Alkemy Capital Investments plc (LON:ALK, JV2:FRA) has presented its unaudited financial statements for the 6 months ended 31 July 2022 as extracted from the Company’s 2022 Half Year Report which is now available on the Company website at www.alkemycapital.co.uk.
The interim financial statements are set out below and should be read in conjunction with the 2022 Half Year Report which contains the notes to the financial statements.
Chairman’s Statement
I have great pleasure in presenting our interim results for the period ended 31 July 2022.
Highlights:
· Tees Valley Lithium officially launched
· Class 4 feasibility study delivered for our lithium hydroxide processing facility in Teesside
· Met test work confirms ultra-pure battery-grade lithium hydroxide
· Partnerships established with Traxys and Weardale Lithium for feedstock
· Australia strategy launched
· Key consultants appointed and management positions filled
· Oversubscribed private placement completed
· Partnership established with bp for green hydrogen use
Tees Valley Lithium
In February 2022 we announced the formation of a subsidiary called Tees Valley Lithium Limited (“TVL”).
TVL will seek to develop the UK’s first lithium hydroxide monohydrate (“LHM”) facility at the Wilton International Chemicals Park located in the Teesside Freeport, UK.
This transaction and change of strategy constituted a reverse takeover transaction under the listing rules of the London Stock Exchange and resulted in Alkemy becoming an operating company.
Although we are still in the early stages, our aim is to build the most sustainable and significant producer of lithium hydroxide globally, utilising the advantages of the UK’s chemical processing skills, infrastructure, green energy and legislation.
Class 4 Feasibility Study
In April 2022 we announced the completion of a Class 4 Feasibility Study for our LHM facility. The LHM facility will process feedstock imported from various sources to produce 96,000 tonnes of a premium, low-carbon lithium hydroxide annually, representing around 15% of Europe’s projected demand.
The proposed LHM facility is located at the “plug and play” Wilton International Chemicals Park in the Teesside Freeport, with connections to 100% certified renewable energy.
The study was prepared by Wave International, a leading engineering consultancy firm with significant experience in developing lithium hydroxide projects worldwide.
Study highlights:
· 96,000 tonnes annual production of battery grade lithium hydroxide representing approximately 15% of projected UK and EU demand;
· The facility has been designed to process a range of imported low-carbon, high value feed sources including lithium sulphate and lithium carbonate;
· Pre-tax net present value (NPV) of GBP2.8 (US$3.9) billion based on long-term lithium hydroxide price of US$25,000 per tonne;
· Initial capital cost of GBP216 (US$300) million;
· Gross revenues of GBP49.2 (US$68.4) billion;
· Internal rate of return (IRR) of 35.6%;
· Significant potential to capture by-product value streams.
The project is the first of its kind in the UK, the biggest in Europe and will when completed be a key supplier to UK and European giga factories, electrical vehicle and battery storage industries.
Metallurgical test work
In May 2022 we announced the initial results of our ongoing metallurgical test-work programme. The test-work was performed by a leading technology provider JordProxa in Australia and independently verified by an internationally recognised cathode active material manufacturer.
The results demonstrated an ultra-pure battery grade lithium hydroxide from a low-quality industrial grade (95%) lithium sulphate.
The product specification rivals the prevalent Chinese standard specification GB/T 26008-2020 D1.
JordProxa further confirmed the ability to upscale to commercial production.
Feedstock and partnerships
During the period we continued to advance our discussions with counterparties for both feedstock and offtake.
In July 2022 we signed a partnership agreement with Traxys, a leading global physical trader and merchant in metals and natural resources, with annual turnover in excess of USD 8 billion. Under the terms of the agreement, Traxys will source and supply lithium feedstock for our processing facilities.
In August 2022 we announced the signing of an MoU with Weardale Lithium as a potential feedstock supplier from its lithium project in the North-East of England.
We are currently in advanced discussions with several other potential suppliers of spodumene concentrate and crude lithium carbonate and look forward to updating the market on this in due course.
