Project update

Today VUL provided an update on its Zero Carbon Lithium project in Germany.

The first point covered was around the development works of its Direct Lithium Extraction (DLE) demo plant. At this stage, ~80% of all of the equipment is ordered and off site prefabrication works have started. VUL is expecting the demo plant commissioning stage to begin in the middle of this year.

VUL also confirmed that its DLE pilot plant was still operating and showing lithium recovery rates averaging ~94-95%. Importantly, this is well above the recovery rates used in the 2021 Pre Feasibility Study (which was assuming 88-90% recovery rates). The change might not sound big but the incremental difference makes a huge difference to project economics.

VUL also announced that it had kicked off discussions with BNP Paribas who would be helping secure project financing after the completion of the definitive feasibility study (DFS) which VUL expects to be completed in the second half of 2022.

Overall today’s announcement directly speaks to our Objectives #1 and #2 for VUL, as per our 2022 Investment Memo, which can be viewed here.

In particular, we think that the lithium recovery rates are important and should feed through to improved project economics when that DFS is completed. The 2021 PFS which delivered a €2.25 billion NPV was estimated using a US$14,925 lithium hydroxide price, compared to current spot prices of ~US$78,000.

We think there's a strong chance that VUL puts together a DFS with improved project economics, and hope that this leads to eventual project financing to propel its Zero Carbon lithium project into the development stage.