The plant extracts magnesium from fly ash from coal-fired power plants.

With China's magnesium production being restricted and the subsequent worldwide shortage pending, the LMG board has decided to investigate increasing the size of the initial plant.

The board believes this expansion will maximise the labour economics of the plant and increase the operating profit.

The initial 1000tpa plant, which will cost between $40 million to $45 million, will be expanded to 10,000tpa at a total cost of $123 million.

It is expected the funding for this expansion of some $75 million will be financed through 100% magnesium offtake agreements.

The company already has 8000tpa allocated in its offtake agreements and has received enquiries for more than 2,000tpa.

The increased production is expected to generate revenues in the order of $110 million and estimated earnings before interest, tax, depreciation and amortisation of $42 million.

These estimates have been extrapolated from the company's feasibility and engineering studies of its 3000tpa plant and will be the subject of a separate study over the next nine months.