REG - Alkemy Capital Invs. - Corporate Update

Alkemy Capital InvestmentsAnnouncement

05/08/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240805:nRSE0736Za&default-theme=true

RNS Number : 0736Z  Alkemy Capital Investments PLC  05 August 2024

5 August 2024

 

Alkemy Capital Investments Plc

 

Corporate Update

 

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

 

HIGHLIGHTS

 

·    Project level financing discussions for Tees Valley Lithium's
refinery advancing with multiple potential providers of debt, strategic equity
and green bond finance; mezzanine finance discussions to fund FEED progressing
well with a shortlist of potential funding providers identified.

 

·    Key technology partner with expertise in lithium refining identified
by Tees Valley Lithium to help accelerate the electrochemical process;
potential reductions in capex and opex for its Teesside refinery.

 

·    Macro outlook for lithium processing remains robust despite a recent
volatility in lithium prices, with European demand for lithium remaining on an
unprecedented upward trajectory; UK battery supply chain continues to develop
at pace.

 

·    Collaboration with UK based lithium focussed Geothermal Engineering
to enable the development of a UK battery grade lithium supply chain; R&D
grant with Weardale Lithium is progressing well.

 

·    Tees Valley Graphite has substantially progressed a legally binding
joint venture agreement with Syrah Resources for its proposed graphite
processing facility 50/50 joint venture.

 

 

Chairman Paul Atherley commented:

 

"Alkemy continues to make good progress on a number of fronts. The growing
interest in Tees Valley Lithium, particularly from prospective UK customers,
is very encouraging. We are excited about the potential for the technology
partnership with scope for both capital and operating cost reductions. Our
main focus remains on progressing the mezzanine financing which is well
advanced."

 

Project and mezzanine funding discussions are progressing with several groups
now shortlisted to provide up to $25m at project (TVL) level

 

Tees Valley Lithium ("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 the
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.

 

TVL is currently making excellent progress in these discussions, having
shortlisted several potential providers of finance, and is confident that it
will secure this key piece of funding. In the meantime, Alkemy and TVL's
corporate overheads have been reduced to a bare minimum and will continue to
be funded via director and short-term loans to avoid any unnecessary equity
dilution.

 

Discussions with key technology partner

 

TVL is in currently in discussions to partner with a leading lithium refining
technology company that would provide a value-add to train 1 (and subsequent
trains), including potential reductions in capex and opex and refinements for
TVL's electrochemical process.

 

The next steps in the process are agreeing commercial terms followed by the
entering into of a binding term sheet, and TVL will keep the market updated as
this partnership progresses.

 

UK Government R&D Grant progressing well

 

TVL in partnership with Weardale Lithium, is actively exploring opportunities
to strengthen the UK lithium supply chain through innovative research and
development. TVL is making significant progress on a government-awarded
R&D grant aimed at evaluating the lithium chloride and carbonate markets,
as well as advancing processing technologies.

 

This initiative is designed to enhance the efficiency and sustainability of
lithium processing, ensuring that the UK remains at the forefront of battery
material innovation. Our efforts are focused on developing cutting-edge
technologies that can be integrated into a cohesive and resilient supply
chain, ultimately supporting the growing demand for lithium in the electric
vehicle ("EV") sector.

 

MOU signed in Q1 2024 with Syrah Resources for a graphite active anode
material processing facility with the legally binding joint venture agreement
progressing well

 

In Q1 2024, Alkemy announced that its wholly owned subsidiary, Tees Valley
Graphite Limited ("TVG"), had entered into a non-binding MOU with Syrah
Resources (SYR:ASX) for the establishment of a joint venture to develop a
commercial-scale natural graphite active anode material ("AAM") processing
facility ("Wilton AAM facility") located at the 'plug-and-play' Wilton
International Chemicals Park within the Teesside Freeport, to supply AAM to
the European market.

 

The Wilton AAM facility is proposed to be supplied with natural graphite from
Syrah's Balama graphite project in Mozambique, the world's largest integrated
graphite operation and would target an initial production capacity of 20,000
tonnes AAM per annum for supply into cell manufacturers and OEMs located in
the UK and European battery markets.

 

TVG is pleased to report that the legally binding joint venture agreement has
progressed well during Q2 and will provide further updates in due course.

 

Long term outlook for downstream lithium products remains robust despite
recent volatility

 

The battery materials market continues to show promising growth, driven by the
accelerating adoption of EVs and renewable energy storage solutions. Despite
recent price fluctuations and supply chain disruptions, the long-term outlook
remains strong.

 

In Q2 2024, lithium prices experienced significant volatility, reaching lows
not seen since 2021. Prices for lithium carbonate fell below $13,000 per
tonne, a 35-month low, despite a surge in plug-in EV sales across key markets.
This drop in prices is attributed to current oversupply and weaker than
expected EV sales in Europe, which have put pressure on lithium demand and
pricing.

