REG - Alkemy Capital Invs. - Interim Results for Period Ended 31 July 2023
27/10/2023 08:00
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RNS Number : 5320R Alkemy Capital Investments PLC 27 October 2023
Alkemy Capital Investments Plc
Interim Results for the Six Month Ended 31 July 2023
Alkemy Capital Investments plc ("Alkemy" or the "Company") announces its
unaudited financial statements for the 6 months ended 31 July 2023 ("Financial
Statements").
Chairman's Statement
I have great pleasure in presenting our interim results for the period ended
31 July 2023.
KEY OPERATIONAL HIGHLIGHTS FOR THE PERIOD:
· Class 4 Feasibility Study completed by Wave International for
Australia's first stand-alone lithium sulphate processing facility at the
Boodarie SIA, Port Hedland
· Tees Valley Lithium shortlisted by a major OEM as the preferred
European lithium refinery for portion of its lithium supply chain
· Oversubscribed private placement and directors subscription
· Grant funding secured from Innovate UK
Class 4 Feasibility Study - Boodarie Lithium sulphate refinery
In August 2023, Alkemy's wholly-owned subsidiary Port Hedland Lithium Pty Ltd
("PHL") announced the completion of a Class 4 Feasibility Study for its
lithium sulphate refinery at Boodarie, Port Hedland.
The Boodarie refinery has been designed to process spodumene concentrate from
various potential Australian mines, producing a lithium sulphate monohydrate
for Alkemy's wholly-owned subsidiary Tees Valley Lithium's ("TVL") Wilton
refinery in the UK.
PHL will develop 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.
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 was prepared by Wave International, a leading
engineering consultancy firm with significant experience in developing lithium
hydroxide projects worldwide.
Study highlights and economics:
· 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
In addition, in May 2023 an ecological baseline survey for the Boodarie
lithium sulphate refinery site was completed by AECOM Australia which included
a detailed flora and fauna survey and the publication of a full report in
accordance with the Environmental Protection Act 1986 and other applicable
regulations and standards.
Feedstock and partnerships
During the period we continued to advance our discussions with counterparties
for both feedstock and offtake.
Earlier this month we announced that following extensive technical and
commercial due diligence, TVL has been shortlisted by a major automotive OEM
as the preferred European lithium refiner for a portion of its lithium supply
chain. TVL is in discussions with several OEMs, encompassing proposals ranging
from sourcing of raw materials and refining of those materials to lithium
hydroxide, to toll treatment of lithium raw materials acquired or to be
acquired by the OEMs.
Being shortlisted by major industrial players validates Alkemy's two-stage
processing strategy, the engineering studies conducted to date, and our team's
execution capability. Alkemy is continuing to work with these OEMs to satisfy
their requirements with a view to concluding legally binding agreements as
soon as possible.
OEMs have also confirmed the ability to benefit from provisions of the
US-Australia Climate, Critical Minerals, and Clean Energy Transformation
Compact and the European Critical Minerals Act and Batteries Regulations.
Alkemy continues in advanced discussions with a number of potential key
feedstock suppliers, including several industry-leading lithium miners, well
known automakers, global commodity trading houses and battery recyclers.
Alkemy is also advancing discussions with several other potential customers
for its lithium hydroxide, including major European gigafactories and
chemicals companies and expects significant offtake and/or partnership deals
to be entered into in due course.
These customers are increasingly focussed on price, transparency and low
embedded carbon, when sourcing high grade lithium products and have indicated
their desire to partner with Alkemy due to our market leading credentials in
these areas.
Fundraising and grant funding
In May 2023 we completed a successful private placing and director
subscription raising £1.35 million. The placing was oversubscribed and
supported by existing and new investors as well as by the directors who
contributed £430,000 in total.
In August 2023 Alkemy received a rebate of approximately £230,000 from HMRC
under its Research and Development tax relief programme which permits
companies to claim a rebate of certain qualifying R&D related expenses
incurred during the previous financial year.
