Vulcan Energy to source more lithium in Germany.
Vulcan Energy Resources Limited (Vulcan; ASX: VUL, FSE: VUL, the Company)1 announce the results of its Definitive Feasibility Study (DFS) for Phase One of Vulcan’s Zero Carbon Lithium™ Project. Vulcan aims to be the world’s first integrated lithium chemicals and renewable energy producer with net zero greenhouse gas emissions.
Compelling economics8
• >250% estimated increase for Phase One NPV8: €3.9Bn NPV8 pre-tax, €2.6Bn NPV8 post-tax9
• >40% estimated increase in rate of return: 34% IRR pre-tax, 26% IRR post-tax.
• >200% increase in target revenues for Phase One: >€700Mpa revenues estimated, with
estimated EBITDA margin of 84%.
• €4,359/t LHM OPEX – potential to be one of the lowest cost lithium operations10.
• Reduced 3.5-year payback (Integrated Project) targeted.
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Larger project. Sustainable, long-term pipeline11
• 60% increase in Phase One production target to 24ktpa LHM per annum capacity. Associated
increase in CAPEX mostly related to larger project and global inflation.
• Increase in Upper Rhine Valley Brine Field (URVBF) lithium Resource to 26.6Mt LCE; the largest
lithium Resource in the EU12.
• Increase in overall Phase One Proven and Probable Reserves to 0.54Mt LCE, centred around
current production wells in core of the URVBF field.13 Decrease in Reserves in Taro sector, mainly
due to shift in production plans to core Lionheart sector where there are operating
production/re-injection wells.
• Phase Two DFS to follow, targeting addition of further modular 24ktpa production, consistent
with 2021 PFS study14, updated for new engineering data from Phase One DFS.
World-leading target environmental metrics
• Forecast net zero project Scope 1, 2 and 3 Greenhouse Gas Emissions per tonne LHM carbon
footprint. A world-first in the lithium industry15.
• Zero Scope 1 fossil fuels consumption in lithium production process.
• Net producer of renewable energy from Phase One.
• Very low water consumption due to recycling streams engineered into process. Estimate of only
1.36 tonnes of water per tonne of LHM produced, net of products16.
Leading edge in-house engineering
• >13,000 hrs of Vulcan’s first pilot plant (PP1) operation on brine from production wells in the core of Phase One area since April ‘21 support Direct Lithium Sorption (DLS) process engineering.
• VULSORB™, Vulcan’s high-performing in-house lithium extraction sorbent, integrated into DFS.
• Vulcan’s second pilot plant (P1A), operates at a higher pressure than PP1 and simplifies overall
design and operation, allowing for estimated CAPEX and OPEX savings in DFS, and enhanced
environmental performance. Further test work to be integrated into bridging phase of
engineering.
Clear project execution plan
• The Project will be delivered under a single integrated projects group, providing a consistent
approach to delivery and overall accountability.
• Phase One project moving into bridging engineering with Hatch Ltd., contract strategy and
delivery model in place, early engagement of key technology and equipment suppliers.
• Vulcan now has ~280 personnel in-house; increased focus on execution capability/operations
readiness, clear ramp up plan in place.
• Sustainable procurement framework and responsibilities assigned to assess, manage, and
report on environmental and human rights impacts.
• Extensive stakeholder engagement strategy implemented by Vulcan’s comms and ESG team
including regular monitoring, multiple communication channels and local Info Centres. Strong
support for the Project from various levels of government including EU, federal and regional.
• Lithium extraction Demonstration Plant approval in place and under construction, planned to
start up mid-year to train operations team, prior to targeted start of Phase One commercial
production17 end-2025.
• Development well drilling targeted to start-up mid-2023 to increase brine flow from producing
core of Phase One area.
Multi-pronged financing process under way
• BNP Paribas advising debt financing process which has initiated. Non-binding Letters of Intent
(LOI) received from European Export Credit Agencies which is a positive step in the debt
financing process.
