TIDMALK
RNS Number : 1372K
Alkemy Capital Investments PLC
23 August 2023
23 August 2023
Alkemy Capital Investments Plc
Completion of Feasibility Study for Australia's first
independent Lithium Sulphate processing facility in Port
Hedland
Alkemy Capital Investments plc ("Alkemy") (ALK:LSE) (JV2:FRA)
and its wholly-owned Australian subsidiary Port Hedland Lithium Pty
Ltd ("PHL") are pleased to announce the completion of a Feasibility
Study for Australia's first stand-alone lithium sulphate processing
facility, located at the Boodarie Strategic Industrial Area
("SIA"), just outside of Port Hedland, Australia's largest export
port.
The Feasibility Study has been produced ahead of schedule in
response to the due diligence requirements of certain global OEMs
looking to utilise and contract with Alkemy's refineries.
HIGHLIGHTS:
-- Class 4 Feasibility Study completed by Wave International for
Australia's first stand-alone lithium sulphate processing facility
at the Boodarie SIA, Port Hedland
-- The Boodarie refinery has been designed to process spodumene
concentrate from various potential Australian mines, producing a
lithium sulphate monohydrate (LSM) for TVL's Wilton refinery in the
UK
-- Initial capital cost for Train 1 of US$322 million
-- Gross revenues per annum for Train 1 of US$396 million
-- Internal rate of return (IRR) of 18%
-- Post-tax net present value (NPV) for Train 1 of $293 million
-- NPV for 4 Trains of US$1.0 billion, which combined with
Wilton's NPV of US$2.7 billion gives a total NPV of US$3.7 billion
across both projects when all 4 Trains are built
-- Flora and Fauna baseline survey completed for Boodarie as
part of the required environmental approvals
Alkemy's strategy, through its two wholly-owned subsidiaries,
PHL and Tees Valley Lithium Ltd ("TVL"), is to produce a high
value, low carbon intermediate lithium sulphate product in
Australia for onward processing in the UK into a premium battery
grade product, for sale to Tier 1 customers in the fast growing
premium European market.
PHL is developing a stand-alone merchant lithium sulphate
refinery at the Boodarie SIA located just south of the proposed new
Lumsden Point Critical Minerals Wharf in Port Hedland, the world's
largest export port by volume, with established road and rail
infrastructure connections to Western Australia's world-class
hard-rock lithium resources.
Powered by local renewable energy, each of the four proposed
lithium sulphate trains at Boodarie will refine approximately
180,000 tpa of locally mined spodumene concentrate to produce
40,000 tpa of lithium sulphate, with lithium content equivalent to
24,000 tpa lithium hydroxide. It is anticipated that lithium
sulphate produced by PHL will be processed further by TVL before
sale to end customers, although PHL will retain flexibility to
provide lithium sulphate to third parties should demand arise.
Conducting the first part of the refining process in Australia
minimises the quantity of waste material exported and reduces both
the shipping cost and the embedded carbon of the resulting lithium
products.
At Wilton, in the Teesside Freeport in the north-east of the UK,
TVL is establishing Europe's largest low-carbon merchant lithium
hydroxide refinery. Each of the four trains at Wilton will take
feedstock in the form of lithium sulphate or crude carbonate, to
produce 24,000 tpa of battery-grade lithium hydroxide (or carbonate
equivalent) feeding directly into the European and international
battery cell manufacturers.
This new Pilbara to Teesside supply chain epitomises the new
critical minerals supply chains made possible under the recently
signed free trade agreement between Australia and the UK and will
leverage the competitive strengths of Australia in mining and
minerals processing and the UK in chemical refining.
The Feasibility Study has been prepared by Wave International, a
leading engineering consultancy firm with significant experience in
developing lithium refinery projects worldwide. It is based on a
merchant lithium sulphate plant comprising up to four trains over a
30-year life.
Economic Evaluation
The Feasibility Study economic evaluation report clearly
demonstrates the robustness of developing a stand-alone lithium
sulphate refinery with low capital and processing costs, a low
carbon footprint, and strong cash flow generation capacity.