In September 2023 we announced that TVL together with Weardale Lithium had
secured a joint funding package of approximately £613,000, including a grant
of approximately £430,000 from Innovate UK. The funding provided under the
Launchpad: Net Zero, CR&D Tees Valley, R2 competition supports outstanding
innovation projects that grow activities in the Net Zero innovation cluster
centred on Tees Valley and supports the Government's goals in the Levelling Up
White Paper.
We continue advancing discussions with financiers for the funding of our LSM
and LHM processing facilities and have received significant inbound interest
including from private equity, structured bond providers and institutions.
As we intend to primarily finance and operate the LSM and LHM facilities via
our operating subsidiaries TVL and PHL, it is anticipated that there will be
no significant dilution to Alkemy's shareholders as part of the proposed
financing process.
Market recognition and outlook
During the period we have continued to make significant progress in a
challenging macro environment.
The pace to decarbonise however continues to accelerate and with a growing
need for lithium hydroxide and now a growing preference from western OEM's to
source lithium hydroxide using more local supply chains, Alkemy is well
positioned to benefit from these changes.
The support received from third parties including major OEMs provides further
validation of our proposed lithium refining strategy. The rapid completion of
due diligence to the satisfaction of certain OEMs is testament to the quality
of the work undertaken by our commercial and technical teams and confirms our
wider business case.
Our focus remains on supporting our potential partners' lithium strategies and
concluding commercial negotiations and will update the market in due course as
these arrangements become binding.
We would like to take this opportunity to thank our shareholders for their
continued support and look forward to reporting on our progress during 2023 as
we deliver on our strategy.
Paul Atherley
Non-Executive Chairman
27 October 2023
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 31 July 2023
For six months ended For the six months ended 31 July 2022 Year ended 31 January 2023 (audited)
31 July 2023 (unaudited) (unaudited)
£ £ £
Note
Administrative expenses (947,423) (708,890) (1,298,002)
Project Development costs (215,461) (649,397) (1,298,011)
Business Development costs - - (12,866)
Foreign exchange gains / (losses) 960 (7,777) (34,344)
Operating profit (1,161,924) (1,366,064) (2,643,223)
Finance costs - (1,535) (1,536)
Loss before taxation (1,161,924) (1,367,599) (2,644,759)
Income tax - - -
Loss after taxation (1,161,924) (2,644,759)
(1,367,599)
Other Comprehensive income
R&D tax credit 95,278 -
-
Exchange gains / (losses) on translation of foreign operations 6,609 (2,645)
(978)
Total other comprehensive income 101,887 (2,645)
(978)
(1,060,037) (2,647,404)
Total comprehensive loss
for the year (1,368,577)
Earnings per share 9
Basic and diluted (£ per share) (0.148) (0.402)
(0.228)
The accompanying notes form an integral part of the financial information.
STATEMENT OF FINANCIAL POSITION
As at 31 July 2023
Note At 31 July 2023 (unaudited) At 31 July 2022 (unaudited) At 31 January 2023 (audited)
£ £ £
ASSETS
Non current assets
Intangibles - Project development costs 302,499 - 298,813
Total Non current assets 302,499 - 298,813
Current assets
Trade and other receivables 8 392,298 15,197 212,125
Restricted cash - 6,598 -
Cash and cash equivalents 40,307 13,242 12,356
Total current assets 432,605 35,037 224,481
Total assets 735,104 35,037 523,294
EQUITY
Equity Attributable to Owners of the company
Share capital 10 144,000 120,000 144,000
Share premium 2,413,243 1,279,094 2,413,243
Share based payments 126,053 - 63,221
Foreign exchange reserve 3,964 (978) (2,645)
Share to issue reserve 872,162 - -
Retained earnings (4,509,055) (2,165,249) (3,442,409)
Total equity (949,633) (767,133) (824,590)
LIABILITIES
Current liabilities
Trade and other payables 11 1,323,448 635,911 1,021,595
Borrowings 361,289 166,259 326,289
Total current liabilities 1,684,737 802,170 1,347,884
TOTAL EQUITY AND LIABILITIES 735,104 35,037 523,294
The accompanying notes form an integral part of the financial information.
