Vulcan Energy Resources (ASX:VUL), Perth, Australia, today announced it has signed an investment agreement with European Union-backed EIT InnoEnergy SE, Eindhoven, The Netherlands, for staged cash investments into Vulcan. This agreement is expected to significantly accelerate the momentum of Vulcan’s Zero Carbon LithiumTM Project in Germany’s Upper Rhine Valley.
Vulcan Energy Resources is the 100% owner of the Vulcan Lithium Project, which uniquely aims to become the world’s first producer of Zero Carbon Lithium. Vulcan recently became public-listed via a transaction with Koppar Resources Ltd.
The initial tranche is valued at A$0.51/share, equivalent to the 15-day VWAP and at an 8.5% premium to 30-day VWAP, subject to shareholder approval. This direct investment by EIT InnoEnergy will assist Vulcan in completing its Pre-Feasibility Study (PFS) program at its Vulcan Zero Carbon LithiumTM Project.
It also marks a vote of confidence in the Vulcan Zero Carbon LithiumTM Project by a prominent EU-backed body mandated to lead the European Battery Alliance. The project is Europe’s largest JORC lithium resource and is located in Germany at the centre of the fastest growing lithium market in the world: the European electric vehicle battery industry.
To serve this market, the company has developed the world’s first and only Zero Carbon LithiumTM Process where the co-generation of geothermal energy from production wells will power lithium extraction at zero net carbon.
Today’s news follows a separate agreement with EIT InnoEnergy, as announced in late-May, to assist with fast-tracking project approvals and securing future large-scale project development funding, including funding from public sources.
Diego Pavia, CEO of EIT InnoEnergy noted: “Accelerating the development of a strong European battery industry is a cornerstone of the European recovery plan recently issued by the European Commission. It will be one of the key differentiators for batteries ‘made in Europe’ to be produced sustainably with the goal of complete carbon neutrality at every stage of the value chain. Therefore, making Vulcan’s mission of carbon-neutral lithium extraction in the Upper Rhine region in Germany is of utmost strategic importance and has our full support, financially and beyond.”
EIT InnoEnergy will provide the following staged payments to Vulcan Energie Ressourcen GmbH, the company’s 100%-owned German subsidiary:
(a) an initial payment of €150,000 (Tranche 1, equivalent to $245,534 at current exchange rates).
(b) further payment of €50,000 after approval by EIT InnoEnergy of the financial and performance reporting related to expenditure of Tranche 1 funding on approved work packages Tranche 2).
(c) a final settlement of €50,000 of approved funding after approval by EIT InnoEnergy of the final financial and performance reporting for the expenditure of Tranche 1 and Tranche 2 funding on approved work packages for the project (Tranche 3).
All payments shall be made within 30 calendar days following the relevant trigger. Based on its current timelines for the Vulcan Zero Carbon LithiumTM Project, the Company expects to receive all three Tranches by the end of 2020.
Vulcan Managing Director, Dr Francis Wedin, commented: “Following our recent announcement of project support by EIT InnoEnergy, we are delighted to also welcome them as a direct investor in Vulcan. This investment in Vulcan and its team is a critical vote of confidence by a prominent EU-backed organisation. The strategic alignment of both organisations will be important in securing funding needs and streamlining approvals for future large-scale project development. It is another significant step towards achieving our goal of supplying the EU battery market with Zero Carbon LithiumTM hydroxide products.”