Vulcan Energy Resources Ltd. · ASX:VUL

Vulcan Energy Resources — Investor Presentation (February 2023)

54 slides from Vulcan Energy Resources's investor presentation, Feb 14, 2023

1. Slide 1: Corporate Presentation Q1 2023

   For personal use only Corporate Presentation Q1 2023 1

2. Slide 2: Disclaimer

   DISCLAIMER No investment or financial product advice For personal use only This Presentation, and the information provided in it, does not constitute, and is not intended to constitute, financial product or investment advice, or a recommendation to acquire Vulcan Shares, nor does it constitute, and

3. Slide 3: Disclaimer: Ore Reserves and Mineral Resources Reporting

   DISCLAIMER Ore Reserves and Mineral Resources Reporting It is a requirement of the ASX Listing Rules that the reporting of ore reserves and mineral resources in Australia comply with the Joint Ore Reserves Committee's Australasian Code for Reporting of Mineral Resources For personal use only and Ore

4. Slide 4: Disclaimer: Financial data

   DISCLAIMER Financial data For personal use only All monetary values expressed as "$" or "A$" in this Presentation are in Australian dollars, unless stated otherwise. All monetary values expressed as EUR or € in this Presentation are in Euros, unless stated otherwise. All monetary values expressed as

5. Slide 5: Competent Person Statement

   COMPETENT PERSON STATEMENT The information in this presentation that relates to estimates of Mineral Resources and Ore Reserves is extracted from the following ASX announcement: For personal use only  "Vulcan Zero Carbon Lithium™ Project Phase One DFS results and Resources-Reserves Update", release

6. Slide 6: Our Target: One Million

   OUR TARGET: ONE MILLION For personal use only Vulcan’s unique Zero Carbon Lithium™ Project We are aiming to become the world’s first aims to produce both renewable geothermal integrated lithium chemicals and renewable energy energy, and lithium hydroxide for Electric Vehicle producer with net zero g

7. Slide 7: Vulcan's Renewable Energy and Lithium Chemicals Project

   VULCAN’S RENEWABLE ENERGY AND LITHIUM CHEMICALS PROJECT For personal use only Reliable, OUR PROJECT Lithium hydroxide distributed ONE CLP in to the EU customers Frankfurt high quality converting end product Central Electric 6 Lithium LiCl to LHM Mobility Plant Renewable electricity Lithium chloride

8. Slide 8: Key Achievements H2 2021-Now

   KEY ACHIEVEMENTS H2 2021-NOW For personal use only High grade, Lowest impurity LHM produced ACQUISITION OF INSHEIM Research Permit in GEOTHERMAL Italy granted POWER PLANT DEVELOPMENT OF "Cesano” Sustainability VULSORB™ BNP Paribas and ESG appointed as FRANKFURT Framework STOCK 5 new launched ONSITE

9. Slide 9: Vulcan Project – Phase One

   VULCAN PROJECT – PHASE ONE Production goals: For personal use only  Target of 24,000tpa of Lithium Hydroxide Monohydrate (LHM) production 1.  Target of >300GWh of renewable power and >250GWh of renewable heat produced each year. Why?  Vital project for Germany, the EU, the auto industry and the e

10. Slide 10: Project Location

    PROJECT LOCATION For personal use only  Large, 300km-long graben system containing consistent sedimentary-hosted geothermal- lithium reservoir.  Vulcan’s Upper Rhine Valley Brine Field (URVBF) within its Zero Carbon Lithium™ Project, consisting of 15 licenses for a total area of 1,583 km2, represe

11. Slide 11: Lionheart Reservoir Framework and Planned Well Placement

    LIONHEART RESERVOIR FRAMEWORK AND PLANNED WELL PLACEMENT For personal use only Use existing production wells and add new wells to aim to achieve production/reinjection capacity of 600l/s1 – approx. 16,000tpa LHM equivalent at SOP. DFS focus of field development planning has been on sustainability of

12. Slide 12: Taro Reservoir Framework and Planned Well Placement

    TARO RESERVOIR FRAMEWORK AND PLANNED WELL PLACEMENT For personal use only Add new wells to aim to achieve production/reinjection capacity of 300l/s1 – approx. 8,000tpa LHM equivalent at SOP. DFS focus of field development planning has been on sustainability of lithium production over time: flow rate

