REG - Alkemy Capital Invs. - First Lithium Sulphate Plant Study

Alkemy Capital InvestmentsAnnouncement

23/08/2023 08:00

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RNS Number : 1372K  Alkemy Capital Investments PLC  23 August 2023

 

 

23 August 2023

 

Alkemy Capital Investments Plc

 

 

Completion of Feasibility Study for Australia's first independent Lithium
Sulphate processing facility in Port Hedland

 

 

Alkemy Capital Investments plc ("Alkemy") (ALK:LSE) (JV2:FRA) and its
wholly-owned Australian subsidiary Port Hedland Lithium Pty Ltd ("PHL") are
pleased to announce the completion of a Feasibility Study for Australia's
first stand-alone lithium sulphate processing facility, located at the
Boodarie Strategic Industrial Area ("SIA"), just outside of Port Hedland,
Australia's largest export port.

The Feasibility Study has been produced ahead of schedule in response to the
due diligence requirements of certain global OEMs looking to utilise and
contract with Alkemy's refineries.

HIGHLIGHTS:

·  Class 4 Feasibility Study completed by Wave International for Australia's
first stand-alone lithium sulphate processing facility at the Boodarie SIA,
Port Hedland

·   The Boodarie refinery has been designed to process spodumene
concentrate from various potential Australian mines, producing a lithium
sulphate monohydrate (LSM) for TVL's Wilton refinery in the UK

·    Initial capital cost for Train 1 of US$322 million

·    Gross revenues per annum for Train 1 of US$396 million

·    Internal rate of return (IRR) of 18%

·    Post-tax net present value (NPV) for Train 1 of $293 million

·    NPV for 4 Trains of US$1.0 billion, which combined with Wilton's NPV
of US$2.7 billion gives a total NPV of US$3.7 billion across both projects
when all 4 Trains are built

·    Flora and Fauna baseline survey completed for Boodarie as part of the
required environmental approvals

Alkemy's strategy, through its two wholly-owned subsidiaries, PHL and Tees
Valley Lithium Ltd ("TVL"), is to produce a high value, low carbon
intermediate lithium sulphate product in Australia for onward processing in
the UK into a premium battery grade product, for sale to Tier 1 customers in
the fast growing premium European market.

PHL is developing a stand-alone merchant lithium sulphate refinery at the
Boodarie SIA located just south of the proposed new Lumsden Point Critical
Minerals Wharf in Port Hedland, the world's largest export port by volume,
with established road and rail infrastructure connections to Western
Australia's world-class hard-rock lithium resources.

Powered by local renewable energy, each of the four proposed lithium sulphate
trains at Boodarie will refine approximately 180,000 tpa of locally mined
spodumene concentrate to produce 40,000 tpa of lithium sulphate, with lithium
content equivalent to 24,000 tpa lithium hydroxide. It is anticipated that
lithium sulphate produced by PHL will be processed further by TVL before sale
to end customers, although PHL will retain flexibility to provide lithium
sulphate to third parties should demand arise.

Conducting the first part of the refining process in Australia minimises the
quantity of waste material exported and reduces both the shipping cost and the
embedded carbon of the resulting lithium products.

At Wilton, in the Teesside Freeport in the north-east of the UK, TVL is
establishing Europe's largest low-carbon merchant lithium hydroxide refinery.
Each of the four trains at Wilton will take feedstock in the form of lithium
sulphate or crude carbonate, to produce 24,000 tpa of battery-grade lithium
hydroxide (or carbonate equivalent) feeding directly into the European and
international battery cell manufacturers.

This new Pilbara to Teesside supply chain epitomises the new critical minerals
supply chains made possible under the recently signed free trade agreement
between Australia and the UK and will leverage the competitive strengths of
Australia in mining and minerals processing and the UK in chemical refining.

The Feasibility Study has been prepared by Wave International, a leading
engineering consultancy firm with significant experience in developing lithium
refinery projects worldwide. It is based on a merchant lithium sulphate plant
comprising up to four trains over a 30-year life.

