3 reasons to buy this ASX 300 lithium share today

A leading investment analyst forecasts a big turnround for this well-funded ASX 300 lithium share.

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Key points
  • Vulcan Energy shares increased by 7% on Wednesday amid a global rally in lithium stocks.
  • The ASX 300 lithium miner recently announced a €2.2 billion funding package for its Lionheart project, potentially positioning it for strong future performance.
  • EnviroInvest’s Elio D’Amato has a bullish outlook on the stock.

S&P/ASX 300 Index (ASX: XKO) lithium share Vulcan Energy Resources Ltd (ASX: VUL) enjoyed a strong run on Wednesday.

Amid a broader rally among global lithium miners, Vulcan Energy shares closed up 7.05% yesterday, trading for $3.95 apiece. The ASX 300, meanwhile, ended the day down 0.12%.

Longer term, Vulcan Energy shares remain down 18% since this time last year, underperforming the 3.67% 12-month gains posted by the benchmark index.

Looking to the year ahead, however, EnviroInvest's Elio D'Amato believes Vulcan Energy will be much more rewarding for its shareholders (courtesy of The Bull).

Here's why.

A white EV car and an electric vehicle pump with green highlighted swirls representing ASX lithium shares

Image source: Getty Images

ASX 300 lithium share well-funded

"Vulcan recently secured a €2.2 billion ($A3.929 billion) financing package to fully fund phase one of its Lionheart project," said D'Amato, who has a buy recommendation on the ASX 300 lithium share.

Lionheart, he explained, is "Europe's first fully integrated, zero carbon lithium and renewable energy project". Which is the second reason you may want to add Vulcan Energy shares to your buy list.

According to D'Amato:

Funding enables immediate construction. The package includes €1.185 billion in senior debt, €204 million in German government grants, €150 million from KfW, plus strategic equity from HOCHTIEF, Siemens and Demeter.

As for the third reason Vulcan Energy shares could outperform in the months ahead, D'Amato said, "Phase one targets 24,000 tonnes of lithium hydroxide per year. With funding risk removed and execution underway, VUL's strategic positioning is materially stronger."

A word from Vulcan Energy's CEO

Vulcan Energy shares crashed 33.1% on 4 December, the day the ASX 300 lithium share emerged from the trading halt following its funding announcement.

However, investors weren't selling the company because of the new funding secured via European government grants and senior debt.

Rather, Vulcan Energy separately announced that it had raised around $710 million via an institutional placement. Investors were favouring their sell buttons on the day, as the new shares were issued for $4 apiece, 34.7% below the last closing price.

But Vulcan Energy CEO Cris Moreno was unapologetic about the discounted capital raise.

"The placement will enable Vulcan to transition from development phase into execution phase with project execution of Project Lionheart due to commence in the coming days," he said.

Moreno added that the ASX 300 lithium share is producing "a lighthouse project for Europe".

According to Moreno:

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.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Siemens Energy Ag. 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 Scott Phillips.

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