Alkemy Capital have delivered three key pieces of news in as many months along with an announcement of a premium fundraise this week to fast-track their Wilton lithium hydroxide processing facility.
Alkemy Capital are pushing forwards at pace with their plan to build Europes first lithium hydroxide processing facility at the Wilton International Chemicals park with an agreement already in place with Sembcorp Industries to provide power, reagents and utilities at site.
You can read more in my research note here, in this blog though I’ll touch upon the recent news which seems to have been somewhat missed by what can only be described as a subdued market!
The company have put out three key pieces of news recently that are all stepping stones to securing project finance and investment, each one further validating the project potential.
The company in April delivered the project 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) today trades at around £7m 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 else has been happening?
Ultra pure-grade lithium hydroxide exceeds industry standard
In May, Alkemy also reported that test work completed on the product it will produce showed an end product higher than the prevailing industry standards. This is another important step in validating the project, some highlights as follows:
- Ongoing testwork had produced ultra-pure battery-grade lithium hydroxide from low quality industrial grade (95%) lithium sulphate
- Product superior to prevalent Chinese standard specification GB/T 26008-2020 D1
- Full end product specifications now identified and independently verified by an internationally recognised cathode active material manufacturer
- Testwork completed by JordProxa, a globally recognised technology provider, confirms ability to upscale to commercial production
Lithium Sulphate Feedstock MOU with Traxys
Following on from the DFS and Test work, Alkemy in July announced an MOU with leading global metals trader Traxys to source lithium feedstock for Tees Valley Lithium.
Traxys has agreed to source and supply lithium feedstock for TVL’s planned processing facility in Teesside, UK. The lithium feedstock will initially supply Train 1 of TVL’s facility, producing 24,000tpa of battery-grade lithium hydroxide, with production due to commence in 2024.
Three important pieces of news that between them confirm robust project economics, the lithium sulphate to hydroxide processing approach and product specification and partnership with a global metals trader to source the feedstock.
The fundraise announced this week represented a c.14% premium to the closing share price. In this market that’s a significant vote of confidence and worth noting additional Director investment in the company whereby they already have significant holdings.
The funds will be used to commence and advance FEED (Front End Engineering Design) and to complete the planning process. Alongside these important additional milestones investors could see further feed-stock supply agreements and news on the financing process/. Similar to Pensana who have recently started construction on the Saltend Rare Earths processing facility (another Atherley project), Alkemy/TVL will be able to look for Government grants/funding and Green bond/debt type instruments to achieve the overall funding required for phase 1 of the project.
With a huge impetus on green energy and the UK’s levelling up strategy, Alkemy look well placed too fast track this important project having delivered recent milestones and secured further funding.
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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.