REG - Alkemy Capital Invs. - Annual Report & Financial Statements
31/05/2023 08:00
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RNS Number : 0904B Alkemy Capital Investments PLC 31 May 2023
31 May 2023
Alkemy Capital Investments Plc
Annual Report & Financial Statements
Alkemy Capital Investments plc ("Alkemy") (ALK:LSE) (JV2:FRA) is pleased to
announce the publication of its audited Annual Report and Accounts for the
year ended 31 January 2023 (the "Annual Report"). The Annual Report is
available on the Company's website, www.alkemycapital.co.uk
(http://www.alkemycapital.co.uk) and is set out in full below.
KEY OPERATIONAL HIGHLIGHTS:
· secured a site at the Wilton International Chemicals Park in the
Teesside Freeport, UK.
· completed a Class 4 Feasibility Study for TVL's Wilton LHM refinery,
demonstrating exceptional project economics, including a pre-tax NPV of £2.8
(US$3.9) billion and gross revenues of £49.2 (US$68.4) billion.
· completed metallurgical testwork yielding ultra-pure lithium
hydroxide exceeding industry standards and validated by third party cathode
active material manufacturers.
· signed partnership agreements with global metals trader Traxys, local
lithium supplier Weardale Lithium and one of the world's largest energy
multinationals bp.
· launched an Australia strategy that will involve the construction of a
LSM refinery in Port Hedland to serve as a refining hub for Australia
spodumene miners and which will supply TVL's Wilton LHM refinery.
· ppointed Wave International as lead engineering and technology
partner, an industry-leading firm with a specialist skillset in lithium
refining.
· received full planning permission from Redcar and Cleveland Borough
Council to build our Wilton LHM refinery following extensive work from the TVL
team, which included the completion of a detailed Environmental Impact
Assessment and planning application.
· agreed the terms of a 30 year lease at the Wilton International
Chemicals Park for TVL's Wilton LHM refinery.
· secured a site for our LSM refinery at Boodarie in Port Hedland,
alongside bp, Posco, Fortescue Metals and Alinta Energy.
· received approval of our expression of interest from the UK Automotive
Transport Fund.
· signed an MOU with Recharge industries, the new owner of Britishvolt,
to supply lithium hydroxide.
· been identified by the Critical Minerals Association (UK) as a case
study project that will form a key strategic component of the UK's critical
minerals midstream processing and refining sector.
· signed an MOU with battery recycling group Altilium Metals for lithium
sulphate feedstock and lithium hydroxide offtake.
· signed an MOU with lithium technology company Lithium Services Pty Ltd
to investigate the processing of lithium from fines materials in tailings
deposits in Western Australia.
Further information
For further information, please visit Alkemy's website:
www.alkemycapital.co.uk (http://www.alkemycapital.co.uk) or TVL's website
www.teesvalleylithium.co.uk (http://www.teesvalleylithium.co.uk) .
-Ends-
Alkemy Capital Investments Plc Tel: 0207 317 0636
Sam Quinn info@alkemycapital.co.uk (mailto:info@alkemycapital.co.uk)
VSA Capital Limited Tel: 0203 005 5000
Andrew Monk (Corporate Broking)
Andrew Raca (Corporate Finance)
Shard Capital Partners LLP Tel: 0207 186 9952
Damon Heath damon.heath@shardcapital.com (mailto:damon.heath@shardcapital.com)
Tel: 0207 186 9927
Isabella Pierre isabella.pierre@shardcapital.com (mailto:isabella.pierre@shardcapital.com)
NOTES TO EDITORS
Alkemy is seeking to establish the world's leading independent and sustainable
lithium hydroxide production by developing state-of-the-art lithium sulphate
and lithium hydroxide facilities in Australia and the UK.
Alkemy, through its wholly-owned subsidiary Tees Valley Lithium, has secured a
9.6 ha brownfields site with full planning permission at the Wilton
International Chemicals Park in Teesside, a major UK Freeport, to build the
UK's first and Europe's largest lithium hydroxide processing facility.
Tees Valley Lithium has completed a Class 4 Feasibility Study for its proposed
lithium hydroxide refinery which will process feedstock imported from
various sources to produce 96,000 tonnes of premium, low-carbon lithium
hydroxide annually, representing around 15% of Europe's projected demand.
Alkemy has also secured a site near Port Hedland, Western Australia to build a
world-class sustainable lithium sulphate refinery that will provide reliable
feedstock for Tees Valley Lithium.
Forward Looking Statements
This news release contains forward‐looking information. The statements are
based on reasonable assumptions and expectations of management and Alkemy
provides no assurance that actual events will meet management's expectations.
In certain cases, forward‐looking information may be identified by such
terms as "anticipates", "believes", "could", "estimates", "expects", "may",
"shall", "will", or "would". Although Alkemy believes the expectations
expressed in such forward‐looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance and
actual results or developments.
may differ materially from those projected. Mining exploration and development
is an inherently risky business. In addition, factors that could cause actual
events to differ materially from the forward-looking information stated herein
include any factors which affect decisions to pursue mineral exploration on
the relevant property and the ultimate exercise of option rights, which may
include changes in market conditions, changes in metal prices, general
economic and political conditions, environmental risks, and community and
non-governmental actions. Such factors will also affect whether Alkemy will
ultimately receive the benefits anticipated pursuant to relevant agreements.
This list is not exhaustive of the factors that may affect any of the
forward‐looking statements. These and other factors should be considered
carefully and readers should not place undue reliance on forward-looking
information.
Chairman's Statement
I have great pleasure in presenting our 2023 Annual Report.
In February 2022, Alkemy Capital Investments plc ("Alkemy" or the "Company")
announced the formation of a subsidiary called Tees Valley Lithium Limited
("TVL") that would seek to develop the UK's first Lithium Hydroxide processing
facility.
This transaction constituted a reverse takeover transaction under the listing
rules of the London Stock Exchange and resulted in Alkemy becoming an
operating company.
Business Overview
The Company is developing two key facilities: a lithium hydroxide ("LHM")
refinery at the Wilton International Chemicals Park in Teesside, UK and a
lithium sulphate ("LSM") refinery in Port Hedland, Australia.
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.
China currently dominates lithium conversion capacity (currently processing
90% of the world's Lithium Hydroxide) and increasingly is moving upstream to
secure feedstock. The market for lithium hydroxide has been well articulated
by many analysts with a consensus forecasting that it will go into deficit
causing prices to rise significantly over the medium term.
Building a European lithium processing facility will reduce the regional
dependence on China, which currently controls 90% of the world's lithium
refining capacity, however, is expected to require all of this production
domestically in order to deliver its US$11 trillion Carbon Neutral 2060 plan.
It is also expected that Europe and the US will continue to use the higher
performance NMC batteries which require a lithium hydroxide feedstock.
A key driver for TVL's site selection at Wilton is the 'plug & play'
advantages of the site, which boasts a plethora of existing infrastructure and
readily accessible utilities including water, gas, steam and electricity.
To meet the demand for the switch to electric vehicles within Europe, over
700GW of gigafactory capacity has been announced with an annual projected
demand of 650,000 tonnes for locally refined lithium chemicals.
The Wilton LHM refinery is expected to produce enough lithium hydroxide to
supply 100% of the forecasted automotive demand in the UK by 2030, with a
further 35% of its total production available for export to other countries in
Europe and elsewhere.
TVL is currently in advanced discussions with a number of offtake customers,
including European gigafactories and electric vehicle OEMs. These customers
are increasingly focussed on price, transparency and low embedded carbon, when
sourcing high grade lithium products.
To address this challenge, the Company plans to import high-grade lithium
feedstock in the form of technical grade lithium carbonate from South America
and lithium sulphate from our Port Hedland LSM refinery in Australia. This
will avoid loading up the world's shipping fleets with low grade spodumene
concentrates and will reduce waste.
By sourcing low carbon feedstock and powering an electrochemical refining
process with offshore wind and green hydrogen supplied by energy multinational
bp's HyGreen Teesside project, TVL aims to supply its UK and European
customers with the world's lowest-carbon lithium hydroxide.
2022-23 Highlights
Since TVL's launch in February 2022, we have been extremely busy and have
completed a number of significant milestones as set out below. We have:
· secured a site at the Wilton International Chemicals Park in the
Teesside Freeport, UK.
· completed a Class 4 Feasibility Study for TVL's Wilton LHM
refinery, demonstrating exceptional project economics, including a pre-tax NPV
of £2.8 (US$3.9) billion and gross revenues of £49.2 (US$68.4) billion.
· completed metallurgical testwork yielding ultra-pure lithium
hydroxide exceeding industry standards and validated by third party cathode
active material manufacturers.
· signed partnership agreements with global metals trader Traxys,
local lithium supplier Weardale Lithium and one of the world's largest energy
multinationals bp.
· launched an Australia strategy that will involve the construction
of a LSM refinery in Port Hedland to serve as a refining hub for Australia
spodumene miners and which will supply TVL's Wilton LHM refinery.
· appointed Wave International as lead engineering and technology
partner, an industry-leading firm with a specialist skillset in lithium
refining.
· received full planning permission from Redcar and Cleveland Borough
Council to build our Wilton LHM refinery following extensive work from the TVL
team, which included the completion of a detailed Environmental Impact
Assessment and planning application.
· agreed the terms of a 30 year lease at the Wilton International
Chemicals Park for TVL's Wilton LHM refinery.
· secured a site for our LSM refinery at Boodarie in Port Hedland,
alongside bp, Posco, Fortescue Metals and Alinta Energy.
· received approval of our expression of interest from the UK
Automotive Transport Fund.
· signed an MOU with Recharge industries, the new owner of
Britishvolt, to supply lithium hydroxide.
· been identified by the Critical Minerals Association (UK) as a case
study project that will form a key strategic component of the UK's critical
minerals midstream processing and refining sector.
· signed an MOU with battery recycling group Altilium Metals for
lithium sulphate feedstock and lithium hydroxide offtake.
· signed an MOU with lithium technology company Lithium Services Pty
Ltd to investigate the processing of lithium from fines materials in tailings
deposits in Western Australia.
Lithium Sulphate Refinery - Port Hedland
In July 2022, the Company announced the launch of its strategy to build a
lithium sulphate plant in Port Hedland, Australia, to serve as a refining hub
for Australian spodumene producers.
The Company has now secured an allocation of land at the new Boodarie
Strategic Industrial Area, alongside other global leaders in the green
industrial sector, to facilitate the development of the Port Hedland LSM
refinery
Building the Port Hedland LSM refinery will provide Australian spodumene
producers with a complete mid-stream lithium refining solution with direct
access to the European market through TVL's Wilton LHM refinery in Teesside,
UK.
