Why the Vulcan (ASX:VUL) share price is jumping 11% on Monday

This lithium share is starting the week strongly…

| More on:
A man takes his dividend and leaps for joy.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Vulcan Energy Resources Ltd (ASX: VUL) share price has returned from its trading halt and is shooting higher.

At the time of writing, the lithium developer’s shares are up 11% to $12.87.

Why is the Vulcan share price charging higher?

Investors have been bidding the Vulcan share price higher today after it released an announcement relating to a new binding offtake agreement.

According to the release, Vulcan has signed a binding lithium hydroxide offtake agreement with Umicore. It is a leader in cathode materials production used in lithium-ion batteries for electrified transportation.

The agreement is for an initial five-year term, with the start of commercial delivery set for 2025. Umicore will purchase a minimum of 28,000 tonnes and a maximum of 42,000 tonnes of battery grade lithium hydroxide over the duration of the agreement. Pricing will be based on market prices on a take-or-pay basis.

The release notes that in Nysa, Poland, Umicore has built the first cathode materials plant in Europe. The plant is expected to start production around year end of 2021 and the materials that will be produced in Nysa will be sold to battery cell makers who produce the batteries for electric vehicles.

Management commentary

Vulcan’s Managing Director, Francis Wedin, commented: “Umicore, a leading cathode manufacturer and the first in Europe, will be a valuable offtake partner for Vulcan, as a direct consumer of Vulcan’s lithium hydroxide products.”

“With our recent announcements of agreements with LG Energy Solution and Renault Group, we now have a diversified mix of offtakers from the cathode, battery and automotive sectors, with further agreements expected in the near term.”

“Importantly, Umicore also shares our ambition to decarbonise the battery supply chain in Europe, by building a carbon neutral cathode plant in Poland. We look forward to a long and fruitful cooperation with Umicore as we progress our Zero Carbon Litihum Project,” he added.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

ASX share price rise represented by investor riding atop leaping lion
Share Gainers

Why has the Liontown share price roared 30% higher in a week?

What's driving Liontown shares higher lately?

Read more »

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.
Share Gainers

Why Graincorp, Imugene, iSelect, and Mayne Pharma shares are racing higher

These ASX shares are on form on Wednesday...

Read more »

A woman blowing gold glitter out of her hands with a joyous smile on her face.
Share Gainers

Guess which ASX mining share is rocketing 30% on a ‘significant new discovery’

Meeka Metals has set off in vertical fashion today.

Read more »

A woman standing on a path flanked by big green trees is surrounded by colourful balloons tumbling from the sky.
Share Gainers

Why did the Pure Hydrogen share price pop 21% today?

Why did Pure Hydrogen shares have such an amazing day today?

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Share Gainers

Why Coronado Global, Lake, Megaport, and REA shares are storming higher

These ASX shares are having a good day...

Read more »

A girl runs along with her kite flying high in the sky.
Share Gainers

3 ASX mining shares rocketing by more than 20% today

Up we go in another day of double-digit gains for the ASX metals and mining equity bucket.

Read more »

Two men laughing while bouncing on bouncy balls
Share Gainers

Why is the BrainChip share price bouncing 6% higher today?

What's causing the BrainChip share price to pop on Tuesday?

Read more »

A graphic showing a businessman running up a white upwards rising arrow symbolising the soaring Magellan share price today
Share Gainers

Why is the Lake Resources share price powering up 17% today?

What's going on with the Lake Resources share price on Tuesday?

Read more »