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Vulcan Energy Resources (ASX:VUL) jumped nearly 4% on Monday heading into lunchtime trades as the company kicks off drilling for the first geothermal well of Phase One at its Lionheart Project.
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Those activities are backed, in part, by Export Finance Australia (EFA), which gave Vulcan some $210M late last year as part of a funding deal to underpin Phase One’s execution.
For those out of the loop, Vulcan Energy’s whole deal is that it’s a lithium company extracting from underground brines in Germany’s Rhine Valley; by a geological coincidence, those same brines coincide with geothermal energy – considered renewable – which Vulcan intends to export around the local area.
This dual value proposition has been the focus of Vulcan for years now, and the company’s notable for being one of the remaining lithium stocks on the ASX that has managed to eke out for itself a relatively decent valuation, surviving the lithium price crash – compared, at least, to its share price around $2.00/sh in January of 2024.
(That said, its share price was above $15 for a brief period in 2021 at the height of the lithium boom.)
Whether or not it can return to those levels depends, most probably, on re-pricing of lithium benchmarks. Analysts have long proposed we might see lithium oversupply dwindle in the late 2020’s which could support prices, but the world continues to produce a lot of it. Especially China.
In that view, Vulcan may stay at its current levels for the foreseeable future. But at least now it’s on the cusp of commercial lithium production – despite everything the last few years has thrown at the sector.
Vulcan was also the subject of a J Capital short sellers’ report a few years ago, which, using Australia’s strong defamation laws, it managed to get wiped from the web.
“All preparatory works have been diligently carried out by the team and safety checks assessed by authorities. Local stakeholders have also been extensively consulted, and the feedback has been overwhelmingly positive,” company CEO Cris Moreno said.
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“This development means Vulcan is one step closer to delivering our mission of establishing a sustainable, European-based lithium supply chain, delivering both baseload renewable heating and lithium production for electric vehicle batteries.”
VUL last traded at $4.25/sh.
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