This new Pilbara to Teesside supply chain will embody the new critical
minerals supply chains possible under the recently signed free trade agreement
between Australia and the UK and leverage the competitive strengths of
Australia in mining and critical minerals processing and the UK in chemical
refining.
Importantly, the Port Hedland LSM refinery will bring major value-adding to
the Pilbara region, with significant multiplier benefits for the local
community and the State of Western Australia, whilst reducing the carbon
footprint of the end-to-end lithium battery cell supply chain to meet new
European emissions standards.
The Port Hedland LSM plant, together with the Wilton LHM refinery, will
deliver a low carbon, de-risked lithium supply chain between Australian
spodumene producers and the burgeoning European lithium battery cell market.
Funding
Alkemy continues to consider various funding options for the project including
strategic partnerships, private equity, a structured bond and an institutional
equity component and will update the market on progress in due course. As it
is intended to finance and operate the facility via its operating subsidiary
TVL, if this is achieved it is anticipated that there will be no significant
dilution to Alkemy's shareholders as part of the proposed financing process.
We would like to take this opportunity to thank our shareholders for their
continued support and look forward to reporting on our progress during the
course of 2023.
Paul Atherley
Non-Executive Chairman
30 May 2023
Strategic Report
The Directors present the Strategic Report of the Company for the year ended
31 January 2023.
Review of business and future developments
The Company was incorporated and registered in England and Wales on 21 January
2021 and on 27 September 2021 was admitted to the Standard Listing segment of
the Official List of the UK Listing Authority and to trading on the London
Stock Exchange, having raised £1.5 million (before expenses) from the issue
of 2,999,999 million ordinary shares at a placing price of 50p.
The Company was formed to undertake an Acquisition of a controlling interest
in a company or business. Given their experience, the Board focused on the
mining and technology metals sectors.
On 25 February 2022, the Company announced that it had entered into an
exclusivity agreement (the "Exclusivity Agreement") with Sembcorp Utilities
(UK) Limited and a heads of terms in respect of a proposed option to enter
into a lease over a brownfields site (the "Site") at Wilton International (the
"Agreement to Lease") and a long lease over the Site. Wilton International is
a well-established chemical engineering park located in Teesside, a major
Freeport in the UK. The entering into the Exclusivity Agreement and
incorporation of TVL constituted an Acquisition and reverse takeover
transaction under the rules of the London Stock Exchange.
On 19 December 2022 the Company announced that it had entered into the
Agreement to Lease pursuant to which an agreed form lease may be entered into
by TVL, a subsidiary of the Company, following exercise of the one year option
granted under the Agreement to Lease (the "Lease"). It is intended that TVL
will be the operating company that develops the Project.
If, during the one year option period the Board determines that the
opportunities presented by the development of the Site would be in the best
interests of shareholders, the Company, via TVL, intends to enter into the
Lease and to commence the design, finance and construct of a plant that will
produce Lithium Hydroxide Monohydrate from Lithium Sulphate Monohydrate
feedstock with a view to becoming a key supplier to the UK and European
battery cell manufacturers (the "Project").
The principal activity of the Company is to act as the holding company to TVL,
an operating subsidiary, which will enter into the Lease. The Company will
provide a parent company guarantee to Sembcorp in order to guarantee the
operating subsidiary's obligations under the Lease. The Company aims to
implement an operating strategy with a view to generating value for its
shareholders through the creation of a Lithium Hydroxide Monohydrate facility.
Key performance indicators
During the reporting year, the Company was focused on the evaluation of
various opportunities in the mining sector. When the Company enters into the
Lease, then financial, operational, health, safety, and environmental KPIs
will become more relevant and reported upon as appropriate. As a result, the
Directors are of the opinion that analysis using KPI's is not appropriate for
an understanding of the business at this time.
Principal risks and uncertainties
The principal risks and uncertainties currently faced by the Company are set
out further in the Risk Management Report on page 18.
Gender analysis
A split of our Directors, senior managers and employees by gender at the end
of the financial year is as follows:
Male - 2 (directors)
Female - 2 (1 director, 1 senior manager)
The Company recognises the need to operate a gender diverse business. The
Board will also ensure any future employment takes into account the necessary
diversity requirements and compliance with all employment law. The Board has
experience and sufficient training and qualifications in dealing with such
issues to ensure they would meet all requirements. More detail will be
disclosed in the future annual reports once the Company enters into the Lease
and has completed its transition to an operating company.
Corporate social responsibility
The Company aims to conduct its business with honesty, integrity and openness,
respecting human rights and the interests of shareholders and employees. The
Company aims to provide timely, regular and reliable information on the
business to all its shareholders and conduct its operations to the highest
standards.
The Company strives to create a safe and healthy working environment for the
wellbeing of its staff and to create a trusting and respectful environment,
where all members of staff are encouraged to feel responsible for the
reputation and performance of the Company.
The Company aims to establish a diverse and dynamic workforce with team
players who have the experience and knowledge of the business operations and
markets in which we operate. Through maintaining good communications, members
of staff are encouraged to realise the objectives of the Company and their own
potential.
Corporate environmental responsibility
This will become more relevant once the Company enters into the Lease and
completes its transition to an operating company. The Board contains personnel
with a good history of running businesses that have been compliant with all
relevant laws and regulations and there have been no instances of
non-compliance in respect of environment matters.
The Company's policy is to minimize the risk of any adverse effect on the
environment associated with its activities with a thoughtful consideration of
key areas such as energy use, pollution, transport, renewable resources,
health and wellbeing. The Company also aims to ensure that its suppliers and
advisers meet with their legislative and regulatory requirements and that
codes of best practice are met and exceeded.
Section 172(1) Statement - Promotion of the Company for the benefit of the
members as a whole
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
1. Consider the likely consequences of any decision in the long
term,
2. Act fairly between the members of the Company,
3. Maintain a reputation for high standards of business conduct,
4. Consider the interests of the Company's employees,
5. Foster the Company's relationships with suppliers, customers
and others, and
6. Consider the impact of the Company's operations on the
community and the environment.
The pre-revenue nature of the business is important to the understanding of
the Company by its members, employees and suppliers, and the Directors are as
transparent about the cash position and funding requirements as is allowed
under LSE regulations.
The application of the s172 requirements can be demonstrated in relation to
the some of the key decisions made during 2022 and after the year end:
· The launch of TVL and the execution of the Exclusivity Agreement;
· Completion of the Class 4 Feasibility Study;
· The launch of an Australia strategy that will involve the
construction of a LSM refinery in Port Hedland;
· The appointment of Wave International as lead engineering and
technology partner;
· The successful lodgement of an application for full planning
permission from Redcar and Cleveland Borough Council to build TVL's Wilton LHM
refinery;
· The execution of the Agreement to Lease.
The Board takes seriously its corporate social responsibilities to the
environment in which it works which will become more relevant once the Company
enters into the Lease and completes its transition to an operating company.
Paul Atherley
Non-Executive Chairman
30 May 2023
Board of Directors
Paul Atherley - Non-Executive Chairman
Mr Atherley is a highly experienced senior resources executive with wide
ranging international and capital markets experience. He graduated as mining
engineer from Imperial College London and has held a number of senior
executive and board positions. He is currently Chairman of LSE listed Pensana
Plc which is establishing the world's first independent and sustainable rare
earth processing facility in the UK.
He is based in London and has broad experience in raising debt and equity
finance for resource companies. He served as Executive Director of the
investment banking arm of HSBC Australia where he undertook a range of
advisory roles in the resources sector. He has completed a number of
acquisitions and financings of resources projects in Europe, China, Australia
and Asia.
Mr Atherley is a strong supporter of Women in STEM and has established a
scholarship which provides funding for young women to further their education
in science and engineering.
Sam Quinn - Non-Executive Director
Sam Quinn is a corporate lawyer with over fifteen years' worth of experience
in the natural resources sector, in both legal counsel and management
positions. Mr Quinn is a principal of Silvertree Partners, a London-based
specialist corporate services provider for the natural resources industry. In
addition Mr Quinn holds various other Non-Executive Directorships and company
secretarial roles for listed and unlisted natural resources companies. During
time spent in these roles, Mr Quinn has gained significant experience in the
administration, operation, financing and promotion of natural resource
companies.
Previously, Mr Quinn worked as the Director of Corporate Finance and Legal
Counsel for the Dragon Group, a London based natural resources venture capital
firm and as a corporate lawyer for Jackson McDonald Barristers &
Solicitors in Perth, Western Australia and for Nabarro LLP in London.
Helen Pein - Non-Executive Director
Helen has over 30 years' experience in natural resources sector and currently
serves as a Director of Pan Iberia Ltd, Trident Royalties Plc and Panex
Resources Pty Ltd.
Helen was formerly a Director of Pangea Exploration Pty Ltd, a company
affiliated with Denham Capital where she was part of the team directly
responsible for the discovery of a number of world-class gold and mineral
sands deposit across Africa. Helen is a recipient of the Gencor Geology
Award.
Directors' Report
The Directors present their annual report together with the financial
statements and Auditor's Report for the year ended 31 January 2023. The
following information is not presented in the Directors' report as it is
presented in the Strategic Report in accordance with s414C(11); Review of
business, Key Performance Indicators, Principal risks and uncertainties,
Gender analysis, Corporate social responsibility, Corporate environmental
responsibility, Section 172(1) statement.
Results and dividends
The results of the Company for the year ended 31 January 2023 are set out in
the Statement of Comprehensive Income on page 29. The Directors do not
recommend the payment of a dividend for the year.
Directors and Directors' interests
The Directors who served during the year to date are as follows:
Paul Atherley
Sam Quinn
Helen Pein
The beneficial shareholdings of the Board in the Company as at 31 January 2023
were as follows:
Number of ordinary shares % of issued share capital Share options
P Atherley 3,078,000 42.75% 175,000
S Quinn 325,000 4.51% 140,000
H Pein 25,000 0.35% 75,000
Director incentives
In the year ended 31 January 2023, 390,000 options were granted to Directors
(2022: nil). As at 31 January 2023, 390,000 (2022: nil) options issued to
Directors were outstanding.
Further details on Directors remuneration can be found in the Directors
Remuneration report on page 14 of this annual report.
Substantial shareholders
As at the date of this Report, the total number of issued Ordinary Shares with
voting rights in the Company was 7,199,998. The Company has been notified of
the following interests of 3 per cent or more in its issued share capital as
at the date of this report.