This report was approved by the board and authorised for issue on 27 October
2023 and signed on its behalf by:
Paul Atherley
Non-Executive Chairman
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 July 2023
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 - - - (2,645) (2,644,759) (2,647,404)
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 63,221 - - 1,221,370
Balance at 31 January 2023 144,000 2,413,243 63,221 (2,645) (3,442,409) (824,590)
Share capital Share Premium Share Based Payments Shares to Issue Reserve Foreign Exchange Reserve Retained Earnings Total
£ £ £ £ £ £ £
As at 1 February 2023 144,000 2,413,243 63,221 - (2,645) (3,442,409) (824,590)
Loss for the year - - - - - (1,066,646) (1,066,646)
Foreign exchange losses on translation of overseas subsidiaries - - - - 6,609 - 6,609
Total Comprehensive income - - - - 6,609 (1,066,646) (1,060,037)
Transactions with owners:
Issue of shares - - - - - - -
Issue of options - - 62,832 - - - 62,832
Shares to issue - - - 872,162 - - 872,162
Total transactions with owners - - 63,221 872,162 - - 934,994
Balance at 31 July 2023 144,000 2,413,243 126,053 872,162 3,694 (4,509,055) (949,633)
The accompanying notes form an integral part of the financial information.
STATEMENT OF CASHFLOWS
for the period ended 31 July 2023
Six months Six months Year ended 31 January 2023 (audited)
ended ended
31 July 2023 (unaudited) 31 July 2022 (unaudited)
£ £ £
Loss before tax (1,066,646) (1,367,599) (2,644,759)
Adjusted for:
Share based payments 62,832 - 63,221
Expenditure met directly by funding provider 35,000 136,289
(Increase)/decrease in receivables (180,173) (15,124) (212,052)
(Decrease)/Increase in trade creditors 301,853 123,197 339,705
Net cash used in operating activities (847,134) (1,259,526) (2,317,596)
Investing activities
Payments for intangible assets (3,686) - (51,475)
Net cash outflow from investigating activities (3,686) - (51,475)
Financing activities
Increase in restricted funds - (6,598) -
Funds received against shares to issue 872,162 - -
Cash from issue of Ordinary shares - - 1,080,149
Proceeds from short term borrowings - 166,259 190,000
Net cash from financing activities 872,162 159,661 1,270,149
Net (decrease)/increase in cash and cash equivalents (1,099,865) (1,098,922)
21,342
Cash and cash equivalents at beginning of the year 1,113,923 1,113,923
12,356
Effects of foreign exchange on cash balances 6,609 (816) (2,645)
Cash and cash equivalents at end of the year 40,307 13,242 12,356
The accompanying notes form an integral part of the financial information.
NOTES TO THE FINANCIAL INFORMATION
1. GENERAL INFORMATION
The Company was incorporated on 21 January 2021 in England and Wales as a
public company, limited by shares and with Registered Number 13149164 under
the Companies Act 2006. On incorporation, the Company's name was Alkemy
Capital Plc. On 4 February 2021, the Company's name was changed to Alkemy
Capital Investments Plc. The Company's registered office address is 167-169
Great Portland Street, Fifth Floor, London W1W 5PF. On 25 February 2022 the
Company formed a wholly owned subsidiary called Tees Valley Lithium Limited, a
company seeking to establish a Lithium Hydroxide Monohydrate ("LHM")
processing facility in Teesside, UK.
The Company's objective is to establish a LHM processing plant at its chosen
site in Teesside, UK which will aim to initially produce LHM from lithium
feedstock from various sources, to be sold to the UK and European mobile
energy markets.
The Company has also announced plans to build a lithium sulphate monohydrate
plant at Port Hedland, Australia's largest export port located in the Pilbara
region of Western Australia, to feed TVL's LHM facility in Teesside and has
formed a wholly owned subsidiary called Port Hedland Lithium Pty Ltd.
Other than the Directors, the Company has no employees.
The Directors who served during the period were Sam Quinn, Paul Atherley and
Helen Pein.
