LATROBE MAGNESIUM LIMITED — Capital/Financing Update 2021

Dec 16, 2021

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UPDATE ON REVISED TERMS OF $23M PROJECT FUNDING

Following the announcement of the acquisition of Tramway Road by Latrobe Magnesium Limited (“LMG”) on 13 December 2021, LMG has successfully negotiated a reduction in the interest rate to 12% on its $23M project finance facility with RnD Funding Pty Ltd (“RnD Funding”), previously announced on 14 December 2021.

The reduced interest rate on the project finance facility is a function of the additional security available to RnD Funding following the purchase of the property at 320 Tramway Road, Hazelwood North for $4.5M.

LMG is currently budgeting loan repayments from R&D tax refunds (arising under LMG’s R&D Tax Incentive entitlements) in the order of $12M to $15M in the period to 23 October 2023 (with no early repayment penalties).

Depending upon the timing and amount of R&D tax refunds to LMG, the effective interest rate on the project finance facility to 31 October 2023 may be closer to 10%.

Whilst the legal term of the project finance facility remains five years from the date of the first drawdown, LMG intends to refinance the remaining balance of the loan (after repayments from R&D tax refunds) as soon as it is cost effective to do so. Based on current funding indications LMG has received, LMG expects it will be able to refinance the remaining balance of the debt facility around October 2023 at an interest rate of circa 6% pa, once confirmatory operating data from its 1,000 tpa initial plant has been generated over a 6 month period.

Should you have any queries in relation to this announcement please do not hesitate to contact the CEO on his mobile 0421234688.

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David Paterson Chief Executive Officer

17 December 2021

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Suite 504, 80 Clarence St, Sydney NSW 2000 | Postal Address: GPO Box 4729, Sydney NSW 2001 | 0419 407191 | lmg@latrobemagnesium.com | Latrobe Magnesium Limited | ABN 52 009 173 611 | www.latrobemagnesium.com

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About Latrobe Magnesium

Latrobe Magnesium is developing a magnesium production plant in Victoria's Latrobe Valley using its worldfirst 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 the Yallourn brown coal power generation.

LMG has completed a feasibility study validating its combined hydromet / thermal reduction process that extracts the metal. Construction is estimated to start on site on its initial 1,000 tonne per annum magnesium plant in first quarter of 2022 with production commencing up to 12 months later in fourth quarter of 2022. The plant will then be expanded to 10,000 tonne per annum magnesium shortly thereafter. Further plant capacity expansion will be considered once the 10,000 tonne per annum is operating successfully. The plant will be in the heart of Victoria’s coal power generation precinct, providing immediate access to feedstock, infrastructure, and labour.

LMG plans to sell the refined magnesium under long-term contracts to USA and Japanese customers. Currently, Australia imports 100% of the 8,000 tonnes annually consumed.

Magnesium 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, voiding landfill and is a low CO [2] emitter. LMG adopts the principles of an industrial ecology system.

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Suite 504, 80 Clarence St, Sydney NSW 2000 | Postal Address: GPO Box 4729, Sydney NSW 2001 | 0419 407191 | lmg@latrobemagnesium.com | Latrobe Magnesium Limited | ABN 52 009 173 611 | www.latrobemagnesium.com