Shareholder Number of ordinary shares % of issued share capital
Paul Atherley 3,078,000 42.75%
Sam Quinn 325,000 4.51%
Corporate governance
The Company has set out its full Corporate Governance Statement on page 20.
The Corporate Governance Statement forms part of this Directors' report and is
incorporated into it by cross reference.
Greenhouse gas disclosures
As the Group remains in the early stages of development without any current
physical operations across its portfolio of projects, it is not practical to
obtain and analyse emissions data for the Company operations. However, given
the minor level of physical operations in the year, and the lack of any plant
or office space, the carbon footprint and climate change impact of the Group's
operations are considered to be negligible, and in any event below the 40 MWh
threshold prescribed for detailed emissions disclosures.
As such, the Group does not consider it relevant to provide climate related
disclosures under the recently enacted TCFD guidelines, nor would
determination of the relevant emissions data be practical. Once the Group
has commenced the construction of physical premises across any of its
projects, and hence transitioned into an operating company, it will revisit
its position on climate disclosures accordingly.
Supplier payment policy
The Company's current policy concerning the payment of trade creditors is to
follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre
Point, 103 New Oxford Street, London WC1A 1DU).
The Company's current policy concerning the payment of trade creditors is to:
· settle the terms of payment with suppliers when agreeing the terms
of each transaction;
· ensure that suppliers are made aware of the terms of payment by
inclusion of the relevant terms in contracts; and
· pay in accordance with the Company's contractual and other legal
obligations.
Financial instruments and risk management
The Company is exposed to a variety of financial risks and the impact on the
Company's financial instruments are summarised in the Risk Management Report.
Details of the Company's financial instruments are disclosed in note 14 to the
financial statements.
Directors' insurance
The Company has implemented Directors and Officers Liability Indemnity
Insurance.
Events after the reporting year
On 7 February 2023 the Company announced that it had entered into an MOU with
Recharge Industries Pty Ltd, an Australian lithium-ion battery company who had
successfully bid to purchase Britishvolt, a planned £3.8 billion lithium-ion
gigafactory in northern England. Under the MOU TVL and Recharge agreed to
negotiate toward executing a definitive offtake agreement to supply low-carbon
lithium hydroxide.
On 1 March 2023 the Company announced that Recharge Industries had completed
the acquisition of Britishvolt and that it was advancing discussions with
Recharge.
On 26 April 2023 the Company signed an MOU with battery recycling group
Altilium Metals for lithium sulphate feedstock and lithium hydroxide offtake.
On 11 May 2023 the Company signed an MOU with lithium technology company
Lithium Services Pty Ltd to investigate the processing of lithium from fines
materials in tailings deposits in Western Australia.
Going concern
As part of their assessment of going concern, the Directors have prepared cash
forecasts to determine the funding requirements of the business over the 18
months from the reporting date, as the Group continues to develop its LHM
refinery at Wilton and LSM refinery in Port Hedland. Cash requirements over
this period have been projected in the range of a £2m minimum (decelerated
project development case) to £12m maximum (accelerated project development
case) depending on the level of technical project development work being
undertaken, as determined by funding availability.
As at the date of this report, the Directors are considering a variety of
funding options from numerous parties to consider the option best suited to
balancing the immediate cash flow needs of the business and desire to
accelerate the project development timeframe against the need to avoid
unnecessary dilution of the shareholders during a period of depressed equity
market prices. Options ranging from project lending facilities, convertible
lending facilities and equity fundraising are under consideration, and the
Board anticipates concluding this process in the near term.
The Directors are reasonably confident that the necessary funding will be
secured, as and when required, by executing on one of the options under
consideration, such that the Directors have a reasonable expectation that the
Company will continue in operational existence for the foreseeable future.
However as successful execution of one of the above fundraising options
cannot be assured, a material uncertainty exists in this regard.
Accordingly, the Directors believe that as at the date of this report it is
appropriate to continue to adopt the going concern basis in preparing the
financial statements.
Disclosure of information to Auditors
The Directors confirm that:
· So far as each Director is aware, there is no relevant audit
information of which the company's auditor is unaware; and
· The Directors have taken all steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that information.
Auditor
A resolution proposing the re-appointment of Crowe U.K. LLP as auditor will be
put to shareholders at the Annual General Meeting.
This Directors' Report has been approved by the Board and signed on its behalf
by:
Paul Atherley
Non-Executive Chairman
30 May 2023
Directors' Remuneration Report
Until the Lease is entered into and the Company completes its transition to an
operating company, the Company will not have a separate remuneration
committee. The Board will instead periodically review the quantum of
Directors' fees, taking into account the interests of shareholders and the
performance of the Company and the Directors.
The items included in this report are unaudited unless otherwise stated.
The Directors who held office at 31 January 2023 are summarised as follows:
Name of Director Position
P Atherley Non-Executive Chairman
S Quinn Non-Executive Director
H Pein Non-Executive Director
Directors' Letters of appointment
Letter of Appointment - Paul Atherley
Pursuant to a letter of appointment dated 21 September 2021 between the
Company and Mr Atherley, Mr Atherley is engaged as Chairman with fees of
£24,000 per annum. The appointment can be terminated by either party on three
months written notice.
Letter of Appointment - Sam Quinn
Pursuant to a letter of appointment dated 21 September 2021 between the
Company and Sam Quinn, Mr Quinn is engaged as a Non-Executive Director with
fees of £18,000 per annum. The appointment can be terminated by either
party on three months written notice.
Letter of Appointment - Helen Pein
Pursuant to a letter of appointment dated 21 September 2021 between the
Company and Helen Pein, Helen is engaged as a Non-Executive Director with fees
of £18,000 per annum. The appointment can be terminated by either party on
three months written notice.
In addition to the salaries received under the service agreements referenced
above, Sam Quinn and Helen Pein will be remunerated for additional work
performed for the Company which is outside the scope of their service
agreements, including project due diligence, consultancy and management
services. Sam Quinn and Helen Pein's contractual daily rate for these
additional services is £1,000 per day and both Sam Quinn and Helen Pein shall
be subject to a maximum of 3 days per calendar month.
Pursuant to a consultancy agreement dated 21 September 2021 between the
Company and Selection Capital Investments Limited the ("Consultancy
Agreement"), Paul Atherley is engaged as Key Personnel (as defined under the
Consultancy Agreement) contracted to provide services to the Company in
consideration of payment of £1,500 per day with a maximum amount of days
contracted to be 3 days per calendar month.
Terms of appointment
The services of the Directors are provided under the terms of letters of
appointments, as follows:
Director Year of appointment Number of periods completed Date of current engagement letter
P Atherley 2021 2 21 September 2021
S Quinn 2021 2 21 September 2021
H Pein 2021 2 21 September 2021
Consideration of shareholder views
The Board considers shareholder feedback received. This feedback, plus any
additional feedback received from time to time, is considered as part of the
Company's annual policy on remuneration.
Policy for salary reviews
The Company may from time to time seek to review salary levels of Directors,
taking into account performance, time spent in the role and market data for
the relevant role. It is intended that there will be a salary review during
the next year as the Company transitions to an operating company.
Policy for new appointments
It is not intended that there will be any new appointments to the Board in the
near term. It is intended that a full review of the Board will take place on
an annual basis following the Company's full transition to an operating
Company following the entering into of the Lease.
Directors' emoluments and compensation (audited)
Remuneration paid to the Directors' during the year ended 31 January 2023 was
as follows (all figures are stated in GBP):
Year Ended 31 January 2023:
Director Directors fees Salary/Consulting fees Total remuneration
P Atherley 31 Jan 2023 24,000 69,000 93,000
S Quinn 31 Jan 2023 18,000 48,600 66,600
H Pein 31 Jan 2023 18,000 - 18,000
Total 31 Jan 2023 60,000 117,600 177,600
Period Ended 31 January 2022:
Director Directors fees Salary/Consulting fees Total remuneration
P Atherley 31 Jan 2022 8,267 - 8,267
S Quinn 31 Jan 2022 6,200 14,400 20,600
H Pein 31 Jan 2022 6,000 - 6,000
Total 31 Jan 2022 20,467 14,400 34,867
Director incentives
In the year ended 31 January 2023, 390,000 options were granted to Directors
(2022: nil). As at 31 January 2023, 390,000 (2022:nil) options issued to
Directors were outstanding.
Directors' Remuneration Policy
Pursuant to the Directors' letters of appointment, as described above, the
Directors receive fees, all payable monthly in arrears. There is currently a
long-term incentive plan in operation for the Directors by way of share
incentive options.
Based on the foregoing, the remuneration policy of the Company can be
summarised as follows:
How the element supports our strategic objectives Operation of the element Maximum potential payout and payment at threshold Performance measures used, weighting and time period applicable
Base Pay
Recognises the role and the responsibility for the delivery of strategy and Paid in 12 monthly instalments Contractual sum None
results
Pensions
None n/a n/a n/a
Short term incentives
None n/a n/a n/a
Long term incentives
Aligns directors and shareholders in share price and project development Share options issued TBC 1/3 of the option vest immediately; 1/3 of the options vest following the
completion of the fund raising to fund construction of the first 24,000 tpa
capacity at TVL's Lithium Hydroxide project at Wilton International; and 1/3
of the options vest following commissioning of the first 24,000 tpa capacity
at the project.
A remuneration committee is expected to be appointed once the Lease is entered
into, to consider an appropriate level of Directors' remuneration.
Although there is no formal Director shareholding policy in place, the Board
believe that share ownership by Directors strengthens the link between their
personal interests and those of shareholders.
No views were expressed by shareholders during the year on the remuneration
policy of the Company.
Other matters
The Company does not currently have any short-term incentive schemes in place
for any of the Directors.
The Company does not have any pension plans for any of the Directors and does
not pay pension amounts in relation to their remuneration.
This Directors' Remuneration Report has been approved by the Board and signed
on its behalf by:
Paul Atherley
Non-Executive Chairman
30 May 2023
Risk Management Report
The Company has undertaken an evaluation of the risks it is exposed to which
are summarised as follows:
There is no assurance that the Company will determine that the Project is
economically viable and the Company may elect not to execute the option
granted under the Agreement to Lease
The success of the Company's business strategy is dependent on its ability to
identify sufficient suitable acquisition opportunities. Whist the Company
believes that the Project presents a good opportunity, it is still in the
process of evaluating such opportunity. If the Company fails to complete the
development of the Project it may be left with substantial unrecovered
transaction costs, potentially including fees, legal costs, accounting costs,
due diligence or other expenses. Furthermore, even if an agreement is reached
relating to the Project, the Company may fail to complete the Project for
reasons beyond its control. Any such event will result in a loss to the
Company of the related costs incurred, which could materially adversely affect
subsequent attempts to identify and acquire another target business.
