Stellantis to become a substantial shareholder, invests $76MASX:VUL Jun 24, 2022
Investment Memo: VUL 2022
Objective #2: Secure Project Financing
Objective #5: More Strategic Partnerships
Vulcan Energy Resources (ASX:VUL) today announced that it has agreed to a A$76M (€50M) equity investment from Stellantis N.V., plus a 5-year extension to their offtake agreement.
This investment marks the world’s first upstream investment by a top tier automaker into a listed lithium company.
We were very surprised (positively) by this announcement - having a key offtaker as a substantial shareholder is a huge win for VUL, and a strong signal to the broader lithium market that has been rattled in recent weeks.
Not to mention a material cash injection at a time of tightening capital markets.
Once the fully paid ordinary shares are issued, Stellantis will become the company’s second largest shareholder with a 8% shareholding. The shares are to be issued at the 30-day Volume Weighted Average Price of A$6.622 (€4.367) per share, representing ~11.45M shares.
Stellantis is one of the world’s leading automakers and has 14 vehicle brands and two mobility companies — Abarth, Alfa Romeo, Chrysler, Citroën, Dodge, DS Automobiles, Fiat, Jeep®, Lancia, Maserati, Opel, Peugeot, Ram, Vauxhall, Free2move and Leasys.
It also has one of the largest electrification and decarbonisation plans of any automaker globally: to reach 100% of European passenger car sales to be battery electric vehicles (BEV) by 2030.
On that note, Carlos Tavares, Stellantis CEO, said, “this highly strategic investment in a leading lithium company will help us create a resilient and sustainable value chain for our European electric vehicle battery production”.
Today’s announcement sees further progress against two of our 2022 objectives for VUL, per our Investment Memo:
Objective #2 - Secure Project Financing
While VUL is already financed through to completion of its DFS, it plans to use the Stellantis proceeds for its planned production expansion drilling in its producing Upper Rhine Valley Brine Field.
Objective #5 - More strategic partnerships
VUL had already locked away much of its first five years of its initial forecast lithium production, including with Stellantis. Today’s announcement has extended that binding lithium hydroxide offtake agreement with Stellantis by five years, to 2035.