The preliminary economics for Train 1 of the Boodarie refinery,
both as a stand-alone project and combined with Train 1 of the
Wilton refinery, are set out below:
Table 1 - Project Economics
Boodarie - Economic Summary 1 Train
---------------------------------- ------- --------
Life of Project years 30
Spodumene concentrate treated kt pa 180
LSM produced kt pa 40
Gross revenue $m pa 396
Capital cost (incl. contingency) $m 322
Post tax NPV $m 293
Post tax IRR % 18%
Payback period years 5.4
Wilton - Economic Summary 1 Train
---------------------------------- ------- --------
Life of Project Years 30
LSM treated kt pa 40
LHM produced kt pa 24
Gross revenue $m pa 600
Capital cost (incl. contingency) $m 288
Post tax NPV $m 936
Post tax IRR % 40%
Payback period years 2.6
Boodarie and Wilton - Combined Economics 1 Train
------------------------------------------ ------- --------
Life of Project Years 30
Spodumene concentrate treated kt pa 180
LHM produced kt pa 24
Gross revenue $m pa 600
Capital cost (incl. contingency) $m 611
Post tax NPV $m 1,228
Post tax IRR % 28%
Payback period years 3.2
Notes:
- the model uses a long-term lithium sulphate price of
$10,000/t, a long term SC6 price of $1,500/t and a long-term
lithium hydroxide price of $25,000/t
- all currency figures are USD
Expansion Capacity of up to 4 Trains per Refinery
The Feasibility Studies for both Wilton and Boodarie have
designed and modelled refineries of up to 4 Trains. For Boodarie,
the economic model across 4 trains shows an NPV of $1.0 billion
with gross revenues per annum of $1.6 billion and an IRR of
18%.
When combined with 4 Trains at Wilton, the economic model for
both projects shows an NPV of $3.7 billion with gross revenues per
annum of $2.4 billion and an IRR of 25%.
Flora, Vegetation and Fauna Assessment
In May 2023, PHL engaged AECOM Australia to complete an
ecological baseline survey for the Boodarie lithium sulphate
refinery site. The survey included a detailed flora and fauna
survey of the Boodarie site and the preparation of a full report in
accordance with the Environmental Protection Act 1986 and other
applicable regulations and standards.
The survey identified a number of native species consistent with
the wider regional flora and fauna, however importantly no priority
or threatened ecological communities or species were recorded
during the survey. This baseline ecological assessment recorded and
mapped significant environmental values on the Boodarie site and
will provide important information for the full environmental
approval application to be lodged as part of the Port Hedland
lithium sulphate refinery project development.
Wave International CEO, Ryan Hanrahan commented:
"The LSM plant at Boodarie is a strong first step to introducing
flexibility into a somewhat rigid existing supply chain. We are
seeing first hand exceptionally high interest in the model of
intermediate chemicals from the end user and investment community,
and this plant is no exception.
We are pleased to continue to support Alkemy and PHL through the
final stages of due diligence with their partners, now that the
feasibility study is completed."
Sam Quinn, Director of Alkemy and Port Hedland Lithium,
commented:
"The completion of the Boodarie Feasibility Study is another
major milestone reached for Alkemy and its 100% owned subsidiary
Port Hedland Lithium.
We are moving quickly to establish a major independent and
sustainable lithium sulphate producer at the Boodarie Strategic
Industrial Area in Port Hedland and are pleased with the validation
that this independent feasibility study brings to our project.
We continue to make excellent progress in advancing both of our
lithium refineries, including advancing discussions with several
key globally significant potential feedstock suppliers and
customers and look forward to updating the market in due course as
these discussions conclude."
APPIX - FEASIBILITY STUDY SUMMARY
PROJECT BACKGROUND AND STRATEGY
In January 2023, the Western Australian Government allocated
Alkemy an area of approximately 43.7 hectares within the Boodarie
SIA for the construction of its Port Hedland refinery. Wave
International and GHD have been engaged to undertake the
engineering and planning approvals for the Boodarie operation.