Development and production activities are capital intensive and inherently
uncertain in their outcome and the Company may not make a return on its
investments, recover its costs or generate cash flows.
The construction of industrial facilities are capital intensive. In addition,
environmental damage could greatly increase the cost of operations, and
various operating conditions may adversely and materially affect the levels of
production. These conditions include delays in obtaining governmental
approvals or consents, insufficient storage or transportation capacity or a
change in demand for the product. While diligent supervision and effective
maintenance operations can contribute to maximising production rates over
time, production delays and declines from normal operations cannot be
eliminated and may adversely and materially affect the revenues, cash flow,
business, results of operations and financial resources and condition of the
Company and its subsidiary undertakings from time to time (the "Group").
Currently the Group has insufficient capital to meet the funding requirements
for the development of the Project
As the Company is still evaluating the Project, it is still considering the
associated costs with the development of the Project and the amount of
additional capital that may be required.
The Company will need to raise additional funding in the near term to meet its
working capital requirements for the next twelve months. In addition to
working capital needs, the Company is of the opinion that if it decides to
proceed with the Project, the Group does not have sufficient capital in order
to complete the construction of the Project and hence will be required to
raise additional funds in support of project development expenditure
requirements.
Based on a high-level preliminary review of expected costs the Directors
anticipate that a total of approximately £250 - 300 million (excluding
financing costs) of additional equity and / or debt financing will be required
and subject to the outcome of the feasibility and engineering studies the
Company's confirmation to proceed with the Project to fund the evaluation,
development and construction of the Project. The Company intends to raise the
development costs of the Project by:
(a) Debt finance - Any debt finance in respect of the Company for the
purposes of developing and completing the Project, is likely to be subject to
customary conditions precedent. As of the date of this document, the Company
has not yet begun the formal process of seeking third party debt financing in
respect of the Project, however the Company expects to carry out this process
immediately following completion of the feasibility studies and the Company's
confirmation to proceed with the Project.
(b) Equity finance - In relation to any equity financing, the Company
expects to engage advisers to assist the Company with its equity funding
requirements. The Company has not yet begun the formal process of seeking
formal engagement with advisers for equity financing in respect of the
Project, however the Company expects to carry out this process in due course
following completion of the feasibility and engineering studies.
Based on the Company's informal discussions with potential debt and equity
providers to date, the Directors are confident that within the period of
twelve months following the date of this document the Group will be able to
secure all the necessary finance required to develop and complete the Project.
The failure to secure additional financing or to secure such additional
financing on terms acceptable to the Company could have a material adverse
effect on the continued development or growth of the acquired business,
prospects, and the financial condition and results and operations of the Group
and could, ultimately lead to the insolvency of the Company.
The price of lithium hydroxide is affected by factors beyond the Group's
control
If the Group proceeds with the Project, and the market price of lithium
hydroxide decreases significantly for an extended period of time, the ability
for the Group to attract finance and ultimately generate profits could be
adversely affected. Numerous external factors and industry factors that are
beyond the control of the Group that affect the price of lithium hydroxide
include:
· industrial demand;
· levels of production;
· rapid short term changes in supply and demand because of
speculative or hedging activities; and
· global or regional political or economic events.
The price at which the Group can sell any lithium hydroxide it may produce in
the future will therefore be relevant to the future revenues that can be
generated by the Group and its ability to finance the Company going forward
and any adverse effects on such price could have a material adverse effect on
the Group's business, financial performance, results of operations and
prospects.
The Company may be unable to hire or retain personnel required to support the
Company going forward
The Group's ability to compete depends upon its ability to retain and attract
highly qualified management and technical personnel. Following completion of
the Project, the Company will evaluate the personnel of the acquired business
and may determine that it requires increased support to operate and manage the
acquired business in accordance with the Company's overall business strategy.
There can be no assurance that existing personnel of the acquired business
will be adequate or qualified to carry out the Company's strategy, or that the
Company will be able to hire or retain experienced, qualified employees to
carry out the Company's strategy
During the development of the Project, the Company may be unable to acquire or
renew necessary concessions, licenses, permits and other authorisations
The Project will require certain concessions, licences, permits and other
authorisations to carry out its operations. Any delay in obtaining or renewing
a license, permit or other authorisation may result in a delay in investment
or development of a resource and may have a materially adverse effect on the
acquired business' results of operations, cash flows and financial condition.
In addition, any concessions, licences, permits and other authorisations of
the Project may be suspended, terminated or revoked if it fails to comply with
the relevant requirements.
Failure to obtain (and shortages and disruptions in lead times to deliver)
certain key inputs may adversely affect the Company's operations during the
development of the Project
During the development of the Project, the Company's inability to timely
acquire feedstock, strategic consumables, raw materials, and processing
equipment could have an adverse impact on any results of operations and
financial condition. Periods of high demand for supplies can arise when
availability of supplies is limited. This can cause costs to increase above
normal inflation rates. Interruption to supplies or increase in costs could
adversely affect the operating results and cash flows of the Company during
the development of the Project.
This Risk Management Report has been approved by the Board and signed on its
behalf by:
Paul Atherley
Non-Executive Chairman
30 May 2023
Corporate Governance Statement
The Company observes the requirements of the Quoted Company Alliance corporate
governance code (the "QCA Code") and is in compliance with the QCA Code, save
as set out below:
1. Given the composition of the Board, certain provisions of the QCA Code
are considered by the Board to be inapplicable to the Company. Specifically,
the Company does not consider it necessary to have a senior independent
Director and the Board will, at the outset, consist of only non-executive
Directors.
2. The QCA Code also recommends the submission of Directors for re-election
at annual intervals. No Director will be required to submit for re-election
until the first annual general meeting of the Company following the
Acquisition.
In the future, the Directors may seek to transfer from a Standard Listing to
either a Premium Listing or other appropriate stock market (although there can
be no guarantee that the Company will fulfil the relevant eligibility criteria
at the time and that a transfer to a Premium Listing or other appropriate
stock market will be achieved). However, in addition to or in lieu of a
Premium Listing, the Company may determine to seek a listing on another stock
exchange. Following such a Premium Listing, the Company would comply with the
continuing obligations contained within the Listing Rules and the Disclosure
and Transparency Rules in the same manner as any other company with a Premium
Listing.
The Company does not have nomination, remuneration, audit or risk committees.
The Board as a whole will instead review its size, structure and composition,
the scale and structure of the Directors' fees (taking into account the
interests of shareholders and the performance of the Company), take
responsibility for the appointment of auditors and payment of their audit fee,
monitor and review the integrity of the Company's financial statements and
take responsibility for any formal announcements on the Company's financial
performance. Following entry into the Lease, the Board intends to put in place
nomination, remuneration, audit and risk committees.
The Board has a share dealing code that complies with the requirements of the
Market Abuse Regulations. All persons discharging management responsibilities
(comprising only the Directors) comply with the share dealing code.
Carbon emissions
The Company currently has no trade, and one employee other than the Directors
and has no office. Therefore, the Company has minimal carbon emissions and it
is not practical to obtain emissions data at this stage.
Board of Directors
The Company has a Board it believes is well suited for the purposes of
implementing its business strategy, combining skill sets for the assessment of
investment and acquisition of royalties and streams in the mining sector.
The Directors are responsible for carrying out the Company's objectives,
implementing its business strategy and conducting its overall supervision.
Acquisition, divestment and other strategic decisions will all be considered
and determined by the Board.
The Board will provide leadership within a framework of prudent and effective
controls. The Board will establish the corporate governance values of the
Company and will have overall responsibility for setting the Company's
strategic aims, defining the business plan and strategy and managing the
financial and operational resources of the Company.
The Board aims to hold meetings on a quarterly basis and is regularly in
contact to discuss prospective acquisition opportunities.
The Articles of the Company contain express provisions relating to conflicts
of interest in line with the Companies Act 2006.
Shareholder communications
The Company uses its corporate website (www.alkemycapital.co.uk) to ensure
that the latest announcements, press releases and published financial
information are available to all shareholders and other interested parties.
The AGM is used to communicate with both institutional shareholders and
private investors and all shareholders are encouraged to participate. Separate
resolutions are proposed on each issue so that they can be given proper
consideration and there is a resolution to approve the Annual Report and
Accounts. Notice of the AGM is sent to shareholders at least 21 days before
the meeting and the results are announced to the London Stock Exchange and are
published on the Company's website.
Paul Atherley
Non-Executive Chairman
30 May 2023
Directors' Responsibility Statement
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with UK Adopted International Accounting
Standards ("IAS"). Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or loss for that
period.
In preparing these financial statements, the Directors are required to:
1. select suitable accounting policies and then apply them
consistently;
2. make judgements and accounting estimates that are reasonable
and prudent;
3. state whether applicable IASs as adopted by the United Kingdom
have been followed, subject to any material departures disclosed and explained
in the financial statements; and
4. prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the Financial Statements and the Directors
Remuneration Report comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and Company, and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
They are also responsible to make a statement that they consider that the
Annual Report and Financial Statements, taken as a whole, is fair, balanced,
and understandable and provides the information necessary for the shareholders
to assess the Company's position and performance, business model and strategy.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom. governing the preparation and dissemination
of the Financial Statements may differ from legislation in other
jurisdictions.
Directors' responsibility statement pursuant to disclosure and Transparency
Rule
Each of the Directors, whose names and functions are listed within the Board
of Directors confirm that, to the best of their knowledge:
1. the financial statements are prepared in accordance with IFRS
as adopted by the United Kingdom, give a true and fair view of the assets,
liabilities, financial position and loss of the Company; and
2. the Annual Report and financial statements, including the
Strategic Report, includes a fair review of the development and performance of
the business and the position of the Company, together with a description of
the principal risks and uncertainties that they face.
Approved by the Board on 30 May 2023
Paul Atherley
Non-Executive Chairman
Independent auditor's report to the members of Alkemy Capital Investments Plc
Opinion
We have audited the financial statements of Alkemy Capital Investments Plc
(the "company") and its subsidiaries (the 'group') for the year ended 31
January 2023 which comprise consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of
changes in equity, consolidated statement of cash flows, company statement of
financial position, company statement of changes in equity, company statement
of cash flows and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted international
accounting standards.
