- Vulcan Energy Resources’ (VUL) shares have soared on the completion of a pre-feasibility study for its Vulcan Lithium Project in Germany
- The project contains the largest JORC resource in Europe and is positioned to be a key, local supplier of lithium hydroxide
- While Europe is the world’s fastest-growing market for lithium hydroxide, it currently has zero local supply of the material
- Vulcan’s aim for the project is to reduce Europe’s reliance on China and be a key supplier of lithium hydroxide – while also maintaining a zero carbon footprint
- The study outlined a post-tax net present value of €2.25 billion (roughly A$3.5 billion) for the whole project
- And total capital expenditure has been calculated at €1.74 billion (roughly A$2.7 billion)
- Company shares have soared 39.1 per cent to trade at $6.94
Vulcan Energy Resources (VUL) has successfully completed its pre-feasibility study (PFS) for the Vulcan Lithium Project.
Pleasingly, the PFS demonstrated the project’s potential to develop a combined renewable energy and lithium hydroxide project with a net zero carbon footprint.
The project is located in the Upper Rhine Valley area of southwest Germany. Strategically, the lithium project is situated in the heart of the European auto and lithium-ion battery manufacturing industry.
While Europe is the world’s fastest-growing market for lithium hydroxide, it currently has zero local supply of the material. However, based on projected lithium-ion battery capacity on the continent, Europe will need almost half a million tons of lithium hydroxide by 2030.
Vulcan’s goal is to decarbonise the carbon footprint of lithium-ion batteries used in electric vehicles. To do this, it has developed a world-first zero carbon lithium hydroxide monohydrate chemical product which has been produced from its namesake project.
The company also aims to support Europe’s forecast supply and reduce its reliance on China for battery-grade lithium chemicals.
While the Vulcan Lithium Project already contained Europe’s largest JORC lithium resource, it was upgraded by 131 per cent in December 2020.
The project’s total inferred and indicated resource now sits at 15.85 million tonnes of lithium carbonate equivalent (LCE) at 181 milligrams per litre lithium.
“The PFS has demonstrated robust economics for both the lithium and energy parts of the project, both independently and combined,” Managing Director Dr Francis Wedin said.
“This means that there doesn’t need to be a compromise on the ethical and environmental sourcing of battery raw materials, for Europe’s current rapid transition to electric vehicles and renewable energy storage,” Francis said.
The PFS outlined a post-tax net present value (NPV) of €2.25 billion (roughly A$3.5 billion) for the whole project.
The combined renewable energy-lithium project also has a pre-tax internal rate of return (IRR) of 26 per cent and a post-tax IRR of 21 per cent. Whereas, lithium as a separate entity shows a pre-tax IRR of 31 per cent and post-tax IRR of 26 per cent.
Total capital expenditure for the project has been calculated at €1.74 billion (roughly A$2.7 billion).
“2021 should be a transformative year for Vulcan, as we commence our DFS, scale up our lithium extraction piloting and advance discussions with European offtakers for our Zero Carbon Lithium product,” Francis concluded.
Vulcan’s main focus for the year will be on progressing the definitive feasibility study, along with permitting, lithium extraction test-work and advancing discussions with European lithium offtakers.
Company shares have soared 39.1 per cent to trade at $6.94 at 12:46 pm AEDT.