Vulcan Energy Resources Ltd (ASX: VUL) has made a final investment decision on its Lionheart lithium and renewable energy project in Germany, and has announced a $3.9 billion financing package to bring it into production.
The company announced on Wednesday that Phase 1 of the Lionheart project will produce 24,000 tonnes of lithium hydroxide monohydrate per year, sufficient to manufacture approximately 500,000 electric vehicle batteries.
It would also produce about 275 gigawatt hours of renewable energy and 560 gigawatt hours of heat for local consumers per year, over an estimated 30-year project life.
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Debt and equity to finance project
Vulcan, which is backed by Australian iron ore magnate Gina Rinehart, said the phase one financing package included $2.1 billion in debt funding from a syndicate of 13 financial institutions, including the European Investment Bank.
The company would also raise $1.1 billion in an equity raising, comprised of a $245 million institutional placement at $4 per share, a $465 million institutional entitlement offer, and a $366 million retail offer open to existing Vulcan shareholders.
The raising is at a deep discount to Vulcan's trading price at market close yesterday, with the company's shares finishing at $6.13 on Tuesday.
Vulcan Managing Director Cris Moreno said securing the financing and making the decision to proceed with the project were significant milestones for the company.
A lighthouse project for Europe, Lionheart is set to redefine lithium production, delivering Europe's first fully domestic and sustainable lithium value chain. It will also provide a clean and reliable source of renewable energy for local communities and industries in Germany's Upper Rhine Valley.
The project involves stripping the lithium from hot brine sourced from underground, with energy and heat also produced as part of the process.
In addition to securing debt funding from the European Investment Bank, the project has also been supported by Export Finance Australia with $214 million in debt funding, Export Development Canada with $357 million, and the Export and Investment Fund of Denmark with $179 million.
Construction to start imminently
Vulcan said it had entered into the majority of the major project contracts for the construction of Lionheart Phase One and had received all of the major construction permits for the project.
The company said on Wednesday it expected the project to generate an average of €566 million in revenue per year and €427 million in EBITDA.
Vulcan shares were in a trading halt on Wednesday while the capital raising plans were finalised.
Ms Rinehart's Hancock Prospecting owned a 6.49% stake in Vulcan before the capital raising plans were announced.
