REG - Alkemy Capital Invs. - Corporate Update

Alkemy Capital InvestmentsAnnouncement

20/04/2023 08:00

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RNS Number : 8874W  Alkemy Capital Investments PLC  20 April 2023

 

20 April 2023

 

Alkemy Capital Investments Plc

 

Corporate Update

 

 

Alkemy Capital Investments plc ("Alkemy") (ALK:LSE) (JV2:FRA) and its
wholly-owned subsidiary Tees Valley Lithium Limited ("TVL") are pleased to
provide a corporate update on recent activities and milestones.

 

HIGHLIGHTS

 

·   Macro outlook for lithium processing remains extremely robust with 700GW
of gigafactory capacity planned for Europe with currently limited lithium
refining capacity in the UK and Europe.

 

·    TVL's world class Wilton lithium hydroxide refinery, one of Europe's
largest and most advanced, has received environmental and planning permission,
is shovel ready, with final FEED engineering studies now underway.

 

·   Alkemy's Port Hedland lithium sulphate refinery is advancing rapidly
with land secured at the Boodarie Strategic Industrial Area alongside
multinationals BP, POSCO and Fortescue Metals, with the environmental and
planning approvals process and feasibility and engineering studies underway.

 

·    Lithium offtake secured with Recharge Industries, the new owners of
Britishvolt, to supply tolled low-carbon lithium hydroxide, with other
European offtake deals currently being advanced

 

·   Feedstock identified for both the Port Hedland and Wilton refineries
with Alkemy in late-stage discussions for supply deals with multiple potential
suppliers including well known automakers, miners and commodity trading
houses.

 

·    Project financing discussions advancing with multiple potential
providers of debt, strategic equity and green bond finance.

 

Director Sam Quinn commented:

 

"Since the inception of our company little over a year ago, we have made
incredible progress in advancing both of our lithium refinery projects,
including securing key sites in Teesside and Port Hedland, receiving planning
and environmental permissions, establishing offtake and other key strategic
partnerships along with key governmental, industry and media recognition.

 

We continue to advance discussions with several key potential feedstock
suppliers and consider that a binding deal with any one or more of these
parties would be a company-maker.

 

We firmly believe that the quality of our offering as one of the world's
lowest-carbon and Europe's largest refiners of zero waste battery-grade
lithium hydroxide, together with the rapid project advancements made to date,
stand us in good stead in these negotiations."

 

 

Macro outlook for lithium processing remains extremely robust

 

The European Commission and the UK have announced the ban on sales of all
combustion engine cars by 2035 and several governments are offering financial
incentives to buy electric vehicles ("EVs") which has seen the demand for EVs
in Europe breaking new records. Norway is leading the charge where a
remarkable 86% of all new vehicles registered late year were EVs with Sweden
47%, Demark 35% and Finland 32% not far behind. Globally, under the IEA's
Stated Policies Scenario, the stock of EVs is forecast to increase 11-fold
from today's levels to over 200 million vehicles.

 

As Europe's car makers make the switch to EVs to meet this burgeoning demand
there is over 700GW of gigafactory capacity either in construction or planned
to provide the batteries for these electric vehicles.

 

These gigafactories will require over 650,000 tonnes of locally refined
lithium per year in the form of either hydroxide or carbonate depending on the
type of vehicle. Currently the UK and Europe has very limited lithium refining
capacity.

 

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.

TVL's processing 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.

 

Alkemy's Teesside and Port Hedland refineries continue to advance at a rapid
pace

 

TVL is looking to address this problem by providing the UK and Europe with a
supply of lithium from its recently approved refinery at the Wilton Chemicals
Park in the Teesside Freeport.

 

The state-of-the-art Wilton refinery will process imported high content
lithium in the form of a technical grade carbonate from brine producers in
South America and lithium sulphate from its Port Hedland refinery in Western
Australia, which will convert low grade spodumene into high grade lithium
sulphate.

 The Wilton refinery has received planning approval for 96,000 tonnes per
annum and is currently undergoing engineering studies ahead of financing.

 

In January 2023, the Western Australian Government allocated Alkemy an area
of approximately 43.7 hectares within the Boodarie Strategic Industrial Area
for the construction of its Port Hedland refinery. Wave Engineering and GHD
have been engaged to undertake the engineering and planning approvals for
the Boodarie operation.

 

Port Hedland, Western Australia is the largest bulk export port in the world,
the largest container port in Australia and with the planned US$470 million
multi-user logistics hub at Lumsden Point it is expected to become the world's
biggest exporter of lithium.

