The Vulcan Energy Resources Ltd (ASX: VUL) share price won't be going anywhere on Tuesday after the clean lithium focused mineral exploration company requested a trading halt.
Why is the Vulcan share price in a trading halt?
Less than one week after advising that it was not conducting a capital raise at this point in time, Vulcan requested a trading halt this morning to launch one.
According to the release, Vulcan Energy is seeking to raise approximately $100 million via the placement of approximately 15.4 million new fully paid ordinary shares to sophisticated and professional investors. The placement is not underwritten.
It is aiming to raise the funds at a fixed offer price of $6.50 per new share, which represents a 17.1% discount to its last closing price of $7.84.
Management notes that the placement will provide the funding to support it through to the final investment decision at its Zero Carbon Lithium Project in Germany.
Where will it spend the funds?
It intends to use $50 million of the funds for project development, permitting, feasibility study costs and overheads.
This includes the definitive feasibility study (DFS), which is due mid-2022 and includes the acquisition of exploration data, the permitting of the Zero Carbon Lithium Project, and completion of studies towards permitting and development.
The company also intends to put $30 million towards drill site acquisition and preparation and $20 million will be used for strategic opportunities to accelerate project development. In respect to the latter, management advised that Vulcan is assessing options to acquire existing infrastructure in Germany to accelerate development.
What is the Zero Carbon Lithium Project?
The Zero Carbon Lithium Project is expected to be Europe's largest lithium operation and run 100% on clean geothermal energy.
Management plans to use its unique Zero Carbon Lithium process to produce both renewable geothermal energy, and lithium hydroxide, from the same deep brine source.
By doing so, it believes it will be addressing EU market requirements for lithium by reducing the high carbon and water footprint of production, and total reliance on imports, mostly from China.
Overall, it believes its resource will be able to satisfy Europe's needs for the electric vehicle transition, from a zero-carbon source, for many years to come.
