron Beijing Tieforce Engineering Co Limited have been working together to clarify the operating and capital costs of the project which will extract magnesium and other commodities from Latrobe Valley brown coal fly ash.

The project will begin with a 10,000 tonnes per annum magnesium demonstration plant using fly ash from the Latrobe Valley. The pre feasibility for this plant has been completed and the bankable pre feasibility is due to be completed by March 2013. The demonstration plant is expected to be commissioned in March 2014 and the full scale plant built early 2015.

The revised estimates of operating costs and income per tonne for the 40,000 tonnes per annum plant:

Revenue from magnesium, cement, carbon credits & char: AUD 5,300
Cash operating costs: AUD 3,800
Operating surplus: AUD 1,500

With an AUD 300 million capital cost the revised study concludes the project's net present value is AUD 108 million. The plant when operating is expected to employ 300 people in Victoria's Latrobe Valley.

Latrobe Magnesium will raise approximately AUD 100 million to build the demonstration plant with initial funding discussions combining grants, equity and debt. The demonstration plant is expected to prove the process and generate company revenues and initial profitability.

The revised study was recommended by GHD to check the capital and operating costs data supplied in the Tieforce Report. The revision's purpose was to reduce the large cost ranges cited in the pre feasibility study. The range was the result of large variations in equipment pricing between China and Australia.

LMG managers visited Beijing and Malaysia to work with Tieforce and to visit existing Pidgeon magnesium processing plants.

Mr David Paterson chairman of Latrobe Magnesium said that "We have initiated discussions with a Chinese technology provider as we are now preparing for the bankable feasibility study and moving towards building the demonstration plant. These discussions also included the testing of commercial samples of LMG material in furnaces available in China."

He added that "Not only does this project harvest waste to extract valuable commodities but LMG's plant process releases about 15 tonnes less CO2 emissions per tonne of magnesium compared to overseas producers. We plan to employ about 300 people and this will be a welcome boost to all businesses and life in the Latrobe Valley."