Latrobe Magnesium : LMG signs ash supply term sheet with Hazelwood Power

Magnes um

ABN 52 009 173 611

LMG intends to develop, build, own and operate a 5,000 tonne per annum magnesium production facility at 320 Tramway Road Morwell. The plant will also produce a supplementary cementitious material that is a suitable replacement for cement in the production of concrete. These two products will use over 90% of the fly ash waste stream.
Once the plant operates successfully, LMG intends to expand the plant to produce
40,000 tonnes of magnesium per annum. The expanded plant will also use the ash contained in the Hazelwood ash dams. It is envisaged that this expansion will be undertaken within 18 months of commissioning the initial plant and directly employ up to 150 people. About 800 people are expected to be employed directly or indirectly through the construction and operating phases.
The purpose of the letter of intent is to pave the way for LMG and Hazelwood to enter into a fully termed Agreement for the supply of ash from Hazelwood's premises for use in the LMG plant as well as the installation of associated delivery infrastructure.
LMG and Hazelwood agree to enter into good faith discussions and use their reasonable endeavours to negotiate the Agreement based on the principles and terms set out in the Ash Supply Term Sheet. It is envisaged that this Agreement will be executed following the completion of LMG's bankable feasibility study expected to be completed in December 2015 and prior to the construction of the initial plant in March
2016.
This Ash Supply Term Sheet does not create any legally binding obligations between the parties at this stage.
The signing of the letter of intent allows LMG to start its bankable feasibility study. LMG has currently tendered the engineering design for its study to five consultants and it is expected that the study will commence within the next month.
Within the next few months LMG intends to hold community information briefings so that the local community can receive information and provide feedback on the project.

Suite 307, 20 Barrack Street, Sydney, NSW 2000 Phone: +61 (0)2 9279 2033

Postal Address: GPO Box 4729, Sydney, NSW 2001 Fax: +61 (0)2 9279 3854

Latrobe Magnesium Limited 3 August 2015

Latrobe Magnesium is developing a magnesium production plant in Victoria's Latrobe Valley using its world-first patented extraction process. LMG intends to extract and sell magnesium metal and cementitious material from industrial fly ash, which is currently a waste stream from brown coal power generation. LMG believes in industrial ecology being the use of industrial waste to create new products.

LMG has completed a pre-feasibility and an adjustment study validating its combined hydromet / thermal reduction process that extracts the metal. Production from its initial 5,000 tonne per annum magnesium plant is due to start at the end of 2016. The plant will be in the heart of Victoria's coal power generation precinct, providing immediate access to feedstock.

LMG plans to sell the refined magnesium under long-term contracts to Australian and American users. Currently, Australia imports 100% of the 10,000 tonnes annually consumed.

Magnesium is known as the green metal. It has the best strength-to-weight ratio of all common structural metals and is increasingly used in the manufacture of car parts, laptop computers, mobile phones and power tools.

The LMG project is at the forefront of environmental benefit - by recycling power plant waste, avoiding landfill. LMG is a low CO² emitter and emits up to 60% less than the industry average.

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