18 January 2024

Alkemy Capital Investments Plc

Corporate Update

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

HIGHLIGHTS

·    Macro outlook for lithium processing remains extremely robust despite a recent fall in lithium prices, with European demand for lithium remaining on an unprecedented upward trajectory.

·    Tees Valley Lithium's refinery at the Wilton International Chemicals Park in Teesside is a refinery of strategic importance in Europe, having already secured environmental and planning permission, and will create over 1,000 local jobs in the UK when in full production in 2026.

·    Feedstock has been secured for the Wilton refinery's first train from global leader Wogen.

·    Project financing discussions advancing with multiple potential providers of debt, strategic equity and green bond finance; mezzanine finance discussions with tier one financial institutions progressing well.

·    Port Hedland Lithium's refinery at the Boodarie Strategic Industrial Area in Port Hedland provides a mid-stream solution for Australia's spodumene miners with direct access to the European premium market and a low-carbon feedstock supply for TVL's Wilton refinery.

·    Alkemy is actively exploring opportunities to expand its downstream processing strategy to other key critical battery minerals in conjunction with strategic and industry partners.

Chairman Paul Atherley commented:

"Since the inception of our company, we have made excellent progress in advancing our lithium refinery projects, including securing key sites in Teesside and Port Hedland, receiving planning and environmental permissions, securing feedstock and establishing other key strategic partnerships along with key governmental, industry and media recognition, reflecting our commitment to becoming a leader in the low-carbon production of battery-grade lithium hydroxide. 

The success of these strategic initiatives and partnerships places us at the forefront of Europe's critical minerals processing sector, and we are now poised to replicate this success across other key critical battery minerals, that could deliver for Alkemy a potentially transformational multi-minerals strategy.

In the short term we remain focussed on securing mezzanine finance to advance the project and I am pleased to report that we are making excellent progress with several tier one financial institutions on this front."

Macro outlook for lithium processing remains robust despite the recent downturn in lithium prices

Despite recent market shifts, European demand for lithium remains on an unprecedented upward trajectory. With the UK and EU's transition towards electric vehicles (EVs), there's a forecasted demand for lithium that far exceeds current supply capabilities.

The UK and European Commission's move to ban combustion engine cars by 2035 is a significant catalyst, signalling a shift towards a more sustainable and electric future. This policy change, along with similar initiatives worldwide, is expected to fuel a consistent and growing demand for lithium.

As Europe's car makers make the switch to EVs to meet this burgeoning demand there is over 700GW of gigafactory capacity either in construction or planned to provide the batteries for these EVs. These gigafactories will require over 650,000 tonnes of locally refined lithium per year in the form of either hydroxide or carbonate depending on the type of vehicle. Currently the UK and Europe has very limited lithium refining capacity.

Building a European lithium processing facility will reduce the regional dependence on China, which currently controls 90% of the world's lithium refining capacity.

Recognising the escalating demand for lithium, Alkemy has been actively developing its lithium refining portfolio through Tees Valley Lithium (TVL) and Port Hedland Lithium (PHL).  Alkemy's focus is not just on meeting the immediate market needs but on establishing a supply chain that is resilient, environmentally responsible, and capable of adapting to the rapidly evolving energy landscape.

TVL's processing 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.

Feedstock secured for TVL's Teesside refinery

TVL has reached an agreement in principle with international trading house Wogen for the supply of technical grade lithium carbonate to TVL's merchant refinery at Wilton.

Wogen is a leading international trader of off-exchange specialty metals and minerals, with a long history and well-established presence in the battery metals market across Asia, the United States and Europe. Wogen has an active trading book in lithium products procuring from an array of producing countries and selling into the battery supply chain.

Wogen intends to supply up to 20,000 tonnes of technical grade lithium carbonate feedstock per annum, for an initial period of five years. The supply will be sufficient to fill the first of the proposed four trains at Wilton producing around 24,000 tonnes of battery grade lithium hydroxide or lithium carbonate equivalent.

TVL's partnership with Wogen ensures a reliable supply of lithium, critical for its first production train. This partnership is however more than just a supply agreement: it's a strategic alignment that ensures a steady and sustainable flow of lithium to TVL's Teesside refinery.  This collaboration is critical in establishing a reliable and ethical supply chain which is crucial in the volatile commodity market. Wogen, known for its global reach and expertise in speciality metals and minerals, brings not just the supply security but also a wealth of industry knowledge and market insight. 

This partnership, combined with ongoing dialogues with other industry leaders, will propel Alkemy forward in its mission to become a significant force in the battery minerals sector, underpinning the Alkemy group's commitment to sustainability and ethical sourcing.

Project and mezzanine funding discussions are progressing well

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 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. Alkemy is currently making excellent progress in these discussions and will update the market as soon as this key piece of funding is secured.

TVL's Teesside lithium refinery is of strategic importance for the UK

The Critical Minerals Association United Kingdom (CMA), a key interlocutor between the UK Government and the critical minerals industry, has identified TVL's lithium refinery in Teesside as a case study project that in its opinion will form a key strategic component of the UK's critical minerals midstream processing and refining sector.

