This lithium share is rocketing higher on Friday. Here’s why…
The post Vulcan share price rockets 25% on Stellantis deal appeared first on The Motley Fool Australia. –
The Vulcan Energy Resources Ltd (ASX: VUL) share price has flown out of the gates on Friday morning.
At the time of writing, the lithium developerâs shares are up 25% to $6.21.
Why the Vulcan share price rocketing higher?
Investors have been fighting to get hold of the companyâs shares this morning after it announced a major investment from a top tier automaker.
According to the release, Stellantis, the company behind car brands including Chrysler, CitroÃ«n, Fiat, Maserati, and Peugeot, has invested A$76 million into Vulcan.
While this news is positive enough, it gets better. Stellantis is paying over the odds to become Vulcanâs second largest shareholder. The two parties agreed a price of $6.622 per share, which represents a 32% premium to the Vulcan share price at yesterdayâs close.
In addition, Stellantis has extended its binding lithium hydroxide offtake agreement by five years to 2035. Starting in 2026, the automaker will be purchasing a minimum of 81,000 tonnes and a maximum of 99,000 tonnes of battery grade lithium hydroxide over a duration of 10 years.
The release reveals that the proceeds from this investment will go towards Vulcanâs planned production expansion drilling in its Upper Rhine Valley Brine Field (URVBF).
âA strong statementâ
Vulcanâs Managing Director, Dr Francis Wedin, believes this is a âstrong statementâ regarding the sourcing of sustainable battery materials. He commented:
Stellantisâ significant investment in Vulcan and the Zero Carbon Lithium Project represents a strong statement by one of the worldâs largest automakers regarding sustainable and strategic sourcing of battery materials.
We are fully aligned with Stellantisâ decarbonisation and electrification goals, which represent some of the most ambitious in the industry. It is encouraging to see a leading automaker investing in local, decarbonised lithium production for electric vehicles. As our largest offtaker, we look forward to deepening our relationship with Stellantis as a substantial shareholder in Vulcan and our Zero Carbon Lithium business.
Stellantisâ CEO, Carlos Tavares, added:
Making 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. We continue our quest of forming strong relationships with partners who share our values as we collectively fight against global warming and provide clean, safe and affordable mobility to our customers.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.