In our opinion the financial statements:
· give a true and fair view of the state of the group's and of the
company's affairs as at 31 January 2023 and of the group's loss for the year
then ended;
· have been properly prepared in accordance with UK-adopted
international accounting standards;
· have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group and the company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to the section headed Going Concern on page 12 of the
financial statements, which details the factors the Company has considered
when assessing the going concern position. As detailed in the relevant note on
page 12, the uncertainty surrounding the availability of funds to finance the
commercial development of the Company's projects indicates the existence of a
material uncertainty that may cast significant doubt on the Company's ability
to continue as a going concern. Our opinion is not modified in respect of this
matter.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the company's ability to continue to adopt the going concern
basis of accounting included:
· Discussions with management in relation to the future plans of the
Company and Group.
· Reviewing activity after the year end to the date of singing the
financial statements.
· Reviewing the directors' going concern assessment including the
worst-case scenario cash flow forecast that covers at least 12 months from the
date we expect to sign the audit report.
· Assessing the cash flow requirements of the Company and Group based
on forecast capital and administrative expenditure for 12 months after the
date of signing.
· Understanding what forecast expenditure is committed and what could
be considered discretionary.
· Considering the liquidity of existing assets of the statement of
financial position.
· Considering the options available to management for further
fundraising, or additional sources of finance.
· Considering potential downside scenarios and the resultant impact
on funding requirements and the Company and Groups ability to raise such
funds.
· Making enquiries of management as to its knowledge of events or
conditions beyond the period of their assessment that may cast significant
doubt on the Company's ability to continue as a going concern, and evaluating
the reliability of the data underpinning the forecast cash flows.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An
item is considered material if it could reasonably be expected to change the
economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality for the
financial statements as a whole to be £125,000 (2022 £39,500), based on
approximately 5% of loss before taxation. Materiality for the parent company
financial statements as a whole was set at £28,000 (2022: £39,500) based on
approximately 5% of loss before taxation. We consider this basis of
determining materiality to be appropriate for a holding entity.
We use a different level of materiality ('performance materiality') to
determine the extent of our testing for the audit of the financial statements.
Performance materiality is set based on the audit materiality as adjusted
for the judgements made as to the entity risk and our evaluation of the
specific risk of each audit area having regard to the internal control
environment. Performance materiality was set at 70% of materiality for the
financial statements as a whole, which equates to £87,500 (2022: £27,650)
for the group and £35,000 (2022: £24,500) for the parent.
Where considered appropriate performance materiality may be reduced to a lower
level, such as, for related party transactions and directors' remuneration.
We agreed with the Audit Committee to report to it all identified errors in
excess of £6,250 (2022: £1,975). Errors below that threshold would also be
reported to it if, in our opinion as auditor, disclosure was required on
qualitative grounds.
Overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the group and its
environment, including the group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the directors that may have
represented a risk of material misstatement.
We identified two significant components, being the parent company and its
principal operating subsidiary, Tees Valley Lithium Limited. The base of
operations is in the United Kingdom, which is where the head office is. Our
group audit strategy focused on the significant components which were subject
to a full scope audit.
The group is accounted for from one central location, it's registered office
in the United Kingdom. The audit of the group was performed by Crowe in the
UK. The consolidation was also subject to a full scope audit performed by the
Group audit team.
The remaining components of the group were considered non-significant. All
balances material to the group were audited and the remaining balances subject
to analytical procedures by the Crowe audit team.
Key Audit Matters
The key audit matters identified in the current year are:
• Going concern (see material uncertainty related to going concern section
above)
• Capitalisation of intangible assets
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter How our scope addressed the key audit matter
Capitalisation of intangible assets
During the period Tees Valley Lithium began capitalising expenditure incurred We reviewed the accounting policies adopted by management in relation to the
in relation to the proposed site. intangible assets and whether they are consistent with IFRS.
The risk is that the point at which capitalisation commences is inappropriate. We obtained an understanding of the design and implementation of systems and
controls relevant to the impairment assessment.
Amortisation will begin when the site is at a point where it could be brought
into commercial use. We reviewed the documentation to support the trigger point of capitalisation,
being the successful granting of planning permission at the site.
We reviewed a sample of capitalised invoices to ensure that these were capital
in nature and related to the underlying asset.
We ensured that the financial statements disclosures are fairly presented,
complete and accurate.
Based on our work performed, we concluded that the carrying value of the
intangible assets is reasonable after proposed audit adjustments.
Our audit procedures in relation to these matters were designed in the context
of our audit opinion as a whole. They were not designed to enable us to
express an opinion on these matters individually and we express no such
opinion.
Other information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion based on the work undertaken in the course of our audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the company, or
returns adequate for our audit have not been received from branches not
visited by us; or
· the company financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we
require for our audit
Responsibilities of the directors for the financial statements
As explained more fully in the directors' responsibilities statement set out
on page 23, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and the parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks that are
applicable to the company and the procedures in place for ensuring compliance
in the jurisdictions where the company operates, focusing on those laws and
regulations that have a direct effect on the determination of material amounts
and disclosures in the financial statements. The laws and regulations we
considered in this context were the Companies Act 2006 and relevant taxation
legislation.
We assessed the nature of the group's business, the control environment and
performance to date when evaluating the incentives and opportunities to commit
fraud.
We identified the greatest risk of material impact on the financial statements
from irregularities, including fraud, to be the override of controls by
management to manipulate financial reporting and misappropriate funds. Our
procedures to address the risk of management override included:
• enquiries of management about their own identification and assessment of
the risks of irregularities;
• review of the system for the generation, authorisation and posting of
journal entries;
• obtaining supporting evidence for a risk-based sample of journals, derived
using a data analytics tool;
• audit of significant transactions outside the normal course of business,
or those that appear unusual;
• considering audit adjustments identified from our audit work for evidence
of bias in reporting;
• considering significant estimates and judgements made by management for
evidence of bias, and performing retrospective reviews where applicable;
• reviewing the other information presented in the annual report for fair
representation and consistency with the audited financial statements and the
information available to us as the auditors.
Owing to the inherent limitations of an audit, there is an unavoidable risk
that some material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed in
accordance with the ISAs (UK). The potential effects of inherent limitations
are particularly significant in the case of misstatement resulting from fraud
because fraud may involve sophisticated and carefully organized schemes
designed to conceal it, including deliberate failure to record transactions,
collusion or intentional misrepresentations being made to us.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Other matters which we are required to address
We were appointed by the Audit Committee on 27 March 2022 to audit the
financial statements for the period ended 31 January 2022. Our total
uninterrupted period of engagement is 2 years, covering the period ended 31
January 2022 to year ended 31 January 2023.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the company and we remain independent of the company in conducting
our audit.
Our audit opinion is consistent with the additional report to the audit
committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Matthew Stallabrass
Senior Statutory Auditor
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
Date: 30 May 2023
Consolidated Statement of Comprehensive Income
for the year to 31 January 2023
Notes Year to 31 January 2023 Period to
31 January
2022
£ £
Continuing operations
Administrative expenses 4 (1,298,002) (466,903)
Project Development expenses 4 (1,298,011) (330,747)
Business Development costs (12,866) -
Finance costs (1,536) -
Foreign exchange gains (losses) (34,344) -
Loss before taxation (2,644,759) (797,650)
Taxation 7 - -
Loss after taxation (2,644,759) (797,650)
Other Comprehensive Income
Foreign exchange differences on translation of overseas subsidiaries -
(2,645)
Total Comprehensive loss for the year (2,647,404) (797,650)
Earnings per share:
Basic and diluted earnings per share (pence) 8 (40.24p) (19.88p)
The notes on pages 36 to 51 are an integral part of these financial
statements.
Consolidated Statement of Financial Position
As at 31 January 2023
Notes 31 January 31 January
2023 2022
£ £
Non Current Assets
Intangibles - Project development costs 10 298,813 -
Total Non Current Assets 298,813 -
Current assets
Trade and other receivables 11 212,125 73
Cash and cash equivalents 12 12,356 1,113,923
Total Current Assets 224,481 1,113,996
Total Assets 523,294 1,113,996
Equity
Share Capital 14 144,000 120,000
Share Premium 14 2,413,243 1,279,094
Share Based Payments 14 63,221 -
Foreign Exchange Reserve (2,645) -
Retained Earnings (3,442,409) (797,650)
Total Equity (824,590) 601,444
Current Liabilities
Trade and other payables 13 1,021,595 512,552
Short Term Borrowings 17 326,289 -
Current and Total Liabilities 1,347,884 512,552
Total Equity and Liabilities 523,294 1,113,996
The notes on pages 36 to 51 are an integral part of these financial
statements.
The financial statements were approved and authorised for issue by the Board
on 30 May 2023.
Paul Atherley
Director
Alkemy Capital Investments plc
Consolidated Statement of Changes in Equity
For the year ended 31 January 2023
Share capital Share Premium Share Based Payments Foreign Exchange Reserve Retained Earnings Total
£ £ £ £
£ £
On incorporation 60,000 - - - - 60,000
Loss for the year - - - - (797,650) (797,650)
Total Comprehensive income - - (797,650) (797,650)
- -
Transactions with owners:
Issue of shares 60,000 1,279,094 - - - 1,339,094
Total transactions with owners 60,000 1,279,094 - 1,339,094
- -
Balance at 31 January 2022 120,000 1,279,094 - - (797,650) 601,444
Share capital Share Premium Share Based Payments Foreign Exchange Reserve Retained Earnings Total
£ £ £ £
£ £
As at 1 February 2022 120,000 1,279,094 - - (797,650) 601,444
Loss for the year - - - - (2,644,759) (2,644,759)
Foreign exchange losses on translation of overseas subsidiaries - - - (2,645)
- (2,645)
Total Comprehensive income - - (2,644,759) (2,647,404)
- (2,645)
Transactions with owners:
Issue of shares 24,000 1,134,149 - - - 1,158 149
Issue of options - - 63,221 - - 63,221
Total transactions with owners 24,000 1,134,149 - 1,221,370
63,221 -
Balance at 31 January 2023 144,000 2,413,243 (3,442,409) (824,590)
63,221 (2,645)
The notes on pages 36 to 51 are an integral part of these financial
statements.
Consolidated Statement of Cash Flows
for the year ended 31 January 2023
Notes Year to 31 January 2023 Period to
31 January
2022
£ £
Cash flows from Operating Activities
Loss for the year before tax (2,644,759) (797,650)
Share based payments 63,221 -
Expenditure met directly by funding provider * 136,289 -
Increase in receivables (212,052) (73)
Increase in payables 339,705 512,552
Net cash outflow from operating activities (2,317,596) (285,171)
Cashflows from Investing Activities
Payments for intangible assets (51,475) -
Net cash outflow from investing activities (51,475) -
Cash flows from financing activities
Proceeds of borrowing 190,000 -
Issue of shares (net of share issue expenses) 1,080,149 1,399,094
Net cash inflow from financing activities 1,270,149 1,399,094
Net increase in cash and cash equivalents during the year 1,113,923
(1,098,922)
Cash at the beginning of year 1,113,923 -
Effect of foreign exchange on currency holdings (2,645) -
Cash and cash equivalents at the end of the year 12 1,113,923
12,356
* During the year, expenditure totalling £136,289 was settled directly by
Paul Atherley on behalf of the company against the loan provided by him (2022:
Nil). As such these amounts represent a material non cash transaction.