2. ACCOUNTING POLICIES
Basis of preparation
The principal accounting policies adopted by the Company in the preparation of
the Company Financial Information are set out below.
The Company Financial Information has been presented in £, being the
functional currency of the Company.
The Company Financial Information has been prepared in accordance with IFRS,
including interpretations made by the International Financial Reporting
Interpretations Committee issued by the International Accounting Standards
Board. The standards have been applied consistently. The historical cost basis
of preparation has been used.
The preparation of the financial statements in conformity with IFRS requires
the use of certain critical accounting estimates. It also requires the
Directors to exercise their judgment in the process of applying the Company's
accounting policies.
In the opinion of the management, the interim unaudited financial information
includes all adjustments considered necessary for fair and consistent
presentation of this financial information. The interim unaudited financial
information should be read in conjunction with the Company's audited financial
statements and notes for the year ended 31 January 2022.
Standards and interpretations issued but not yet applied
A number of new standards and amendments to standards and interpretations have
been issued but are not yet effective and, in some cases, have not yet been
adopted by the UKEU. The Directors do not expect that the adoption of these
standards will have a material impact on the Company Financial Information.
Going Concern
The Company Financial Information has been prepared on a going concern basis.
The Company's assets are comprised almost entirely of cash. The Directors have
outlined their new strategy for the Company in the Chairman's Statement. As
part of their assessment of going concern, the Directors have prepared cash
forecasts to determine the cash requirements of the business as it continues
to deliver on its strategy.
In order for the Company to be successful in its strategy, it will need to
raise additional funds. The Directors are reasonably confident that such funds
will be forthcoming as and when they are required, however as successful
future fundraising in support of this strategy cannot be assured, a material
uncertainty exists in this regard. The Directors have a reasonable expectation
that the Company shall be able to secure adequate resources to continue in
operational existence for the foreseeable future.
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.
Financial assets
Financial assets and financial liabilities are recognised when the Company
becomes a party to the contractual provisions of a financial instrument.
Financial assets and financial liabilities are offset if there is a legally
enforceable right to set off the recognised amounts and interests and it is
intended to settle on a net basis. Cash comprises cash in hand and on demand
deposits. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and that are subject to an
insignificant risk of changes in value with maturities of less than 90 days.
Financial liabilities
The Company does not currently have any financial liabilities measured at fair
value through profit or loss, therefore all financial liabilities are
initially measured at fair value, net of transaction costs, and are
subsequently measured at amortised cost. The Company recognises an equity
instrument on any contract that evidences a residual interest in the assets of
the Company. In this period Ordinary Shares were the only equity instrument,
recognised at the point at which a call is made on the Shareholders.
Earnings per Ordinary Share
The Company presents basic and diluted earnings per share data for its
Ordinary Shares. Basic earnings per Ordinary Share is calculated by dividing
the profit or loss attributable to Shareholders by the weighted average number
of Ordinary Shares outstanding during the period. Diluted earnings per
Ordinary Share is calculated by adjusting the earnings and number of Ordinary
Shares for the effects of dilutive potential Ordinary Shares.
3. USE OF ASSUMPTIONS AND ESTIMATES
In preparing the Company Financial Information, the Directors have to make
judgments on how to apply the Company's accounting policies and make estimates
about the future. The Directors do not consider there to be any critical
judgments that have been made in arriving at the amounts recognised in the
Company Financial Information.
4. DIRECTORS' EMOLUMENTS
31 July 2023 Directors' Consultancy Social Security Total
fees fees £'000 £'000
£'000 £'000
P Atherley 29,472 35,000 2,870 67,342
S Quinn 22,104 30,000 2,074 54,178
H Pein 9,000 - - 9,000
Total 60,575 65,000 4,944 130,520
No amount was paid or became payable to any of the Directors of the Company in
the prior period, and there were no staff costs as no staff was employed by
the Company during the prior period.
5. FINANCIAL RISK MANAGEMENT
The Company uses a limited number of financial instruments, comprising cash
and various items such as trade payables, which arise directly from
operations. The Company does not trade in financial instruments.
