- Vulcan Energy (VUL) has entered an investment agreement with E.U.-backed EIT InnoEnergy for its Zero Carbon lithium project in Germany
- Vulcan and EIT already have an agreement in place for EIT to help with funding, licensing and offtake arrangements for the project
- The new staged investment agreement will involve an immediate payment of €150,000 (around A$245,500) to advance the project’s pre-feasibility study
- Two more tranches of €50,000 each (currently valued at approximately A$81,000) may be triggered upon attainment of project milestones
- The deal is a win-win: while Vulcan has immediate liquidity to advance the PFS, EIT gains equity in what could be Europe’s premier lithium project
- Vulcan shares are trading 0.9 per cent lower at Wednesday’s close, priced at 54 cents each
Vulcan Energy (VUL) has entered an investment agreement with E.U.-backed EIT InnoEnergy for its Zero Carbon Lithium Project in Germany.
The staged investment agreement will see an immediate payment of €150,000 (A$245,534, based on the 30-day average exchange rate of 0.6109) to advance the project’s pre-feasibility study (PFS).
A new deal
This is the second deal struck between Vulcan and EIT InnoEnergy.
The first agreement, from late May, would see EIT help Vulcan secure funding, offtake agreements and licences in exchange for equity in the company. Vulcan would offer the shares on a success-related basis at no upfront cost.
This new deal will bring cash straight into Vulcan’s coffers to advance the PFS, and marks a considerable show of faith by EIT in the project’s viability.
Once again, the cash injection will be settled in equity, with Vulcan to offer EIT warrants issued at 51 cents each, equivalent to the $245,534 price tag. This figure represents the 15-day volume-weighted average price and is subject to shareholder approval.
The warrants can only be exercised after September 1, 2021, and will convert to ordinary shares upon execution.
There are further triggers after the initial phase to initiate the second and third tranche payments, worth €50,000 each (currently valued at approximately A$81,000, but subject to exchange rates at the time of the transaction).
Win-win
The deal is mutually beneficial to Vulcan and EIT. While Vulcan has immediate liquidity to advance the PFS, EIT gains equity in what could be Europe’s premier lithium project.
The ‘zero carbon’ factor is an important part of the project’s viability in the European market going forward, as there’s a huge emphasis on green credentials at all stages of the electric vehicle (EV) supply chain.
Vulcan Managing Director, Dr Francis Wedin, says the EIT InnoEnergy partnership is a boon for the project’s development.
“This investment in Vulcan and its team is a critical vote of confidence by a prominent E.U.-backed organisation,” Francis said.
“The strategic alignment of both organisations will be important in securing funding needs and streamlining approvals for future large-scale project development,” he added.
“It is another significant step towards achieving our goal of supplying the E.U. battery market with zero carbon lithium hydroxide products.”
Managing Director, Dr Francis Wedin
By providing totally green lithium carbonate to underpin European EV manufacturing, the project stands to be a big winner for both Vulcan and EIT InnoEnergy.
Vulcan shares are trading 0.9 per cent lower at Wednesday’s close, priced at 54 cents each.