TVL Industry Engagement Update

Alkemy Capital Investments Plc (LSE: ALK) has provided a significant update regarding its wholly owned subsidiary, Tees Valley Lithium (TVL), which is advancing its project development amid strong engagement within the European battery supply chain. The announcement highlights TVL's participation in the Benchmark GigaEurope Conference, where it secured a binding offtake agreement with a subsidiary of Glencore Plc for up to 40% of its planned production capacity. This engagement underscores the growing demand for domestic lithium refining capabilities in Europe, a trend that is increasingly critical as the region seeks to establish a sustainable electric vehicle supply chain. Following the conference, TVL has initiated follow-up discussions with various stakeholders, including potential feedstock suppliers and Tier 1 cathode and battery manufacturers, indicating a robust commercial framework is being established.

In terms of project development, TVL has successfully completed its Front-End Engineering Design (FEED) study and is now entering the next phase, which will focus on advancing commercial, financing, and delivery workstreams. This progression is essential as the company aims to solidify its position in the lithium market, particularly given the increasing emphasis on local sourcing of battery materials. The announcement also includes a share issuance of 100,000 new ordinary shares at £3.97 each to Wave International, which will support engineering services related to the Tees Valley Lithium project. This issuance is expected to increase the total share capital to 10,976,625 ordinary shares, with the new shares set to be admitted to trading on March 24, 2026. Additionally, 61,004 warrants have been issued at an exercise price of £6.15, valid for 48 months, which could further dilute existing shareholders if exercised.

Currently, Alkemy Capital Investments has a market capitalisation of approximately £43.5 million. The issuance of new shares to Wave International at the current market price reflects a strategic move to align interests and secure necessary engineering expertise for the project. However, this also raises concerns regarding dilution, particularly as the company continues to issue shares and warrants to fund its development activities. The cash balance and recent burn rate were not disclosed in the announcement, making it difficult to assess the funding runway accurately. However, the ongoing share issuance suggests that the company is actively seeking to bolster its capital position as it progresses through the various phases of project development.

Valuation metrics are essential for assessing Alkemy's positioning relative to its peers in the lithium sector. Given its current market capitalisation, Alkemy can be compared to similarly sized companies within the AIM market focused on lithium production and refining. Notably, peers such as European Metals Holdings Limited (AIM: EMH), which has a market cap of approximately £40 million, and Cornish Lithium Limited (AIM: CL) with a market cap around £30 million, provide a relevant basis for comparison. European Metals Holdings is currently valued at about £10 per resource tonne, while Cornish Lithium is trading at approximately £8 per resource tonne. In contrast, Alkemy's valuation, based on its agreements and project potential, suggests it may be undervalued at around £3.97 per share, particularly given its binding offtake agreement with Glencore and the strategic importance of its project in the context of European lithium supply.

Execution risk remains a critical factor for Alkemy as it moves forward. The company has made significant strides in establishing its commercial framework, yet the successful execution of its project development plans will depend on timely financing and the ability to secure necessary partnerships within the battery supply chain. The reliance on external parties for feedstock and offtake agreements introduces potential risks related to market fluctuations and the ability of these partners to meet their commitments. Additionally, the issuance of warrants could lead to further dilution if exercised, impacting shareholder value in the long term.

The next measurable catalyst for Alkemy will be the admission of the new shares to trading on March 24, 2026, which will provide a clearer picture of the company's capital structure moving forward. This event will be closely watched by investors as it may influence market sentiment and the stock's performance. Furthermore, the ongoing discussions with potential feedstock suppliers and Tier 1 customers will be critical in determining the project's viability and future revenue streams.

In conclusion, the announcement from Alkemy Capital Investments regarding its subsidiary Tees Valley Lithium reflects a significant step forward in project development and engagement within the European battery supply chain. The binding offtake agreement with Glencore and the completion of the FEED study are notable achievements that enhance the company's strategic positioning. However, the ongoing share issuance raises concerns about dilution and funding sufficiency, which will need to be monitored closely. Overall, this announcement can be classified as significant, as it materially impacts the company's valuation and execution outlook, while also highlighting the growing importance of lithium refining in Europe.

Key insights

• ●Alkemy's market cap is approximately £43.5 million.
• ●TVL has a binding offtake agreement with Glencore for 40% of production.
• ●Share issuance raises potential dilution concerns.

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