Latrobe Magnesium (ASX:LMG) said its binding memorandum of understanding with Societe Le Nickel, a subsidiary of Eramet, can be expanded to supply up to 600,000 tonnes per year of ferronickel slag, supporting its planned 50,000-tonne-per-year US magnesium metal plant over 30 years, according to an Australian bourse filing on Wednesday after market hours.

The company also plans to negotiate expansion options for a second 50,000-tonne-per-year production train in the US, per the filing.

The company reaffirmed its capital expenditure estimate of $1.1 billion to $1.5 billion, with projected net present value of $1.4 billion to $2.7 billion and an 18% to 26% unlevered internal rate of return at magnesium prices of $5,000 to $7,500 per tonne, the filing said.

The company will evaluate project finance, equity, offtake funding, and US government incentives ahead of the targeted final investment decision while advancing the feasibility study, the filing added.