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Research Reports

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ALSTERRESEARCH

29 July 2022

Increasing positive momentum at local level, drilling to start soon

“Vulcan Energy Resources is experiencing an increasing positive momentum of the political backing, as Germany’s high dependence on Russian gas produces a more favorable climate towards geothermal energy.

This week, Vulcan Energy Resources has received approval for its 3D seismic program from eight local councils within its license area in Rhineland-Palatine. Also, the company is making progress on developing the Taro license, while adding additional exploration licenses to its portfolio. The favorable political environment should continue to provide tailwinds.”

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CANACCORD GENUITY CAPITAL MARKETS

27 July 2022

Community support building

“Vulcan has announced the positive outcome of a number of municipality and city council votes regarding acquisition of 3D seismic data for the Zero Carbon Lithium project in Germany. Our interpretation is that the local communities are keenly aware of the current energy situation in Europe and are beginning to see what we see in Vulcan: a business that can contribute to disconnecting from fossil fuel energy systems at the same time as developing an in-country lithium supply chain.

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AlsterResearch

24 June 2022

Stellantis takes share in  Vulcan, growing political backing – BUY

“Stellantis is taking an 8% share in Vulcan by an equity investment of AUD 76m (EUR 50m) for new shares. The carmaker already signed an offtake agreement with Vulcan last November. In our view, the Stellantis investment marks a major accolade and important signal that strongly supports the business case. In fact, there aren’t many disclosed investments by carmakers into lithium projects, apart from General Motors in CTR’s Hell’s Kitchen project in the US. The political backing, as just concluded in Landau was already overdue in the context of national decarbonization plans and the current energy crisis related to imports from Russia. We confirm our PT with AUD 20.00, equivalent to EUR 13.11 and reiterate to BUY.”

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CANACCORD GENUITY CAPITAL MARKETS

24 June 2022

Stellantis steps up for equity

First direct equity investment by an auto OEM… so far

“Vulcan has announced an A$74m strategic investment by Stellantis. The deal sees VUL issuing Stellantis ~11.5m shares (8% of VUL) at a price of A$6.62/sh, a 32% premium to the previous close. The investment follows on from Stellantis’ offtake agreement that it signed last year and as far as we are aware the first major auto to directly invest in a listed lithium equity. We believe the investment is a strong signal that Stellantis has done its due diligence and is backing Vulcan to bring production online. It is also something we had been looking for in the current market, being the large autos seeking to move downstream and ultimately making more direct investment to secure supply.”

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AlsterResearch

10 March 2022

Energy Crisis Underpins Vulcan’s Business Model – BUY

“With the Russian war against Ukraine and the associated sanctions, some of the economic consequences of this war are immediate, as certain metals like aluminum, nickel and palladium, but also crude oil and natural gas have seen steep price increases since the start of the war. Much likely, the push into renewable energies is about to accelerate as energy policy is reevaluated. Going in the same direction, the Fraunhofer Institute sees geothermal energy as a viable substitute for fossil energy sources and recommends action by policymakers and industry for an accelerated penetration. Overall, we expect the conditions for Vulcan to receive a further impetus not only due to the conflict, but also due to the fulfillment of climate targets. We confirm our PT with AUD 20.00, equivalent to EUR 13.22. We reiterate to BUY”

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AlsterResearch

15 February 2022

Dual Listing On FSE, Trading Commenced – BUY

“Vulcan received approval from the Ba Fin, the German Federal Financial Supervisory Authority to dual list on the Prime Standard of the Frankfurt Stock Exchange (FSE). Trading commenced today on 15 February 2022. By committing to higher transparency standards, Vulcan is gearing up for larger investors with stricter guidelines, which we view as a positive signal to the market and the equity story as a whole.”

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AlsterResearch

2 February 2022

Finalized Agreement With LG Energy, Dual Listing Ahead – BUY

“Vulcan has finalized its agreement with LG Energy Solutions (LGES), the world’s second-largest batteyr maker after China’s CATL. According to the definitive offtake agreement, LGES will purchase between 41,000 to 50,000t of battery grade lithium chemicals over initially 5 years, with a start of commercial delivery set for 2025.”

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Canaccord Genuity Capital Markets

24 January 2022

Lithium | 1H’22 – Higher For Longer

“Can 2022 eclipse 2021? 2022 is shaping up to be a stand out year in the lithium market, hard pressed given 2021 delivered impressive price rises across carbonate (431%),  hydroxide (340%) and spodumene (532%). However, after refreshing our SxD model for EV sales and lithium production we do not see an easy route for the market to balance throughout the year. This is being reflected in spot pricing recently pushing over US$50,000/t. We anticipate this pressure being maintained over at least the first six months of 2022 before additional supply reaches the market. In this report, we update our price forecasts and price targets for our global lithium coverage. “

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AlsterResearch

14 January 2022

Adding More Quality To The Project, BUY Confirmed

“Vulcan continues to deliver positive news flow, thus showing promising progress of its Zero Carbon Lithium project. Vulcan is partnering with Nobian, a leading European chlor-alkali producer. In a multi-phased agreement, both companies will assess the development and the subsequent joint operation of the CLP (Central Lithium Plant). In our view, Nobian’s experience and expertise will deliver a positive contribution to Vulcan’s ambitions for a commercial lithium production and thereby further lower the risk profile.”

