Company Interview / Vulcan's power play: new leadership, big lithium moves

Key points:

Vulcan Energy (ASX: VUL) transitions to the execution phase of its lithium projectMajor off-take agreements secured with European automotive giantsFinal stages of €1.4 billion phase one financing nearing completion

Francis Wedin, Executive Chair of Vulcan Energy (ASX: VUL) discusses the company's transition to the execution phase of its project development, highlighting the appointment of Angus Barker as a non-executive director. Francis stresses that Angus brings valuable experience in critical raw materials financing and government funding.

The company's key project, an integrated lithium hydroxide plant, aims to produce 24,000 tonnes of battery-grade lithium hydroxide annually in Germany, with major European automotive companies like Stellantis, VW, and Renault already locked in as off-takers. Vulcan Energy (ASX: VUL) remains committed to its net-zero carbon lithium extraction process, positioning itself favourably in the rapidly growing lithium market.

Vulcan Energy (ASX: VUL), supported by substantial shareholders like the European Investment Bank, Hancock Prospecting, and Cimic Group, is in the final stages of securing €1.4 billion for phase one financing. Francis highlights increasing interest from oil and gas companies, aiming to finalise funding by year-end to proceed with the project .

Full unedited transcript below:

0:00

Well, there has been some C-suite changes at Vulcan Energy Vulcan appointing Angus Barker as non-executive director. They've also been several other changes to the company board. They're transitioning to the execution phase of project development. Let's get details. Vulcan Energy's executive chair, Francis Warren, joins me. I want to have a broader conversation as well about where your company is headed. But just tell us about the changes at the C-suite.

0:24

Yeah, thanks for having me on. So, yeah, this is about the company really transitioning to that next phase of its developments and its growth. So, um, yeah, we're very pleased to have Angus join our board. Uh, Angus is a,

0:38

um, very senior person with, uh, a lot of experience in the, in the finance space. And also, um, it's specifically related to critical raw materials financing and linked to government funding as well. Um, so very happy to have Angus on the board. And this is also about, um, making room on the board for a potential future. Uh strategic project investor as well, because we're going through our financing for phase one of our zero carbon lithium project. So, um, also some changes there as well. Yeah. Just tell us about that because I understand you still a couple of years away from full commercial operation, but certainly the market believes in what you're doing.

1:18

That's right. Well, I think that's because we we've executed on what we said we were going to do so far. Hopefully that continues going that way. Um, so we're we're getting to the final stages of financing our phase one projects. Phase one is for an integrated lithium hydroxide project for about 24,000 tonnes per annum of battery grade lithium hydroxide in Europe, in Germany. Um, we've got off takes locked in with Europe's major automotive suppliers, um, uh, automotive companies, Stellantis, VW, um, Renault, among others. Um, and it's all it's all systems go basically once we've got this financing locked away, hopefully by the end of the year, then it's going to be shovels in the ground and building this project for the next two years. And then we have a very low cost project with, um, very attractive pricing for our lithium, um, supplying the European market with a sustainable lithium hydroxide product. What do you think as well, that you've managed to escape some of the woes that other lithium players have

2:18

faced this year?

2:21

Uh, well, I don't want to jinx it, but, um, I think so far, um, we've we've held up very well because ours is a very low cost project. And I think this next wave of, um, uh, of the lithium market, this, this next, um, uh, this next phase, if you like, of lithium as it grows very quickly, year on year will be defined by two things. It will be defined by your pricing. And that's why our optics with tier one counterparties are very important. And it will be defined by cost of production. And this is where our project, which is a brine project with um, a natural heating source to drive that lithium extraction process. That's why it's net zero carbon. Um, this is why we're very, very low cost. Um, and we believe that's the future. Um, Hardrock lithium will always have its place, but, um, we think that low cost, um brine related lithium is, um, is the future and will be really well placed in the way of growth. and Francis just view as it may not be aware of what Vulcan energy does. And I

3:21

guess some of your backers as well tell us some of the investment you've had because you've had the European Investment Bank, Gina Rinehart also has a stake.

3:30

That's right. So, um, Hancock Prospecting, uh, which is chaired by Gina Rinehart. Um, as you pointed out. Uh, Hancock Prospecting is a substantial shareholder in Vulcan. They've been very supportive since they came onto our register in 2021. They recently increased their ownership. Um, we also have Cimic Group, which is a very large engineering and construction group, and they're part of Hok chief in Germany, which is an even larger engineering construction group, and they're likely to be involved in the project as PCM. They're also substantial shareholder Stellantis, which, um, is a very large automotive group that includes Fiat Chrysler, Opel, Peugeot, Citroen, um, they're also substantial shareholder. They're also a largest off taker. Um, so we're very well supported uh, on our register. And that's really important going into this, this next stage of, of development. There has been concern, though, that you may run out of money. What do you say to those who say shareholders should be worried about your cash burn?

4:31

So, um, I mean, it's all about this phase one financing. So, um, what what we're aiming to do is raise the, um, the equity that we need at a project level. So we're raising, um, uh, about €1.4 billion of of CapEx plus financing costs. Um, and we're targeting a 65, 35 equity split, and we're aiming to do this at a project level. Um, so we're looking to crowd in as much, um, government backed funding as possible. So we have, uh, in principle, um, commitments from the export credit agencies from France, Italy. You mentioned the European Investment Bank. They've indicated up to €500 million. Um, also Canada and Australia, uh, on the debt side. And we're in the the final stages of a strategic equity process to raise equity at a project level as well. And very interestingly, we're seeing a lot of interest from oil and gas companies. So it's a really interesting space where oil and gas is really starting to move in,

5:31

uh, in the lithium sector because of the similarities, uh, between an oil and gas operation and the lithium brine operation of this nature. Um, so the strategy is to raise the funding required at a project level. Um, let's see. Hopefully we can pull it off by the end of the year. And then we're fully funded to, um, uh, to completion of phase one. And your dual listed also on the Frankfurt Stock Exchange. No plans, I assume, though France is to leave Australia, the ASX.

5:59

Absolutely not. No ASX would be very good to us. Um, and long term strategy. I mean, we, we have this lithium extraction technology that, um, has originated out of Australia and we want to deploy this elsewhere and perhaps we'll just deploy this, um, even in Australia as well. We are aware of, um, low cost lithium brine opportunities associated with oil and gas fields in Australia. Um, but we see ourselves as a global company. Um, we have some growth ahead of us in Germany and France. But, um, certainly the relevance of Australia, um, at the ASX and the resources sector here is not going to go away.