Vulcan Energy Resources Ltd (ASX:VUL, OTC:VULNF, XETRA:VUL) has secured a €2.2 billion (about A$3.9 billion) financing package to fully fund Phase One of its Lionheart lithium and renewable energy project in Germany’s Upper Rhine Valley, enabling a final investment decision and the imminent start of construction.
Phase One will establish an integrated geothermal–lithium brine operation targeting annual production of 24,000 tonnes of lithium hydroxide monohydrate (LHM), enough to supply around 500,000 electric vehicle batteries per year. The project is also expected to deliver 275 gigawatt-hours (GWh) of renewable electricity and 560 GWh of heat annually over an estimated 30-year operating life.
Development will include geothermal production wells, surface facilities, a substation and pipelines, a renewable power and heat plant, a lithium extraction plant using the company’s proprietary VULSORB direct lithium extraction technology and a central lithium conversion plant. Most major contracts are already executed, with first production expected in 2028 following an anticipated 2.5-year construction period.
“Securing this financing package and taking a positive FID is a significant achievement in the history of Vulcan Energy. It will allow the company to transition from development phase into execution phase with the construction of the commercial scale supply chain for Lionheart," Vulcan Energy’s managing director and CEO, Cris Moreno, said.
“A lighthouse project for Europe, Lionheart is set to redefine lithium production, delivering Europe’s first fully domestic and sustainable lithium value chain. It will also provide a clean and reliable source of renewable energy for local communities and industries in Germany’s Upper Rhine Valley.
“I wish to acknowledge our financial and investment partners, including the European Investment Bank and international export credit agencies and commercial banks, KfW, and our high-quality strategic investors for their support of this project. In addition, I extend a sincere thanks to the federal, state and local governments of Germany, our offtake and major contract partners, shareholders and the entire Vulcan Energy team for their ongoing commitment and belief in Lionheart.”
Debt, grants and strategic equity underpin funding structure
The €2.2 billion financing package combines senior debt, government grants and strategic equity investments. PhaseOneCo, the asset-level project owner, has closed €1,185 million in senior debt across 13 lenders, including the European Investment Bank, export credit agencies and commercial banks. An additional €154 million in working capital and VAT facilities has also been secured. The debt matures in 2038 and features deferred repayments and cash-sweep mechanisms to support ramp-up.
Government support totals €204 million in non-dilutive grants, including €100 million for geothermal energy infrastructure and €104 million for lithium production. Payments will be tied to capital expenditure milestones, with construction required to begin by January 2026.
Equity commitments include a €150 million investment by KfW, granting the German government-backed institution a 14% interest in Vulcan’s German holding subsidiary. A consortium comprising HOCHTIEF, Siemens Financial Services and Demeter will invest €133 million for a 15% stake in PhaseOneCo.
HOCHTIEF strengthens role in Vulcan
HOCHTIEF’s total commitment comes to €169 million, including €39 million invested directly into the project and up to €130 million through Vulcan’s equity raising. This may lift its shareholding from 6.7% to as high as 15.7%.
HOCHTIEF will gain a board seat once it reaches a 10% holding and will also hold preferred EPCM contractor status for future expansion phases.
Major equity raising to complete funding package
To support the financing structure, Vulcan is raising up to €603 million (about A$1.08 billion) via an institutional placement and accelerated non-renounceable entitlement offer, complemented by a retail offer. The underwritten €528 million component will be issued at €2.24 (A$4.00) per share, adding up to 269 million new shares or roughly 115% of the current register.
Updated economics confirm strong project returns
At final investment decision, Phase One capital expenditure is estimated at €1,476 million including a 15% contingency.
On a 100% basis, the project is forecast to generate average annual revenue of €566 million and EBITDA of €427 million at a 75% margin. The post-tax NPV (8% discount rate) stands at €1,152 million, with a post-tax leveraged IRR of 16.6%.
With funding, regulatory approvals and key contracts in place, Vulcan is now progressing Lionheart as a flagship European lithium and renewable energy development designed to support a domestic, lower-carbon battery materials supply chain.