Port Hedland, Western Australia is the largest bulk export port
in the world and one of the largest container ports 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 export
port for lithium.
Alkemy 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.
Building the Boodarie lithium sulphate refinery will provide
Australian spodumene producers a complete mid-stream lithium
refining solution with direct access to the premium European market
through TVL's refinery at the Wilton International Chemicals Park
in Teesside, UK.
Through the first trains at both the Boodarie lithium sulphate
refinery and the Wilton lithium hydroxide refinery, Alkemy will
have the capacity to convert 180,000 tpa of lithium spodumene to
24,000 tpa of lithium hydroxide and aims to become the world's
lowest embedded carbon lithium refiner.
Alkemy's strategy is to be a mid-stream refiner producing
battery grade lithium chemicals to the electric vehicle and energy
stationary storage markets. In doing so, Alkemy is developing its
two key assets in Wilton and Boodarie. The advantages of the split
refinery strategy are as follows:
-- the Wilton refinery takes advantage of the Teesside Freeport
location, allowing certain financial and trade advantages to the
European, UK and US markets.
-- the finished product is a high purity chemical, or pseudo
commodity, and the UK has a long history in chemical manufacturing.
The project takes advantage of an existing skilled workforce in
chemical processing.
-- the Wilton refinery can take advantage of multiple feed
sources, being either lithium sulphate or other lithium compounds
that can be converted to lithium sulphate and apply either the
conventional flowsheet or TVL's electrochemical flowsheet to
produce lithium hydroxide.
-- PHL's plant provides access to Australian hard rock spodumene
mines located in the Pilbara, which is geographically favourable
for lithium bearing pegmatites and hosts a number of existing
globally significant spodumene operations.
-- PHL's plant will produce lithium sulphate, which has a much
higher lithium content than spodumene concentrate and will reduce
the volume of material (and specifically, non-lithium material)
shipped to Wilton. This reduces the end-to-end lithium supply chain
carbon footprint and avoids downstream issues with managing high
volumes of non-lithium material.
-- The transport of LSM not only reduces the mass of material
moved over ocean, but also avoids a significant residue handling
issue at the destination. There is no identified true solution to
residue management in the UK, and ALK's model wholly addresses this
issue.
-- PHL's Boodarie plant takes advantage of existing industry
knowledge and skills in Western Australia, with three other LHM
plants operating the same front end process, either in operation or
under construction in Western Australia.
Aerial view of the Boodarie Strategic Industrial Area, Port
Hedland
PROCESS AND FLOWSHEET DEVELOPMENT
The flowsheet is based on a conventional, proven process route
for processing spodumene. The process design is based on extensive
industry knowledge on Wave International's background knowledge of
lithium sulphate circuits and the extensive experience of the
project team who have undertaken testing on multiple global
spodumene concentrates.
The design is based on the same fundamental chemistry and
equipment as the three other lithium hydroxide plants in Australia,
and the majority of Chinese plants. Process validation testwork
will take place with specific feedstocks as part of ongoing future
due diligence activities.
A final lithium sulphate product with a purity of 95-97%
Li2SO4.H2O is targeted from the process design. The TVL impurity
removal process is designed to remove impurities and accept
feedstock of industrial grade lithium sulphate.
In Wave International's experience, a plant of this
configuration is capable of producing much lower impurities, but
the design of the TVL plant in Wilton has been based on various
feedstocks and hence conservative impurity removal circuit
inclusions.
LOCATION
The Boodarie SIA is an optimal site for a lithium sulphate
refinery for a number of reasons:
-- proximity to existing and planned spodumene producers in the Pilbara;
-- well located for the import of spodumene production from
other parts of Australia for conversion to primary lithium sulphate
prior to export to the UK;
-- access to critical infrastructure including skilled labour,
the Great Northern Highway, the 210MW Alinta gas fired power
station operating in the Boodarie SIA, existing gas pipeline
infrastructure, and existing water pipeline infrastructure and
telecommunications;
-- adjacent to Port Hedland, the world's largest bulk export
port and one of Australia's largest container ports; and
-- ability to source renewable energy and energy storage from
new developments planned in the region, delivering low carbon
energy sources for the new lithium sulphate plant.