 

Alkemy has been allocated land along with BP, POSCO, Fortescue Metals and
Alinta Energy with the aim of making Boodarie part of an A$70 billion globally
competitive Pilbara green industrial precinct.

 

Building the Port Hedland LSM refinery will provide Australian spodumene
producers with a complete mid-stream lithium refining solution with direct
access to the premium European market through TVL's refinery at the Wilton
International Chemicals Park 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.

 

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, commencing in
2025.

 

Offtake has been secured with more lithium supply deals expected

 

Recharge Industries Pty Ltd ("Recharge"), an Australian Lithium-ion battery
company, has now completed the acquisition of Britishvolt, a planned
£3.8 billlion lithium-ion gigafactory in Northern England. TVL and Recharge
have signed an MOU and will now seek to negotiate and finalise a definitive
offtake agreement to supply tolled low-carbon lithium hydroxide into
Recharge's qualified supply chain and to potentially jointly source spodumene
for TVL's processing facilities. Recharge is currently developing Australia's
first large-scale lithium-ion cell production facility in Geelong, Australia.

 

Under plans presented by Recharge, Britishvolt will be the UK's first
gigafactory, creating a strategic economic and security asset which will play
a critical role in the UK's industrial and net zero
strategies. Britishvolt will provide thousands of green, skilled and local
jobs that will drive local and national benefits.

 

Under its MOU with Recharge, TVL has agreed to supply tolled lithium hydroxide
to Britishvolt from its facility in Teesside. Both companies will continue
good-faith negotiations, with the aim of concluding a definitive offtake and
supply agreement. In addition, both TVL and Recharge have agreed to work
together to jointly source lithium spodumene to be used in TVL's refinery in
Port Hedland, Western Australia for conversion to lithium sulphate to be
shipped to Teesside, UK for conversion into lithium hydroxide.

 

TVL is also in discussions with several other European gigafactories and
electric vehicle OEMs to supply lithium hydroxide and carbonate and expects
more offtake deals to be signed in due course. These customers are
increasingly focussed on price, transparency and low embedded carbon, when
sourcing high grade lithium products.

 

Government and industry continue to recognise the importance of Alkemy's
refineries

 

The Critical Minerals Association United Kingdom, a key interlocutor between
the UK Government and the critical minerals industry, has recently identified
TVL's lithium refinery in Teesside as a case study project that in its opinion
will form a key strategic component of the UK's critical minerals midstream
processing and refining sector.

 

In addition, the UK Automotive Transformation Fund ("ATF"), which is designed
to help fund the UK's automotive supply chain, has approved TVL's initial
expression of interest with a formal decision due in the coming months. The
ATF is a funding programme created to support large-scale industrialisation
and will invest up to £1 billion to develop a high-value end-to-end
electrified automotive supply chain in the UK. The ATF is a long-term
programme designed to enable the UK to build the world's most comprehensive
and compelling electrified vehicle supply chain, supporting over 160,000 jobs
and creating export opportunities

 

TVL's world-class zero waste lithium hydroxide refinery will form a
significant component of the UK's transition to EVs and is expected to produce
enough lithium hydroxide to supply 100% of the forecasted automotive demand in
the UK by 2030.

 

Discussions regarding feedstock supply and offtake are rapidly advancing and
nearing completion

 

Alkemy is currently in advanced discussions with a number of potential key
feedstock suppliers, including both technical grade carbonate suppliers
from South America (to supply TVL's lithium hydroxide refinery in Teesside)
and spodumene suppliers from Australia (to supply the Port Hedland refinery).

 

TVL's merchant refinery design is able to accommodate multiple feedstock
sources on a train-by-train basis, thereby opening up various feedstock,
partnership and funding options.

 

Advanced detailed discussions are ongoing with several industry-leading
lithium producers (miners), well known automakers, global commodity trading
houses and battery recyclers, to supply Alkemy's available trains and Alkemy
is confident of completing on one or more of these feedstock supply deals in
the short term.

 

Project funding discussions underway with several strategic groups

 

Alkemy is in discussions with a number of groups and financial
institutions for the financing of both of its refineries.

 

The $600m approximate capital cost of trains 1 for both refineries is expected
to be financed largely through green bonds (for which Alkemy will seek
accreditation) combined with a mix of debt and strategic equity finance at
project level.

 

As securing feedstock is a key component for each project, these financing
discussions are expected to be concluded following the signing of one or more
feedstock deals.

 

Whilst Alkemy's goal has always been to mimimise dilution in the listed topco,
it may also seek to introduce one or more long term strategic partners who
share in our vision of building a global leader in lithium downstream
processing and refining.

 

 

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.

 

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