Latrobe Magnes um Latrobe Valley Presentation - February 2018 - Latrobe Magnesium

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                  Magnes um
         Latrobe Valley Presentation

                  February 2018

David Paterson                         ASX:
     CEO                               LMG

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Presentation contents               Magnes um

 1. Latrobe project update
 2. LMG location and site
 3. Vertical Retort construction
 4. Magnesium market and developments
 5. Financial overview
 6. State Economic Benefits
 7. Timetable

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1. Latrobe Project update               Magnes um

 Signed MoU with Yallourn for the supply of ash.
 Complete construction of vertical retort by end of
  Feb 2018 and tests by March 2018.
 Finalise new ash test work and complete feasibility
  study from March to June 2018.
 Secure state and federal government grants by July
  2018.
 Start construction on site in August 2018.
 Commence production at 3,000tpa in July 2019 and
  expanding to 40,000tpa in 2020 12 mths later.

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2. LMG site    Magnes um

                    Swop Line
                    from
                    Yallourn

                    Natural
                    Gas
                    Pipeline

                    Swop Line
                    From
                    Hazelwood

                    320
                    Tramway
                    Site

                         4

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2. LMG building                         Magnes um

                                               5
           320 Tramway Site Building

2.   LMG plant layout   Latrobe
                         Magnes um

                                6

3. Horizontal retort –   Latrobe
   pidgeon process        Magnes um

                                 7

3. Vertical Retort   Latrobe
                      Magnes um

                             8

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 Furnace
  Only

           9

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     Fast
     Cycle
    Vertical
    Retort

        1/16th
by width the size of a
 commercial furnace
    same height

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4. Magnesium uses                  Magnes um

                                     %
•   Aluminium alloy                  37
•   Die casting for automobiles      33
•   Steel desulphurization           15
•   Titanium sponge                  14
•   Other die casting                  1
                                   -----
                                   100
                                   ===

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4. Magnesium market and                  Latrobe
developments                              Magnes um

Primary Mg projections for -
• 2016      actual               900,000 tonnes
• 2017      projected          1,000,000 tonnes plus
• 2024      projected          1,700,000 tonnes

China produces some 86% of world production.
World useage of Mg for auto in 2016 some 300,000
tonnes. China projected use for auto in 2025 is
825,000 tonnes as compared to 258,000 in 2017.

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4. Magnesium market and                 Latrobe
developments                             Magnes um
China projections for average Mg use in cars -
• 2017       8.6 kg       258,000 tonnes
• 2020       15 kg        495,000 tonnes
• 2025       25 kg        825,000 tonnes
• 2030       45 kg       1,485,000 tonnes
China produces some 30M cars or 30% of world
production in 2017.
Japan projects a 5 times increase in Mg for
diecasting parts in cars to 30,000 tpa by 2021 from
5,900 tpa in 2016.

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4. Magnesium developments   Latrobe
as a CRM for EU              Magnes um

                                    14

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5. Financial overview                    Magnes um
 Capital Requirements                 3,000 tpa
                                        A$M’s
 LMG Equity                              12
 R&D Funding                             16
 Victorian Grants                          6
 Federal RJIP Grant                        6
                                         ----
 Total Project Funding                   40
                                         ==
 Capex estimated at A$37M with a working capital
 requirement of A$3M. Total funding A$40M. EBITDA
 estimated at approx A$500,000 pa.

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6. State Economic Benefits                        Magnes um

Industrial Ecology and Circular Economy principles
• Job creation –
  3,000 tpa plant: up to 50 permanent jobs and 75 construction jobs
  40,000 tpa plant: up to 300 new permanent jobs with 240
  construction jobs
• Support regional development – imports and exports from the
  Valley approx 700,000tpa which will support the development of
  the Regional Transport Hub
• Increase business in the Valley eg retort maintenance $21M pa,
  double Sibelco lime plant and indirect employment.
• Environment friendly – lowest CO2 magnesium producer and
  removal of 95% of industrial waste
• Improved health outcomes from waste removal and recycling

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7. Timetable                     Magnes um

  Tasks                         Timing
• Complete Bankable Study      April 2018
• Complete fund raising        July 2018
• Construction – Site works    Aug 2018
• Procurement & Permitting     Sept 2018
• Production - Initial plant    July 2019
• Expansion Stage 2             July 2020

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Disclaimer                                                Magnes um
• 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 variety of variables and
  changes in underlying assumptions which could cause actual results or
  trends to differ materially including but not limited to: price fluctuations,
  actual demand, currency fluctuations, production results, reserve
  estimates, loss of market, industry competition, environmental risks,
  physical risks, legislative, fiscal and regulatory developments, economic
  and financial market conditions in various countries and regions, political
  risks, project delay or advancement, approvals and cost estimates.
• Investors should undertake their own analysis and obtain independent
  advice before investing in LMG shares.
• All reference to dollars, cents or $ in this presentation are to Australian
  currency, unless otherwise stated.