Economic Evaluation

The Feasibility Study economic evaluation report clearly demonstrates the
robustness of developing a stand-alone lithium sulphate refinery with low
capital and processing costs, a low carbon footprint, and strong cash flow
generation capacity.

The preliminary economics for Train 1 of the Boodarie refinery, both as a
stand-alone project and combined with Train 1 of the Wilton refinery, are set
out below:

 

Table 1 - Project Economics

 

 Boodarie - Economic Summary              1 Train
 Life of Project                   years  30
 Spodumene concentrate treated     kt pa  180
 LSM produced                      kt pa  40
 Gross revenue                     $m pa  396
 Capital cost (incl. contingency)  $m     322
 Post tax NPV                      $m     293
 Post tax IRR                      %      18%
 Payback period                    years  5.4

 

 Wilton - Economic Summary                1 Train
 Life of Project                   Years  30
 LSM treated                       kt pa  40
 LHM produced                      kt pa  24
 Gross revenue                     $m pa  600
 Capital cost (incl. contingency)  $m     288
 Post tax NPV                      $m     936
 Post tax IRR                      %      40%
 Payback period                    years  2.6

 

 Boodarie and Wilton - Combined Economics         1 Train
 Life of Project                           Years  30
 Spodumene concentrate treated             kt pa  180
 LHM produced                              kt pa  24
 Gross revenue                             $m pa  600
 Capital cost (incl. contingency)          $m     611
 Post tax NPV                              $m     1,228
 Post tax IRR                              %      28%
 Payback period                            years  3.2

 

Notes:

- the model uses a long-term lithium sulphate price of $10,000/t, a long term
SC6 price of $1,500/t and a long-term lithium hydroxide price of $25,000/t

- all currency figures are USD

 

Expansion Capacity of up to 4 Trains per Refinery

 

The Feasibility Studies for both Wilton and Boodarie have designed and
modelled refineries of up to 4 Trains. For Boodarie, the economic model across
4 trains shows an NPV of $1.0 billion with gross revenues per annum of $1.6
billion and an IRR of 18%.

 

When combined with 4 Trains at Wilton, the economic model for both projects
shows an NPV of $3.7 billion with gross revenues per annum of $2.4 billion and
an IRR of 25%.

 

Flora, Vegetation and Fauna Assessment

 

In May 2023, PHL engaged AECOM Australia to complete an ecological baseline
survey for the Boodarie lithium sulphate refinery site.  The survey included
a detailed flora and fauna survey of the Boodarie site and the preparation of
a full report in accordance with the Environmental Protection Act 1986 and
other applicable regulations and standards.

 

The survey identified a number of native species consistent with the wider
regional flora and fauna, however importantly no priority or threatened
ecological communities or species were recorded during the survey. This
baseline ecological assessment recorded and mapped significant environmental
values on the Boodarie site and will provide important information for the
full environmental approval application to be lodged as part of the Port
Hedland lithium sulphate refinery project development.

Wave International CEO, Ryan Hanrahan commented:

 

"The LSM plant at Boodarie is a strong first step to introducing flexibility
into a somewhat rigid existing supply chain. We are seeing first hand
exceptionally high interest in the model of intermediate chemicals from the
end user and investment community, and this plant is no exception.

 

We are pleased to continue to support Alkemy and PHL through the final stages
of due diligence with their partners, now that the feasibility study is
completed."

 

Sam Quinn, Director of Alkemy and Port Hedland Lithium, commented:

 

"The completion of the Boodarie Feasibility Study is another major milestone
reached for Alkemy and its 100% owned subsidiary Port Hedland Lithium.

We are moving quickly to establish a major independent and sustainable lithium
sulphate producer at the Boodarie Strategic Industrial Area in Port Hedland
and are pleased with the validation that this independent feasibility study
brings to our project.

We continue to make excellent progress in advancing both of our lithium
refineries, including advancing discussions with several key globally
significant potential feedstock suppliers and customers and look forward to
updating the market in due course as these discussions conclude."

