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Vulcan Energy Resources


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Our Investment Summary

Date of Initial Coverage


Initial Entry Price


Returns from Initial Entry


Investment Memo:

Vulcan Energy Resources (ASX:VUL)


Opened: 21-Dec-2021

Shares Held at Open: 563,000

What does VUL do?

Vulcan Energy Resources (ASX:VUL, FWB:6KO) is aiming to become the world’s first Zero Carbon LithiumTM producer.

VUL plans to produce battery-grade lithium hydroxide from geothermal brines pumped from wells with a renewable geothermal energy by-product.

VUL will sell its lithium product to car manufacturers looking to make Electric Vehicles (EVs) in Europe and electricity and heat energy into local markets.

What is the macro theme?

The rechargeable batteries that power EVs require lithium. And with increasing focus on decarbonisation of EV supply chains, companies that can supply the raw materials for these vehicles with low or zero carbon emissions should thrive. This has appeal for governments, ESG Funds, manufacturers and end users alike.

Why did we invest in VUL?

Excellent execution

VUL has performed extremely well and the management has been excellent in execution. They have delivered every promise since we invested two years ago.

Lots of cash in the bank

VUL raised over $320M in 2021 so we are holding to see how they will deploy this new capital.

Valuable technical skill set

Sustainable lithium from brines and geothermal is growing in popularity globally. VUL has assembled one of the best technical teams with this rare skill set, putting VUL in a strong position to grow through acquisition of geothermal\brine projects.

De-risked capital

Large pools of capital earmarked for Environmental, Social & Governance (ESG) investments need to find a home, meaning that VUL should face fewer hurdles in securing financing.

What do we expect VUL to deliver?

Objective #1: Complete Phase 1 Definitive Feasibility Study (DFS)

The major milestone of the upcoming year is completing the Phase 1 Definitive Feasibility Study (DFS), also called a Bankable Feasibility Study (BFS), which will provide further clarity on the project’s economics and development feasibility. DFS completion is expected in the second half of 2022.

Objective #2: Secure Project Financing

Having raised $320M via two Placements in 2021, VUL is financed through to completion of its DFS, but further financing will need to be secured to fund project construction.

Objective #3: Expansion of scope

VUL has already signed offtakes for all of its planned Zero Carbon LithiumTM production. We want to see the company expand its scope for future lithium production by acquiring more land holdings and more projects to help meet anticipated rising demand.

Objective #4: Heat offtake agreements

VUL is looking to sign offtake agreements in order to sell renewable heat generated from its geothermal brines into the local market.

Objective #5: More strategic partnerships (to demonstrate execution)

While VUL has already locked away much of its first five years of lithium production, it continues to develop strategic partnerships across all three of its businesses.

What could go wrong?

Development risk

The project economics are hurt by a declining lithium price or cost blow outs in the project construction. Alternatively, the flow rates from the lithium project (how much lithium comes out of their project’s wells) are slower than adequate, in turn hurting the project economics.

Market risk

It's possible the oil price takes a sharp dip on a major global economic slowdown, slowing the uptake of EV vehicles in Europe.

Financing risk

We think the DFS is going to be VUL’s calling card for financing the project, but things may change. For example, the full project currently calls for expenditure of €1.78B ($2.81B) as of the Pre-Feasibility Study (PFS). Should development risks and market risks play out this could negatively impact the level of financing. Put simply, VUL is operating in an early-stage market that could change rapidly.

Stakeholder risk

VUL needs a social licence to operate. Local landowners, business owners and community members may oppose the project’s development, either slowing down the development or preventing it altogether.

What is our investment plan?

VUL has already been a very successful investment for us since we invested at 20c in August 2019 - we have free carried, taken profit and still hold 563,000 shares.

Our plan is to continue to hold a position during 2022 and beyond. We will likely sell another 20% of our holding during the year, hopefully if the share price re-rates on the back of any significant news.

Disclosure: The authors of this memo and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 563,000 VUL shares at the time of writing this investment memo. S3 Consortium Pty Ltd has been engaged by VUL to share our commentary on the progress of our investment in VUL over time.