Australia strategy
In August 2022 we announced plans to build a lithium sulphate monohydrate (“LSM”) plant at Port Hedland, Australia’s largest export port located in the Pilbara region of Western Australia, to feed TVL’s LHM facility in Teesside.
Port Hedland is an ideal location as it is in close proximity to a large number of spodumene producers in Western Australia. Port Hedland also benefits from excellent existing infrastructure (road, rail, water, electricity and gas) as well as talent. It further benefits from access to renewable energy and energy storage, allowing the delivery of a LSM plant with a low carbon footprint.
Train 1 of the Port Hedland LSM plant will process spodumene from Australian lithium miners to produce 40,000 tpa of primary LSM, with trains 2-4 adding a further 120,000 tpa primary LSM production in future expansions.
The Port Hedland LSM plant, together with TVL’s LHM processing facility at Teesside, will deliver a low carbon, de-risked lithium supply chain between Western Australian spodumene producers and the burgeoning European lithium battery cell market.
Key consultants and management team
In March 2022 we strengthened our management team with the addition of John Walker as the chief executive officer of TVL. John has more than 30 years of leadership experience in the mining and advanced materials processing industries.
In October 2022 we further bolstered the team with the appointment of Tony Veitch to lead our LSM project development. Tony is a very capable and experienced project builder and we are pleased to retain such talent on our team.
We have also appointed several industry leading consultants to help us deliver the projects, including:
· Wave International – a leading consulting firm in the battery and tech metals sector, with extensive upstream and downstream lithium processing experience. Wave delivered the Class 4 study and have had a significant involvement in the development of lithium hydroxide refineries in Australia. Wave will manage all work programmes including the work of our other experts and consultants, in order to develop a best-in-class LSM and LHM refining process.
· ANZAPLAN – a leading engineering consultant who will assist TVL in the development of the electrochemical route process.
· Nagrom laboratories – a leading laboratory who will advise on the removal of impurities.
We expect to make further appointments as the projects develop and will keep the market updated on this front.
Funding
In August 2022 we completed a successful private placing raising £1.2 million. The placing was oversubscribed and supported by existing and new investors as well as by the directors.
We are also advancing discussions with financiers for the funding of its LSM and LHM processing facilities and has received significant inbound interest including from private equity, structured bond providers and institutions.
As we intend to primarily finance and operate the LSM and LHM facilities via our operating subsidiary TVL, it is anticipated that there will be no significant dilution to Alkemy’s shareholders as part of the proposed financing process.
Partnership with bp for use of green hydrogen
In October 2022 we announced an MOU with bp Alternative Energy Investments who will seek to supply green hydrogen to TVL as part of bp’s Hygreen hydrogen project which is currently under development. As part of this partnership, TVL and bp will evaluate the feasibility of further decarbonising TVL’s processes and energy requirements via a switch from natural gas to green hydrogen.
Agreement to Lease at Wilton International
In September 2022 we announced an extension to the exclusivity period with Sembcorp Energy UK until 31 October 2022 to facilitate ongoing discussions with the aim of concluding legal documentation for the Agreement to Lease at Wilton International. We will provide further updates as and when there are any developments to report.
Market recognition and outlook
During the period we hosted a number of site visits in Teesside for brokers, investors and partners. The site visits were very well received and demonstrated to our guests the excellent facilities at Wilton International and at Teesside.
During the period we also engaged brokers Shard Capital and VSA Capital, who both produced detailed research notes which were highly supportive of our project.
The pace to decarbonise is accelerating and with a growing need for lithium hydroxide and now a growing preference from western OEM’s to source lithium hydroxide using more local supply chains, Alkemy is well positioned to benefit from these changes.
We would like to take this opportunity to thank our shareholders for their continued support and look forward to reporting on our progress during 2022 as we deliver on our strategy.
Paul Atherley
Non-Executive Chairman, Alkemy Capital Investments plc
27 October 2022
