Vulcan energy (ASX: VUL) announced a $164 million institutional placement and a $20 million share purchase plan (SPP) to finance key aspects of its Lionheart project in Germany’s Upper Rhine Valley brine field .
The company aims to become the world’s leading carbon-neutral, integrated lithium and renewable energy producer.
The placement will raise $121 million from institutional investors and $43 million from strategic investors, with the SPP offering existing shareholders the opportunity to participate at the same offering price. The placement price of $5.85 per share represents an 11.9% discount to Vulcan’s last traded price of $6.64.
The SPP will close on January 20, 2025 and the shares of the SPP will be issued on January 28, 2025.
About Vulcan and Lionheart
Vulcan Energy is building a fully integrated lithium and renewable energy production system in Germany’s Upper Rhine Valley. The Lionheart project aims to extract lithium from underground brines while co-producing renewable geothermal energy. The company’s in-house VULSORB technology enables direct lithium extraction with low environmental impact, reducing carbon emissions compared to conventional extraction methods.
Offtake agreements with Stellantis, Renault, Volkswagen, Umicore and LG already cover most of the project’s first 10 years of production.
Use of funds
Funds raised will be directed towards key execution tasks for the Lionheart Project, including the commencement of field development plan activities, such as drilling rig mobilization, well drilling and procurement for execution of the FDP. Capital will also be allocated towards engineering, procurement and construction contracts for the development of the Rankine Cycle Organic Geothermal Power Plant, a Lithium Extraction Plant and a Central Lithium Plant.
In addition, proceeds will be used to fund critical execution-related expenses, such as land acquisition, site establishment and key procurement agreements. Operating expenses are also included in the funding allocation, with revenue supporting operational activities and investment costs.
Broader funding
The capital increase is part of a broader financing strategy for the first phase of the Lionheart project. The total financing requirement for the first phase is estimated at €2.2 billion ($3.61 billion), covering capital expenditure, financing costs, owner fees, reserve accounts for debt service, ramp-up costs and contingencies.
Vulcan is targeting €1.5 billion to €1.6 billion in debt financing, including loans from the European Investment Bank, Export Finance Australia, Export Development Canada and commercial lenders. It has already received conditional approval for €120 million in debt financing from Export Finance Australia.
On the equity side, Vulcan aims to raise between €625 million and €725 million through strategic partnerships, public capital increases and government funding. Recent grants from the German government and the European Recovery and Resilience Facility have already contributed €100 million to the project.