Investment Milestones for VUL

✅ Initial Investment: @ 20c
Top Slice
Free Carry
✅ Increase Investment: @ 40c
Free Carry
✅ Increase Investment: @ $6.50
Free Carry
Take Profit
Price increases 300% from initial entry
Price increases 500% from initial entry
Price increases 1000% from initial entry
Price increases 2000+% from initial entry
12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years

Our Past Commentary on Vulcan Energy Resources

Date Title
21-Feb-2022 $ 8.950 Why we invest in Oil & Gas and Precious Metals
05-Feb-2022 $ 9.000 The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
22-Jan-2022 $ 9.240 Our Investment Approach, Energy Cold War, Ukraine, Supply Chain Crisis
14-Jan-2022 $ 10.310 How do Fund Managers Invest in Small Cap Stocks?
08-Jan-2022 $ 10.000 Early-year trading indicates market is set for an up-and-down year
21-Dec-2021 $ VUL continues to execute as sustainable lithium demand surges. So what’s next?
11-Dec-2021 $ 11.700 ASX rests pre-Christmas as the market trades on very low volumes
27-Nov-2021 $ 10.750 New COVID strain, Santa Rally, Market Thoughts
20-Nov-2021 $ 10.210 Australia bets big on Hydrogen at COP26, investment in companies that solve problems
06-Nov-2021 $ 12.950 COP26, Battery Metals, Green Energy
01-Nov-2021 $ VUL Withstands Short Seller Attack
30-Oct-2021 $ 12.080 The fallout from the VUL short attack explained
29-Oct-2021 $ VUL Short Squeeze - Here’s Why
25-Oct-2021 $ 13.600 Lockdown lifts, Two stocks to watch: MNB and ONE
18-Oct-2021 $ VUL signs third major offtake in 90 days
16-Oct-2021 $ 12.790 Mainstream media casts a big spotlight on Green Hydrogen
09-Oct-2021 $ 11.650 Investing 101: Key lessons for small cap investors
02-Oct-2021 $ 13.150 Evergrand, Gold and Traditional Energy
29-Sep-2021 $ Lithium price keeps rising as VUL locks in lithium production plant site
27-Sep-2021 $ 13.590 VUL Produces First Battery-Grade Lithium Sample
25-Sep-2021 $ 13.590 Managing a market crash - lessons from March 2020
20-Sep-2021 $ 14.600 ONE, VUL all grown up… BPM, LCL finding targets. PUR drilling again.
18-Sep-2021 $ 14.600 Why uranium stocks are soaring, one good movie recommendation
17-Sep-2021 $ Cashed up VUL Expands its Zero Carbon Lithium Ambitions
04-Sep-2021 $ 14.100 Annual Reports, Uranium and a Welcome to New Subscribers
28-Aug-2021 $ 13.480 Recap of the KNI IPO and share price run
23-Aug-2021 $ 12.150 VUL appoints project finance advisor BNP Paribas. Alster upgrades VUL price target (again) to $19.50
21-Aug-2021 $ 12.150 Market fluctuations and portfolio news and quick takes
14-Aug-2021 $ 13.750 Bookmark it, a new Pick of the Year is coming next week
09-Aug-2021 $ 13.890 VUL Now Entering The Big Leagues
07-Aug-2021 $ 13.890 Market swings back up as small caps scramble towards the end of the year
02-Aug-2021 $ VUL secures a potential US$1B Lithium deal with leading EV carmaker
02-Aug-2021 $ 10.150 VUL Signs ANOTHER Lithium offtake - this time worth up to US$255M per year
24-Jul-2021 $ 9.160 Why stocks go into "Quiet Execution Mode", how to spot a cap raise, stock "Confession Season"
20-Jul-2021 $ VUL’s US $150M per year Lithium Offtake Deal
19-Jul-2021 $ 10.080 VUL signs ~$150M per year offtake with world’s biggest EV battery Maker LG
17-Jul-2021 $ 10.080 Cash is King, Gold Stocks and Enough of VUL and EMN
16-Jul-2021 $ 9.400 VUL and EMN: Key takeaways out of Europe this week
13-Jul-2021 $ 8.850 Two more key events coming out of Europe in the next 48 hours...