In addition, the UK Automotive Transformation Fund (ATF), which is designed to help fund the UK's automotive supply chain, has approved TVL's initial expression of interest and TVL remains in discussions with the ATF to secure a grant which will form part of TVL's project financing package. The ATF is a funding programme created to support large-scale industrialisation and will invest up to £1 billion to develop a high-value end-to-end electrified automotive supply chain in the UK.

The endorsement from the CMA and the engagement with the ATF are testaments to the national significance of this project.  It's not just an industrial venture but a crucial part of the UK's strategic move towards a sustainable automotive industry. TVL's refinery, with its cutting-edge technology and capacity, is set to become a cornerstone in the UK's industrial landscape, contributing significantly to the country's environmental goals and its position in the global battery supply chain.

Port Hedland Lithium provides a mid-stream solution for Australia's spodumene miners with direct access to the premium European market

The Western Australian government has allocated PHL an area of approximately 43.7 hectares within the Boodarie Strategic Industrial Area for the construction of its proposed Port Hedland LSM refinery with Wave Engineering and GHD engaged to undertake the engineering and planning approvals.

Port Hedland, Western Australia is the largest bulk export port in the world, the largest container port in Australia and with the planned US$470 million multi-user logistics hub at Lumsden Point it is expected to become the world's biggest exporter of lithium.

PHL has been allocated land along with BP, POSCO, Fortescue Metals and Alinta Energy with the aim of making Boodarie part of an A$70 billion globally competitive Pilbara green industrial precinct. 

PHL represents a strategic initiative that transcends geographical boundaries. It's a symbol of the new era of critical mineral supply chains, effectively bridging the Australian mining capabilities with the European automotive industry. This project not only reinforces the strong trade relations between the UK and Australia but also establishes a direct and efficient supply line to Europe's rapidly expanding battery market.

The Port Hedland facility is poised to become a vital link in the global supply chain of lithium, facilitating the transfer of raw materials from one of the world's richest mining regions directly to the heart of the UK and Europe's battery manufacturing hub.

Alkemy to replicate downstream strategy in other key critical battery minerals in conjunction with strategic partners

Building on the successful foundations laid by TVL and PHL, Alkemy is actively exploring new horizons in the battery minerals sector. Alkemy's vision extends beyond lithium to encompass a range of critical battery minerals, positioning it as a diversified leader in the energy transition sector. 

Alkemy is committed to being a pivotal force in critical minerals processing, guiding its portfolio companies towards not only achieving operational excellence but also adhering to sustainable practices in premium mineral production. Alkemy will seek to nurture their growth and expansion, while strategically forging partnerships to diversify and align its portfolio with the evolving demands of the energy transition industry. Alkemy's focus is steadfastly on driving consistent growth, ensuring global market resilience, and fostering long-term value creation.

Alkemy continues to advance discussions with potential key strategic and industry partners to develop additional downstream processing refineries for other battery minerals. These projects will build on the key relationships already in place between TVL and its various stakeholders and will be fully complementary to TVL's aims and objectives.

Alkemy expects to make further announcements in due course once key agreements have been entered into.

Further information

For further information, please visit the Company's website: www.alkemycapital.co.uk or www.teesvalleylithium.co.uk

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ABOUT ALKEMY CAPITAL

Alkemy is seeking to establish independent and sustainable lithium hydroxide production by developing lithium sulphate and lithium hydroxide facilities in the UK and Australia.

Alkemy, through its wholly owned UK subsidiary Tees Valley Lithium, has secured a 9.6 ha brownfields site with full planning permission at the Wilton International Chemicals Park in Teesside, a major UK Freeport, to build the UK's first and one of Europe's largest lithium hydroxide processing facility.

Tees Valley Lithium has completed a Class 4 Feasibility Study for its proposed lithium hydroxide refinery which will process feedstock imported from various sources to produce 96,000 tonnes of premium, low-carbon lithium hydroxide or an equivalent amount of lithium carbonate annually, representing around 15% of Europe's projected demand.

Alkemy, through its wholly owned Australian subsidiary Port Hedland Lithium, has secured a 43.7 ha site at the Boodarie strategic industry area, near Port Hedland, Western Australia to build a world-class sustainable lithium sulphate refinery that will provide reliable feedstock for Tees Valley Lithium's refinery.

Port Hedland Lithium has completed a Class 4 Feasibility Study for its proposed lithium sulphate refinery, each train of which will process spodumene concentrate to produce 40,000 tonnes of lithium sulphate annually.

Forward Looking Statements

This news release contains forward?looking information. The statements are based on reasonable assumptions and expectations of management and Alkemy provides no assurance that actual events will meet management's expectations. In certain cases, forward?looking information may be identified by such terms as "anticipates", "believes", "could", "estimates", "expects", "may", "shall", "will", or "would". Although Alkemy believes the expectations expressed in such forward?looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those projected. In addition, factors that could cause actual events to differ materially from the forward-looking information stated herein include changes in market conditions, changes in metal prices, general economic and political conditions, environmental risks, and community and non-governmental actions. Such factors will also affect whether Alkemy will ultimately receive the benefits anticipated pursuant to relevant agreements. This list is not exhaustive of the factors that may affect any of the forward?looking statements. These and other factors should be considered carefully and readers should not place undue reliance on forward-looking information.