ENVIRONMENT, PERMITTING AND APPROVALS
Primary approvals required for the project include Environmental
Protection Act Part IV approval and Environmental Protection Act
(EP Act) Part V works approval.
Under Part IV of the EP Act, development proposals that have the
potential to result in significant impact on the environment are
required to be referred to the Environmental Protection Authority
(EPA). In deciding whether a proposal will be subject to a formal
EIA process, the EPA considers the environmental significance of
potential impacts that may result from the implementation of the
proposal. Developments assessed by the EPA must receive Ministerial
Approval in order to proceed. Various studies will be required to
be completed to support the Part IV approvals documentation,
including:
-- Land: flora and vegetation
-- Land: terrestrial environmental quality
-- Land: terrestrial fauna
-- Water: inland waters
-- Air: air quality
-- Air: greenhouse gas emissions
-- People: social and surroundings
A Department of Water and Environmental Regulation Works
Approval for the project will be submitted on the basis that a
number of the proposed activities are anticipated to trigger the
definition of Prescribed Premise Categories under the Environmental
Protection Regulations 1987.
Other secondary approvals to operate will be required including
various dangerous goods licenses.
Where possible, PHL will seek to gain approvals for completion
of early works so as to optimise the project delivery schedule.
A binding lease agreement for the Boodarie site will also be
required to be executed prior to the commencement of construction
based on the option to lease currently being negotiated with
DevelopmentWA.
OPERATING AND CAPITAL COSTS
An operating cost estimate has been prepared for the project and
was developed as a bottom-up estimate with key values taken from
the Feasibility Study's economic evaluation report.
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.
Based on the engineering development and operational management
work progressed, a Capital Cost Estimate has been prepared for the
project.
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 15%. All cost data is in USD.
The Capital Cost Estimate presents the capital requirements to
engineer, procure, construct and commission the project.
WORKFORCE
At a steady state of production the Company anticipates to
employ up to 125 people per train.
During the construction phase it is anticipated that around 300
direct jobs will be created for train 1 alone at peak
construction.
FEEDSTOCK AND OFFTAKE
The plant is set up to accommodate multiple feed sources of
spodumene concentrate from mining operations in Western Australia
which is currently the world's leading source and supplier of
spodumene. This diversity will provide flexibility of supply and
de-risks the project.
Alkemy is in advanced discussion with a number of potential
feedstock suppliers including some of the world's largest miners
and OEMs and is confident to be able to secure sufficient spodumene
concentrate for the project .
The Feasibility Study will be utilised for completion of due
diligence activities with various potential feedstock suppliers as
a planned next step to finalising binding agreements.
Alkemy is also in discussions for long-term offtake agreements
with OEMs and battery manufacturers and is confident that it will
secure customers for 100% of its production.
TIMELINE
PHL anticipates first production for the Boodarie refinery
during H1 2026. Significant milestones include the following:
-- Permitting: Q4 2023 - Q4 2024
-- Financing: Q4 2023-Q1 2024
-- Main Construction (subject to financing): Q1 2025 to Q1 2026.
-- Commercial production: Q2 2026
Further information
For further information, please visit the Company's website:
www.alkemycapital.co.uk or www.teesvalleylithium.co.uk
-Ends-
Alkemy Capital Investments Plc Tel: 0207 317 0636
info@alkemycapital.co.uk
SI Capital Limited Tel: 0148 341 3500
VSA Capital Limited Tel: 0203 005 5000
NOTES TO EDITORS
Alkemy is seeking to establish the world's leading independent
and sustainable lithium hydroxide production by developing
state-of-the-art lithium sulphate and lithium hydroxide facilities
in Australia and the UK.
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 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 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 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. 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.
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