13. Slide 13: Target Lithium Output Phase One – LHM Equivalent

    TARGET LITHIUM OUTPUT PHASE ONE – LHM EQUIVALENT Lithium dilution at the well sites modelled over 30 years and remains above cut-off, with only ~1.6% annual grade For personal use only decrease. Production levels could be increased by adding new wells in the future, not modelled here1. Li dilution (

14. Slide 14: Development Drilling Plan

    DEVELOPMENT DRILLING PLAN Vulcan has established its own in-house geothermal drilling company, Vercana, due to a high demand for geothermal drilling for For personal use only renewable energy projects and tightness of rig supply. In this regard, Vulcan has also acquired two electric drill rigs, and

15. Slide 15: Site Infrastructure: Industry Water Cycle and Piping

    SITE INFRASTRUCTURE: INDUSTRY WATER CYCLE AND PIPING Vulcan intends to use an intermediate heat exchanger at the nine Phase One well sites to capture the heat from the geothermal brine For personal use only into a closed loop industrial water cycle which will pipe hot water to the Organic Ranking Cy

16. Slide 16: Proposed Pipeline System

    PROPOSED PIPELINE SYSTEM Lionheart – 16km total of pipelines Interconnecting Power and Piping network For personal use only Connecting multiple wells1 with ORCs, LEPs and Well sites with: Existing ORC ORC, LEP & Well site  Hot/Cold water  Li-rich/Depleted Li brine  Power Taro – 5km pipelines ORC,

17. Slide 17: Geothermal Energy Plants

    GEOTHERMAL ENERGY PLANTS Phase One: one existing geothermal plant and two new sites For personal use only Insheim Lionheart Taro Total1 ORC (Existing) ORC1 ORC1 Power Production (MW p/a) 4.2 24.5 8.4 37.1 Heat Production (MW p/a) 0.5 29.9 0.0 30.4 Power Production (MWh p/a) 34,856 203,326 69,712 307

18. Slide 18: Energy Balance: Net Positive Producer of Renewable Energy

    ENERGY BALANCE: NET POSITIVE PRODUCER OF RENEWABLE ENERGY¹ Geothermal Lithium For personal use only Geothermal LEP CLP Phase One MW 40 30 20 10 - Taro Pumps & Piping Lionheart LEP Taro ORC Lionheart ORC* Taro ORC Lionheart Pumps & Piping Taro LEP SPV1 Power Heat production SPV1 SPV2 Power Lionheart

19. Slide 19: Vulcan In-House Piloting and Testwork

    VULCAN IN-HOUSE PILOTING AND TESTWORK In-house designed and operated lithium extraction pilot plant operational since April 2021 (PP1 – low For personal use only  pressure).  >13,000 of hours of continuous pilot plant test data from PP1, and latterly >1,000 hours of operation from high pressure P1

20. Slide 20: Improved In-House Lithium Extraction Flow Sheet

    IMPROVED IN-HOUSE LITHIUM EXTRACTION FLOW SHEET Upgrading to a High Pressure system with VULSORB™ For personal use only Improvement #1: VULSORB™  Vertically integrated production Make-up water  10% less OPEX1  €24M less CAPEX1 Brine Direct feed Pre-treatment Lithium Post-treatment Improvement #2:

21. Slide 21: Lithium Extraction Plants (LEPs)

    LEP – Taro 300l/s LITHIUM EXTRACTION PLANTS (LEPs) 8kt LiCl For personal use only Phase One Two sorption-type LEPs:  LEP Taro: “standard” modular sized of 8,000tpa LHM equivalent fed by 300l/s Li-rich brine. Asset to be built next to Taro’s ORC plant.  LEP Lionheart: “Double-size” 16,000tpa LHM eq

22. Slide 22: Lithium Chloride Conversion to LHM: CLP

    LITHIUM CHLORIDE CONVERSION TO LHM: CLP For personal use only Phase One  Conversion of lithium chloride to battery grade LHM using electrolysis.  Process uses similar technology as used in the chlor-alkali industry, which has been used for over a century. Significant in-house expertise at Vulcan.

