The Latrobe Magnesium Limited (ASX: LMG) share price is heading south on Friday. This comes after the magnesium producer announced an update on the revised terms of a project finance facility.
During early afternoon trade, Latrobe Magnesium shares are swapping hands for 9.4 cents, down 5.05%. It's worth noting that the Latrobe Magnesium share price has lost more than 20% in value over the past month.
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Latrobe Magnesium renegotiates contract terms
Investors are selling Latrobe Magnesium shares despite the company successfully renegotiating more favourable contract terms.
In its release, Latrobe Magnesium advised that the interest rate on its $23 million project finance facility has been amended. The reduced 12% interest payable follows close discussions with RnD Funding, which has agreed to the new terms.
Latrobe Magnesium noted that the lower interest rate is a function of the additional security available to RnD Funding. This follows Latrobe Magnesium's purchase this week of the property at 20 Tramway Road, Hazelwood North for $4.5 million.
In addition, the company is expecting to receive between $12 million to $15 million of R&D tax refunds until 23 October 2023. Depending on the amount and time that the incentivised payment is collected, Latrobe Magnesium stated that the effective interest rate could be closer to 10%.
When the loan is first drawn down, the term is 5 years. However, the company intends to refinance the balance to make it as cost-effective as possible. Latrobe Magnesium estimates that this will occur in or about October 2023 at an interest rate of about 6% per annum.
About the Latrobe Magnesium share price
Over the past 12 months, Latrobe Magnesium shares have accelerated by 370%.
Based on today's price, Latrobe Magnesium presides a market capitalisation of $147.28 million. It has approximately 1.57 billion shares outstanding.