• Discussions with strategic funding partners under way, with Vulcan assessing options to source
Phase One equity requirements at a project level and/or parent level.
• Vulcan’s binding lithium hydroxide offtake agreements with Stellantis, Volkswagen, Renault, LG
Energy Solution and Umicore18 support stability for financiers during payback period.
Dr. Francis Wedin, Vulcan Managing Director and CEO, commented:
I would like to thank our whole Vulcan team and our consultants for the monumental effort in getting our Phase One, Zero Carbon Lithium™ Project DFS completed successfully.
“Our Project consists of commercially well understood methods or processes with commercial analogues from other industries, but this is the first time these processes from the lithium chemicals and renewable energy industries have been combined to produce a unique, net zero carbon, zero scope 1 fossil fuels project development.
“It is an exciting project to work on, combining multidisciplinary, international scientific, engineering and commercial teams, passionately driven by the desire to provide sustainable, decarbonised lithium and renewable energy supply from Europe, for Europe.”
“The Phase One DFS, backed up by technical data from our operating commercial geothermal wells and plant, and our operating lithium extraction pilot plants, shows compelling financial results, as well as worldleading target environmental metrics. Simply put, we are showing that with the right engineering, choosing a sustainable lithium production process can be a more profitable route than legacy methods.”
“The work doesn’t stop here, it starts here, as we target start of production by end-2025 and ramp-up thereafter. This is a tight timeframe, and we recognise the significant challenge ahead of us as a growing company. To this end, we are rapidly transforming towards being a project execution and operations company.”
“We have an exciting time ahead of us, with start-up of demonstration plants to train our operations team, start of development drilling for new production wells, and of course Project financing. It is shaping up to be a very exciting year for Vulcan, and the Zero Carbon Lithium™ Project, and I look forward to continuing to share the journey with our team and our stakeholders.”
Cris Moreno, Vulcan Deputy CEO, commented:
What a fantastic achievement by the Vulcan team to complete the DFS.
“We are in a race to get to net zero and Vulcan is playing its part in disrupting and decarbonising two traditionally carbon-intensive industries, in energy and battery raw materials. Our Zero Carbon Lithium™ Project in the Upper Rhine Valley Brine Field marries geothermal energy and lithium production in an innovative and circular manner, allowing us to be fossil fuel-free in our process and ensure we deliver net carbon neutral, domestically sourced energy and lithium from Europe, for Europe.”
“Our Vulcan team has done a terrific job to deliver such a comprehensive and positive DFS result for our Phase One Project. Vulcan Energy is transitioning quickly from a development company to an integrated project execution and production company and aims to continue to build on its German-centric delivery model, with on the ground leadership and close collaboration with key technology and execution partners to help deliver its Phase One Project safely, with quality, on time and within budget. “
Highlights:
- Aiming to be the first integrated, renewable heat and power, lithium extraction and lithium hydroxide refining project, to supply the battery electric vehicle industry from Europe, for Europe.
- Targeting 24Ktpa Lithium Hydroxide Monohydrate (LHM) p.a. production from EU, for EU. 3
- Targeting >300GWh/a renewable power, >250GWh/a renewable heat production p.a.4
- 250% increase in estimated NPV8: €3.9Bn pre-tax, €2.6Bn post-tax5
- 34% estimated IRR pre-tax, 26% IRR post-tax.
- Targeted >€700Mpa estimated revenues. Targeted EBITDA margin of 84%.
- €1,496M estimated CAPEX, increase broadly in line with larger project and inflation.
- Low estimated OPEX of €4,359/t LHM.
- Targeted 3.5-year payback (Integrated Project). Target start of production end-2025.
- Net zero per tonne estimated LHM carbon footprint: a world first in lithium industry6
- Zero Scope 1 fossil fuels. Net water consumption very low.
- Increase in Resources and Reserves relative to Integrated Phase One PFS: largest lithium
- Resource in EU7
Vulcan Zero Carbon Lithium™ Project Phase One DFS results and Resources-Reserves update, February 13, 2023
