CHINA Magnesium Corporation (CMC) has received approval for a 50-year lease for 6ha of industrial land in Pingyao County in the Shanxi Province.
It will be used to accommodate the expansion of the Pingyao Magnesium Plant. Phase one of the Shanxi province plant is spread across 180,000sqm with the capacity to produce 20,000 tonnes of magnesium by next February.
CMC raised $12 million after completing an IPO and since upgraded its joint venture in subsidiary Shanxi Luyuan Magnesium Company to fund an upgrade and expansion of an existing magnesium ingot plant.
The capital injection has increased CMC’s stake in the venture from 30.6 per cent to 90 per cent. With cash flows of $10.7 million, the company will seek to further upgrade infrastructure in China.
In March, 1.27 million shares were released from ASX escrow. There are 127.6 million shares on issue with 65,380 remaining in escrow.
CMC aims to be one of the largest producers in the world of pure magnesium and magnesium alloy, supplying domestic Chinese and international customers. Core demand is expected to come from the burgeoning electric car market.
Chief executive Tom Blackhurst (pictured) has been in China pushing ahead with capital works.
Blackhurst says the long-term goal is to expand magnesium production to 105,000tpa over three major phases by 2013.
“We have already received a non-binding letter of intent from the China Construction Bank, one of the world’s largest banks, to debt fund US$14.6 million of the total expansion capital expenditure to 105,000tpa,” he says.
Non-executive chairman Bill Bass says the group is backed by the Chinese Government and guided by a management team with significant experience.
“CMC operates in a country that is actively encouraging resources industry and investment – so the project is not exposed to the current uncertainty created by Australia’s proposed resource super profits tax, and the expansion project has been classified by the local provincial government as a ‘preferred project’,” he says.
The Gold Coast’s newest ASX recruit posted half year net profit of $576,000 after floating in November 2010.
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