Vulcan Energy's Lionheart Supply Chain Nears Completion as Q1 Burn Rate Comes Into Focus

Vulcan Energy finalizes procurement for its €2B Lionheart lithium project, shifts focus to spending as construction begins, with Q1 results and cash burn under investor scrutiny.

The final piece of the procurement puzzle has fallen into place for Vulcan Energy’s Lionheart project. A multi-million-euro contract with French industrial specialist Mersen, covering a conversion plant at the Höchst site that will turn lithium chloride into lithium hydroxide, marks the end of the sourcing phase. That follows a major automation technology award to Siemens, meaning the supplier lineup is now effectively locked in.

Yet with construction now underway, attention is shifting sharply from procurement to spending. When Vulcan publishes its first-quarter results on Wednesday — just days after the official groundbreaking at Frankfurt-Höchst — investors will be watching the cash outflow closely. The previous quarter showed an operating cash burn of €7.2 million, but that figure is expected to rise significantly as parallel drilling campaigns at Schleidberg and Trappelberg accelerate. The main drilling phase is scheduled for the second half of 2026.

The project carries a total price tag north of €2 billion, with financing already secured. A €2.2 billion package assembled in December 2025 draws on bank loans, government grants and equity, backed by a consortium of 13 financial institutions including export credit agencies from Denmark, France, Canada, Italy and Australia, alongside the European Investment Bank and commercial lenders such as BNP Paribas, ING and UniCredit. Construction group Hochtief recently took a stake of just over 15% and now has a seat on the supervisory board.

On the offtake side, the picture is equally clear. Around 72% of planned production for the first decade is tied up in binding contracts. Stellantis has committed to 128,000 tonnes over ten years, Glencore to between 36,000 and 44,000 tonnes over eight years, LG Energy Solution to 31,000 tonnes over six years, and Umicore to 23,000 tonnes over six years. The Glencore deal was the most recent addition, bringing the offtake roster to four major names.

The two-stage production process is straightforward in concept. In Landau, lithium chloride brine is extracted from geothermal sources in a process billed as CO?-neutral. That brine is then shipped to Frankfurt, where electrolysis converts it into lithium hydroxide monohydrate (LHM). Phase one targets an annual capacity of 24,000 tonnes of LHM — enough for roughly 500,000 electric vehicle batteries — with 275 gigawatt-hours of renewable electricity and 560 gigawatt-hours of heat for local customers as byproducts. The project has a 30-year operating life.

The market backdrop is stable but unexciting. Battery-grade lithium hydroxide was recently priced at around $19,800 per tonne CIF Europe, edging up slightly week-on-week but showing no dramatic swings. For a project with long-term offtake agreements, that is a workable environment.

The stock has been volatile, reflecting the risks inherent in the build phase. Shares last traded at $2.48, up nearly 27% over the past month but slightly in the red since the start of the year. The next major milestone after Wednesday’s quarterly report is the annual general meeting on 28 May in Perth, where CEO Cris Moreno will update shareholders on Lionheart’s progress. Management has already flagged that reaching the 24,000-tonne annual production target by 2028 will require additional capital, keeping the prospect of dilution firmly on the agenda.