23. Slide 23: CAPEX Estimated Breakdown

    CAPEX ESTIMATED BREAKDOWN1 Geothermal Lithium For personal use only Geothermal LEP CLP €M SPV Geothermal: €657M1 SPV2 Lithium CAPEX: €839M1 500 440 €657M Phase One CAPEX: 450 25 €1,496M 400 - €322M 350 88 293 €517M 300 38 103 217 35 223 250 8 200 27 61 55 150 23 256 28 233 100 178 151 50 97 0 - - -

24. Slide 24: OPEX Estimated Breakdown – 20Y Average

    OPEX ESTIMATED BREAKDOWN – 20Y AVERAGE For personal use only Lithium Geothermal LEP CLP Phase One 112 55 35 €/y 22 GeoOPEX Geo Opex LEP OPEX Opex CLP OPEX Opex Total OPEX Total Phase Opex One Phase 1 Energy Labour Maintenance Supplies Operating Supplies Reagents Water Steam Nitrogen Trucking Service

25. Slide 25: Global Cost Curve LHM – Projected 2025

    GLOBAL COST CURVE LHM – PROJECTED 2025 Vulcan’s Zero Carbon Lithium™ Project has the potential to be one of the lowest cost integrated LHM projects in the world. For personal use only Lithium hydroxide delivered costs - 2025 ($/tonne, ddp Rotterdam) Vulcan Energy $4,5771 €4,359 1Projected cost curve

26. Slide 26: Strategic Support with Long Term Lithium Supply Contracts

    STRATEGIC SUPPORT WITH LONG TERM LITHIUM SUPPLY CONTRACTS Five key offtake agreements secured, binding, take-or-pay, with mixture of pricing mechanisms to provide stability but keep some For personal use only exposure to upside in pricing Binding lithium hydroxide offtake agreement, 10-year term. A$

27. Slide 27: LHM Price Forecast

    LHM PRICE FORECAST LHM prices as of Feb. 2023 are reported at $79,000/t (Fastmarkets) For personal use only Lithium hydroxide price forecasts1 - €/t 40,000 Forecast average price realised combining Fastmarkets price forecast and Vulcan offtake agreements 35,000 pricing mechanisms (€/t) Average 30,28

28. Slide 28: Target Revenues – 20Y Average

    TARGET REVENUES – 20Y AVERAGE For personal use only Geothermal Lithium Geothermal LEP CLP Phase 1 HCl HCl 2% 1% NaOCl NaOCl Heat 0% 0% 10% Heat 3% Power Li Brine 10% 49% LHM Power 86% 41% LHM 98% €174M/a €616M/a €704M/a* Annual Revenue €M/y, 20y average (excluding 2026 ramp-up) SPV Geothermal SPV Li

29. Slide 29: Target Project Economics Summary

    TARGET PROJECT ECONOMICS SUMMARY1 For personal use only COMPELLING ECONOMICS: DFS vs PFS2,3 Geothermal Lithium Phase 1  >250% increase for Phase 1 NPV8: €3.9Bn Revenues €M/a4 174 616 704 NPV8 pre-tax, €2.6Bn NPV8 post-tax. Net Op. Cash Flow €M/a* 111 328 437 NPV pre-tax m€ 724 3,192 3,917  >40% in

30. Slide 30: Permitting Process – Current Update

    PERMITTING PROCESS – CURRENT UPDATE1 Exploration license 1 Licenses For personal use only Production license 2 Pre-EIA 3 Main operation plan (one well site, all wells) Mining authority Drilling Special operating plan: Well pad Special operating plan: Drilling Secure land Permitting progress Drilling

31. Slide 31: Our Unique Selling Point: Leading Environmental Credentials

    OUR UNIQUE SELLING POINT: LEADING ENVIRONMENTAL CREDENTIALS For personal use only Low ESG Risk Rating from 9,5kT CO2 avoided from ESG linked KPIs including Sustainalytics (01/2023) renewable energy generated individual and shared targets First amongst peers and in at NatürLich Insheim in 2022. the 2

32. Slide 32: Aiming for Lowest CO2 Footprint in the Lithium Industry

    AIMING FOR LOWEST CO2 FOOTPRINT IN THE LITHIUM INDUSTRY Vulcan is developing the first and only net zero carbon, zero fossil fuels lithium project in the world1. For personal use only Emissions from GLOBAL LHM operations Vulcan Energy -1.7kg CO2/t LHM 1Sources: Fastmarkets projection for industry. V

