Vulcan’s Lionheart Project Faces Delayed Production Amid Rising Costs

Equity Raising Completes Successfully

Vulcan Energy Resources (ASX – VUL) has successfully closed a fully underwritten institutional placement and entitlement offer, raising approximately €398 million (A$710 million) by issuing around 178 million new shares at A$4.00 each. This price represents a notable discount of roughly 35% to the last traded price on the ASX, reflecting the company’s strategic move to secure robust funding for its flagship Lionheart lithium project.

The institutional offer attracted strong support from existing shareholders and new global investors alike, underscoring confidence in Vulcan’s vision to establish Europe’s first fully domestic and sustainable lithium supply chain. The retail entitlement offer, expected to raise an additional €205 million (A$366 million), is set to open shortly, with Hochtief committed to underwriting a significant portion of any shortfall.

Transitioning from Development to Execution

With the equity raising proceeds, Vulcan is poised to transition decisively from the development phase into the execution phase of the Lionheart project. Construction activities are slated to commence imminently, marking a critical milestone in delivering Europe’s pioneering carbon-neutral lithium production facility. CEO Cris Moreno highlighted the project’s role as a “lighthouse” for sustainable battery materials in Europe, emphasizing the company’s commitment to redefining lithium production through innovative, low-carbon technologies.

Updated Project Economics and Timeline

Alongside the financing announcement, Vulcan provided updated economic assessments for Phase One of the Lionheart project. The revised forecast incorporates a 21% reduction in lithium price projections over the 30-year project life and a 3% increase in capital expenditure, now estimated at approximately €1.48 billion. Operating costs have also been adjusted, reflecting changes in co-product pricing and a shift to self-consuming generated electricity rather than selling it externally.

These adjustments have pushed the expected start of lithium hydroxide monohydrate production to the second half of 2028, a delay from the previously anticipated mid-2027 timeline. Despite these changes, the project maintains robust financial metrics, including a post-tax net present value of €1.15 billion and an internal rate of return of 16.6% on an unlevered basis, affirming its long-term viability.

Strategic Partnerships and Market Position

Vulcan’s financing package is complemented by strategic partnerships and credit support from institutions such as Bpifrance and SACE, which are conditions precedent to finalising debt financing. The company’s innovative approach, leveraging geothermal energy to produce lithium with minimal carbon footprint, positions it uniquely within the European battery materials ecosystem, which is increasingly focused on sustainability and supply chain security.

As Vulcan prepares to lift its trading halt and resume share trading, market participants will be watching closely how the company executes on its ambitious plans amid evolving lithium market dynamics and broader energy transition trends.