Vulcan Energy (ASX:VUL) announced a $164 million institutional placement and $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 first integrated, zero-carbon lithium and renewable energy producer.
The placing 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 placing price of $5.85 per share represents an 11.9% discount to Vulcan’s last trading price of $6.64.
The SPP will end on January 20, 2025 and shares under 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 and co-produce renewable geothermal energy. The company’s in-house VULSORB technology enables the direct extraction of lithium with a low environmental impact, reducing carbon emissions compared to conventional mining 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
The funds raised will be allocated to key execution tasks for the Lionheart project, including the initiation of field development plan activities, such as rig mobilization, well drilling and procurement for period execution of flight service. Capital will also be allocated to engineering, procurement and construction contracts for the development of the Organic Rankine Cycle geothermal plant, a lithium extraction plant and a lithium power plant.
Additionally, proceeds will be used for critical execution-related expenses, such as land acquisition, site creation and key supply agreements. Operating expenses are also included in the funding allocation, with the proceeds supporting operational activity and placement costs.
Wider funding
The capital raise is part of a broader funding strategy for Phase One of the Lionheart Project. The total financing requirement for Phase One is estimated at €2.2 billion ($3.61 billion), covering capital expenditure, financing costs, owner costs, reserve accounts for debt service, acceleration costs and contingencies.
Vulcan is targeting debt financing of between €1.5 billion and €1.6 billion, including loans from the European Investment Bank, Export Finance Australia, Export Development Canada and trade lenders. It has already received conditional approval for €120 million in debt financing from Export Finance Australia.
From a capital point of view, Vulcan aims to raise 625 to 725 million euros through strategic partnerships, public capital increases and government financing. Recent grants from the German government and the European Recovery and Resilience Facility have already contributed 100 million euros to the project.