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Speaker #2: A couple of highlights to mention as part of the last quarter: we've focused heavily on safety. We've got a really important role to play here within our safety leadership, making sure that we send our people safely home.
Speaker #2: We've also had no lost time injuries again recorded this quarter. We're now coming up to well over a year and a half without an LTI, so we're really, really proud of the Vulcan leadership that continues to drive quality in this space, and we're very proud of that record.
Speaker #2: So we continue to drive a strong HSC leadership and culture within the company. And, of course, from a construction, engineering, procurement, construction perspective, we remain on schedule and within budget as part of the Project Lionheart project.
Speaker #2: A couple of standouts from the broader project as well—a few details. In upstream, where we have the field development, we successfully drilled our seventh well of the entire campaign, and it's the first time we've actually drilled a matrix injector into our Buntu sandstone.
Speaker #2: This is actually a really important part, and it basically validates some key assumptions that we've had in the field development, which now tells us that we are on track to deliver our base case. More importantly, we saw some really strong results, where we exceeded by nearly 50% the injection capacity into our first matrix injector.
Speaker #2: So that's a wonderful signal; it's a wonderful validation. And I would also argue that this now opens up opportunities for optimization of the field development, which our teams are now working on.
Speaker #2: So it's great to be able to be in this position—seven wells in as of 2028. We are well on track to have the wells required to start production in 2028, and moreover, we now have even more opportunities on how we can potentially optimize.
Speaker #2: So delighted to be able to report that in this quarter, our new—or our next—drill site, or well site, which we refer to as Trappelberg, is nearing completion.
Speaker #2: I was there last week, smelling the ashfold, and we've actually started to do some of the pre-drilling of the protector pipes into the wells.
Speaker #2: Some of the pre-drilling activities have already started. That means it will allow us to mobilize the Vulcan V10 rig this quarter as well.
Speaker #2: So that's another great signal. Again, as per plan, we're mobilizing the V10 rig to site, and that will now be at the Trappelberg.
Speaker #2: So, all in all, things are going very, very well on the drilling side. And, last but not least, as part of the broader field development, we also announced that we received another lithium production license called ILCA.
Speaker #2: Effectively, that responds to our Landau South license, and now we've got the two main production licenses for the project. So, all in all, a really strong period for the field development of Lionheart.
Speaker #2: If I switch gears a bit to our pipeline project, we've got a number of really important items and a lot of momentum in this pipeline part of the project.
Speaker #2: We've started Section One construction. I think we put a nice video out along with the announcement today with the quarterly. Really moving along really well—on time, on budget; probably a little bit ahead, actually.
Speaker #2: So, looking really, really good. We're also preparing now to commence Section 2, the start of the construction of our pipelines. We've also started tendering the remainder of the pipeline sections, Sections 3 to 7, which have been received and are looking very positive.
Speaker #2: And we'll look to actually make an award of the remaining pipeline sections this quarter as well. So, all in all, it's going very, very well within the pipeline part of the project.
Speaker #2: Obviously, very key. We need to connect our well sites, where we drill the wells, with pipelines to our central upstream facility, where we extract the lithium and extract the energy.
Speaker #2: If I now switch to the heart of the upstream, which is what we refer to as our geothermal and lithium extraction plant, that's progressing really well.
Speaker #2: Particularly if I look at the power plant, it's very, very visual. We've actually now started seeing civil, so we're coming out of the ground where the power plant is being built.
Speaker #2: It's a 30-megawatt electrical energy Organic Rankine Cycle power plant, one of the biggest in Germany, actually. But that's going really, really well on track, and also you can just start to see the construction on site, which is great to see.
Speaker #2: On the lithium extraction side, where we have the plant, we're working with our main contractor, Sedgman-Hatch JV. Some key earthworks are being completed there now.
Speaker #2: A lot of the bulk earthworks in preparatory work are happening now for some of the projects, and we've also completed a major design review at the 30% stage for that plant as well.
Speaker #2: So again, very much validating our on-track assessment. And it's nice to see as well, Vulcan has commenced commercial production of our adsorbent. It's our proprietary adsorbent called Volsorb—an important part of the lithium extraction process is the adsorbent.
Speaker #2: It's what extracts the lithium from the brine. And of course, this is something that Vulcan has spent a lot of our time and shared a lot of money on: having Western IP and a Western supply chain for this adsorbent.
