The Vulcan Energy Resources Ltd (ASX: VUL) share price has been having a very tough time in recent weeks.
So much so, the lithium developer's shares are down approximately 22% since this time last month.
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What's going on with the Vulcan Energy share price?
Investors have been selling down Vulcan Energy and other ASX lithium shares this month amid concerns over falling lithium prices.
Current spot prices are down significantly since the start of the year and have been tipped to continue their decline in the coming months and years.
This is being driven by a supply/demand imbalance, which Bank of America expects to lead to the lithium market being oversupplied in 2024 and 2025. This is particularly bad timing for a company like Vulcan Energy, which is aiming to commence production at its Zero Carbon Lithium project in Germany in the latter year.
In light of this, the market has been overlooking the progress the company is making at the project and selling down the Vulcan Energy share price.
What progress is being made?
Vulcan's progress includes the phase one bridging study, which is on track for completion in October. This bridging study is being completed together with Hatch, who also completed the PFS and DFS.
Management notes that several key value improvements not included in the DFS from February have been identified, which it believes could drive further economies of scale. This includes the reduction of the planned two Lithium Extraction Plants (LEPs) and two geothermal power plants, to one central LEP and geothermal power plant with 24 ktpa lithium hydroxide equivalent capacity.
Vulcan also recently released a mineral resource update which resulted in the largest lithium resource in Europe increasing further in size. Vulcan's lithium resource has increased to 27.7 million tonnes of contained lithium carbonate equivalent (LCE) @ 175 mg/L.
But just how profitable will this operation be when in 2025 with lithium prices potentially much lower than current levels? We'll have to wait and see.
