The Vulcan Energy Resources Ltd (ASX: VUL) share price will be on watch after getting strong support for its capital raising. It’s currently up 8% in early trading.
Vulcan Energy says that it is trying to become the world’s first ‘zero carbon lithium’ producer for electric vehicle batteries.
Vulcan Energy’s capital raising
The lithium energy business said that it has received firm commitments to raise $120 million (before costs) through its capital raising at $6.50 per share. That represented a 17.1% discount to the last closing share price of $7.84.
The interested institutions are a suite of ESG institutions (ESG stands for Environmental, Social, and Corporate Governance). The company said that significant investment was provided by the BNP Energy Transition Fund, a European ESG-focused institution. The cornerstone investment was provided by Hancock Prospecting, which is led by Executive Chair Gina Rinehart, one of Australia’s richest people.
What will Vulcan Energy use the money for?
Vulcan Energy said that the money will be used for three different purposes.
- Project development, permitting, feasibility study costs and overheads – A definitive feasibility study is due by the middle of 2022, which includes the acquisition of exploration data, the permitting of the zero carbon lithium project and completion of studies towards permitting and development.
Within this category, the next part is for the extensive lithium test work and development plants in Germany.
The final part within this category that the money will be used for is corporate overheads and working capital to support a significant increase in the headcount in Germany in order to accelerate on-the-ground development. - Drill site acquisition and preparation – For this portion, money is needed for land access costs (acquisition or leasing) and the purchase of long lead drilling items in Germany.
- Strategic opportunities to accelerate project development – Vulcan is assessing options to acquire existing infrastructure in Germany to accelerate development.
Management comments
Vulcan Managing Director Dr Francis Wedin said: “We received overwhelming support for the placement from both domestic and international ESG-focused institutional investors. This demonstrates clear support for our strategic plan to develop the world’s ‘Zero Carbon Lithium’ project.”
He went on to say that this is the beginning of an exciting journey for Vulcan.
Summary thoughts
Vulcan could turn into an impressive business if things go well. But I’m not the person to be able to tell how effective or possible its idea is. So I’m happy just to watch on the sidelines.
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