 

APPENDIX - FEASIBILITY STUDY SUMMARY

PROJECT BACKGROUND AND STRATEGY

In January 2023, the Western Australian Government allocated Alkemy an area
of approximately 43.7 hectares within the Boodarie SIA for the construction
of its Port Hedland refinery. Wave International 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
and one of the largest container ports 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 export port for 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 Boodarie lithium sulphate refinery will provide Australian
spodumene producers 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.

Through the first trains at both the Boodarie lithium sulphate refinery and
the Wilton lithium hydroxide refinery, Alkemy will have the capacity to
convert 180,000 tpa of lithium spodumene to 24,000 tpa of lithium hydroxide
and aims to become the world's lowest embedded carbon lithium refiner.

 

Alkemy's strategy is to be a mid-stream refiner producing battery grade
lithium chemicals to the electric vehicle and energy stationary storage
markets. In doing so, Alkemy is developing its two key assets in Wilton and
Boodarie. The advantages of the split refinery strategy are as follows:

 

·    the Wilton refinery takes advantage of the Teesside Freeport
location, allowing certain financial and trade advantages to the European, UK
and US markets.

·    the finished product is a high purity chemical, or pseudo commodity,
and the UK has a long history in chemical manufacturing. The project takes
advantage of an existing skilled workforce in chemical processing.

·    the Wilton refinery can take advantage of multiple feed sources,
being either lithium sulphate or other lithium compounds that can be converted
to lithium sulphate and apply either the conventional flowsheet or TVL's
electrochemical flowsheet to produce lithium hydroxide.

·    PHL's plant provides access to Australian hard rock spodumene mines
located in the Pilbara, which is geographically favourable for lithium bearing
pegmatites and hosts a number of existing globally significant spodumene
operations.

·    PHL's plant will produce lithium sulphate, which has a much higher
lithium content than spodumene concentrate and will reduce the volume of
material (and specifically, non-lithium material) shipped to Wilton. This
reduces the end-to-end lithium supply chain carbon footprint and avoids
downstream issues with managing high volumes of non-lithium material.

·    The transport of LSM not only reduces the mass of material moved over
ocean, but also avoids a significant residue handling issue at the
destination. There is no identified true solution to residue management in the
UK, and ALK's model wholly addresses this issue.

·    PHL's Boodarie plant takes advantage of existing industry knowledge
and skills in Western Australia, with three other LHM plants operating the
same front end process, either in operation or under construction in Western
Australia.

 

Aerial view of the Boodarie Strategic Industrial Area, Port Hedland

 

PROCESS AND FLOWSHEET DEVELOPMENT

The flowsheet is based on a conventional, proven process route for processing
spodumene. The process design is based on extensive industry knowledge on Wave
International's background knowledge of lithium sulphate circuits and the
extensive experience of the project team who have undertaken testing on
multiple global spodumene concentrates.

 

The design is based on the same fundamental chemistry and equipment as the
three other lithium hydroxide plants in Australia, and the majority of Chinese
plants. Process validation testwork will take place with specific feedstocks
as part of ongoing future due diligence activities.

 

A final lithium sulphate product with a purity of 95-97% Li2SO4.H2O is
targeted from the process design. The TVL impurity removal process is designed
to remove impurities and accept feedstock of industrial grade lithium
sulphate.

 

In Wave International's experience, a plant of this configuration is capable
of producing much lower impurities, but the design of the TVL plant in Wilton
has been based on various feedstocks and hence conservative impurity removal
circuit inclusions.

 

LOCATION

The Boodarie SIA is an optimal site for a lithium sulphate refinery for a
number of reasons:

 

·    proximity to existing and planned spodumene producers in the Pilbara;

·    well located for the import of spodumene production from other parts
of Australia for conversion to primary lithium sulphate prior to export to the
UK;

·    access to critical infrastructure including skilled labour, the Great
Northern Highway, the 210MW Alinta gas fired power station operating in the
Boodarie SIA, existing gas pipeline infrastructure, and existing water
pipeline infrastructure and telecommunications;

·    adjacent to Port Hedland, the world's largest bulk export port and
one of Australia's largest container ports; and

·    ability to source renewable energy and energy storage from new
developments planned in the region, delivering low carbon energy sources for
the new lithium sulphate plant.

