The Latrobe Magnesium Limited (ASX: LMG) share price skyrocketed today. In fact, the magnesium share has collected a new all-time high, with the share price reaching 15 cents apiece.
It appears both macro and micro events are aiding in the ascension of the relatively little-known resource company. Ongoing concerns of a magnesium shortage have placed company's exposed to the alloy element on many watchlists. At the same time, Latrobe released some news of its own last week that might have investors excited.
Here's a look at the current landscape for Latrobe Magnesium on the ASX.
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What's going on with ASX-listed Latrobe Magnesium?
Investors pushed the Latrobe Magnesium share price to new heights on Tuesday, despite no announcements released by the company. As such, we're forced to take notice of what could be influencing this move more broadly.
Despite European automakers assuring investors that magnesium shortages are not of immediate concern, car part suppliers say otherwise. According to an article published by Reuters, suppliers of components to big auto are wary that if China does not increase its magnesium supply soon, issues will likely arise.
Furthermore, on its earnings call, Volkswagen's head of purchasing, Murat Aksel stated:
We cannot forecast right now if the shortage on magnesium, which will happen definitely according to planning, will be bigger than the semiconductor shortage.
The concerns of an imminent shortage continue irrespective of China's partial resumption of production. Reports indicate that the number of magnesium producers that have spun back up is not enough to significantly ease the shortage.
In turn, investors are speculating on ASX-listed Latrobe Magnesium benefitting from a potential lift in magnesium prices.
What else?
Closer to home, last week Latrobe announced the expansion of its demonstration plant. According to the release, the demonstration plant will increase from 3,000 tonnes per annum to 10,000 tonnes per annum (tpa) in response to world demand.
The company expects that the increased production will result in revenue of roughly $110 million and estimated earnings before interest, tax, depreciation, and amortisation (EBITDA) of $42 million.
Positively, Latrobe noted it already has a buyer for 8,000 tpa under its current offtake agreements. Meanwhile, another 2,000 tpa worth is being sought after by enquiries received.
These catalysts have helped Latrobe Magnesium return 575% on the ASX since the beginning of 2021.