Speaker #2: So we've received the first few batches; it's all looking very, very good as well. So we're on track to provide our first fuel volumes for our Volsorb.
Speaker #2: If I now talk about the downstream, of course, once we've extracted the lithium, we've purified it, and we've created a bit of a concentration—40% by weight—we then truck that down the road to Frankfurt, where we convert that into a battery-grade chemical.
Speaker #2: This is what we do in Frankfurt, in the industrial park Höchst. Now, that plant is also going very well. A lot of the bulk earthworks are ongoing, and now we're looking to seize an opportunity to start some early civil works.
Speaker #2: So that's also going quite well. And, similar to the lithium extraction plant, our contractor—our EPCM, Sedgman-Hatch JV—has also finalized the 30% design review.
Speaker #2: So again, very much on track in terms of the engineering, the procurement, and the early construction, which is great to see. That sort of keeps us on track as we move into this quarter and the following year.
Speaker #2: What's also important to note, and this is probably something we glossed over sometimes, but remembering Vulcan has and are and have been producing lithium and renewable energy for a number of years now from our demonstration industrial scale plant.
Speaker #2: And we continue operating this value chain, this supply chain. And that's an important part of our financing as well, where we have to continue to actually deliver high-quality, battery-grade chemicals—lithium chemicals—from this supply chain.
Speaker #2: So again, we've had a really solid quarter where we've produced what we needed to, to the quality you needed, to enable a lot of the funding for the project.
Speaker #2: So I'm delighted to see the team really operate there and operate safely, but also operate with quality. Because a lot of these lessons learned will be directly applied to the industrial, the commercial plant that we're building at the moment for Lionheart.
Speaker #2: So again, we're really delighted that we continue to produce high-quality material and a lot of tons of material for Vulcan. One thing to note, and I think it's something I wanted to explain in a bit more detail—and we've tried to do so within the quarterly this time—is that, of course, we're following a standard project finance process.
Speaker #2: So, we have a number of milestones that we need to meet as part of the equity process, as part of the grant funding, and also eventually for the debt.
Speaker #2: What we demonstrated this quarter is that we've actually met the first two milestones for the equity drawdown, the strategic equity drawdown. And we've also met the first German government grants as well.
Speaker #2: So that's sort of totaling around €60 million of equity investment we've done so far in this quarter. So that's a very strong signal and almost a validation that, as part of that process, it demonstrates that we're on track with the project.
Speaker #2: Because that's the enabler to enable the equity drawdown and the grant funding. So, yeah, hopefully that message is loud and clear to everyone. And last but not least, I think we also mentioned in this quarter that we had a very positive, preliminary feasibility study.
Speaker #2: We mentioned Project Ludwig as a potential second phase of production. Very robust economics for the project. We demonstrated another 30-year life, with around a 15% capital intensity reduction from Lionheart.
Speaker #2: So, we saw MPVs pre-tax of around $2.6 billion and rates of return around 25%. So again, it's not a priority for Vulcan as much as Lionheart.
Speaker #2: Lionheart is still our key focus, but again, we're continuing to develop our portfolio in the background, knowing that at some point we can sort of move into a future phase of production.
Speaker #2: And last but not least, I just wanted to highlight some of the corporate updates. People are probably aware at the moment that we've had a change within the board.
Speaker #2: We're really fortunate to have Amanda Lekazi join and be appointed as a non-executive director. Obviously, she speaks volumes about being able to manage and lead a critical material and raw material company with Linus.
Speaker #2: And having her on board obviously provides a lot of stewardship of the company and of the project as well. So, welcome to Amanda to the Vulcan Board.
Speaker #2: And also, we've had the appointment and the transition of Angus Barker, now appointed as the non-executive chairman, who has succeeded Francis, our founder, who's now moved into a growth role as founder within the company as well.
Speaker #2: So congratulations to both Amanda and Angus. I just wanted to address the share price as well—it's something that we're obviously keeping an eye on.
Speaker #2: Of course, we really believe in Vulcan and our fundamentals. We appreciate there's concern out there and, obviously, the short-term valuation impact. We understand that can be concerning, but we also very much believe in the fundamentals of the project and the fundamentals of the company, which have not changed. If anything, they've gotten better over the last 10 months, as we've started moving into the execution of Lionheart.
