Alkemy Capital’s Feasibility Study for their Tees Valley Lithium project confirms a £49bn revenue / 30 year project

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.

Alkemy Capital is a company that is listed on the main market recently completing an RTO of Tees Valley Lithium. Currently their isn’t much chatter on the company on social media and bulletin boards etc but I think that’s going to change.

It reminds to some extent of a company called Goldstone Resources which is a company I discovered a couple of years ago and wrote a research note on at c.3p. It subsequently went on to hit a high of 15p.

Spotting companies with potential early is one of the best ways to beat the herd and importantly the bigger money that may follow such as funds/institutions.

Alkemy in my opinion is another classic example of a company that as visibility increases will become a mainstream favourite especially as it’s a unique offering in the green-energy sector with first mover advantage in the UK and probably Europe.

You can read more in my research note here

The company last week delivered the feasibility study for a world class lithium hydroxide project to be based at the Wilton International Chemical park in the UK Teeside Freeport.

The project economics look exceptional especially when you consider Alkemy (LSE:ALK) trades at sub £10m cap – some project economic highlights as follows:

  • Pre-tax net present value (NPV) of GBP2.8 (US$3.9) billion based on long-term lithium hydroxide price of US$25,000 per tonne
  • Initial capital cost of GBP216 (US$300) million;
  • Gross revenues of GBP49.2 (US$68.4) billion;
  • Internal rate of return (IRR) of 35.6%;

Those are clearly some hefty numbers, so what will investors be looking out for in terms of further de-risking, news-flow and importantly a valuation uplift? Well I caught up with Chairman Paul Atherley recently and you can read more in that blog here

I’d expect to see news in the near future on a number of fronts including metallurgical work to prove up the lithium sulphate to hydroxide chemical process, FEED (Front End Engineering Design) milestones and as mentioned by Paul news on supply/off-take contracts. Don’t discount the possibility of some initial funding news either as I would expect with those economics and larger players wanting exposure to this sector there will already be significant interest!

Alkemy/TVL will need to secure/source lithium sulphate as opposed to lithium spodumene concentrate – there are some options for this but the critical thing to realise here is that lithium miners will need to move towards supplying more lithium sulphate to avoid shipping 95% waste around the world before it’s refined – yes you heard that right!

The feasibility is the first and important step with independent confirmation of the project economics. I look forward to and will report on further news as it comes!

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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