Vulcan Energy secures $2.6bn financing package for lithium project

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Vulcan Energy Resources has received a financing package of €2.2bn ($2.57bn) to completely fund the construction and development of phase one of the Lionheart lithium and renewable energy project in the Upper Rhine Valley, Germany.

With this financing in place, the Vulcan board has approved the final investment decision (FID) for phase one of the Lionheart project.

Execution of the project is set to begin in the coming days.

Vulcan stated that phase one of the Lionheart project is expected to position the company as a “key enabler” of Europe’s battery and electric vehicle (EV) supply chain, and as a “climate champion” by delivering low-cost lithium and renewable energy for Europe.

Phase one of Lionheart features the development of an integrated lithium and renewable energy facility. The project aims to achieve an annual production capacity of 24,000 tonnes of lithium hydroxide monohydrate (LHM), which is sufficient to supply approximately 500,000 EV batteries each year.

In addition to lithium production, the project is designed to generate 275 gigawatt-hours (GWh) of renewable power and 560GWh of heat annually for local consumers, with an expected operational lifespan of around 30 years.

The development will include several key facilities: geothermal-lithium brine production wells and their supporting facilities; ancillary infrastructure such as substations and pipelines; a renewable power and heat plant; a lithium extraction plant that utilises Vulcan’s proprietary VULSORB Adsorption-type Direct Lithium Extraction technology to extract lithium from brine; and a central lithium plant.

The extracted lithium will then be processed at this central lithium plant to produce battery-quality LHM.

Most of the major contracts required for phase one have already been signed with project partners, with the remaining agreements expected to be finalised by the end of this year.

The project has also secured full offtake agreements for its lithium production for the first ten years, partnering with Europe-focused buyers.

Commercial production of LHM is scheduled to begin in 2028 following a construction period of approximately two and a half years.

The total Phase One Financing Package amounts to approximately €2.2bn (A$3.9bn), providing Vulcan with the necessary funds to cover the development costs of phase one at Lionheart.

This financing will support the project through its construction, commissioning and start-up phases, carrying it through to the generation of its first cash flow.

Vulcan has also received substantial financial backing from HOCHTIEF, which has invested a total of €169m.

This investment includes €39m directed into the Phase One Lionheart project entity, as well as a cornerstone subscription of up to €130m in Vulcan shares.

The financing package has come from European and German government agencies, commercial banks and strategic industrial partners.

The package includes €1.18bn in senior debt funding, provided by a syndicate of 13 financial institutions comprising the European Investment Bank, five Export Credit Agencies and seven commercial banks.

Additionally, the German Government is contributing €204m in grants.

The KfW Raw Materials Fund (KfW) will make an equity investment of €150m in Vulcan’s primary German holding subsidiary, Vulcan Energie Ressourcen, securing a 14% stake in the company.

A consortium of strategic investors including HOCHTIEF, Siemens Financial Services and Demeter, will invest €133m to acquire a 15% equity interest in the Phase One Lionheart project entity.

Furthermore, the financing package features €528m in proceeds from the underwritten component of an equity raising by Vulcan at €2.24 per share.

The elements of the financing package are closely interconnected and dependent on customary conditions.

The company expects these conditions to be met in accordance with the planned disbursement and drawdown timelines, which have been aligned with the budgeted construction schedule and capital expenditure profile for phase one of the Lionheart project.

Vulcan Energy managing director and CEO Cris Moreno said: “Securing this financing package and taking a positive FID is a significant achievement in the history of Vulcan Energy. It will allow the company to transition from development phase into execution phase with the construction of the commercial-scale supply chain for Lionheart.

“A lighthouse project for Europe, Lionheart is set to redefine lithium production, delivering Europe’s first fully domestic and sustainable lithium value chain. It will also provide a clean and reliable source of renewable energy for local communities and industries in Germany’s Upper Rhine Valley.”

"Vulcan Energy secures $2.6bn financing package for lithium project" was originally created and published by Mining Technology, a GlobalData owned brand.

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