The Vulcan Energy Resources Ltd (ASX: VUL) share price is back on form again and is storming higher on Wednesday.
At one stage today the clean lithium developer’s shares were up as much as 12.5% to $8.19.
The Vulcan share price has since given back some of these gains but remains up 8.5% to $7.90 at the time of writing.
Why is the Vulcan share price storming higher?
Investors have been buying Vulcan shares today after it responded to media speculation that it could be about to undertake a capital raising.
According to the release, Vulcan is not conducting a capital raise at this point in time. Instead, it advised that it is undertaking a non-deal roadshow with potential investors.
The AFR had suggested that this roadshow could be a pre-requisite before launching a capital raising to fund future work at its lithium project in Europe.
Chief among these will be the starting capital cost of 226 million euros for geothermal energy plants and 474 million euros for direct lithium extraction and processing plants. After which, its phase two total capital expenditure is forecast to be 1.14 billion euros.
This means its full project costs with no phasing could come to a sizeable 1.74 billion euros by the time it is operational in 2024. But investors certainly believe this investment will be worth it based on its pre-feasibility study (PFS).
According to its announcement, the Zero Carbon Lithium Project’s first PFS demonstrates strong potential to develop a cutting edge, combined renewable energy and lithium hydroxide project, in the centre of Europe, with net zero carbon footprint.
The study also reveals that the project has an after tax net asset value of 2.25 billion euros. This equates to approximately A$3.5 billion.
What’s next for Vulcan?
The company’s main focus in 2021 will be the Definitive Feasibility Study (DFS) work at the project.
It is also working on permitting, the scale up of lithium extraction test-work, and advancing its current discussions with European lithium offtakers.
The Vulcan share price is now up 185% since the start of 2021.
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Returns as of 6th October 2020
More reading
- 5 lithium shares that are fast-charging up in 2021
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- Why Cleanaway, Crown, Pro Medicus, & Vulcan shares are tumbling lower
- Why Vulcan (ASX:VUL) and these ASX shares are smashing the market in 2021
- We have lift-off: Vulcan Energy (ASX:VUL) share price hits new heights
Motley Fool contributor James Mickleboro 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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