Alkemy’s Tees Valley Lithium set to lead the UK’s Lithium charge

Alkemy’s recent RTO of 100% owned Tees Valley Lithium brings the UK’s first planned Lithium Hydroxide producer to the UK investment market with 2022 set to be a landmark year for the company.

Last week I caught up with Paul Atherley, Chairman of Alkemy Capital (100% owner of Tees Valley Lithium). Investors wont have heard much about Tees Valley Lithium or its owner Alkemy for that matter but that’s about to change with Alkemy shares now out of suspension and Tees Valley Lithium approaching some key milestones that should establish the UK and possibly Europes first Lithium Hydroxide producer.

Many will know Paul from his involvement at Pensana Rare Earths, a company that has a Rare Earths minerals project in Angola and who are looking to establish a UK Rare Earths processing facility at the Saltdean Humber freeport in the UK. Paul is very excited about Pensana’s prospects with the project moving forwards at pace, with investment from the Angolan Sovereign Wealth fund and only recently a £10m equity investment from M&G Investment.

Paul is equally excited about Tees Valley Lithium and its easy to see a ‘read across’ from Pensana as both companies aim to be at the forefront of the UK Governments ‘levelling-up’ strategy with Rare Earths and Lithium processing capabilities being crucial for the UK’s battery and renewables supply chains and its competitiveness on the world stage. This has never been more evident as it is now with countries trying to reduce reliance upon the likes of Russia and China who dominate much of the minerals and resources supply chains.

I’m not going to go into the ‘nuts and bolts’ of what Alkemy/TVL are doing in this brief blog, you can read my detailed research note here.

In my chat with Paul I was keen to find out what’s next now the company is re-listed and what could excite investors going forwards and importantly from my perspective bring about a healthy return on my investment given it still trades at a sub £10m market cap.

There is some key news flow on the way as highlighted in recent RNS. This month we can expect delivery of the Feasibility Study which will hopefully confirm some exceptional project economics where an incremental four train 24k tpa lithium hydroxide operation could yield a $1bn NPV increasing to $3.8bn at full 96k tpa, with first production as early as 2024. To view these numbers in a different way this could translate to annual EBITDA ranging from £130m to £511m all from an initial £177m Capex. Confirmation of economics like this in the feasibility study should get some attention!

Paul also highlighted that investors can expect to hear news on supply and off-take contracts over the coming months and remainder of 2022 which is unsurprising given I am reading there is a lot of concern over the ev battery and energy storage supply chains. This is largely driven by reliance upon China who will need all their lithium hydroxide resource for example to meet their own 2060 carbon neutral plan.

Given Paul’s previous success at bringing in institutions and funds to the share registrar at the likes of Pensana I was wondering if we’d see some new names coming onto the Alkemy register. Unsurprisingly, Paul confirmed there has been a lot of inbound interest from such parties but the current Market Cap is a short term barrier to entry as the likes of funds and institutions have valuation and liquidity thresholds they must adhere to. Therein lies the opportunity for retail investors to get in early. Earlier stage investing carries higher risk of course so please do consider this and do your own research!

Paul (and myself for that matter) doesn’t expect the Market Cap to stay at this level for long though given the news pipeline ahead, work achieved at TVL to date and the fact the TVL management team are pushing the project forward at pace. You can search Google and find multiple news items emerging on Tees Valley Lithium and the Teeside Freeport – it’s gong to become more and more topical!

The company are well funded, with at my last check over £1m in cash and in terms of financing have multiple financing options with ‘green debt’ based instruments such as bonds of particular appeal to ESG funds.

My investment in Alkemy sits nicely alongside my investment in AMTE Power (a lithium-ion battery developer and potential customer of TVL) with both companies offering significant upside potential from current levels as they deliver over the coming months and years.

Lastly Paul suggested any investors interested in following the progress of the company and Tess Valley Lithium sign-up to their email newsletter here I did this with Pensana and its far more interesting than reading a black and white RNS!

Don’t forget to follow me on twitter for more updates https://twitter.com/TheMoneySponge

Disclaimer

Research materials prepared based upon my own analysis and research. Accuracy cannot be guaranteed and research notes should not be taken as investment advice. Please always do your own research.

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