33. Slide 33: Overall LEP and CLP Water Balance

    OVERALL LEP AND CLP WATER BALANCE Vulcan’s Zero Carbon Lithium™ Project has been engineered to have an extremely small water footprint1 For personal use only Location Tonnes Water/LHM Taro LEP Net freshwater input 0.58 Lionheart Net freshwater input 1.16 CLP Net freshwater input 0.08 Net High Purity

34. Slide 34: 2023 – Our Short Term Objectives

    2023 – OUR SHORT TERM OBJECTIVES For personal use only DFS 1 Phase One DFS (complete) Demo Plants to commence operation and first LHM Demo production from demo Start drilling of new production/re-injection wells in Phase Drilling One area Grant of relevant permits in line with development timeline P

35. Slide 35: Target Project Timeline – Phase One

    TARGET PROJECT TIMELINE – PHASE ONE 2023 2024 2025 2026 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 DFS Publication Bridging Phase For personal use only Start of procurement phase Detailed Engineering Start of EPC contract awards Strategic equity funding process Debt funding process Ongoing pilo

36. Slide 36: Matrix Organisation Geared for Execution and Delivery

    MATRIX ORGANISATION GEARED FOR EXECUTION AND DELIVERY For personal use only CEO Level 0 Dr. Francis Wedin Deputy CEO Cris Moreno CORE FUNCTIONS SUPPORT FUNCTIONS CFO VP CCoO CoSec/ In- COO CTO Deputy CEO CEO - GER ESG LEAD CFO Production Vincent GM IR House Legal Thorsten Dr. Stephen Cris Dr. Horst

37. Slide 37: Robust Target Project Financials and Strategic Project Funding

    ROBUST TARGET PROJECT FINANCIALS AND STRATEGIC PROJECT1 For personal use only FUNDING TARGETED FROM A MIX OF EQUITY, DEBT AND GRANTS MULTIPLE TARGET OPTIONS FOR VULCAN Equity at project level – Phase 1 Equity at project level – SPV Geo Equity at project level – SPV Li Equity at parent level Debt fun

38. Slide 38: Conclusions

    CONCLUSIONS  The first integrated renewable energy, lithium extraction and For personal use only lithium hydroxide refining project development, seeking to supply the battery electric vehicle industry from Europe, for Europe.  World-leading sustainability credentials: engineered specifically to be

39. Slide 39: Appendices

    For personal use only APPENDICES 39

40. Slide 40: Appendix 1: Board of Directors

    APPENDIX 1: BOARD OF DIRECTORS Dr. Francis Wedin For personal use only Managing Director & CEO Gavin Rezos Ranya Alkadamani Chair Non-Executive Director Founder of Vulcan Zero Carbon Lithium™ Project. Lithium Executive Chair/CEO positions of three companies that grew from Founder of Impact Group Int

41. Slide 41: Appendix 2: Share Price and Capital Structure

    APPENDIX 2: SHARE PRICE AND CAPITAL STRUCTURE ASX : VUL For personal use only Shares on Issue 143,435,301 Performance Shares 91,174 Performance Rights 8,742,801 Market Capitalisation at $7.16 ~$1.03B (undiluted as at 10 February 2023 ) Cash Position (as at 31 Dec 2022) €134M Top 20 Shareholders ~61%

42. Slide 42: Appendix 3: DLE/DLS Projects and Assets - References

    APPENDIX 3: DLE/DLS PROJECTS AND ASSETS - REFERENCES For personal use only Livent https://s22.q4cdn.com/453302215/files/doc_presentations/2022/2022.11-Livent-Investor-Presentation.pdf https://www.linkedin.com/pulse/from-catamarca-qinghai-commercial-scale-direct-lithium-alex-grant/ Lanke Lithium http

43. Slide 43: Appendix 4: European Lithium Projects Peer Comparison

    APPENDIX 4: EUROPEAN LITHIUM PROJECTS PEER COMPARISON REFERENCES For personal use only COMPANY1 CODE PROJECT STAGE RESOURCE CATEGORY RESOURCES M RESOURCE GRADE CONTAINED MT LCE INFORMATION SOURCE ONNES (LI2O) TONNES European Metals ASX: EMH Cinovec PFS Complete Indicated & Inferred 708.2 0.43 7.39 A