10-Jul-2021 $ 8.200 Breaking News: Stellantis signs offtake MoU with VUL
09-Jul-2021 $ 8.200 Stellantis EV Day: Mystery European Geothermal Lithium MoU & Manganese to be used in all batteries
08-Jul-2021 $ 8.130 Move over Musk. Yet Another Auto giant to reveal Electric strategy tonight at 11:30pm AEST
05-Jul-2021 $ 8.000 World First: Lithium from geothermal brine offtake deal signed in the USA
26-Jun-2021 $ 7.950 June tax loss selling is behind us, KNI IPO expected in August
19-Jun-2021 $ 7.980 What is Tax Loss Selling?
16-Jun-2021 $ 8.360 Last night VW announced it wants to secure battery metals directly from miners...
12-Jun-2021 $ 8.850 What did our investments do this week? CPH, ONE, TMZ, 88E and more...
29-May-2021 $ 7.820 Green Hydrogen in the news, Investment Milestones released, stock portfolio news
27-May-2021 $ 7.310 VUL ASX Achieves Target 90% Lithium Extraction while Billionaires Buying on Market
27-Apr-2021 $ 7.900 Our Portfolio Performance from January 1st to March 31st 2021
15-Apr-2021 $ 7.020 New $15 Analyst Price Target Gives VUL a Nudge
09-Apr-2021 $ 6.450 And our Next Investment is… Going to be Announced in the Coming Weeks
23-Mar-2021 $ 6.480 TRIPLE DOWN ALERT - Plus 6 Hot Stocks
16-Mar-2021 $ 6.710 Power Day Launches Volkswagen’s EU Electric Vehicle Future
02-Mar-2021 $ ASX Stock to Ride the Great Electric Vehicle Rush
02-Mar-2021 $ Vulcan on Track to Deliver World First Zero Carbon Lithium
25-Feb-2021 $ 6.450 This ASX Stock is Now Cheaper than Where We Last Invested
18-Feb-2021 $ 7.240 We Just Invested More in this Stock ... ... plus what's happening with VUL and EXR?
12-Feb-2021 $ 7.500 What are the best returns in our portfolio?
04-Feb-2021 $ 8.500 Vulcan ASX Bags $120M Bucks from Big Name Backers and Banking Behemoth
25-Jan-2021 $ 8.100 Vulcan ASX has Evolved into a Tesla Like Share Price Story
16-Jan-2021 $ 6.980 Vulcan ASX Reveal A$3.5BN Net Present Value on Zero Carbon Lithium Project
15-Jan-2021 $ 6.980 Our Key Takeaways from VUL’s PFS - What will the VUL share price do next?
12-Jan-2021 $ 6.980 What we are Watching Over the Next 48 Hours
07-Jan-2021 $ 3.550 Our Stock Picks for 2021
11-Dec-2020 $ 2.460 EU Climate Policy - Battery Materials Supply Regulations Leaked?
09-Dec-2020 $ 2.290 Why are We Staying Up to 3am Tonight?
23-Nov-2020 $ Vulcan's Resources Could Satisfy the EU's EV Needs
12-Nov-2020 $ 1.445 Vulcan ASX Boosts Confidence in Lithium Resource Ahead of PFS
06-Nov-2020 $ 1.050 Is Vulcan ASX Presenting a Buying Opportunity?
24-Sep-2020 $ 0.880 Tesla Unveils Strategic Battery Plans: What This Means for Our Pick of the Year
03-Aug-2020 $ 0.455 Vul ASX Hits Milestone: Reports 90%+ Lithium Recoveries from Geothermal Brines
11-Jul-2020 $ 0.540 Our Top Pick Up 100% Since Our May Update (Vul ASX) – Now with Institutional Backers
01-Jun-2020 $ World's First Zero Carbon Lithium Project
29-May-2020 $ 0.285 Momentum Building in Vul ASX - Our Top Pick of 2020
16-Mar-2020 $ 0.200 Vul ASX “Our First Ten-Bagger” say German Research House
21-Feb-2020 $ 0.245 REVEALED: Our Top Stock Pick for 2020 (Vulcan Energy ASX)
20-Jan-2020 $ 0.175 Vulcan Increases Europe’s Largest Lithium Resource
05-Dec-2019 $ 0.185 A New Number One – Vulcan Energy ASX Now Hold the Largest Lithium Resource in Europe
22-Nov-2019 $ 0.120 Can Vulcan’s Zero Carbon Lithium™ Deliver Emission-Free Cars?
20-Aug-2019 $ 0.185 Vulcan Energy ASX Delivering the World’s First “Zero Carbon” Lithium Project