The notes on pages 36 to 51 are an integral part of these financial
statements.
Company Statement of Financial Position
As at 31 January 2023
Notes 31 January 31 January
2023 2022
£ £
Non Current Assets
Investments in subsidiaries 11 1,878,904 -
Total Non Current Assets 1,878,904 -
Current assets
Trade and other receivables 12 83,158 73
Cash and cash equivalents 13 5,356 1,113,923
Total Current Assets 88,514 1,113,996
Total Assets 1,967,418 1,113,996
Equity
Share Capital 15 144,000 120,000
Share Premium 15 2,413,243 1,279,094
Share Based Payments 14 63,221 -
Retained Earnings (1,372,013) (797,650)
Total Equity 1,248,451 601,444
Current Liabilities
Trade and other payables 18 392,678 512,552
Short Term Borrowings 326,289 -
Current and Total Liabilities 718,967 512,552
Total Equity and Liabilities 1,967,418 1,113,996
Company Statement of Comprehensive Income
As permitted by Section 408 Companies Act 2006, the Company has not presented
its own Statement of Comprehensive Income. The Company's loss for the
financial year was £574,363 (2022: loss of £797,650).
The notes on pages 36 to 51 are an integral part of these financial
statements.
The financial statements were approved and authorised for issue by the Board
on 30 May 2023.
Paul Atherley
Director
Alkemy Capital Investments plc
Company Statement of Changes in Equity
For the year ended 31 January 2023
Share capital Share Premium Share Based Payments Retained Earnings Total
£ £ £ £
£
On incorporation 60,000 - - - 60,000
Loss for the year - - - (797,650) (797,650)
Total Comprehensive income - - (797,650) (797,650)
-
Transactions with owners:
Issue of shares 60,000 1,279,094 - - 1,339,094
Total transactions with owners 60,000 1,279,094 - 1,339,094
-
Balance at 31 January 2022 120,000 1,279,094 - (797,650) 601,444
Share capital Share Premium Share Based Payments Retained Earnings Total
£ £ £ £
£
As at 1 February 2022 120,000 1,279,094 - (797,650) 601,444
Loss for the year - - - (574,363) (574,363)
Total Comprehensive income - - (574,363) (574,363)
-
Transactions with owners:
Issue of shares 24,000 1,134,149 - - 1,158 149
Issue of options - - 63,221 - 63,221
Total transactions with owners 24,000 1,134,149 - 1,221,370
63,221
Balance at 31 January 2023 144,000 2,413,243 (1,372,013) 1,248,451
63,221
The notes on pages 36 to 51 are an integral part of these financial
statements.
Company Statement of Cash Flows
for the year ended 31 January 2023
Notes Year to 31 January 2023 Period to
31 January
2022
£ £
Cash flows from Operating Activities
Loss for the year before tax (574,363) (797,650)
Expenditure met directly by funding provider * 136,289 -
Share based payments 63,221 -
Increase in receivables (83,085) (73)
Increase in payables (41,874) 512,552
Net cash outflow from operating activities (499,812) (285,171)
Cashflows from Investing Activities
Investments in subsidiaries (2)
Loans provided to subsidiaries (1,878,902) -
Net cash outflow from investing activities (1,878,904) -
Cash flows from financing activities
Proceeds of borrowing 190,000 -
Issue of shares (net of share issue expenses) 1,080,149 1,399,094
Net cash inflow from financing activities 1,270,149 1,399,094
Net increase in cash and cash equivalents during the year 1,113,923
(1,108,567)
Cash at the beginning of year 1,113,923 -
Cash and cash equivalents at the end of the year 13 1,113,923
5,356
* During the year, expenditure totalling £136,289 was settled directly by
Paul Atherley on behalf of the company against the loan provided by him (2022:
Nil). As such these amounts represent a material non cash transaction.
The notes on pages 36 to 51 are an integral part of these financial
statements.
Notes to the Financial Statements
1. GENERAL INFORMATION
Alkemy Capital Investments Plc is a company incorporated and domiciled in the
United Kingdom. The Company is a public limited company, which is listed on
the London Stock Exchange. The address of the registered office is 167-169
Great Portland Street, Fifth Floor, London, England W1W 5PF.
The Company was initially formed to undertake an acquisition of a controlling
interest in a company or business in the battery metals sector with the
objective of operating the acquired business and implementing an operating
strategy to generate value for its shareholders through operational
improvements as well as potentially through additional complementary
acquisitions following the Acquisition.
On 25 February 2022, the Company announced that it had formed a subsidiary
called Tees Valley Lithium Limited ("TVL") that would aim to develop the UK's
first Lithium Hydroxide processing facility. 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.
On 2 May 2022 the Company formed a subsidiary in Australia called Alkemy
Capital Services Pty Ltd to act as a project services company for operations
in Australia.
Group Subsidiaries as at 31 January 2023:
Subsidiary Name Date of Incorporation Percentage Interest Registered office address Country of Incorporation
Tees Valley Lithium Ltd 25 February 2022 100% 167-169 Great Portland Street, London W1W 5PF United Kingdom
Alkemy Capital Services Pty Ltd 4 May 2022 100% Level 4, 46 Colin Street, West Perth WA 6005, Australia Australia
The financial statements which cover the year to 31 January 2023 are presented
in British Pounds Sterling, the currency of the primary economic environment
in which the Company operates. The comparative financial statements cover
the period from 21 January 2021 to 30 January 2022.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
financial statements are set out below. The policies have been consistently
applied throughout the year, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with UK adopted
International Accounting Standards ("IAS" or "IFRS"), which has been adopted
by both the Company and the Group.
The financial statements are presented in pounds sterling ("£") which is also
the functional currency of the Company.
Going Concern
As part of their assessment of going concern, the Directors have prepared cash
forecasts to determine the funding requirements of the business over the 18
months from the reporting date, as the Group continues to develop its LHM
refinery at Wilton and LSM refinery in Port Hedland. Cash requirements over
this period have been projected in the range of a £2m minimum (decelerated
project development case) to £12m maximum (accelerated project development
case) depending on the level of technical project development work being
undertaken, as determined by funding availability.
As at the date of this report, the Directors are considering a variety of
funding options from numerous parties to consider the option best suited to
balancing the immediate cash flow needs of the business and desire to
accelerate the project development timeframe against the need to avoid
unnecessary dilution of the shareholders during a period of depressed equity
market prices. Options ranging from project lending facilities, convertible
lending facilities and equity fundraising are under consideration, and the
Board anticipates concluding this process in the near term.
The Directors are reasonably confident that the necessary funding will be
secured, as and when required, by executing on one of the options under
consideration, such that the Directors have a reasonable expectation that the
Company will continue in operational existence for the foreseeable future.
However as successful execution of one of the above fundraising options
cannot be assured, a material uncertainty exists in this regard.
Accordingly, the Directors believe that as at the date of this report it is
appropriate to continue to adopt the going concern basis in preparing the
financial statements.
Statement of compliance
The financial statements comply with UK adopted International Accounting
Standards ("IAS").
1. The company has adopted all relevant IASs which were in effect from
incorporation when preparing these financial statements.
2. Standards and Interpretations which are effective in the current year
(Changes in accounting policies); None of the standards which became effective
during the year which are applicable to the Company have had a material
impact.
3. Adoption of new Standards and Interpretations to standards in future years;
The Directors anticipate that the adoption of new Standards and
Interpretations in future years will have no material impact on the financial
statements of the Company. The Company expects to adopt all relevant
Standards and Interpretations as and when they become effective.
Basis of Consolidation
The consolidated Financial Statements of the Group incorporate the Financial
Statements of the Company and entities controlled by the Company, its
subsidiaries, made up to 31 January each year.
Subsidiaries
Subsidiaries are entities over which the Group has the power to govern the
financial and operating policies so as to obtain economic benefits from their
activities. Subsidiaries are consolidated from the date on which control is
obtained, the acquisition date, until the date that control ceases. They are
deconsolidated from the date on which control ceases.
Intra-group transactions, balances and unrealised gains and losses on
transactions between Group companies are eliminated on consolidation, except
to the extent that intra-group losses indicate an impairment.
Foreign Currencies
Both the functional and presentational currency of the Company is Sterling
(£). Each Group entity determines its own functional currency and items
included in the Financial Statements of each entity are measured using that
functional currency.
The functional currencies of the foreign subsidiaries are the Australian
Dollar ("AUD").
Transactions in currencies other than the functional currency of the relevant
entity are initially recorded at the exchange rate prevailing on the dates of
the transaction. At each reporting date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the exchange rate
prevailing at the reporting date. Non-monetary assets and liabilities carried
at fair value that are denominated in foreign currencies are translated at the
rates prevailing at the date, when the fair value was determined. Gains and
losses arising on retranslation are included in profit or loss for the year,
except for exchange differences on non-monetary assets and liabilities, which
are recognised directly in other comprehensive income, when the changes in
fair value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group's overseas
operations are translated into the Group's presentational currency at exchange
rates prevailing at the reporting date. Income and expense items are
translated at the average exchange rates for the year unless exchange rates
have fluctuated significantly during the year, in which case, the exchange
rate at the date of the transaction is used. All exchange differences arising,
if any, are recognised as other comprehensive income and are transferred to
the Group's foreign currency translation reserve. On disposal of any such
overseas subsidiaries, cumulative foreign exchange losses or gains recognised
in equity via Other Comprehensive Income become realised and are recognised
through the profit and loss account on disposal.
Taxation
Current taxation is the taxation currently payable on taxable profit for the
year.
Current tax is calculated at the tax rates (and laws) that have been enacted
or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the
year when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity. Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the
same taxation authority and the Company intends to settle its current tax
assets and liabilities on a net basis.
Intangible assets - project development costs
Intangible assets comprise project development costs, incurred on the Group's
Wilton International Chemicals Park Lithium Hydroxide Monohydrate processing
facility in Teesside, UK. These costs include the cost of obtaining planning
permission for the development of the facility, design and planning costs and
all technical and administrative overheads directly associated with this
project. These costs are carried forward in the Statement of Financial
Position as non-current intangible assets less provision for identified
impairments. Costs associated with development activity will only be
capitalised if they meet the criteria as set out in IAS 38.
