Vulcan Energy Resources Limited (ASX: VUL) has released positive results from its Definitive Feasibility Study (DFS) for Phase One of Vulcan’s Zero Carbon Lithium Project.
Vulcan aims to be the world’s first integrated lithium chemicals and renewable energy producer with net zero greenhouse gas emissions.
Highlights
Aiming to be the first integrated, renewable heat and power, lithium extraction and lithium hydroxide refining project, to supply the battery electric vehicle industry from Europe, for Europe.
- Targeting 24Ktpa Lithium Hydroxide Monohydrate (LHM) p.a. production from EU, for EU.
- Targeting >300GWh/a renewable power, >250GWh/a renewable heat production p.a.
- >250% increase in estimated NPV8: €3.9Bn pre-tax, €2.6Bn post-tax.
- 34% estimated IRR pre-tax, 26% IRR post-tax.
- Targeted >€700Mpa estimated revenues. Targeted EBITDA margin of 84%.
- €1,496M estimated CAPEX, increase broadly in line with larger project and inflation.
- Low estimated OPEX of €4,359/t LHM.
- Targeted 3.5-year payback (Integrated Project). Target start of production end-2025.
- Net zero per tonne estimated LHM carbon footprint: a world first in lithium industry
- Zero Scope 1 fossil fuels. Net water consumption very low.
- Increase in Resources and Reserves relative to Integrated Phase One PFS: largest lithium Resource in EU7.
- Very low water consumption due to recycling streams engineered into process. Estimate of only 1.36 tonnes of water per tonne of LHM produced, net of products.
Leading edge in-house engineering
- >13,000 hrs of Vulcan’s first pilot plant (PP1) operation on brine from production wells in the core of Phase One area since April ‘21 support Direct Lithium Sorption (DLS) process engineering.
- VULSORB, Vulcan’s high-performing in-house lithium extraction sorbent, integrated into DFS.
- Vulcan’s second pilot plant (P1A), operates at a higher pressure than PP1 and simplifies overall design and operation, allowing for estimated CAPEX and OPEX savings in DFS, and enhanced environmental performance. Further test work to be integrated into bridging phase of engineering.
Clear project execution plan
- The Project will be delivered under a single integrated projects group, providing a consistent approach to delivery and overall accountability.
- Phase One project moving into bridging engineering with Hatch Ltd., contract strategy and delivery model in place, early engagement of key technology and equipment suppliers.
- Vulcan now has ~280 personnel in-house; increased focus on execution capability/operations readiness, clear ramp up plan in place.
- Sustainable procurement framework and responsibilities assigned to assess, manage, and report on environmental and human rights impacts.
- Extensive stakeholder engagement strategy implemented by Vulcan’s comms and ESG team including regular monitoring, multiple communication channels and local Info Centres. Strong support for the Project from various levels of government including EU, federal and regional.
- Lithium extraction Demonstration Plant approval in place and under construction, planned to start up mid-year to train operations team, prior to targeted start of Phase One commercial production end-2025.
- Development well drilling targeted to start-up mid-2023 to increase brine flow from producing core of Phase One area.
Multi-pronged financing process under way
- BNP Paribas advising debt financing process which has initiated. Non-binding Letters of Intent (LOI) received from European Export Credit Agencies which is a positive step in the debt financing process.
- Discussions with strategic funding partners under way, with Vulcan assessing options to source Phase One equity requirements at a project level and/or parent level.
- Vulcan’s binding lithium hydroxide offtake agreements with Stellantis, Volkswagen, Renault, LG Energy Solution and Umicore18 support stability for financiers during payback period.
I would like to thank our whole Vulcan team and our consultants for the monumental effort in getting our Phase One, Zero Carbon Lithium Project DFS completed successfully,” Vulcan Managing Director and CEO, Dr Francis Wedin, said.
“Our Project consists of commercially well understood methods or processes with commercial analogues from other industries, but this is the first time these processes from the lithium chemicals and renewable energy industries have been combined to produce a unique, net zero carbon, zero scope 1 fossil fuels project development.
“It is an exciting project to work on, combining multi- disciplinary, international scientific, engineering and commercial teams, passionately driven by the desire to provide sustainable, decarbonised lithium and renewable energy supply from Europe, for Europe.
“The Phase One DFS, backed up by technical data from our operating commercial geothermal wells and plant, and our operating lithium extraction pilot plants, shows compelling financial results, as well as world- leading target environmental metrics. Simply put, we are showing that with the right engineering, choosing a sustainable lithium production process can be a more profitable route than legacy methods.
“The work doesn’t stop here, it starts here, as we target start of production by end-2025 and ramp-up thereafter. This is a tight timeframe, and we recognise the significant challenge ahead of us as a growing company. To this end, we are rapidly transforming towards being a project execution and operations company.
“We have an exciting time ahead of us, with start-up of demonstration plants to train our operations team, start of development drilling for new production wells, and of course Project financing. It is shaping up to be a very exciting year for Vulcan, and the Zero Carbon Lithium Project, and I look forward to continuing to share the journey with our team and our stakeholders.”
