Vulcan Energy: EU-backed investment agreement in Vulcan Zero Carbon Lithium™ Project

Vulcan Energy: EU-backed investment agreement in Vulcan Zero  Carbon Lithium™ Project

Investment agreement signed with EU-backed EIT InnoEnergy for
staged cash investments into Vulcan, with initial tranche valued at
A$0.51/share, equivalent to the 15-day VWAP and at an 8.5%
premium to 30-day VWAP, subject to shareholder approval.

Direct investment by EIT InnoEnergy marks a vote of confidence in
the Vulcan Zero Carbon Lithium™ Project by a prominent EU-backed
body mandated to lead the European Battery Alliance.

This follows Vulcan recently announcing a separate agreement with
EIT InnoEnergy to assist with securing future large-scale project
development funding, including from public sources, and to assist
with fast-tracking project approvals.

Investment to be used by Vulcan towards its Pre-Feasibility Study (PFS) programme.

Vulcan Managing Director, Dr. Francis Wedin, commented: “Following our
recent announcement of project support by EIT InnoEnergy, we are delighted
to also welcome them as a direct investor in Vulcan. This investment in
Vulcan and its team is a critical vote of confidence by a prominent EU-backed
organisation. The strategic alignment of both organisations will be important
in securing funding needs and streamlining approvals for future large-scale
project development. It is another significant step towards achieving our goal
of supplying the EU battery market with Zero Carbon Lithium™ hydroxide
Diego Pavia, CEO of EIT InnoEnergy noted: “Accelerating the development
of a strong European battery industry is a cornerstone of the European
recovery plan recently issued by the European Commission. It will be one of
the key differentiators for batteries ‘made in Europe’ to be produced
sustainably with the goal of complete carbon neutrality at every stage of the
value chain. Therefore, making Vulcan’s mission of carbon-neutral lithium
extraction in the Upper Rhine region in Germany is of utmost strategic
importance and has our full support, financially and beyond.”

Recent activities by the Company:

  • Completion of $4.8m institutional and ESG investor equity placement.
  • Securing EU backing for the Vulcan Zero Carbon Lithium™ Project.
  • Presentation to European Commission and European Investment Bank Vice-Presidents, alongside VW, BASF, EDF.
  • Recruitment of German lithium chemistry & geothermal lithium expert Dr. Katharina Gerber to the Vulcan Board.
  • Appointment of strategic communications expert Ranya Alkadamani to the Vulcan Board.
  • Agreement to acquire 3D seismic package to accelerate project development.
  • Commencement of lithium extraction test work for PFS.
  • Positive Scoping Study.

Material terms of agreement
EIT InnoEnergy will provide the following staged payments to Vulcan Energie Ressourcen GmbH, the
Company’s 100%-owned German subsidiary (Subsidiary):

  1. an initial payment of €150,000 (Tranche 1, equivalent to $245,534 at current exchange rates).
  2. further payment of €50,000 after approval by EIT InnoEnergy of the financial and performance reporting related to expenditure of Tranche 1 funding on approved work packages Tranche 2).
  3. a final settlement of €50,000 of approved funding after approval by EIT InnoEnergy of the final financial and performance reporting for the expenditure of Tranche 1 and Tranche 2 funding on approved work packages for the project (Tranche 3).

All payments shall be made within 30 calendar days following the relevant trigger. Based on its current timelines for the Vulcan Zero Carbon Lithium™ Project, the Company expects to receive all three Tranches by the end of 2020.
EIT InnoEnergy is not be obliged to make any of the subsequent payments if the Subsidiary fails to fulfil any relevant obligations under the agreement (including cost reporting obligations).

The Subsidiary must use the funding in accordance with a project plan and project budget approved by EIT InnoEnergy. EIT InnoEnergy may reduce (or, with the Company’s agreement, increase) the amount of funding provided under Tranche 3 depending on the needs of the Vulcan Zero Carbon Lithium™ Project and the Subsidiary’s compliance with its reporting requirements.

In the event that the Subsidiary does not use the Tranche 1 or 2 funding (in whole or in part) for the purpose of the Vulcan Zero Carbon Lithium™ Project, the Subsidiary must return the unused amounts to EIT InnoEnergy within 30 days of EIT InnoEnergy requesting that the funds be returned.

Issue of Warrants
The Company has agreed to grant Warrants to EIT InnoEnergy on payment of each Tranche of funding,
in the following amounts:

  1. Tranche 1: 479,519 Warrants (being the Australian dollar amount of the Tranche 1 funding, divided by $0.512, which was the volume weighted average price (VWAP) for Shares over the last 15 days on which Shares were traded immediately prior to execution of the funding agreements; and
  2. Tranches 2 and 3: the number equal to the Australian dollar amount of the relevant Tranche of funding, divided by the VWAP for Shares over the last 15 days on which Shares were traded immediately prior to EIT InnoEnergy paying the relevant Tranche of the funding.

The Warrants will convert into Shares on a one for one basis on exercise.
The Warrants can only be exercised:

  1. after 1 September 2021; and
  2. once the agreed work packages and final settlement of the Tranche 3 funding have been completed.

Once those things have occurred, the Warrants are exercisable at any time on or prior to expiry on the
date which is 3 years from the date of grant.
The payments will be the exercise price for the Warrants, payable on grant of the Warrants rather
than on exercise. No further amount will be payable by EIT InnoEnergy to exercise the Warrants.
If any part of the funding is clawed back by EIT InnoEnergy under the terms of the funding agreements,
a corresponding number of the Warrants will be cancelled.
A summary of the other material terms and conditions of the Warrants is set out in the Schedule to
this announcement.

This announcement has been approved for release by the Board
Robert Ierace
Chief Financial Officer – Company Secretary
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