Vulcan Energy Secures Major Funding Package for Flagship Lithium Project

Vulcan Energy AU0000066086

Vulcan Energy Resources has successfully finalized a comprehensive €2.2 billion funding package for its core lithium extraction venture, Project Lionheart. This financial milestone fully underwrites the planned construction phase, elevating the company into a select group of project developers with fully financed build-out stages. A significant cornerstone investment from construction giant HOCHTIEF is a central pillar of the arrangement.

The Phase One financing is composed of multiple, diversified components, ensuring robust backing for the project.

• Debt Financing: €1.185 billion in senior debt has been secured from a consortium of 13 financial institutions, which notably includes the European Investment Bank.
• Equity Raise: A fresh equity injection of €545 million was gathered from institutional and private investors.
• Strategic Capital: Additional funds were contributed by consortium partners and the KfW Commodity Fund.

The equity raise, equivalent to approximately 973 million Australian dollars, was executed in three distinct tranches:

• An institutional placement raising €137 million.
• An accelerated institutional entitlement offer generating €261 million.
• A retail entitlement offer for private shareholders, resulting in proceeds of roughly €147 million (263 million Australian dollars).

This multi-source approach provides a solid foundation for Lionheart's initial development phase.

Strategic Shift with HOCHTIEF's Expanded Role

The involvement of HOCHTIEF has evolved from a minority stake to a deep strategic partnership. The construction group has substantially increased its shareholding and will assume an active operational role during project execution.

Key elements of this strengthened alliance include:

• Increasing its equity stake from 6.7% to 15.41%.
• Subscribing to 58,035,714 new shares.
• Gaining the right to a board seat for as long as it maintains a minimum 10% holding.
• Serving as both a major shareholder and a construction-phase partner.

HOCHTIEF had committed to underwriting up to €130 million of any remaining volume from the retail entitlement offer. Its subsequent uptake of the available shares rendered a previously contemplated conditional placement unnecessary, simplifying Vulcan's capital structure.

Shareholder Register Sees Changes

In a related development, Citigroup Global Markets Australia and its affiliated entities ceased to be classified as a substantial shareholder as of January 2, 2026. This change is attributed to adjustments in securities lending activities and routine trading operations.

This shift coincides with the large-scale equity raising. The influx of new, long-term-oriented investors from the financing package is reshaping the shareholder base, providing a counterbalance to more tactical positions held by other market participants.

Financial Metrics and Market Outlook

Vulcan Energy shares are currently trading at a price-to-book ratio of approximately 3.3. This valuation positions the company:

• Above the industry average, which sits around 2.5.
• Below more dynamic growth peers, which trade at an average of about 5.3.

The average analyst price target for the stock stands at 8.08 Australian dollars, suggesting notable upside potential from recent price levels near 4.58 Australian dollars. For the 2024 fiscal year, the company reported a net loss of €42.4 million, a figure characteristic of a capital-intensive development stage prior to commercial production.

Path Forward: From Financing to Construction

With financing secured, the company's focus now shifts to execution and delivering on key project milestones. Management has outlined several objectives for the first quarter of 2026, including:

• The formal commencement of construction at central plant facilities.
• Initial drawdowns on the committed debt facilities.
• Continued advancement of the Lionheart project within the Upper Rhine Valley.

Lionheart, regarded as Europe's largest lithium resource, is designed to establish Vulcan as a key supplier for the European electric vehicle battery supply chain. Its "Zero Carbon Lithium" extraction process provides access to green financing sources unavailable to many competitors and aligns with increasingly stringent EU regulations on sustainable supply chains.

The combination of long-term funding, a strategic industrial partner, and a product profile favored by regulatory trends establishes a new framework for the equity's performance in the coming year.