Upon any disposal, the difference between the fair value of consideration
receivable for development assets and the relevant cost within non-current
assets is recognised in the Income Statement.
Financial assets
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and deposit
balances at banks, together with other short-term, highly liquid investments
that are readily convertible into known amounts of cash within a period of 3
months at inception of the instrument/investment and which are subject to an
insignificant risk of changes in value.
Financial liabilities
Financial liabilities are recognised in the statement of financial position
when the Group and Company becomes a party to the contractual provisions of
the instrument.
The Company's financial liabilities comprise trade and other payables.
Trade payables are recognised initially at their fair value and subsequently
measured at amortised cost.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of the Company after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds received net of
direct issue costs.
Ordinary shares are classified as equity.
Share capital account represents the nominal value of the shares issued.
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits.
Retained earnings include all current year results as disclosed in the
Statement of Comprehensive Income.
Share-Based Payments
Share Options
The Group operates equity-settled share-based payment arrangements, whereby
the fair value of services provided is determined indirectly by reference to
the fair value of the instrument granted.
The fair value of options granted to Directors and others, in respect of
services provided, is recognised as an expense in the Income Statement with a
corresponding increase in equity reserves - the share-based payment reserve.
The fair value is measured at grant date and charged over the vesting period
during which the option becomes unconditional.
The fair value of options is calculated using the Black-Scholes model, taking
into account the terms and conditions upon which the options were granted. The
exercise price is fixed at the date of grant.
Non-market conditions are performance conditions that are not related to the
market price of the entity's equity instruments. They are not considered, when
estimating the fair value of a share-based payment. Where the vesting period
is linked to a non-market performance condition, the Group recognises the
goods and services it has acquired during the vesting period, based on the
best available estimate of the number of equity instruments expected to vest.
The estimate is reconsidered at each reporting date, based on factors such as
a shortened vesting period, and the cumulative expense is "trued up" for both
the change in the number expected to vest and any change in the expected
vesting period.
Market conditions are performance conditions that relate to the market price
of the entity's equity instruments. These conditions are included in the
estimate of the fair value of a share-based payment. They are not taken into
account for the purpose of estimating the number of equity instruments that
will vest. Where the vesting period is linked to a market performance
condition, the Group estimates the expected vesting period. If the actual
vesting period is shorter than estimated, the charge is to be accelerated in
the period that the entity delivers the cash or equity instruments to the
counterparty. When the vesting period is longer, the expense is recognised
over the originally estimated vesting period.
For other equity instruments, granted during the year (i.e. other than share
options), fair value is measured on the basis of an observable market price.
Critical accounting judgments and estimations
The preparation of the financial statements in conformity with IFRS requires
the use of estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting year. Although
these estimates are based on management's best knowledge of the amounts,
events or actions, actual results ultimately may differ from these estimates.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Directors consider the areas of critical accounting judgements or
estimations in these financial statements to be the capitalisation of
development expenditure on the Wilton project, vesting periods for share
options and the application of the going concern principal.
On 24 November 2022 the Company received planning permission for the
construction of its planned LHM refinery in Wilton International Chemicals
Park, Teeside from the Redcar & Cleveland Borough Council. The Directors
have determined that this event triggers the eligibility for the
capitalisation of development expenditure Under IAS 38 as the Company now has
the commercial and legal rights to construct and exploit the plant for future
economic benefit and, in the judgement of the Directors, the Group retains
adequate technical resources and future availability of necessary financial
resources necessary to complete the development of the project. As such, the
costs of obtaining planning permission and all development costs incurred post
receipt of planning permission are recognised as intangible assets in these
financial statements.
During the year the Company issued a number of share options with market based
vesting conditions, notably when the Company share price reaches a certain
threshold. In order to determine the fair value of options as required under
IFRS 2, the Directors have had to make judgements on when these vesting
conditions are likely to be met and the options consequently vest and become
exercisable. The judgements have been formed following analysis of previous
Company share price performance to specific events.
See above for further details on the Directors' assessment that the Company is
a going concern.
3. BUSINESS AND GEOGRAPHICAL REPORTING
The accounting policy for identifying segments is based on internal management
reporting information that is regularly reviewed by the chief operating
decision maker, which is identified as the Board of Directors. The Board of
Directors consider the Group to have two identifiable operating segments; (a)
the construction and operation of the Wilton Park Lithium Hydroxide processing
facility in Teeside, UK and (b) the construction of a Lithium ore enrichment
facility in Port Headland, Australia.
At this point, the Group has not incurred any material expenditure towards the
construction of a Lithium ore enrichment facility in Port Headland, Australia
and as such the results for the current year are considered to form a single
operating/reportable segment.
Therefore the financial information of the single segment is the same as that
set out in the Consolidated statement of comprehensive income, Consolidated
statement of financial position, the Consolidated statement of changes to
equity and the Consolidated statement of cashflows.
4. EXPENSES BY NATURE
2023 2022
£ £
Employee benefit expense (note 6) 529,782 156,897
Employee benefit - share based payments 53,844 -
Advertising and Marketing 147,199 3,200
Regulatory compliance expense 122,324 77,871
Audit 35,276 30,000
Legal fees 5,584 50,000
Share based payments - advisors 9,377 -
Travel & accommodation 81,738 -
Other professional fees 232,062 124,253
Other operating expenses 80,816 24,682
Total administrative expenses 1,298,002 466,903
Project development costs of £1,298,011 (2022: £330,747) in the year
comprise the costs incurred in progressing the Company's Project in Teesside,
U.K that do not meet the criteria for capitalisation into intangible assets.
5. AUDITOR REMUNERATION
During the year the Company obtained the following services from the auditor:
2023 2022
£ £
Fees payable to the auditor for non-audit services - 28,200
Fees payable to the auditor for the audit of the Company 35,276 30,000
Total auditor's remuneration 35,276 58,200
6. EMPLOYEE BENEFIT EXPENSE
2023 2022
£ £
Directors' salaries 60,000 20,467
Staff salaries 272,051 21,247
Recruitment costs 158,451 114,000
Social security 39,280 1,183
Total employee benefit expense 529,782 156,897
There were two employee in the year other than the Directors. Further
disclosures in respect of Directors' remuneration are included within the
Directors' Remuneration Report.
7. INCOME TAX
2023 2022
£ £
Current tax - -
Total - -
2023 2022
£ £
Loss on ordinary activities before taxation (2,644,759) (797,650)
Tax calculated at domestic rate applicable to UK standard rate for small (151,554)
companies of 19%
(502,504)
Effects of:
Expenses not deductible for tax purposes 12,682 -
Tax losses carried forward on which no deferred tax asset is recognised 489,822 151,554
Income tax credit - -
Tax losses totalling approximately £3,275,660 (2022: £797,650) have been
carried forward for use against future taxable profits. No deferred tax
asset has been recognised in respect of these tax losses.
Increases to the UK Corporation tax rate from 19% to 25% is effective from 1
April 2023.
8. EARNINGS PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the loss attributable to
equity holders of the Company by the weighted average number of ordinary
shares in issue during the year.
2023 2022
£ £
Loss from continuing operations attributable to equity holders of the company (797,650)
(2,644,759)
Weighted average number of ordinary shares in issue 6,572,053 4,013,298
Pence Pence
Basic and fully diluted loss per share from continuing operations (40.24) (19.875)
As at 31 January 2023 and 2022 there were no potentially dilutive instruments
in issue for consideration in arriving at the fully diluted loss per share as
the impacts of all such instruments as at the year end are anti-dilutive.
9. DIVIDENDS
There were no dividends paid or proposed by the Company.
10. INTANGIBLE ASSETS - PROJECT DEVELOPMENT COSTS
2023 2022
£ £
At the beginning of the year - -
Additions in the year 298,813 -
At the end of the year 298,813 -
On 24 November 2022 the Group was awarded planning permission by the Redcar
& Cleveland Borough Council for the construction of its planned LHM
refinery in Wilton International Chemicals Park, Teeside. In the view of the
directors, this milestone event represents the point when the criteria for
capitalisation of project development costs as outlined in IAS 38 has been
met. As a consequence, the Group has commenced the policy of capitalising
all qualifying expenditure from this date. All costs incurred in the year
that are directly associated with the application for and receipt of planning
approval have been capitalised, including expenditure incurred prior to
receipt of planning permission.
11. INVESTMENT IN SUBSIDIARIES (COMPANY)
2023 2022
£ £
Investment in Subsidiaries 2 -
Loans to Subsidiaries 1,878,902 -
Total 1,878,904 -
Loans to subsidiaries have been included within the investment balance due to
the long term nature of these receivables. The loans are interest free and
repayable on demand when the subsidiary projects have yielded economic returns
sufficient to settle the value of the loans.
12. TRADE AND OTHER RECEIVABLES
Group 2023 2022
£ £
Prepayments 45,891 58
VAT and GST recoverable 160,165 -
Other receivables 6,069 15
Total 212,125 73
Company 2023 2022
£ £
Prepayments 39,293 58
VAT and GST recoverable 39,321 -
Other receivables 4,543 15
Total 83,157 73
13. CASH AND CASH EQUIVALENTS
Group 2023 2022
£ £
Cash at bank and on hand 12,356 1,113,923
12,356 1,113,923
Company 2023 2022
£ £
Cash at bank and on hand 5,356 1,113,923
5,356 1,113,923
All of the Group's and Company's cash and cash equivalents are held in
accounts which bear interest at floating rates and the Directors consider
their carrying amount approximates to their fair value. Details of the
credit risk associated with cash and cash equivalents is set out in note 15.
14. TRADE AND OTHER PAYABLES
Group 2023 2022
£ £
Trade payables 552,146 331,997
Other payables 17,761 3,394
Accrued expenses 451,688 177,161
Total trade and other payables 1,021,595 512,552
Company 2023 2022
£ £
Trade payables 303,250 331,997
Other payables 6,264 3,394
Accrued expenses 83,164 177,161
Total trade and other payables 392,678 512,552
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The Company has financial risk management
policies in place to ensure that all payables are paid within the pre-agreed
credit terms. The Directors consider that the carrying amount of trade
payables approximates to their fair value.