 

ENVIRONMENT, PERMITTING AND APPROVALS

Primary approvals required for the project include Environmental Protection
Act Part IV approval and Environmental Protection Act (EP Act) Part V works
approval.

 

Under Part IV of the EP Act, development proposals that have the potential to
result in significant impact on the environment are required to be referred to
the Environmental Protection Authority (EPA). In deciding whether a proposal
will be subject to a formal EIA process, the EPA considers the environmental
significance of potential impacts that may result from the implementation of
the proposal. Developments assessed by the EPA must receive Ministerial
Approval in order to proceed. Various studies will be required to be completed
to support the Part IV approvals documentation, including:

 

·    Land: flora and vegetation

·    Land: terrestrial environmental quality

·    Land: terrestrial fauna

·    Water: inland waters

·    Air: air quality

·    Air: greenhouse gas emissions

·    People: social and surroundings

 

A Department of Water and Environmental Regulation Works Approval for the
project will be submitted on the basis that a number of the proposed
activities are anticipated to trigger the definition of Prescribed Premise
Categories under the Environmental Protection Regulations 1987.

 

Other secondary approvals to operate will be required including various
dangerous goods licenses.

Where possible, PHL will seek to gain approvals for completion of early works
so as to optimise the project delivery schedule.

 

A binding lease agreement for the Boodarie site will also be required to be
executed prior to the commencement of construction based on the option to
lease currently being negotiated with DevelopmentWA.

 

OPERATING AND CAPITAL COSTS

An operating cost estimate has been prepared for the project and was developed
as a bottom-up estimate with key values taken from the Feasibility Study's
economic evaluation report.

All significant and measurable items have been calculated; however, smaller
items are factored as per industry practice. The level of effort for each of
the line items meets the requirements for a Class 4 Feasibility Study
estimate.

Based on the engineering development and operational management work
progressed, a Capital Cost Estimate has been prepared for the project.

The Capital Cost Estimate was developed to meet the requirements of a Class 4
estimate as defined by the American Association of Cost Engineers' Cost
Estimation and Classification System (as applied for mining and minerals
processing industries) and represents a nominal accuracy range of ±25%, with
a contingency of 15%. All cost data is in USD.

The Capital Cost Estimate presents the capital requirements to engineer,
procure, construct and commission the project.

WORKFORCE

At a steady state of production the Company anticipates to employ up to 125
people per train.

During the construction phase it is anticipated that around 300 direct jobs
will be created for train 1 alone at peak construction.

FEEDSTOCK AND OFFTAKE

The plant is set up to accommodate multiple feed sources of spodumene
concentrate from mining operations in Western Australia which is currently the
world's leading source and supplier of spodumene. This diversity will provide
flexibility of supply and de-risks the project.

Alkemy is in advanced discussion with a number of potential feedstock
suppliers including some of the world's largest miners and OEMs and is
confident to be able to secure sufficient spodumene concentrate for the
project.

The Feasibility Study will be utilised for completion of due diligence
activities with various potential feedstock suppliers as a planned next step
to finalising binding agreements.

Alkemy is also in discussions for long-term offtake agreements with OEMs and
battery manufacturers and is confident that it will secure customers for 100%
of its production.

TIMELINE

 

PHL anticipates first production for the Boodarie refinery during H1 2026.
Significant milestones include the following:

·    Permitting:   Q4 2023 - Q4 2024

·    Financing:   Q4 2023-Q1 2024

·    Main Construction (subject to financing):  Q1 2025 to Q1 2026.

·    Commercial production:  Q2 2026

 

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

 

 

 

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 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 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, through its wholly owned Australian subsidiary Port Hedland Lithium,
has secured a 43.7 ha site 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.
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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