The Vulcan Energy Resources Ltd (ASX: VUL) share price has been an exceptional performer in 2021.
With the lithium developer’s shares currently trading at $10.24, this means they have gained 270% since the start of the year.
Where next for the Vulcan share price?
Incredibly, despite its impressive rise in 2021, one leading broker believes the Vulcan share price could double in 2022.
According to a recent note out of Canaccord Genuity, its analysts have retained their speculative buy rating and $21.00 price target on the company’s shares.
This implies staggering potential upside of 105% over the next 12 months.
What did the broker say?
Canaccord was pleased to see Vulcan recently acquire the Insheim geothermal plant in Germany for 31.5 million euros. It sees this as a significant derisking event and expects it to accelerate Vulcan’s development plans as it now has a brine source for an early stage DLE plant.
Another recent positive that Canaccord highlights is the company’s offtake agreement with the Landau geothermal plant for access to brine from the operation. It expects this to boost volumes.
All in all, based on recent developments, the broker suspects that Vulcan could be producing more lithium than expected and sooner than first anticipated. The broker explained:
Given the announced acquisition and offtake agreement, Vulcan aims to deliver an updated DFS in the second half of 2022. This will likely entail an up-scaled plant with possible early production from the newly acquired facilities, in our view.
We had previously forecasted first production in 2025, reaching its full 40ktpa production rate in 2028 and this now may prove to be conservative. Vulcan has signed offtake agreements which if delivered at the top end of estimates would exceed 40ktpa.
Vulcan now has a history of moving the Zero Carbon Lithium project forward and has now significantly derisked its profile as it has moved from zero wells under its control to effectively controlling four. On our estimates, the current plants would be pumping 4-6ktpa of lithium back underground.
Based on the above, the Vulcan share price could be one to watch closely again in 2022.