Vulcan Energy Resources Ltd [ASX:VUL] announced brine sample results that reveal high-grade lithium with low impurities causing the VUL share price to spike in early trade before settling flat.
The Vulcan share price shot up as high as $6.25 a share in early trading but have settled flat at $5.56 a share at time of writing, down slightly at -0.5%.
Earlier, early trading saw Vulcan shares up as much as 11%.
This follows our earlier coverage of another lithium stock — Lithium Australia NL [ASX:LIT] — and its rising share price on today’s news of an accepted patent grant.
What was in Vulcan’s ASX announcement?
Here is a brief overview of VUL’s announcement:
- Vulcan collected a 10,000-litre brine sample from a recently drilled geothermal well in the Upper Rhine Valley.
- The brine sample returned a high-grade of 214 mg/L Li that will be used in Direct Lithium Extraction (DLE) pilot test work.
- According to Vulcan, brine data now dates back to 1980 and shows consistent Li values in the Upper Rhine Valley brine.
- Brine analysis revealed ‘exceptionally low impurities relative to other high-lithium geothermal brines worldwide’.
- The sample data will be incorporated into Vulcan’s resource estimation update work later in the year as part of its Definitive Feasibility Study work for Vulcan’s Zero Carbon Lithium project.
What did Vulcan Energy management have to say?
Vulcan Managing Director Dr Francis Wedin commented:
‘It is encouraging to observe high grade lithium, with exceptionally low impurities, in geothermal brine analysis such as this from our sampling efforts in the URVP.
‘The low impurities are important as this increases the effectiveness of our DLE techniques.
‘This data collection and analysis is an important part of our strategy to become a major supplier of our unique Zero Carbon Lithium to the European battery electric vehicle market.’
Vulcan Energy’s big February
As Selva Freigedo covered in Money Morning last month, Vulcan Energy has been making moves to start 2021.
Vulcan raised $120 million before costs in February to accelerate development of its Zero Carbon Lithium project.
The company then also announced the purchase of GeoThermal Engineering GmbH (GeoT), a geothermal sub-surface consultancy.
Vulcan’s other moves featured an agreement with DuPont to advance Direct Lithium Extraction.
Vulcan Energy also updated the market in February that it entered a binding agreement to acquire a 100% stake in Global Geothermal Holding UG.
Vulcan Energy share price outlook
While the VUL share price tumbled over the recent weeks, the Vulcan share price is still up over the past year.
Year-to-date, Vulcan Energy shares are up 100% and 2,600% over one year.
This steep upward trajectory mirrored the recent fortunes of lithium stocks worldwide.
For instance, according to Bloomberg, the US GlobalX Lithium and Battery Tech ETF is up 130% since March last year.
With the world shifting away from carbon and tilting more and more towards renewables, the lithium sector will play a key role in the new green energy world.
But the question is how much runway do Vulcan Energy shares have left?
Has the market already priced in Vulcan’s place in the green energy transition or can the shares move higher?
As I’ve said regarding Vulcan’s share price outlook back in January, investors shouldn’t get too ahead of themselves.
Yes, the company has an exciting opportunity on its hands with lots of potential growth in store.
But there’s still a lot of work ahead for Vulcan.
While today’s ASX announcement was positive, it will still only serve as data to be ‘incorporated into Vulcan’s resources estimation update work later in the year as part of Definitive Feasibility Study work for the Vulcan Zero Carbon Lithium project.’
Once the DFS is in place, then we will know a lot more.
Finally, if you’re interested in finding out more about lithium stock investment opportunities, then make sure to check out this free report. The report reveals three stocks that could surge on the back of renewed demand for lithium in 2021.
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For Money Morning