27 April 2022

Alkemy Capital Investments Plc

Tees Valley Lithium announces plans to establish world class Lithium Hydroxide production at Wilton International Chemical Park, UK

Alkemy Capital Investments plc ("Alkemy") is pleased to announce the completion of a Feasibility Study for a world class lithium hydroxide processing facility at the Wilton International Chemical Park located in the Teesside Freeport, UK.

Alkemy, through its wholly owned subsidiary Tees Valley Lithium, is seeking to develop an independent and sustainable supply of lithium hydroxide to meet the burgeoning demand from UK and European giga factories.

The facility will process feedstock imported from various sources to produce 96,000 tonnes of a premium, low-carbon lithium hydroxide annually, representing around 15% of Europe's projected demand.

The proposed facility is located at the "plug and play" Wilton International Chemical Park located in the Teesside Freeport with connections to low carbon offshore wind and 100% certified renewable energy.

The project is the first of its kind in the UK, the biggest in Europe and will when completed be a key supplier to UK and European giga factories, electrical vehicle and battery storage industries.

The study has been prepared by Wave International, a leading engineering consultancy firm with significant experience in developing lithium hydroxide projects worldwide.

HIGHLIGHTS:  

·  96,000 tonnes annual production of battery grade lithium hydroxide representing approximately 15% of projected UK and EU demand;

·    Plant has been designed to process a range of imported low-carbon, high value feed sources including lithium sulphate and lithium carbonate;

·   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%;

·    Significant potential to capture by-product value streams.

The results of the Feasibility Study demonstrate the viability of developing a robust battery-grade lithium hydroxide project with low capital and processing costs, a low carbon footprint, strong cash flow generation capacity and significant upside potential by capturing by-product credits.

The Feasibility Study has evaluated the project economics using the following assumptions:

·    A merchant lithium hydroxide plant comprising four trains each with a 24,000tpa capacity, to produce up to 96,000tpa of battery-grade lithium hydroxide.

·    Train 1 will follow the conventional Glauber's Salt process route with trains 2 to 4 following an Electrochemical route.

·    Purpose built facility to be constructed on a 9.6 ha plot at the Wilton International Chemical Park in the Teesside Freeport.   

·    Plug and play infrastructure with a connection to reliable and cheap offshore wind and 100% certified renewable energy.

·    Production of a premium, low carbon product for sale to Tier 1 customers in the UK and Europe.

The Feasibility Study identifies target production over a 30-year life to be the most appropriate option. The preliminary economics of the project are set out below:

Table 1 - Project Economics

Notes:

-The model uses a long-term lithium sulphate price of US$10,000/t and a long-term lithium hydroxide price of $25,000/t

-Peak funding for Train 1 is GBP218m

-Long term GBP/US$ exchange rate is 1.39

Sam Quinn, Director of Alkemy and Tees Valley Lithium, commented:

"This Feasibility Study is a major milestone for Alkemy and its 100% owned subsidiary Tees Valley Lithium. We are moving quickly to establish a major independent and sustainable lithium hydroxide producer at the Wilton International Chemical Park in the Teesside Freeport and are pleased with the validation that this independent feasibility study brings to our project.

At full production, Tees Valley Lithium will produce 96,000 tonnes of battery-grade lithium hydroxide per annum and will be a major supplier to the UK and European electric vehicle industry."

APPENDIX - CLASS 4 FEASIBILITY STUDY SUMMARY

PROJECT BACKGROUND   

Tees Valley Lithium's strategy is to become a leading producer of lithium products, and a key supplier to the battery supply chain for the expanding electric vehicle ("EV") and stationary energy storage markets.

A merchant Lithium Hydroxide Monohydrate ("LHM") plant consisting of four trains is proposed to be developed at Teesside with the following key advantages:

·    Direct access to cheap, renewable (wind) power and certified renewable electricity;

·    Location within a Freeport zone providing economic benefits and frictionless trade;

·    Location close to the fifth biggest port in the UK for the import of raw materials and export of products;

·    Location within an established industrial chemicals park, with "plug and play" services and infrastructure;

·    Proximity to the UK and EU's Cathode Active Material and automotive industry;

·    Experienced management team specialising in mining, mineral processing, lithium hydroxide projects and battery supply chain;

·    Pioneering the world's first successful low-carbon electrochemical route by partnering with global expertise and generating proven lab results.

Train 1 is anticipated to have a production capacity of 24,000 tpa LHM and will be designed to process Lithium Sulphate Monohydrate ("LSM") and lithium carbonate from multiple sources with initial supply via third party feedstock contracts.

Train 1 will be based on a conventional Glauber's Salt processing route, producing LHM and Anhydrous Sodium Sulphate. This process is currently utilised extensively in LHM production in China and Australia.

Trains 2 to 4 are anticipated to have a combined production capacity of 72,000 tpa LHM and will also be designed to process LSM and lithium carbonate from multiple sources. Train 2 will likely be based on the Electrochemical processing route, producing LHM and a dilute Sulphuric Acid stream (which in turn will be converted into a saleable by-product).

Tees Valley Lithium ("TVL") has developed its own IP on the Electrochemical processing route, which utilises equipment available from reputable, global vendors who have completed extensive testwork on lithium extraction. The Electrochemical route is ideally suited to sites with low cost, renewable power sources.

The target product will be Battery Grade LHM meeting the specifications of tier 1 European automotive Original Equipment Manufacturers, TVL's target customers. With the EV ambitions of its customers in mind, TVL aims to be an early full-scale manufacturer of Battery grade LHM in the UK and Europe.

A key strategic consideration for the plant design is the ability to process multiple sources of LSM, including LSM derived from spodumene, mica, brine and recycling of used batteries as well as lithium carbonate. The test work undertaken to date, along with resulting engineering development, has considered variability of both LSM and lithium carbonate sources.

To achieve its strategic goals, TVL has aligned with a key strategic shareholder base as well as appointing a highly experienced management team with experience in the chemicals and lithium sectors.

METALLURGICAL TESTWORK  

To date, a considerable amount of metallurgical test-work has been carried out by a number of leading laboratories in the field of lithium and speciality minerals processing and treatment.

The test-work has formed the basis for the process flowsheet in the Feasibility Study. The metallurgical test work yielded an ultra-pure battery grade lithium hydroxide, exceeding the industry-recognised Chinese standard GB/T 26008-2020 D1.

The studies and laboratories are listed below.
 

Table 2 - Testwork Programmes

The process route for each process route is set out in the Figure 1, along with the scope of each programme. It is noted that Anzaplan's scope included a single stage crystallisation only to a crude LHM and that Electrosynthesis did not perform LHM crystallisation.

Figure 1 - Proposed flowsheet (left Glauber's Salt route, right Electrochemical route) To view the image, please click on the following link https://www.alkemycapital.co.uk/images/2022/April/Figure_1_.jpg

Results - Impurity Removal Programme at Nagrom

The impurity removal programme was designed to produce a purified lithium sulphate liquor from a low-grade lithium sulphate input, to levels acceptable to both the Glauber's Salt and Electrochemical process routes. It is noted that the purity requirements differ between the two routes.

The flowsheet is based on process widely used commercially in industry, and as such the ongoing testwork is focused on examining varying reagent regimes and the impact on liquor purity ahead of either downstream process (Glauber's Salt or Electrochemical). The regimes and specific results are considered confidential, and this testwork is ongoing.

Results - Glauber's Salt crystallisation work at JordProxa

The crystallisation testwork programme was designed to prove the causticisation and crystallisation process to a final ultra-pure LHM project. This involved causticisation, Glauber's Salt crystallisation, and three stage lithium hydroxide crystallisation.

After three stages of crystallisation, an ultra-pure battery grade LHM product was produced, exceeding the Chinese Standard GB/T 26008-2020 D1 as well as TVL's target specification. TVL considers the actual values confidential at this stage, but all analyte requirements were exceeded easily, demonstrating the premium product to be produced by TVL.

Figure 2 - Crystallisation testwork at JordProxa. Top left: glass jar crystallisers. Top right: crystallisers. Bottom left: centrifuge. Bottom right: LHM crystals. To view the image, please click on the following link https://www.alkemycapital.co.uk/images/2022/April/Figure_2.jpg

The Zero Liquid Discharge testwork was also completed, providing relevant process parameters for equipment sizing which has been used in the capital cost estimates.

Results - Electrochemical Testwork at Anzaplan

The Anzaplan testwork programme was design to examine two different electrochemical cell configurations, and to produce a crude LHM product through single stage crystallisation. The testwork reported specific energy consumption and current efficiency for the two configurations, as well as impurity profiles for crude LHM. The details of the configurations and outputs are considered confidential.

The results from Anzaplan provide excellent justification for the proposed Electrochemical flowsheet, proving that key purity and a number of impurity targets can be met with only a single stage crystallisation. Future testwork will combine the results from both Anzaplan and Electrosynthesis (see below) into an optimised Electrochemical cell configuration, taken all the way through to final ultra-pure battery grade LHM.

Results - Electrochemical Testwork at Electrosynthesis

The Electrosynthesis testwork programme was designed to test various process parameters against cell performance, and also to evaluate two different commercially available membrane technologies.

The process parameters and membrane details are considered confidential, but included acid and base concentrations, lithium sulphate concentration, cell configuration and batch vs. continuous operation.  Specific energy consumption, production rate, base impurity and acid impurity were included in reported details.

Approximately 3kg of LHM equivalent was produced in product liquor, which is available for future crystallisation testwork along with dilute acid which is available for future valorisation testwork.

ENGINEERING

Process Description - Glauber's Salt Route

The LSM feedstock is received and dissolved in water. The crude lithium sulphate solution is transferred to impurity removal.  

Impurity removal consists of two stages, where caustic and sodium carbonate solution are respectively added as pH modifiers to precipitate out key impurities of calcium, magnesium, iron, and aluminium by forming insoluble hydroxides. Precipitates are removed via filtration, prior to a final impurity removal stage using ion exchange.  

The purified LSM solution is transferred to ion exchange columns, which facilitate the removal of the remaining impurities from the liquor by adsorption onto the ion exchange resin. The purified pregnant liquor solution from the IX package is sent to the causticisation stage. 

The purified liquor is pumped to the Lithium Hydroxide reactor where caustic is added to convert Li₂SO₄ to LiOH and Na₂SO₄. Glauber's Salt is removed from the solution by exploiting its poor solubility in water at low temperatures and transferred to the sodium sulphate anhydrous crystallization circuit.

The LHM product circuit is a three-stage Lithium crystallization circuit where the first stage is crude stage crystallization, the second is pure stage crystallization and the third is ultra-pure stage crystallization. The wet precipitated crystals from the third stage are then transported into the LHM drying stage with the cooled and dried LHM product bagged and dispatched to customers. 

The Glauber Salt crystals that were removed report to the Glauber Salt Melter, which dissolves the Glauber Salt crystals back into the recirculating solution. This liquor is pumped to the Sodium Sulphate Anhydrous (SSA) Crystallizer, which precipitates out anhydrous Na2SO4 (or SSA) crystals. The SSA crystals are transferred to the SSA Dryer to remove all moisture and generate the final SSA product. The SSA product is then bagged and dispatched to customers. 

A Zero Liquid Discharge system is incorporated to capture water excess and return it to the processes (resulting in zero environmental liquid discharge).

Electrochemical Route

The LSM feedstock is received and dissolved in Calcium rich water. The Crude Lithium Sulphate solution is transferred to impurity removal.   

Impurity removal consists of two stages, where a mixture of NaOH, LiOH and Na2SO4 and a mixture of NaOH, LiOH, Na2SO4 and lithium carbonate solutions are respectively added as pH modifiers to precipitate out key impurities of Magnesium, Manganese, Iron, and Aluminium into insoluble hydroxides and silicates as Magnesium or Calcium silicates.

Precipitates are removed via filtration, prior to a final impurity removal stage using ion exchange.  Target impurity levels for the Electrochemical route are different to the Glauber's Salt route, and the specifics of the process are modified for this route.

The purified LSM solution is prepared prior to ion exchange, which facilitate the removal of the remaining impurities from the liquor by adsorption onto the ion exchange resin.

The polished Lithium Sulphate solution from IX is mixed prepared and pH adjusted ahead of the Electrochemical cell feed. This solution is then pumped to the Electrochemical cells, whereupon with the application of an electric current, lithium sulphate is converted to

lithium hydroxide which is transferred to Lithium Hydroxide Evaporation, Salt which is transferred to Salt Concentration, and Sulphuric Acid. 

The Lithium Hydroxide is evaporated to increase the overall concentration of the solution. The concentrated LiOH is pumped to Crude Crystallization, where it exploits the saturated solubility of LiOH in the water against that of the remaining impurities.

The LiOH crystallizes out of the solution, forming LiOH crystals that can be removed and

reprocessed through an additional crystallization stage until the desired grade specifications are achieved. The wet precipitated crystals from the second stage are then transported into LHM Drying where the cooled and dried lithium hydroxide product will be bagged and dispatched to customers.  

The dilute Sulphuric Acid produced by the Electrochemical process is converted into Gypsum using Limestone or quick lime.  The precipitated slurry is then transferred to Gypsum Filtration. The washed cake discharge from filtration is transported onto a stockpile where it is ready for transport off-site and sale to the market. 

Engineering Development

The engineering has been developed to a sufficient level to support the Feasibility Study economics which includes:

1.   Block flow diagrams

2.   Preliminary Process flow diagrams

3.   Preliminary mass and water balance

4.   Preliminary mechanical equipment list

5.   Preliminary layouts

These deliverables were completed for each process route, based on Wave International's experience and the outcomes of the metallurgical testwork.

The figure below provides for a representation of the proposed facility location on TVL's selected site at Wilton International.

Figure 3 - image of the proposed processing facility. To view the image, please click on the following link https://www.alkemycapital.co.uk/images/2022/April/Figure_3.jpg

LOCATION

The location of the process facility is strategically proposed in the Teesside Freeport, in close proximity to TVL's customers and to provide for fast development and efficient operations leveraging the established "plug and play" infrastructure at Wilton International.

The process plant benefits from excellent transport links as it is located adjacent to the UK's fifth largest port, enabling ease of supply as well as providing direct access to the European Market which is of particular interest due to the size and growth rate of the EV market. TVL has been in discussions with local transport logistics companies for the LSM feedstock and LHM offtake.

The local skilled workforce both in the engineering and chemical processing domains are further upsides of this location as well as the proximity to potential future lithium mines currently under assessment in Europe.

NON-PROCESS INFRASTRUCTURE

During the process of site selection, the non-process related infrastructure has been evaluated for the project. This includes the facilities, and logistics requirements for material movements. The non process related infrastructure includes the following:

1.   Site access and security

2.   Potable and demineralised water

3.   Steam

4.   Power

5.   Medical Facilities

6.   Fire services   

The site is adjacent to PD Ports, the 5^th largest container port in the UK. PD Ports boasts large scale Roll-On-Roll-Off and Lift-On-Lift-Off container handling facilities, as well as bulk materials handling capability.

TVL's logistics requirements can be easily met by existing port capacity and TVL will not need to handle any bulk materials (and hence avoids issues associated with dust management of concentrates, as well as reduced carbon footprint from large volume international logistics).

ENVIRONMENT, PERMITTING AND APPROVALS

The Company anticipates receiving planning approval in July 2022. The table below list the submission dates.

Table 3 - Environmental Impact Assessment Milestones

OPERATING COSTS

An operating cost estimate has been prepared for the individual Glauber's Salt and Electrochemical routes, both of which have a nameplate capacity of 24,000 tpa of LHM per train.

The operating cost estimate was developed as a bottom-up estimate with key values taken from the Feasibility Study's economic evaluation report, namely the process design criteria, mass and water balance, and the mechanical equipment list.

All significant and measurable items have been calculated; however, smaller items are factored as per industry practice. The level of effort for each of the line items meets the requirements for a Class 4 Feasibility Study estimate.

CAPITAL COST  

Based on the engineering development and operational management work progressed, a Capital Cost Estimate has been prepared for the Glauber's Salt and Electrochemical routes.

The Capital Cost Estimate was developed to meet the requirements of a Class 4 estimate as defined by the American Association of Cost Engineers' Cost Estimation and Classification System (as applied for mining and minerals processing industries) and represents a nominal accuracy range of ±25%, with a contingency of 17.5%. All cost data is in GBP (£).

The Capital Cost Estimate presents the capital requirements to engineer, procure, construct and commission TVL as defined with a throughput of 24,000 tpa. The Capital Cost Estimate covers project implementation costs for the period between Financial Investment Decision and commissioning completion. It also includes long-lead items brought forward from Financial Investment Decision.

The following table provides a summary of capital costs for the Glauber's Salt and Electrochemical routes.

Table 4 - Capital Cost (in GBP)

SUSTAINING CAPITAL

Sustaining capital of 2% of direct capital costs (excluding earthworks) has been included in the financial model for the first 25 years, increasing to 3% for the last 5 years.

PRE-FINANCING ANALYSIS

The project has been evaluated on both a pre-tax basis and after UK taxes. Modelling incorporates fiscal aspects of the UK tax law, including a 19% UK corporate tax rate.

The financial model was developed for a Base Case scenario using a long-term LSM price forecast of US$10,000/t and long-term LHM price of US$25,000t.

WORKFORCE

At a steady state of production the Company anticipates to employ up to 100 people per train totaling 400 people for the plant at its design rate.

During the construction phase it is anticipated that around 250 direct jobs will be created for train 1 alone.   

UPSIDE OPPORTUNITES

The Feasibility Study has also identified a number of opportunities to further improve the project and a work programme is planned to investigate these opportunities. In additional to TVL's ultra-pure LHM product, the project will produce two additional non lithium products:

1.   Anhydrous Sodium Sulphate from the Glauber's Salt route.

2.   Gypsum from the Electrochemical route.

An existing market exists for Anhydrous Sodium Sulphate within Europe, and as a first mover TVL expects to place this material from train 1 into existing markets.

For train 2, gypsum is proposed to be produced as it is noted the region is a net importer of gypsum. It is anticipated that this product can be sold locally.

Zero revenue has been attributed to these products in the economics.

FEEDSTOCK

The plant is set up to accommodate multiple feed sources of lithium sulphate and lithium carbonate to maximise the number of potential suppliers. This diversity will provide flexibility of supply and de-risks the project.  

TVL is in advanced discussion with a number of feedstock suppliers including some of the world's largest groups and is confident to be able to secure sufficient LSM for all 4 trains.

The Feasibility Study will be utilised for completion of due diligence activities with various suppliers as a planned next step to finalising binding offtake.

CLIENTS  

TVL is also in discussions for long-term supply agreements with Original Equipment Manufacturers and battery manufacturers and is confident that it will secure customers for 100% of its production.  

TIMELINE

TVL anticipates first production during Q4 2024. Figure 4 lists the various milestones including:

·    Permitting - Q2 to Q3 2022

·    Long lead time procurement - Q3 2022 to Q2 2023

·    Financing - Q4 2022

·    Main Construction, subject to financing - Q4 2022 to Q4 2023.

·    Commercial production - Q4 2024

Figure 4 - Timeline of the development Milestones To view the image, please click on the following link https://www.alkemycapital.co.uk/images/2022/April/Figure_4.jpg

EV REVOLUTION

The UK / EU have announced a ban on petrol and diesel car production from 2030 onwards. This means that the automotive industry are obligated to switch to EVs. A typical NMC EV battery requires approximately 1.15kg of lithium hydroxide per kWhr of energy storage. Typically NMC EV's have 40kWhr batteries.

The UK is forecast to produce 1.5M EVs in 2030, with the EU producing a further 15M. This implies a UK market of approximately 43kt and a European market of 434kt of lithium hydroxide. Consumer sentiment driven by concern over climate change and more recently high petrol prices, has shown a very aggressive adoption rate for EV's with most manufacturers quoting 9 to 12 month lead times. These two points are what is driving the EV revolution.

By 2027 it is forecast that an EV will cost less than an internal combustion engine vehicle, so with energy costs of EV's at 1/10 of an internal combustion engine, it will be an overwhelming economic choice to buy and EV, ensuring the complete transition to EV's by 2030.

The rapid changes in consumer demand is attracting significant investment in battery cell manufacturing. The figure below provides an estimate of battery manufacturing capacity globally between 2021 and 2031.

Figure 5 - Battery manufacturing forecast (source: Benchmark Minerals Intelligence, Battery Gigafactories 2021) To view the image, please click on the following link https://www.alkemycapital.co.uk/images/2022/April/Figure_5_.jpg

The mid and upstream supply chains to support this capacity however, is considered constrained within the UK / EU region with respect of access to raw materials, access to mid-stream refining and rising cost pressures. In addition, there is tight supply of primary lithium units from brine, hard rock (and other minerals) and recycled lithium is not yet available in material quantities. The figure below provides a LHM market balance forecast to 2040.

Figure 6 - LHM market balance forecasts (source: Benchmark Minerals Intelligence, Wave International) To view the image, please click on the following link https://www.alkemycapital.co.uk/images/2022/April/Figure_6_.jpg

Whilst hard rock primary lithium supply is proving to be a dominant source of lithium units for LHM, key challenges present themselves within the supply chain.

Further information

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

-Ends-

NOTES TO EDITORS

Alkemy is seeking to develop, construct and operate the world's leading independent and sustainable lithium hydroxide production facility.

Alkemy, through its wholly-owned subsidiary Tees Valley Lithium, has secured a 9.6ha brownfields site at the Wilton International Chemical Park located in Teesside, a major UK Freeport.

Alkemy has completed a Class 4 Feasibility Study for its proposed lithium hydroxide facility which will process feedstock imported from various sources to produce 96,000 tonnes of a premium, low-carbon lithium hydroxide annually, representing around 15% of Europe's projected demand.

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. Mining exploration and development is an inherently risky business. In addition, factors that could cause actual events to differ materially from the forward-looking information stated herein include any factors which affect decisions to pursue mineral exploration on the relevant property and the ultimate exercise of option rights, which may 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.