REG - Alkemy Capital Invs. - Corporate Update

Alkemy Capital InvestmentsAnnouncement

18/01/2024 07:00

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RNS Number : 0699A  Alkemy Capital Investments PLC  18 January 2024

 

18 January 2024

 

Alkemy Capital Investments Plc

 

Corporate Update

 

Alkemy Capital Investments plc ("Alkemy") (LSE: ALK) (FRA:JV2) is pleased to
provide a corporate and strategic update.

 

HIGHLIGHTS

 

·    Macro outlook for lithium processing remains extremely robust despite
a recent fall in lithium prices, with European demand for lithium remaining on
an unprecedented upward trajectory.

 

·    Tees Valley Lithium's refinery at the Wilton International Chemicals
Park in Teesside is a refinery of strategic importance in Europe, having
already secured environmental and planning permission, and will create over
1,000 local jobs in the UK when in full production in 2026.

 

·    Feedstock has been secured for the Wilton refinery's first train from
global leader Wogen.

 

·    Project financing discussions advancing with multiple potential
providers of debt, strategic equity and green bond finance; mezzanine finance
discussions with tier one financial institutions progressing well.

 

·    Port Hedland Lithium's refinery at the Boodarie Strategic Industrial
Area in Port Hedland provides a mid-stream solution for Australia's spodumene
miners with direct access to the European premium market and a low-carbon
feedstock supply for TVL's Wilton refinery.

 

·    Alkemy is actively exploring opportunities to expand its downstream
processing strategy to other key critical battery minerals in conjunction with
strategic and industry partners.

 

 

Chairman Paul Atherley commented:

 

"Since the inception of our company, we have made excellent progress in
advancing our lithium refinery projects, including securing key sites in
Teesside and Port Hedland, receiving planning and environmental permissions,
securing feedstock and establishing other key strategic partnerships along
with key governmental, industry and media recognition, reflecting our
commitment to becoming a leader in the low-carbon production of battery-grade
lithium hydroxide.

 

The success of these strategic initiatives and partnerships places us at the
forefront of Europe's critical minerals processing sector, and we are now
poised to replicate this success across other key critical battery minerals,
that could deliver for Alkemy a potentially transformational multi-minerals
strategy.

 

In the short term we remain focussed on securing mezzanine finance to advance
the project and I am pleased to report that we are making excellent progress
with several tier one financial institutions on this front."

 

 

Macro outlook for lithium processing remains robust despite the recent
downturn in lithium prices

 

Despite recent market shifts, European demand for lithium remains on an
unprecedented upward trajectory. With the UK and EU's transition towards
electric vehicles (EVs), there's a forecasted demand for lithium that far
exceeds current supply capabilities.

 

The UK and European Commission's move to ban combustion engine cars by 2035 is
a significant catalyst, signalling a shift towards a more sustainable and
electric future. This policy change, along with similar initiatives worldwide,
is expected to fuel a consistent and growing demand for lithium.

 

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 EVs. 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.

Recognising the escalating demand for lithium, Alkemy has been actively
developing its lithium refining portfolio through Tees Valley Lithium (TVL)
and Port Hedland Lithium (PHL).  Alkemy's focus is not just on meeting the
immediate market needs but on establishing a supply chain that is resilient,
environmentally responsible, and capable of adapting to the rapidly evolving
energy landscape.

TVL's processing refinery in Teesside 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.

 

Feedstock secured for TVL's Teesside refinery

 

TVL has reached an agreement in principle with international trading house
Wogen for the supply of technical grade lithium carbonate to TVL's merchant
refinery at Wilton.

 

Wogen is a leading international trader of off-exchange specialty metals and
minerals, with a long history and well-established presence in the battery
metals market across Asia, the United States and Europe. Wogen has an active
trading book in lithium products procuring from an array of producing
countries and selling into the battery supply chain.

 

Wogen intends to supply up to 20,000 tonnes of technical grade lithium
carbonate feedstock per annum, for an initial period of five years. The supply
will be sufficient to fill the first of the proposed four trains at Wilton
producing around 24,000 tonnes of battery grade lithium hydroxide or lithium
carbonate equivalent.

 

TVL's partnership with Wogen ensures a reliable supply of lithium, critical
for its first production train. This partnership is however more than just a
supply agreement: it's a strategic alignment that ensures a steady and
sustainable flow of lithium to TVL's Teesside refinery.  This collaboration
is critical in establishing a reliable and ethical supply chain which is
crucial in the volatile commodity market. Wogen, known for its global reach
and expertise in speciality metals and minerals, brings not just the supply
security but also a wealth of industry knowledge and market insight.

 

This partnership, combined with ongoing dialogues with other industry leaders,
will propel Alkemy forward in its mission to become a significant force in the
battery minerals sector, underpinning the Alkemy group's commitment to
sustainability and ethical sourcing.

 

Project and mezzanine funding discussions are progressing well

 

TVL is in discussions with a number of leading financial institutions for
the financing of its Wilton refinery.