15. SHARE CAPITAL, SHARE PREMIUM & SHARE BASED PAYMENTS
Number of ordinary shares of 2p Share Capital Share premium Share based payments
£ £ £
At 21 January 2021 3,000,000 60,000 - -
Share issues 2,999,999 60,000 1,440,000 -
Share issue expenses - - (160,906) -
At 31 January 2022 5,999,999 120,000 1,279,094 -
Share issues 1,199,999 24,000 1,175,999 -
Share issue expenses - - (41,850)
Issue of Options and Warrants - -
- 63,221
At 31 January 2023 7,199,998 144,000 2,413,243 63,221
Share issues in year and prior year:
On 9 August 2022 the Company issued 1,199,999 ordinary shares of 2p for cash
at a price of £1 per share.
On 27 September 2021, 2,999,999 ordinary shares were issued for cash at 50p
per share, raising £1,500,000 before expenses of £160,906.
On 21 January 2021 the Company issued 3,000,000 ordinary shares of 2p for
cash.
Options issued in the year:
On 4 August 2022 the Company issued 590,000 options over ordinary shares,
exercisable for 5 years from grant at a strike price of £1 per share and made
up of three equal tranches with vesting conditions as follows:
A) The options vest when the Company share price has exceeded £5 for a
period of 10 consecutive trading days;
B) The options vest on the later of i) the share price having exceeded £5
for a period of 10 consecutive trading days and ii) completion of project
financing for the construction of the Wilton park refinery;
C) The options vest on the later of the share price having exceeded £5 for
a period of 10 consecutive trading days and ii) the commissioning of train 1
of the Wilton park refinery.
On 5 August 2022 the Company issued 100,000 options over ordinary shares,
exercisable for 5 years from grant at a strike price of £1 per share and made
up of three equal tranches with vesting conditions as follows:
A) The options vest when the Company share price has exceeded £5 for a
period of 10 consecutive trading days;
B) The options vest on the later of i) the share price having exceeded £5
for a period of 10 consecutive trading days and ii) completion of project
financing for the construction of the Wilton park refinery;
C) The options vest on the later of the share price having exceeded £5 for
a period of 10 consecutive trading days and ii) the commissioning of train 1
of the Wilton park refinery.
On 19 September 2022 the Company issued 100,000 options over ordinary shares,
exercisable for 2 years from grant at a strike price of £1.5 per share and
made up of two tranches with vesting conditions as follows:
A) The options vest when the Company share price has exceeded £5 for a
period of 10 consecutive trading days - 40%;
B) The options vest when the Company share price has exceeded £10 for a
period of 10 consecutive trading days - 60%;
The below table provides details on the assumptions used in arriving at the
calculation of Fair Value for each of the above tranches of share options
issued in the year.
Date of grant Tranche Number of Options Assumed Exercise date Risk free rate (%) Volatility (%) FV
4 August 2022 A 196,668 4 August 2027 1.719 24.51 £59,500
4 August 2022 B 196,667 4 August 2027 1.719 24.51 £59,500
4 August 2022 C 196,665 4 August 2027 1.719 24.51 £59,500
5 August 2022 A 33,334 5 August 2027 1.875 24.49 £9,600
5 August 2022 B 33,333 5 August 2027 1.875 24.49 £9,600
5 August 2022 C 33,333 5 August 2027 1.875 24.49 £9,600
19 September 2022 A 40,000 19 September 2024 3.13 23.77 £2,525
19 September 2022 B 60,000 N/A - lapse prior to exercise 3.13 23.77 Nil
Share Capital
The share capital account represents the par or nominal value received for
ordinary shares issued by the Company.
Share Premium
The share premium account represents the excess of consideration received for
ordinary shares issued above their nominal value net of transaction costs.
Share-Based Payment Reserve
The share-based payment reserve represents the cumulative fair value charge
for options and warrants granted by the Company over ordinary shares.
Foreign Exchange Reserve
The translation reserve represents the exchange gains and losses that have
arisen on the retranslation of overseas operations.
16. RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and Company is exposed to a variety of financial risks which result
from both its operating and investing activities. The Group and Company's
risk management is coordinated by the Board of Directors and focuses on
actively securing the Group and Company's short to medium term cash flows by
minimising the exposure to financial markets.
The main risk the Group and Company is exposed to through its financial
instruments is credit risk.
Capital risk management
The Group and Company's objectives when managing capital are:
(a) to safeguard the Group and Company's ability to continue as a going
concern, so that it continues to provide returns and benefits for
shareholders;
(b) to support the Group and Company's growth; and
(c) to provide capital for the purpose of strengthening the Group and
Company's risk management capability.
The Group and Company actively and regularly reviews and manages its capital
structure to ensure an optimal capital structure and equity holder returns,
taking into consideration the future capital requirements of the Group and
Company and capital efficiency, prevailing and projected profitability,
projected operating cash flows, projected capital expenditures and projected
strategic investment opportunities. Management regards total equity as capital
and reserves, for capital management purposes. The Group and Company is not
subject to externally imposed capital requirements.
Credit risk
The Group and Company's financial instruments that are subject to credit risk
are cash and cash equivalents. The credit risk for cash and cash equivalents
is considered negligible since the counterparties are reputable financial
institutions.
The Group and Company defines a default by a counterparty to be an event in
which a balance receivable remains unsettled after a period of 90 days from
the date on which the balance was due for settlement.
The Group's maximum exposure to credit risk is £224,481 comprising £212,125
of Trade and other receivables and £12,356 in cash and cash equivalents.
The Company's maximum exposure to credit risk is £1,967,416 comprising
£1,878,902 of intercompany receivables, £83,157 of Trade and other
receivables and £5,356 in cash and cash equivalents.
Liquidity Risk
The Group and Company monitors its rolling cashflow forecasts and liquidity
requirements to ensure it has sufficient cash to meet its operational needs.
As the Group and Company maintains its cash reserves in instant access
current accounts liquidity risk to operations is deemed to be minimal. Short
term borrowings taken out in the year represent a loan provided by Paul
Atherley, Group CEO and Directors, which is interest free and repayable when
the Group and Company has raised sufficient additional finance to effect
settlement.
Interest Rate Risk
As the Group and Company has no debt, other than the non-interest bearing loan
provided by Paul Atherley, and does not maintain cash reserves on long term
deposit accounts liked to interest rates, interest rate risk to operations is
deemed to be minimal.
Foreign Exchange Risk
As the current operations of the Group and Company are focused entirely within
the United Kingdom, and hence denominated in Pounds Sterling, foreign exchange
risk to operations is deemed to be minimal.
17. FINANCIAL INSTRUMENTS
Categories of financial instruments:
2023 2022
Group £ £
FINANCIAL ASSETS AT AMORTISED COST:
Cash and cash equivalents 1,113,923
12,356
Trade and other receivables 73
212,125
Total financial Assets at amortised cost 1,113,996
224,481
2023 2022
£ £
FINANCIAL LIABILITIES AT AMORTISED COST: 512,552
Trade and other payables 1,021,595
Short term borrowings 326,289 -
Total financial liabilities at amortised cost 1,347,884 512,552
2023 2022
Company £ £
FINANCIAL ASSETS AT AMORTISED COST:
Cash and cash equivalents 1,113,923
5,356
Trade and other receivables 73
83,158
Total financial Assets at amortised cost 1,113,996
88,514
2023 2022
£ £
FINANCIAL LIABILITIES AT AMORTISED COST: 512,552
Trade and other payables 392,678
Short term borrowings 326,289 -
Total financial liabilities at amortised cost 718,967 512,552
18. RELATED PARTY TRANSACTIONS
The compensation payable to Key Management personnel comprised £177,600
(2022: £34,867) paid by the Company to the Directors in respect of services
to the Company. Full details of the compensation for each Director are
provided in the Directors' Remuneration Report.
Sam Quinn is a partner in Silvertree Partners LLP who received £55,980 (2022:
£24,419) during the year for the provision of accounting and finance,
administration, bookkeeping and secretarial services. At the year end, an
amount of £12,567 (2022: £Nil) was due to Silvertree Partners LLP.
Sam Quinn is a director and shareholder of Lionshead Consultants Ltd who
received £48,600 (2022: £14,400) during the year for the provision of
consulting services and £5,390 in reimbursement of expenses (2022: £nil). At
the year end, an amount of £13,829 (2022: £Nil) was due to Lionshead
Consultants Ltd.
Paul Atherley is a director and shareholder of Selection Capital Ltd who
received £69,000 during the year for the provision of advisory services and
£47,852 (2022: £38,600) during the year in reimbursement of various costs
met on behalf of the Company. At the year end, an amount of £16,641 (2022:
£Nil) was due to Selection Capital Ltd.
During the year, Paul Atherley provided a short term working capital loan to
the Company, with the balance outstanding at the reporting date being
£326,289. The loan is interest free and repayable when the Company has
raised sufficient additional finance to effect settlement.
During the year, the Company incurred £7,775 in travel related costs and
charged £3,500 in travel related cost recharges to Pensana plc, a company in
which Paul Atherley is a director and shareholder. As at the reporting date,
both amounts remained outstanding for settlement.
During the year, the Company provided loans to its two subsidiaries, Tees
Valley Lithium Limited ("TVL") and Alkemy Capital Services Pty Ltd ("ACSL") by
way of funds provided to meet their ongoing cash needs and the recharging of
expenditure met by the Company on behalf of the subsidiaries. Loans provided
during the period totalled £1,776,103 for TVL and £102,801 for ACSL
respectively. Balances remaining owing from subsidiaries to the Company as
at 31 January 2023 were £1,776,103 (2022: Nil) for TVL and £102,801 (2022:
Nil) for ACSL respectively.
During the year, amounts totalling £56,900 (2022: £20,248) were paid to Alex
Della Bosca, daughter of Paul Atherley, for her employment by the Group.
19. POST YEAR-END EVENTS
On 7 February 2023 the Company announced that it had entered into an MOU with
Recharge Industries Pty Ltd, an Australian lithium-ion battery company who had
successfully bid to purchase Britishvolt, a planned £3.8 billion lithium-ion
gigafactory in northern England. Under the MOU TVL and Recharge agreed to
negotiate toward executing a definitive offtake agreement to supply low-carbon
lithium hydroxide.
On 1 March 2023 the Company announced that Recharge Industries had completed
the acquisition of Britishvolt and that it was advancing discussions with
Recharge.
On 26 April 2023 the Company signed an MOU with battery recycling group
Altilium Metals for lithium sulphate feedstock and lithium hydroxide offtake.
On 11 May 2023 the Company signed an MOU with lithium technology company
Lithium Services Pty Ltd to investigate the processing of lithium from fines
materials in tailings deposits in Western Australia.
20. ULTIMATE CONTROLLING PARTY
The Directors consider that the Company has no ultimate controlling party, as
no individual member holds more than 50% of the issued shares.
21. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
There were no contingent liabilities or capital commitments as at 31 January
2023.
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