44. Slide 44: Appendix 5: European Macro Policy Tailwinds in Vulcan's Favour

    APPENDIX 5: EUROPEAN MACRO POLICY TAILWINDS IN VULCAN’S FAVOUR European Commission President, Ursula von der Leyen For personal use only Lithium production for EVs Ursula von der Leyen, President of the European Commission, said: “We have a once in a generation opportunity to show the way with speed

45. Slide 45: Appendix 6: Key Risks Technology / Execution / Resource

    APPENDIX 6: KEY RISKS TECHNOLOGY / EXECUTION / RESOURCE Risk Description Mitigation For personal use only Currently in discussions with a local toll manufacturer to manufacture VULSORB™, who is already supplying Vulcan for its Demo Technology: VULSORB™ industrial manufacturing capability still to be

46. Slide 46: Appendix 7: Key Risks General

    APPENDIX 7: KEY RISKS GENERAL Risk Description Mitigation Vulcan closely monitors developments in the battery industry, and preferred battery chemistries. Vulcan notes that, whilst EU For personal use only Markets: General demand for lithium hydroxide may decrease as a result of new market or techno

47. Slide 47: Appendix 7: Key Risks General Cont.

    APPENDIX 7: KEY RISKS GENERAL CONT. Risk Description Mitigation For personal use only Technical: Battery raw materials and geothermal energy exploration and development are high-risk Vulcan uses modern geothermal industry best practice by incorporating 3D seismic data and analysis and has a world un

48. Slide 48: Appendix 8: Modern Li-Brine Projects Choosing Direct Lithium Sorption

    APPENDIX 8:MODERN Li-BRINE PROJECTS CHOOSING DIRECT LITHIUM SORPTION (DLS) Energy Lake Lanke Zangge Eramet/ Vulcan Compass Berkshire Source Standard Resources/ Company1 Livent Lithium Lithium Jintai Lithium Tsingshan Energy Rio Tinto Minerals Hathaway CTR Lithium E3 LIthium Minerals Lilac Hombre Cen

49. Slide 49: Appendix 9: Phase One Production Study and Reserves

    APPENDIX 9: PHASE ONE PRODUCTION STUDY AND RESERVES  Detailed reservoir engineering and production simulation study conducted to achieve maximum “sweep” of lithium across the field. For personal use only  Planned well placement and brine flow rates optimised for sustainable lithium production over

50. Slide 50: Appendix 10: Upper Rhine Valley Brine Field: Mineral Resource Update

    APPENDIX 10:UPPER RHINE VALLEY BRINE FIELD: MINERAL RESOURCE UPDATE Note 1: Mineral Resources are not Licence Reservoir Classification GRV km3 Avg. NTG Avg. Avg. Li Elemental Li LCE3 Ore Reserves and do not have For personal use only demonstrated economic viability. % Phie mg/L t kt Note 2: The weig

51. Slide 51: Appendix 11: Permitting Process

    APPENDIX 11:PERMITTING PROCESS EXTERNAL ASSESSMENTS MAIN PERMITS specific species Ground survey BBergG (Federal Mining Act), BauGB (Building Act), GEG (Building Energy Act), BImSchG (Fed. Immission Ctrl. Act) protection assessment GEOTHERMAL ENERGY For personal use only (saP) Exploration License (ge

52. Slide 52: Appendix 12: Integrated Project Delivery Model

    APPENDIX 12: INTEGRATED PROJECT DELIVERY MODEL Strategy moving towards project execution and delivery model For personal use only Phase One Phase One Phase One Organisation & Governance Delivery Wells Model ICPP ORC LEP CLP Site GLEP Executive Project SteerCo Integrated Owner Vulcan Schedule EPCM Co

53. Slide 53: For personal use only

    Intermediate Lithium End- Well Sites Heat Piping System Geothermal Operations Lithium Extraction Transport Conversion market Exchanger Hot water 0.5MW Heat Hot Brine ORC 4.2MW & Heating 0.5MW customers Cold water Heat Li (+) Cold Brine Li (+) Insheim Sold: +30MW For personal use only 4.2MW Bought: 0

54. Slide 54: Appendix 14: Financial Definitions

    APPENDIX 14: FINANCIAL DEFINITIONS • CAPEX = Capital Expenditure in tangible and intangible assets For personal use only • EBIT = Earnings before interest and taxes • EBITDA = Earnings before interest, taxes, depreciation and amortisation • IRR = Internal Rate of Return • Net Income (EAT) = Earnings

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