Vulcan to raise $200m at record high

Vulcan Energy Resources, the top-performing stock on the ASX last year, went into a trading halt on Tuesday and announced the launch of a placement to sophisticated, professional, and institutional investors to raise $200 million. In addition to the placement, Vulcan intends to offer eligible existing Vulcan shareholders the opportunity to participate in a share purchase plan to raise up to a further $20 million.

The stock last traded at a record high of $15.90, valuing the group at $1.7 billion. Shares will be offered at $13.50, a 15% discount to the last trading price.

Proceeds from the offer, together with existing cash, will be used to accelerate exploration initiatives and expand Vulcan’s dual renewable energy and lithium development strategy, with proceeds being applied to:

1) Targeted acquisition and refurbishment of exploration equipment:

• Enables Vulcan to accelerate exploration initiatives and ensure timely project execution

• Reduces the likelihood of delays resulting from supply chain disruptions caused by COVID-19

2) Targeted acquisition and upgrade of existing brownfield energy and brine infrastructure:

• Expands Vulcan’s dual development strategy by adding complementary existing renewable energy generation and future potential lithium production

• Brownfield nature of existing infrastructure significantly de-risks the development of Vulcan’s Zero Carbon Lithium Project

3) Expanded project development:

• Expanding the scope of current projects with the aim of increasing future targeted production to meet offtake demand

• Increased exploration data acquisition, land acquisition, and feasibility costs to accommodate the above

4) General working capital and costs of the offer:

• General working capital required to support significant investment in local expertise to accelerate on-the-ground development, and transactions cost associated with the offer

The rise of EVs, and Vulcan’s green credentials, saw the stock end up as the ASX’s top-performing stock for 2020. It has rocketed from 15 cents last year to its new record high this week.