The Vulcan Energy (ASX:VUL) share price has fallen 17% in 2 weeks

Here’s why the Vulcan (ASX: VUL) share price has come under fire in recent weeks to give back its extraordinary gains.
The post The Vulcan Energy (ASX:VUL) share price has fallen 17% in 2 weeks appeared first on The Motley Fool Australia. –

Watching ASX share price represented by boy with question mark on forehead looking up

When the Vulcan Energy Resources Ltd (ASX: VUL) share price started to move recently, it put the returns of most shares to shame.

The lithium company’s shares were trading at less than 20 cents in late 2019 to early 2020 before running as high as $14.20 on 19 January 2021. 

But for investors with the fear of missing out or chasing highs, this has likely ended in tears as the Vulcan share price has started to give back some of its extraordinary returns. 

After hitting its all-time record high of $14.20, its shares have more than halved to close at $6.18 on Tuesday. Even in recent weeks, the Vulcan share price has fallen some 17%. 

Why is the Vulcan share price falling?

The timing of the Vulcan share price slump has coincided with broader weakness across ASX lithium shares. This includes the Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS) share prices experiencing a similar pattern. 

These ASX lithium shares have rallied in recent months following a recovery in lithium spot prices and a resurgence in investor interest in the renewables sector. By late January 2021, ASX lithium shares largely topped out and drifted lower by February. 

While Orocobre and Pilbara are established lithium producers, Vulcan is still in its early days with development work such as a definitive feasibility study to finish in the third quarter FY22 and production expected to start in Q3 FY24. 

Vulcan had also recently completed a $120 million capital raising at a placement price of $6.50 per share, a 17.1% discount to its last closing before the capital raising.

Capital raisings can weaken a company’s share price in the short-term as it dilutes existing shareholders. The discount also means that those who participated in the capital raising could sell their new shares at a profit. 

Looking ahead 

Despite the recent weakness in the Vulcan share price, there are exciting times ahead for the world’s first and only zero-carbon lithium project. 

The company cites that it possesses the largest resource size in Europe, with 15.85 million tones of lithium carbonate equivalent.

The company has planned to complete the development work by Q3 FY22, including pilot test work, a definitive feasibility study and project financing.

Its scheduled drilling will follow this in Q3 FY22 and plant construction in Q1 FY23. If all goes to plan, the company could hit producer status by 2024.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The Vulcan Energy (ASX:VUL) share price has fallen 17% in 2 weeks appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!