Financial risk factors
The Company's activities expose it to a variety of financial risks: credit
risk and liquidity risk. The Company's overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Company's financial performance.
(a) Credit risk
The Company does not have any major concentrations of credit risk related to
any individual customer or counterparty.
(b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the
Company ensures it has adequate resource to discharge all its liabilities. The
directors have considered the liquidity risk as part of their going concern
assessment.
Fair values
Management assessed that the fair values of other receivables approximate
their carrying amounts largely due to the short-term maturities of these
instruments.
6. CAPITAL MANAGEMENT POLICY
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. The capital structure of the
Company consists of equity attributable to equity holders of the Company,
comprising issued share capital and reserves.
7. FINANCIAL INSTRUMENTS
The Company's principal financial instruments comprise other receivables. The
Company's accounting policy and method adopted, including the criteria for
recognition, the basis on which income and expenses are recognised in respect
of this financial asset. The Company does not use financial instruments for
speculative purposes.
There are no financial assets that are either past due or impaired.
8. TRADE AND OTHER RECEIVABLES
31 July 31 July
2023 2022
£ £
Prepayments 68,207 15,197
VAT receivable 97,117 -
Other receivables 226,974 -
Total trade and other receivables 392,298 15,197
9. EARNINGS PER SHARE
The loss per share has been calculated using the loss for the year and the
weighted average number of ordinary shares entitled to dividend rights which
were outstanding during the year. There were no potentially dilutive ordinary
shares at the year end.
31 July 31 July
2023 2022
£ £
Loss for the period attributable to equity holders of the Company
(1,066,646) (1,367,599)
Weighted average number of ordinary shares (number of shares)
7,199,998 5,999,999
Loss per share (£ per share)
(0.148) (0.228)
10. SHARE CAPITAL
Ordinary shares of £0.02 each
Number of shares Amount
£
Issued, called up and paid - 31 July 2023 7,199,998 144,000
7,199,998 144,000
Number of shares Amount
£
Issued, called up and paid - 31 July 2022 5,999,999 120,000
5,999,999 120,000
On incorporation on 21 January 2021, the Company issued 3,000,000 Ordinary
Shares of £0.02 nominal value.
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 9 August 2022 the Company issued 1,199,999 ordinary shares of 2p for cash
at a price of £1 per share.
On 31 May 2023 the Company entered into a loan arrangement with Paul Atherley
for £920,800 in gross funding (£872,162 net of costs) to be repaid in a
fixed number of ordinary shares in the Company, at a fixed price, at a future
date. Under IFRS, the terms of this loan require it to be recorded as an
equity reserve "shares to issue" as the economic risks of the instrument are
more closely aligned to equity than debt, with transactions costs being taken
as a deduction from this equity reserve. As a consequence these net amounts
received as at the reporting date have been recognised in the "shares to
issue" reserve. On issuance of the repayment shares, which took place on 5
October 2023, these amounts will be reallocated to the share capital and share
premium reserves.
No further issues of Ordinary Shares were made during the period.
11. TRADE AND OTHER PAYABLES
31 July 2023 31 July
£ 2022
£
Trade payables 1,011,480 579,489
Other payables 123,996 41,357
Accrued expenses 187,972 15,064
Total trade and other payables 1,323,448 635,910
12. POST BALANCE SHEET EVENTS
On 23 August 2023 the Company announced the completion of a feasibility study
for its lithium sulphate processing facility in Port Hedland, Australia.
On 28 August 2023 the Company received a rebate of approximately £230,000
from HMRC under its Research and Development tax relief programme.
On 29 September 2023 the Company announced the repayment of 657,711 loan
shares by the Company to Paul Atherley through the issue of new shares. In
addition the Company issued new shares to Paul Atherley and Sam Quinn at
£1.40 per share to satisfy £440,000 of outstanding director loans.
On 29 September 2023 the Company announced that it had secured £613,000 of
grant funding together with Weardale Lithium from Innovate UK.
13. ULTIMATE CONTROLLING PARTY
As at 31 July 2023, the company has no ultimate controlling party.
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