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Canaccord Genuity Capital Markets

12 January 2022

A Marathon At Sprint Pace

“In mid-December, Vulcan agreed to acquire the Insheim geothermal plant and secured offtake rights for spent brine from the Landau geothermal plant. The acquisition, which was effective 1 Jan 2022, transitions Vulcan into an operator with revenues. However, more importantly, it is a platform for Vulcan to demonstrate its DLE technology in a commercial operation and how geothermal reservoirs operate (Li grades, flow rates, subsurface conditions).”

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AlsterResearch

10 December 2021

Once An Exploration Company, Now An Incumbent Operator; PT Raised, Remains BUY

“1 January 2022 marks a fundamental transition of Vulcan. The company will take over the operational geothermal plant in Insheim, Germany. Vulcan will be an incumbent operator, producing renewable power for approximately 8,000 households. Moreover, from now on, there is virutally no risk anymore that Vulcan could be circumvented by potential competitors when it comes to lithium production in the Upper Rhine Valley, as Vulcan has underpinned its indispensable role on the path to commercial lithium extraction.”

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Canaccord Genuity Capital Markets

9 December 2021

Executing To Plan

“Vulcan has announced it has acquired the Insheim geothermal plant in Germany for €31.5m (Funded through cash). The plant generated €2.9m in EBITDA (10.8x) in 2020. The plant has been operating below its 4.8MW nameplate capacity, producing ~2.9MW of power, however, Vulcan intends to expand and modernise the plant.”

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Canaccord Genuity Capital Markets

8 December 2021

Das Auto!

“Vulcan has signed a definitive offtake agreement with Volkswagen for 34-42kt of lithium hydroxide over five years from 2026. This follows on from the 81-99kt offtake agreeement signed with Stellantis at the end of November.”

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Canaccord Genuity Capital Markets

29 November 2021

Locking Away More Offtake

“Vulcan has announced that it has signed a binding offtake agreement with Stellantis for 81-99kt of lithium hydroxide over five years from 2026. We believe this is the largest hydroxide offtake agreement by tonnage signed globally to date and represents a significant step in Vulcan securing its customer pipeline with tier 1 customers.”

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Canaccord Genuity Capital Markets

3 November 2021

Back to Fundamentals

“We reiterate our support for the project given its potential to: supply lithium to the European market, fundamentally shift the lithium industry carbon cost curve; and produce high quality lithium products at low unit costs.”

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AlsterResearch

29 October 2021

Concerns in Short-Seller Report seem Unfounded; PT Confirmed, BUY

“We see nothing new in the accusations and confirm our view: Vulcan Energy provides a rare opportunity to benefit from the strongly growing lithium growth trajectory and, by the same token, to participate in a porject directly located in Germany, a heartland of automotive industry. We confirm our PT of AUD22.00, equivalent to EUR14.21, and reiterate our BUY recommendation. Upside 76%.”

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Canaccord Genuity Capital Markets

21 October 2021

Vulcan Securing Centre Stage in the European Lithium Race

“We have included the capital raising in our model, accounting for dilution, rolled forward our valuation period to DecQ’22 and increased our risking from 50% to 60% to account for the potential of a brownfields acquisition. We continue to focus on Vulcan’s rapid delivery of milestones as it moves towards becoming the leading European lithium producer. Our PT has increased 25% to A$21/sh (Prev. A$16.75/sh).”

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AlsterResearch

15 September 2021

AUD 220m Fresh Cash to Expedite Transformation; PT up, BUY Reiterated

“Due to the placement, Vulcan will have the scope to execute a targeted acqusition of exisitng brownfield energy and brine infrastructure. The addition capital also widens the leeway to act opportunistically, and thus to accelerate the process of ramping up production further. .. We raise our PT to AUD 22.00 (old PT:AUD 19.50), equivalent to EUR 13.65, and reiterate our BUY recommendation. Upside 38%.”

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Canaccord Genuity Capital Markets

13 April 2021

Not Unconventional… Untapped!

“We believe the Zero Carbon Lithium project represents an untapped lithium resource class which will be needed to meet expected lithium demand over the long term. The project proposes to use an innovative approach, extracting hot brines to generate geothermal power, then use Direct Lithium Extraction (DLE) and electrolysis to produce battery-quality lithium hydroxide.”

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AlsterResearch

15 September 2021

AUD 220m Fresh Cash to Expedite Transformation; PT up, BUY Reiterated

“Due to the placement, Vulcan will have the scope to execute a targeted acqusition of exisitng brownfield energy and brine infrastructure. The addition capital also widens the leeway to act opportunistically, and thus to accelerate the process of ramping up production further. .. We raise our PT to AUD 22.00 (old PT:AUD 19.50), equivalent to EUR 13.65, and reiterate our BUY recommendation. Upside 38%.”

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