Vulcan Energy trades higher as drilling on German lithium project starts
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More news: Vulcan Energy’s share price rose in early trading after announcing it had begun drilling its first new geothermal energy and lithium well for the Phase One Lionheart project in Germany.
Vulcan shares have increased 4.65% to $4.28 at 10:18am AEST.
On Monday, prior to Vulcan’s announcement, investment advisory Bell Potter initiated a buy recommendation — with a speculative risk setting — on Vulcan Energy off the back of its Lionheart plans. It set a share valuation of $6.10, 46.9% higher than Vulcan’s last close price.
The project is expected to be the European Union's first domestic lithium supply. It has an initial 30-year project target of 24,000 tonnes per annum of lithium hydroxide monohydrate production and 95MW of geothermal energy generation which will ramp up from 2027.
Bell Potter analyst Stuart Howe said Vulcan’s location, development-ready stage, and novel technology position put the company in a good position to benefit from a rebalance of lithium markets in the medium term.
What they said: “Our Lionheart NPV and the project’s potential for subsequent staged expansions support our valuation of $6.10 [per share]. VUL is an asset development company with only forecast cash flow; our Speculative risk rating recognises this high level of risk and potential share price volatility,” Howe said in a note.
Vulcan Energy begins drilling new German lithium project
The news: Vulcan Energy’s subsidiary Vercana has started drilling its first new geothermal energy and lithium well for the Phase One Lionheart project in Schleidberg near Landau, Germany.
The numbers: The field development plan for phase one involves adding 24 production and re-injection wells to the area, adding to the four production and re-injection wells that Vulcan already operates there.
The project has a production target of 24,000 tonnes per annum of lithium hydroxide monohydrate for electric vehicle batteries.
Vulcan will also use the lithium-rich hot brine extracted from the Upper Rhine Valley Brine Field to expand its production of geothermal heating and power production.
The context: The drilling represents execution of sub-surface works on the project. Full project execution, including mobilisation of engineering, procurement, construction, and management contracts, will commence when financing is completed.
The Lionheart project was granted strategic project status by the European Commission under the Critical Raw Materials Act in late March 2025.
The sources: ASX, Bell Potter research
