Why is the Vulcan share price lagging the ASX 200 today?

A quarter of milestones not enough to put Vulcan in the green today…

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Key points

  • The Vulcan Energy Resources share price is trading 2.6% lower to $8.36 following its quarterly report 
  • Several accomplishments during the quarter indicate Vulcan is progressing with its roadmap 
  • Around 18.94 euros were consumed from the company's cash balance during the period 

It appears the Vulcan Energy Resources Ltd (ASX: VUL) share price is not getting the attention it might have wanted amid the release of its quarterly activities report.

As we enter the afternoon, the lithium project developer is being valued at $8.37 per share, down 2.3%. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is up 0.99% to 7,332.9 points. Furthermore, the blame cannot be placed on the sector — the materials segment of the market is currently the best performing.

So, let’s take a look at the latest quarter for Vulcan.

Vulcan energy share price wanes amid cash-burning

  • Receipts from customers of 2.214 million euros, up from zero
  • Commenced pre-fabrication of Direct Lithium Extraction (DLE) demonstration plant
  • Exploration license area up 50% to more than 1,000 square kilometres
  • Binding lithium hydroxide offtake agreement signed with LG Energy Solutions
  • Began trading on the Frankfurt Stocks Exchange
  • Finished the quarter with cash and cash equivalents totalling 115.61 million euros

What else happened during the quarter?

The quarter gone by was yet another eventful period for the upcoming lithium aspirant. Importantly, it involved several accomplishments that progress the company’s lithium production ambitions.

During the quarter, Vulcan entered into a memorandum of understanding with chemicals company Nobian. Essentially, the agreement will see the two explore the feasibility of bringing a central lithium plant to life in Frankfurt, Germany.

In another key update, Vulcan is moving closer to having its demo plant up and running. This will serve as a 1:200 scale representation of the company’s commercial plans for its Zero Carbon Lithium Project.

However, the exploratory operations come at a cost. Due to Vulcan not having its core operations cemented yet, the company burnt through 18.94 euros during the quarter. This might be weighing on the Vulcan Energy share price today.

What did management say?

Commenting on the progression of the company, Vulcan managing director Dr Francis Wedin said:

We are swiftly capitalising on strategic opportunities to ensure timely project development. The recent appointment of Dr Günter Hilken and Mr Mark Skelton complement the existing key skills of our Board, at this critical juncture in our project development. I would like to thank the entire Vulcan team for their unwavering commitment to the Zero Carbon Lithium™ Project, as we remain focused on delivering the Definitive Feasibility Study (DFS) in the second half of the year, ahead of our targeted phase one commercial lithium production in 2024.

In addition, Dr Wedin highlighted the pleasing numbers from Vulcan’s operational DLE pilot plant. So far, the company has found lithium recovery rates averaging between 94% to 95%.

Vulcan share price snapshot

Despite some ASX-listed lithium players continuing their upward trajectory this year, the Vulcan share price has had no such luck. In 2022, the project developer has experienced a 22.5% fall in its valuation.

At present, ASX-listed Vulcan boasts a market capitalisation of $1.12 billion.

Motley Fool contributor Mitchell Lawler 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.

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