 

The $300m approximate capital cost of train 1 is expected to be financed
largely through green bonds (for which TVL will seek accreditation) combined
with a mix of debt, strategic equity finance and grant funding, all at project
level.

 

Having secured feedstock for its first train at Wilton, a key component for
these financing discussions, TVL is now working with several leading financial
institutions to obtain initial mezzanine funding which will enable it to
complete Front End Engineering Design (FEED) and commence the purchase of key
long lead items for the refinery. Alkemy is currently making excellent
progress in these discussions and will update the market as soon as this key
piece of funding is secured.

 

TVL's Teesside lithium refinery is of strategic importance for the UK

 

The Critical Minerals Association United Kingdom (CMA), a key interlocutor
between the UK Government and the critical minerals industry, has 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 and TVL remains in discussions with the ATF to secure a
grant which will form part of TVL's project financing package. 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 endorsement from the CMA and the engagement with the ATF are testaments to
the national significance of this project.  It's not just an industrial
venture but a crucial part of the UK's strategic move towards a sustainable
automotive industry. TVL's refinery, with its cutting-edge technology and
capacity, is set to become a cornerstone in the UK's industrial landscape,
contributing significantly to the country's environmental goals and its
position in the global battery supply chain.

 

 

Port Hedland Lithium provides a mid-stream solution for Australia's spodumene
miners with direct access to the premium European market

 

The Western Australian government has allocated PHL an area of approximately
43.7 hectares within the Boodarie Strategic Industrial Area for the
construction of its proposed Port Hedland LSM refinery with Wave Engineering
and GHD engaged to undertake the engineering and planning approvals.

 

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.

 

PHL 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.

 

PHL represents a strategic initiative that transcends geographical boundaries.
It's a symbol of the new era of critical mineral supply chains, effectively
bridging the Australian mining capabilities with the European automotive
industry. This project not only reinforces the strong trade relations between
the UK and Australia but also establishes a direct and efficient supply line
to Europe's rapidly expanding battery market.

 

The Port Hedland facility is poised to become a vital link in the global
supply chain of lithium, facilitating the transfer of raw materials from one
of the world's richest mining regions directly to the heart of the UK and
Europe's battery manufacturing hub.

 

Alkemy to replicate downstream strategy in other key critical battery minerals
in conjunction with strategic partners

 

Building on the successful foundations laid by TVL and PHL, Alkemy is actively
exploring new horizons in the battery minerals sector. Alkemy's vision extends
beyond lithium to encompass a range of critical battery minerals, positioning
it as a diversified leader in the energy transition sector.

 

Alkemy is committed to being a pivotal force in critical minerals processing,
guiding its portfolio companies towards not only achieving operational
excellence but also adhering to sustainable practices in premium mineral
production. Alkemy will seek to nurture their growth and expansion, while
strategically forging partnerships to diversify and align its portfolio with
the evolving demands of the energy transition industry. Alkemy's focus is
steadfastly on driving consistent growth, ensuring global market resilience,
and fostering long-term value creation.

 

Alkemy continues to advance discussions with potential key strategic and
industry partners to develop additional downstream processing refineries for
other battery minerals. These projects will build on the key relationships
already in place between TVL and its various stakeholders and will be fully
complementary to TVL's aims and objectives.

 

Alkemy expects to make further announcements in due course once key agreements
have been entered into.

 

 

Further information

For further information, please visit the Company's website:
www.alkemycapital.co.uk (http://www.alkemycapital.co.uk) or
www.teesvalleylithium.co.uk (http://www.teesvalleylithium.co.uk)

-Ends-

 Alkemy Capital Investments Plc  Tel: 0207 317 0636

                                 info@alkemycapital.co.uk (mailto:info@alkemycapital.co.uk)
 SI Capital Limited              Tel: 0148 341 3500
 VSA Capital Limited             Tel: 0203 005 5000

 

 

ABOUT ALKEMY CAPITAL

Alkemy is seeking to establish independent and sustainable lithium hydroxide
production by developing lithium sulphate and lithium hydroxide facilities in
the UK and Australia.

 

Alkemy, through its wholly owned UK 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 one of 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 or an equivalent amount of lithium carbonate annually, representing
around 15% of Europe's projected demand.

 

Alkemy, through its wholly owned Australian subsidiary Port Hedland Lithium,
has secured a 43.7 ha site at the Boodarie strategic industry area, near Port
Hedland, Western Australia to build a world-class sustainable lithium sulphate
refinery that will provide reliable feedstock for Tees Valley Lithium's
refinery.

 

Port Hedland Lithium has completed a Class 4 Feasibility Study for its
proposed lithium sulphate refinery, each train of which will process spodumene
concentrate to produce 40,000 tonnes of lithium sulphate annually.

 

 

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. In
addition, factors that could cause actual events to differ materially from the
forward-looking information stated herein 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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