 

Notwithstanding this, the long-term outlook for lithium remains positive. The
global push towards decarbonization and the increasing adoption of EVs are
expected to drive substantial demand growth. The European Critical Raw
Materials Act underscores the strategic importance of lithium, aiming for 40%
of the lithium required to be refined within Europe. Currently, Europe's
lithium refining capacity stands at approximately 35,000 ktpa, while demand is
projected to reach 350 ktpa by 2030. This significant gap highlights the
urgent need for increased refining capacity, a shortfall TVL is
well-positioned to address.

 

UK battery market continues to develop at pace

 

The UK is making significant strides in battery manufacturing, with several
high-profile projects underway. Tata Group has announced the construction of a
£4 billion battery gigafactory in Somerset, which will produce 40 GWh of
battery cells annually starting in 2026. This facility is expected to create
thousands of skilled jobs and strengthen the UK's position in the global EV
market. Additionally, Chinese battery manufacturer EVE Energy is planning to
build the UK's largest gigafactory, with an initial investment of £1.2
billion, further boosting the country's battery production capacity.

 

The UK government continues to support the transition to EVs with proposed
legislation and strategic investments. The Labour Party has indicated plans to
bring forward the ban on internal combustion engine vehicles to 2030,
emphasizing the need for a robust EV infrastructure. This aligns with the
government's broader goal of achieving net-zero emissions and securing a
leading position in the clean energy sector.

 

The development of robust and localized supply chains is crucial for the
growth and sustainability of the battery materials industry in the UK.
Establishing a secure and efficient supply chain not only reduces dependency
on imports but also enhances the resilience and competitiveness of the
domestic market. By fostering innovation and investing in local capabilities,
the UK can become a leader in the global transition to EVs and renewable
energy storage solutions.

 

TVL's lithium 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.

 

Collaboration with Geothermal Engineering to develop an integrated UK lithium
supply chain

 

TVL is pleased to announce a collaboration with Geothermal Engineering Limited
("GEL") to explore opportunities to advance their respective lithium projects
through the exchange of information and the potential development of
integrated supply chains within the UK.

 

GEL is a geothermal lithium resource owner and is currently developing a
geothermal energy plant and a lithium extraction facility in Cornwall. GEL's
innovative approach focusses on extracting lithium from geothermal brines,
producing intermediate lithium products in an environmentally friendly manner.
This sustainable method aligns with the UK's commitment to reducing carbon
emissions and promoting green technologies.

 

This collaboration aims to identify the best specifications and frameworks to
support sustainable development while maintaining flexibility for both parties
to pursue various strategic interests. By leveraging the unique capabilities
of each organization, TVL is well-positioned to contribute to the creation of
a robust and innovative UK supply chain that meets the evolving needs of the
industry.

 

Grant of FEED Performance Share Options to Senior Team

 

Alkemy is pleased to announce the launch of an incentivisation package for
directors and senior management.

As outlined above, TVL has been in discussions with several leading financial
institutions and industry groups to secure initial project level
mezzanine/debt funding as well as strategic project-level partnerships, for
the purpose of funding and completing FEED for TVL's lithium refinery in
Teesside.

Discussions are still progressing for this key piece of funding, which upon
completion will be transformational for TVL as it will enable a clear path
forward to Final Investment Decision (FID) for TVL's proposed Train 1 Bond
financing programme.

Given the criticality of funding FEED, the Board believes it is the
appropriate to establish an incentive program tied to the delivery of this key
milestone.

Alkemy will accordingly issue its directors and senior team, with immediate
effect, nil cost performance share options, that will only vest once funding
to complete FEED has been secured ("FEED Performance Share Options").  If
exercised in full, the FEED Performance Share Options will total 500,000
ordinary shares representing approximately 5.4% of Alkemy's enlarged share
capital.

Any shares issued as a result of the exercise of the FEED Performance Share
Options will be subject to a hard lock-up until such time as the main
financing for TVL's train 1 is secured or for two years, whichever is sooner.

The Board believes the structuring of the FEED Performance Share Options as
set out above provides full alignment with Alkemy shareholders, with the
financing and delivery of the FEED study being a potential company-making
event.

The grant of the FEED Performance Share Options to directors is set out below:

 Director       Performance Options
 Paul Atherley  150,000
 Sam Quinn      150,000
 Vikki Jeckell  150,000
 Helen Pein     25,000

 

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

                                 info@alkemycapital.co.uk (mailto:info@alkemycapital.co.uk)
 Zeus Capital                    Tel: 0203 829 5000

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDDZGGRMFFGDZZ