Alkemy Capital Investments Plc

Interim Results for the Six Month Ended 31 July 2024

Alkemy Capital Investments plc ("Alkemy" or the "Company") announces its unaudited financial statements for the 6 months ended 31 July 2024 ("Financial Statements").

Chairman's Statement

I have great pleasure in presenting our interim results for the period ended 31 July 2024.

Since the inception of Alkemy, its wholly-owned subsidiary Tees Valley Lithium (TVL) has made excellent progress in advancing its key lithium refinery project in Teesside, receiving planning and environmental permissions, securing feedstock and establishing other key strategic partnerships along with key governmental, industry and media recognition, reflecting its commitment to becoming a leader in the low-carbon production of battery-grade lithium hydroxide. 

Despite recent market shifts, European demand for lithium remains on an unprecedented upward trajectory. 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.

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.

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 in Teesside. 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 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 TVL's proposed four trains, producing around 24,000 tonnes of battery grade lithium hydroxide or lithium carbonate equivalent.

Having secured feedstock for its first train, TVL is now focussed on obtaining 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. TVL is currently making good progress in these discussions and expects to make further announcements on this front in the short term.

Building on the successful foundations laid by TVL, Alkemy will continue to explore new horizons in the battery minerals sector to encompass a range of critical battery minerals, positioning it as a diversified leader in the energy transition sector, however the immediate focus will remain on securing funding for TVL. 

During the period we have continued to make significant progress in a challenging macro environment.

The pace to decarbonise however continues to accelerate and with a growing need for lithium hydroxide and now a growing preference from western OEM's to source lithium hydroxide using more local supply chains, Alkemy is well positioned to benefit from these changes.

The support received from third parties including major OEMs provides validation of our proposed lithium refining strategy. The rapid completion of due diligence to the satisfaction of certain OEMs is testament to the quality of the work undertaken by our commercial and technical teams and confirms our wider business case.

We would like to take this opportunity to thank our shareholders for their continued support and patience and look forward to reporting on our progress during 2024 as we deliver on our strategy.

Paul Atherley

Non-Executive Chairman

2 October 2024

STATEMENT OF COMPREHENSIVE INCOME

for the period ended 31 July 2024

The accompanying notes form an integral part of the financial information.

STATEMENT OF FINANCIAL POSITION

As at 31 July 2024

This report was approved by the board and authorised for issue on 2 October 2024 and signed on its behalf by:

Paul Atherley

Non-Executive Chairman

The accompanying notes form an integral part of the financial information.

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 July 2024                                     

The accompanying notes form an integral part of the financial information.

STATEMENT OF CASHFLOWS

for the period ended 31 July 2024

The accompanying notes form an integral part of the financial information.

NOTES TO THE FINANCIAL INFORMATION

1.    GENERAL INFORMATION

The Company was incorporated on 21 January 2021 in England and Wales as a public company, limited by shares and with Registered Number 13149164 under the Companies Act 2006. On incorporation, the Company's name was Alkemy Capital Plc. On 4 February 2021, the Company's name was changed to Alkemy Capital Investments Plc. The Company's registered office address is 167-169 Great Portland Street, Fifth Floor, London W1W 5PF. On 25 February 2022 the Company formed a wholly owned subsidiary called Tees Valley Lithium Limited, a company seeking to establish a Lithium Hydroxide Monohydrate ("LHM") processing facility in Teesside, UK.

The Company's objective is to establish a LHM processing plant at its chosen site in Teesside, UK which will aim to initially produce LHM from lithium feedstock from various sources, to be sold to the UK and European mobile energy markets.

In August 2022 the Company announced plans to build a lithium sulphate monohydrate plant at Port Hedland, Australia's largest export port located in the Pilbara region of Western Australia, to feed TVL's LHM facility in Teesside and in September 2022 the Company formed a wholly owned subsidiary called Port Hedland Lithium Pty Ltd.

Other than the Directors, the Company has no employees.

The Directors who served during the period were Sam Quinn, Paul Atherley, Helen Pein and Vikki Jeckell.

2.    ACCOUNTING POLICIES

Basis of preparation

The principal accounting policies adopted by the Company in the preparation of the Company Financial Information are set out below.

The Company Financial Information has been presented in £, being the functional currency of the Company.

The Company Financial Information has been prepared in accordance with IFRS, including interpretations made by the International Financial Reporting Interpretations Committee issued by the International Accounting Standards Board. The standards have been applied consistently. The historical cost basis of preparation has been used.

The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Directors to exercise their judgment in the process of applying the Company's accounting policies.

In the opinion of the management, the interim unaudited financial information includes all adjustments considered necessary for fair and consistent presentation of this financial information. The interim unaudited financial information should be read in conjunction with the Company's audited financial statements and notes for the year ended 31 January 2024.

Standards and interpretations issued but not yet applied

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and, in some cases, have not yet been adopted by the UKEU. The Directors do not expect that the adoption of these standards will have a material impact on the Company Financial Information.

Going Concern

As part of their assessment of going concern, the Directors have prepared cash forecasts to determine the funding requirements of the business over the 18 months from the reporting date. Cash requirements over this period have been projected in the range of a £2m minimum (decelerated project development case) to £9m maximum (accelerated project development case) depending on the level of technical project development work being undertaken, as determined by funding availability.

As at the date of this report, the Directors are considering a variety of funding options from numerous parties to consider the option best suited to balancing the immediate cash flow needs of the business and desire to accelerate the project development timeframe against the need to avoid unnecessary dilution of the shareholders during a period of depressed equity market prices.  Options ranging from:

·      project level debt or strategic equity which would provide sufficient funding to accelerate the project development program over the period of consideration, including the LHM refinery train 1 FEED study alongside development of the Port Hedland LSM refinery and TVG graphite projects, as well as general working capital requirements;

·      market equity placings to secure working capital funding needs whilst project development funding opportunities continue to be assessed;

·      convertible lending facilities which may act as a hybrid of working capital and project development funding, allowing progression of project development at a less accelerated rate that would be the case under a more substantial project lending facility;

·      any combination of the above.

As successful execution of one of the above fundraising options cannot be assured, a material uncertainty exists which may cast significant doubt on the ability of the Company and Group to continue as a going concern and realise its assets and discharge its liabilities in the normal course of business.

However, the Board remains in detailed discussions on the above funding opportunities and anticipates concluding this process in the near term. As such, the Directors are therefore reasonably confident that the necessary funding will be secured, as and when required, by executing on one of the above options under consideration, such that the Directors have a reasonable expectation that the Company will continue in operational existence for the next 12 months. 

Accordingly, the Directors believe that as at the date of this report it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

Financial assets

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of a financial instrument. Financial assets and financial liabilities are offset if there is a legally enforceable right to set off the recognised amounts and interests and it is intended to settle on a net basis. Cash comprises cash in hand and on demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value with maturities of less than 90 days.

Financial liabilities

The Company does not currently have any financial liabilities measured at fair value through profit or loss, therefore all financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost. The Company recognises an equity instrument on any contract that evidences a residual interest in the assets of the Company. In this period Ordinary Shares were the only equity instrument, recognised at the point at which a call is made on the Shareholders.

Earnings per Ordinary Share

The Company presents basic and diluted earnings per share data for its Ordinary Shares. Basic earnings per Ordinary Share is calculated by dividing the profit or loss attributable to Shareholders by the weighted average number of Ordinary Shares outstanding during the period. Diluted earnings per Ordinary Share is calculated by adjusting the earnings and number of Ordinary Shares for the effects of dilutive potential Ordinary Shares.

3.    USE OF ASSUMPTIONS AND ESTIMATES

In preparing the Company Financial Information, the Directors have to make judgments on how to apply the Company's accounting policies and make estimates about the future. The Directors do not consider there to be any critical judgments that have been made in arriving at the amounts recognised in the Company Financial Information.

4.    DIRECTORS' EMOLUMENTS

There were no staff costs other than directors fees as no staff were employed by the Company during the or prior period.

5.    FINANCIAL RISK MANAGEMENT

The Company uses a limited number of financial instruments, comprising cash and various items such as trade payables, which arise directly from operations. The Company does not trade in financial instruments.

Financial risk factors

The Company's activities expose it to a variety of financial risks: credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

(a) Credit risk

The Company does not have any major concentrations of credit risk related to any individual customer or counterparty.

(b) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash, the Company ensures it has adequate resource to discharge all its liabilities. The directors have considered the liquidity risk as part of their going concern assessment.

Fair values

Management assessed that the fair values of other receivables approximate their carrying amounts largely due to the short-term maturities of these instruments.

6.    CAPITAL MANAGEMENT POLICY

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The capital structure of the Company consists of equity attributable to equity holders of the Company, comprising issued share capital and reserves.

7.    FINANCIAL INSTRUMENTS

The Company's principal financial instruments comprise other receivables. The Company's accounting policy and method adopted, including the criteria for recognition, the basis on which income and expenses are recognised in respect of this financial asset. The Company does not use financial instruments for speculative purposes.

There are no financial assets that are either past due or impaired.

8.    TRADE AND OTHER RECEIVABLES

9.    EARNINGS PER SHARE

The loss per share has been calculated using the loss for the year and the weighted average number of ordinary shares entitled to dividend rights which were outstanding during the year. There were no potentially dilutive ordinary shares at the year end.

10.  SHARE CAPITAL & RESERVES

On 31 May 2023 the Company entered into a loan arrangement with Paul Atherley for £920,800 in gross funding (£872,162 net of costs) to be repaid in a fixed number of ordinary shares in the Company, at a fixed price, at a future date. Under IFRS, the terms of this loan required it to be recorded as an equity reserve "shares to issue" as the economic risks of the instrument are more closely aligned to equity than debt, with transactions costs being taken as a deduction from this equity reserve.  As a consequence these net amounts received as at the prior period reporting date were recognised in the "shares to issue" reserve.  On issuance of the repayment shares, which took place on 5 October 2023, these amounts were reallocated to the share capital and share premium reserves.

No further issues of Ordinary Shares were made during the period.

11.  TRADE AND OTHER PAYABLES

12.  POST BALANCE SHEET EVENTS

On 5 August 2024, the Company granted 500,000 options to directors and advisors as part of an incentivisation package linked to the achievement of the securing funding to complete the FEED study for the Company's LHM refinery.  The options have an exercise price of nil, expiry period of 5 years and become exercisable once the funding required for the completion of the FEED study has been fully secured.

Details of the allocation of the above options are as follows:

13.  ULTIMATE CONTROLLING PARTY

As at 31 July 2024, the company has no ultimate controlling party.