Latrobe Magnesium (ASX:LMG) said its demonstration plant in the Latrobe Valley in Victoria produced around 20 tonnes of magnesium oxide from brown coal ash over a sustained two-week period of focused operations, according to a Friday Australian bourse filing.

The next stage of metal production will see the installation of on-site horizontal retorts, targeting 500 tonnes per annum of magnesium. The plant is entering a planned shutdown phase, with the installation and commissioning of the remaining process flowsheet required for magnesium metal production. The initial plant restart is targeted for mid-year, with first metal production expected in the second half of 2026.

The firm sold the magnesium oxide to a customer, and the plant produced several by-products, including char, iron oxide, and agricultural lime. The company will start customer validation trials with multiple interested parties to confirm byproduct specifications for sale, as well as for the future stage two commercial plant.

Its shares fell 5% in recent trading on Friday.