Vulcan Energy: New Plant, New Tech, No Carbon: Is it True?

Richard Hemming

Vulcan Energy (ASX;VUL) is going ballistic.

A year ago its shares were well under $1 and today they’re not far off its recent highs of $15.45! Under the Radar Report has been riding this phenomenon, having recommended the stock at below $8 in early July.

The company is taking advantage of big themes that investors like – decarbonisation, lithium and batteries. Peter Chilton analyses in detail what’s going on and whether there is more money to be made.

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ASX Small Cap: Lithium Developer Vulcan Energy (VUL)

The key to Vulcan Energy's (ASX;VUL) success is the company’s operating base in Germany’s Upper Rhine Valley, from where it has an incredibly sustainable, low carbon emitting, lithium extraction and conversion process.

Investors are transfixed as Vulcan aims to decarbonise the transition to Electric Vehicles through its leading Zero Carbon Lithium business for electric vehicle batteries and renewal energy business.

The company is located in the crucial  European market, where EVs are selling faster than anything else, on top of which there are big barriers to entry in the form of a carbon tax, leaving Vulcan a  under-exploited european lithium reserves. 

Under the Radar Report Analysis of Vulcan Energy

Most recently Vulcan Energy’s Direct Lithium Extraction (DLE) pilot plant has produced promising results from Upper Rhine Valley geothermal salt lake brines.

The company has achieved target specification of DLE feed into the pilot plant and achieved target recovery of over 90% for lithium chloride. Next it ramps up to 24/7 production of lithium chloride for conversion to lithium hydroxide and production of samples for potential customers and offtakers.

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Vulcan

will use the pilot plant data to assist the design of a larger demonstration plant to be used in the Definitive Feasibility Study, with an expected mid CY22 finish. Operations are expected to scale up from demonstration to commercial scale with minimal risk.

The developer has also been granted an additional exploration licence in the state of Hessen, valid for three years, for geothermal energy, geothermal heat and lithium in the Upper Rhine Valley. The licence covers  108 sq km,considered prospective for geothermal and lithium brine.

Vulcan now holds licences across three states in the Upper Rhine Valley. The new licence complements existing licences in the states of Rhineland Palatinate and Baden-Wurttemberg. 

Moreover, this ASX listed company has the largest lithium resource in Europe with a total mineral resource of 15.85mt lithium carbonate equivalent (LCE) at 181mg/l lithium in the Upper Rhine Valley.

EU Lithium Ownership

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Importantly too, the company is securing major purchasers for its battery essential product, having already secured lithium offtake agreements.  In July, Vulcan signed a binding lithium hydroxide term sheet with LG Energy Solution, the largest producer of lithium-ion batteries in the world. The agreement is for an initial 5 year term for 5,000 tonnes, ramping up to 10,000 tonnes, with the first commercial delivery in 2025. In early August 2021, it signed an offtake agreement with Renault for an initial five year term, which can be extended, for 6-17,000 tonnes of battery grade lithium chemicals, with the start of commercial delivery in 2026.

It’s all happening for the well-named and well-timed Vulcan.

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About the Author

Richard Hemming

Richard Hemming (r.hemming@undertheradarreport.com.au) is an independent analyst who edits www.undertheradarreport.com.au, which provides investment opportunities in Small Caps that you won’t get anywhere else.

Under the Radar Report is licensed to give general financial advice only (AFSL: 409518). The author does not own shares in any of the stocks mentioned.

Under the Radar Report is licensed to give general financial advice only (ASFL: 409518). The author does not own shares in any of the stocks mentioned.

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