The Vulcan Energy Resources Ltd (ASX: VUL) share price has flown out of the gates on Friday morning.
At the time of writing, the lithium developer's shares are up 25% to $6.21.
Why the Vulcan share price rocketing higher?
Investors have been fighting to get hold of the company's shares this morning after it announced a major investment from a top tier automaker.
According to the release, Stellantis, the company behind car brands including Chrysler, Citroën, Fiat, Maserati, and Peugeot, has invested A$76 million into Vulcan.
While this news is positive enough, it gets better. Stellantis is paying over the odds to become Vulcan's second largest shareholder. The two parties agreed a price of $6.622 per share, which represents a 32% premium to the Vulcan share price at yesterday's close.
In addition, Stellantis has extended its binding lithium hydroxide offtake agreement by five years to 2035. Starting in 2026, the automaker will be purchasing a minimum of 81,000 tonnes and a maximum of 99,000 tonnes of battery grade lithium hydroxide over a duration of 10 years.
The release reveals that the proceeds from this investment will go towards Vulcan's planned production expansion drilling in its Upper Rhine Valley Brine Field (URVBF).
'A strong statement'
Vulcan's Managing Director, Dr Francis Wedin, believes this is a "strong statement" regarding the sourcing of sustainable battery materials. He commented:
Stellantis' significant investment in Vulcan and the Zero Carbon Lithium Project represents a strong statement by one of the world's largest automakers regarding sustainable and strategic sourcing of battery materials.
We are fully aligned with Stellantis' decarbonisation and electrification goals, which represent some of the most ambitious in the industry. It is encouraging to see a leading automaker investing in local, decarbonised lithium production for electric vehicles. As our largest offtaker, we look forward to deepening our relationship with Stellantis as a substantial shareholder in Vulcan and our Zero Carbon Lithium business.
Stellantis' CEO, Carlos Tavares, added:
Making this highly strategic investment in a leading lithium company will help us create a resilient and sustainable value chain for our European electric vehicle battery production. We continue our quest of forming strong relationships with partners who share our values as we collectively fight against global warming and provide clean, safe and affordable mobility to our customers.
