Hot Stock: A Green Energy Company that is up 2734% in a Year

To decarbonise the global economies and eschew emissions from the mobility and energy industry, the world has come together to raise a toast to transition to cleaner and sustainable sources of energy. Amidst the pandemic across geographies, a considerable ferment in support of the electric vehicles and renewable energy has begun to shape up.

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In fact, the countries including some of the largest polluters have reiterated their confidence in ambitious climate change goals and have announced their respective tentative deadlines to achieve a carbon neutral economy. The US anticipates achieving a carbon neutral economy by 2050 and have re-joined the Paris climate change agreement. In order to turn these seemingly extravagant goals into reality, the world may need to minimise its usage of conventional sources of energy and transition to renewable power and electric vehicles complemented by efficient and green energy storage solutions.

To store the incremental energy, the reliable and sustainable sources for battery metals are sought after. Automobile and consumer electronics majors have been struggling to secure reliable and environment friendly supplies of lithium, cobalt and other metals.

While the demand for these commodities continue to surge, many listed battery metals players have delivered strong returns on the equity investments. Vulcan Energy Resources (ASX:VUL), an aspiring producer of green and sustainable lithium, has easily outshined its peers on the ASX.

Share performance of Vulcan energy and S&P/ASX300 metals & mining index Source: Eikon Refinitiv

On a 1-year basis, VUL has delivered a total return of ~2734 per cent (as on 14 May 2021). VUL has outperformed almost all lithium stocks trading on the ASX crowning it as the hottest lithium stock on the bourses.

The next big Lithium producer in the making

ASX-listed Vulcan Energy aims to become the first Zero Carbon Lithium™ producer for electric vehicle batteries, globally. The company is developing its German project, which is the largest JORC lithium resource in Europe, to feed millions of electric vehicles. The company is involved in the development of its flagship Lithium project, located in the Upper Rhine Valley in Southwest Germany.

Large scale Zero Carbon Lithium™ opportunity: The lithium project includes 3 granted exploration permits and several applications stretching over more than 1,000 km2. The lithium project holds lithium resources of over 15.85 million tonnes LCE.

The project enjoys regional proximity to Wolfsburg, the German car capital, and the proposed Tesla Gigafactory. The lithium project is strategically located to cater to the world’s fastest growing EV market of Europe where the union has set a target to achieve 30 million electric vehicles by 2030.

Dual revenue streams of Lithium and Geothermal Energy: The lithium project is a unique project that aims to leverage its combined deep geothermal and lithium brine resource. Unlike the lithium resource, the mining and refining of lithium to electrify the world’s passenger vehicles will lead to the emission of 1 billion tonnes of carbon dioxide. This is where the Vulcan’s zero carbon LithiumTM gets an edge over its competitors.

Vulcan will produce battery quality lithium hydroxide chemical product with a net carbon footprint of zero from its asset in the Upper Rhine Valley of Germany.

Pilot Plant Commences at Insheim - In mid-April 2021, Vulcan updated that it has designed, built and now operates the pilot plant to demonstrate Direct Lithium Extraction (DLE) from Upper Rhine Valley geothermal brine. The pilot operations will demonstrate potential of pre-treatment and DLE processes over the operating cycles.

The data from the pilot plant will be used to finalise the designing of the larger commercial plant and towards the Definitive Feasibility Study (DFS).

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Low operating cost: Vulcan’s process utilises Dupont’s proprietary adsorbent-type DLE technologies to produce large volumes of chemicals like sulfuric acid to dissolve rock feeds or soda ash for brine. Further, the low-cost energy from the geothermal operations would be used to meet the power needs.

Vulcan also uses electrolysis to upgrade the chloride to a battery quality high purity hydroxide. The usage of electrolysis process does not require sodium hydroxide or lime, enhancing the project economics.

Supported by global institutions & the EU: In the March quarter, Vulcan completed a $120 million placement with strong support from ESG-focused institutions. Goldman Sachs and Canaccord Genuity were the lead manager for placement.

Vulcan’s strong prospectivity and the innovative approach has successfully charmed investors and has even secured the project financing support by the EU. The lithium project is full funded to FID.

Technologically savvy and Seasoned Management: Recently, Vulcan announced the acquisition of the leading geothermal surface consultancy company Global Engineering and Consulting Gmbh. Through the acquisition, Vulcan plans to double its technical team.

The existing technical team includes world renowned engineering, chemistry, and geology experts The management and leadership team includes one of the biggest names in the industry including several who held key leadership positions at EV and battery firms like Tesla.

The company aims to produce the world’s first premium-battery quality lithium chemicals with net zero carbon footprint using renewable geothermal energy. The unique mix of seasoned and dynamic management coupled with an innovative technical approach bodes well for the company to achieve its goals and make a meaningful impact in the electric motility segment.

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