Next Investors logo grey

Is Vulcan ASX Presenting a Buying Opportunity?


Published 06-NOV-2020 10:00 A.M.


2 minute read

Vulcan Energy Resources Ltd (ASX:VUL | FWB: 6KO) is our 2020 Top Pick of the Year and is currently the biggest position in our portfolio.

We think there is a lot more to come for VUL and agree with prominent German research house Alster Research House calling a price target of $2.55.

We believe there may now be an entry opportunity given that VUL:

  1. Has been trading strongly for weeks at around $1.20
  2. Is fully funded with $5M in the bank and has upcoming catalysts
  3. Seen a small share price dip from general US election jitters in the market

This dip over the last few days (on low volumes) could provide an attractive entry point into what we believe is one of the best small cap lithium stocks in Europe, especially if the global markets fire back up post the US election.

The European Union has set aggressive goals to be climate neutral by 2050.

One trillion euros has been earmarked to decarbonise the energy sector and roll out cleaner, cheaper and healthier forms of transportation.

Vulcan is developing Europe’s biggest Lithium resource using its world first, IP protected “Zero Carbon LithiumTM extraction process to produce both renewable geothermal energy and battery quality lithium hydroxide, from the same deep brine source.

We first took a position in VUL because of the carbon neutral process, magnitude and quality of the Vulcan Lithium Brine Project, proximity within the EU and access agreements in place, and we believe it is still significantly undervalued compared to its peers.

Vulcan is positioned to play an integral role in the European Union’s plan to establish a consistent and environmentally friendly European supply chain of lithium.

Not only is it the right time, VUL’s project is in the right place.

Vulcan’s lithium project is roughly 600km from Tesla’s soon to be completed Berlin Gigafactory.

Tesla CEO Elon Musk has stated the company will be making a lot more electric vehicles (EV) and batteries, with its Gigafactories to directly purchase battery metals like Lithium.

Tesla isn’t the only car manufacturer in Vulcan’s vicinity that will be looking for battery metal suppliers. There are no less than 18 battery factories dotted around Vulcan’s project in Europe, at a negligible distance for supply chains.

VUL recently added a former Tesla Director, an ex direct report to Elon Musk, to its team.

With the company moving towards first commercial production, we believe VUL is positioned well to make big long-term gains.

There are several catalysts on the horizon, including the PFS, that should see the company finish the year in a strong position.

See our full VUL company overview page by clicking the link below including why we invested in VUL, all our past articles about VUL and links to other VUL research:

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.