Vulcan’s €7.8m Well Impairment Raises Questions Amid Lionheart Project Build

A Landmark Quarter for Vulcan Energy

Vulcan Energy Resources Limited has announced a pivotal quarter, securing a comprehensive €2.2 billion (A$3.9 billion) financing package to fund the construction and development of its Phase One Lionheart Project in Germany’s Upper Rhine Valley. This milestone enabled the company’s board to give a positive Final Investment Decision (FID), transitioning Vulcan from development into execution mode.

The Lionheart Project aims to produce 24,000 tonnes per annum of lithium hydroxide monohydrate (LHM), enough to supply around 500,000 electric vehicle batteries each year. Alongside lithium, the project will generate 275 GWh of renewable power and 560 GWh of heat annually, supporting local energy needs over an estimated 30-year lifespan.

Financing and Commercial Partnerships

The financing package includes significant backing from HOCHTIEF, which invested €169 million, alongside support from European and German government agencies, commercial banks, and strategic industrial partners. Vulcan successfully completed a fully underwritten institutional placement and entitlement offer, raising approximately €710 million, with additional retail participation.

Crucially, Vulcan signed an offtake agreement with global resource giant Glencore to supply between 36,000 and 44,000 tonnes of LHM over eight years. This deal complements existing agreements with Stellantis, Umicore, and LG Energy Solution, solidifying Vulcan’s position in Europe’s battery materials supply chain.

Operational Progress and Construction

Operationally, Vulcan reported strong drilling results from the LSC-1 vertical well and its sidetrack LSC-1b, confirming lithium grades and reservoir quality consistent with project expectations. Although the LSC-1a sidetrack was abandoned due to wellbore instability, this resulted in a non-cash impairment of €7.8 million, with no impact on cash flow.

Construction has commenced at the upstream Geothermal Lithium Extraction Plant (G-LEP) site in Landau, Germany, with all major permits secured. The company held a high-profile groundbreaking ceremony attended by political and economic stakeholders, signalling strong regional support. Key supply contracts were signed with Sedgman and HOCHTIEF joint venture for engineering and construction management, JordProxa for lithium purification technology, and ABB for electrical infrastructure.

Sustainability and Future Outlook

Vulcan continues to prioritise health, safety, and environmental stewardship, recording no lost-time injuries during the quarter and updating its Environmental and Social Impact Assessment to reflect recent studies and project refinements. The integrated approach of combining geothermal energy with lithium extraction positions Vulcan as a leader in sustainable battery materials production.

Looking ahead, the company is advancing exploration and development in additional licence areas including Mannheim, Ludwigshafen, and Ortenau, with ongoing funding applications and geophysical surveys underway. These efforts aim to expand Vulcan’s resource base and support future project phases.

Managing Director Cris Moreno described the quarter as the most transformational in Vulcan’s history, emphasising the company’s commitment to delivering Europe’s first fully domestic and sustainable lithium value chain.