Lithium

Vulcan Energy officially a renewable energy producer

Fri 10 Dec 21, 11:55am (AEST)
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Key Points

  • Vulcan has agreed to acquire a geothermal renewable energy power plant in Germany for 31.5m euros
  • Vulcan has signed a 20-year brine offtake agreement set to commence in December 2024
  • Acquisition and brine offtake positions Vulcan to potentially expand production

Vulcan Energy (ASX: VUL) is set to acquire the Insheim renewable power plant in Germany’s Rhine Valley for 31.5m euros.  

The acquisition will utilise a portion of proceeds from Vulcan’s recent $200m capital raise. 

Vulcan officially a renewable energy business 

The Insheim plant currently pumps lithium-rich brine to the surface for renewable geothermal energy generation before the brine is reinjected into the reservoir. It is understood that the plant currently has the technical ability to produce a maximum of 4.8 megawatts of power, enough to power approximately 8,000 households.  

Interestingly, the plant is a revenue generating asset, having reported sales of 5.8m euros for the financial year ending 31 December 2020. 

Vulcan is expected to take over the plant from 1 January 2022 with intentions to expand and modernise the new asset. 

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The geothermal power plant in Insheim, Upper Rhine Valley, Germany.

 

Vulcan’s Managing Director Dr. Francis Wedin said the acquisition represents a “significant, first step in establishing Vulcan as a revenue generating, renewable energy producer.” 

“We will capitalise on our local knowledge and expertise to continue to make a positive contribution to the energy transition in the region, while discussions with multiple local stakeholders to provide renewable heating to communities and renewable power to the German grid are ongoing,” he added. 

Brine offtake agreement secured 

In addition to the acquisition, Vulcan executed a 20-year brine offtake agreement with geox GmbH.

The agreement enables Vulcan to purchase and extract lithium from geox, and return it to its plant for re-injection.

Subject to financing and drilling of a re-injection well, the offtake is forecast to start in December 2024.

Production expansion incoming

The acquisition and brine offtake agreement has given Vulcan the confidence to potentially increase production to meet significant customer demand for its sustainable lithium.

Vulcan said it will look to include more project areas to expand production studies and hopes to deliver a Phase 1 Definitive Feasibility Study (DFS) in the second half of 2022.

Market excitement over Vulcan's German acquisition was short lived, with shares popping 3.9% at open before fading -1.6% lower.

Consensus recommendation is Strong Buy, and based on Morningstar's fair value of $12.71, the stocks looks to be undervalued at $10.89.

 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University and was Vice President of the University Network for Investing and Trading (UNIT). He is an avid swing trader, and drawn to breakouts and technical set ups. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

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