Speaker #2: And that's what drives us as well. We genuinely believe that if we keep on doing what we were doing, the value will be there.
Speaker #2: And I guess that's what we're here to do: to demonstrate that we can deliver value for our shareholders. The best thing we can do is deliver on time and on budget, which is exactly what we're doing at the moment.
Speaker #2: So we'll continue working hard for our shareholders. Please, please be aware, and of course, coming out with our positive announcements and positive on-track assessments of the project is the least we can do.
Speaker #2: So that's basically what we wanted to update you on. We've been really busy. We're really delighted to see the progress now on the ground and transitioning from a lot of the planning phase into the execution phase.
Speaker #2: Of course, there's a long way to go, but it's almost a delight to be a year into execution and seeing such positive signals—both from the field development in the drilling results, in the way we're producing lithium, and in the way we're executing a major capital project.
Speaker #2: So hopefully that gives you a bit of comfort about where we are. Please have a read of the quarterly, and some of the videos that we've posted give you a really strong feel for where we are.
Speaker #2: And I'm looking forward to keeping you all updated in the future with more information. I'm happy to take some questions as well. If there are any questions out there, please let me know.
Speaker #2: I can't see any in the chat at the moment. Q&A. Okay, here we go. Anne, please comment on costs. Are you experiencing a cost blowout?
Speaker #2: Well, I've just actually stated we're actually on budget and on time, so therefore we cannot be having a cost blowout. And we can't draw down on equity and we can't draw down on grants if we're not.
Speaker #2: So, very much on track. Really happy with what we're doing, and that's something we'll continue to keep our shareholders posted on. So, thanks for your question.
Speaker #2: Thank you, Graham. Congratulations on what you've done and achieved today. It's around the current LHM price. How is it affecting financing, given the price of LHM in your business cases is quite a lot higher?
Speaker #2: Actually, that's a great point, Graham. I think something to be aware of is that Vulcan has got incredible protection against lithium price.
Speaker #2: If you remember, as part of our offtakes, the binding for offtakes that we've got for Lionheart, we have the first 10 years sold out for the four offtakers.
Speaker #2: But more importantly, it's the mechanisms and the price protections that we have within those offtakes that really probably help Vulcan stand out and protect us in a period where there is a low lithium price.
Speaker #2: So, at the moment, we would be protected in a really depressed lithium price because of those price floors. And nearly 72%, so nearly three quarters of our volumes, are protected with those price floors.
Speaker #2: So again, our business case is probably more resilient than most because of this. So I think that's what makes us unique, and gives us robustness even through all cycles.
Speaker #2: So hopefully that gives you some comfort. Helen, hi. Chris, how many wells are planned that need to be completed by H2? We don't have an exact number.
Speaker #2: We've got a minimum requirement of around 40 to 50 percent of production to be in place. So, if you convert that into the number of wells, you're somewhere just between 15 and 20.
Speaker #2: And we're pretty much on track for that. We've drilled seven wells already—seven wells available. And we can drill between three to four wells per rig per year.
Speaker #2: So obviously, that gives us more than enough wells to go into production in the back end of 2028. So we're pretty comfortable and pretty confident with the amount of brine, and therefore wells in the ground, before the end of 2027.
Speaker #2: 2028, sorry. Trevor, is there a qualification process that potential purchasers of Volsorb go through? Is anyone doing that at the moment? So, Trevor, Volsorb is our adsorbent.
Speaker #2: It doesn't go through a qualification process because it's actually our adsorbent. So we've been qualifying that for the last five or six years. Basically, our qualification is that, when we speak to different suppliers or tollers, when they produce the Volsorb for us, we then take that Volsorb and test it in-house, and then we measure the actual extraction performance of the Volsorb.
Speaker #2: So it doesn't have to go through any more qualification. It's actually a bankable technology, proven by the fact that we're able to raise the €2.2 billion financing package.
Speaker #2: So yeah, no further qualification for that, to be honest. That's good to go. In case we do start to commercialize that outside of Vulcan, that would have a different process.
Speaker #2: But for ourselves, no, we don't need any further validation or qualification for that. Paul, congrats on the progress today. Can you confirm whether the existing committed finance fee remains sufficient to complete Lionheart through commissioning ramp-up, including continuous allowances requiring additional equity, and so forth, so forth?
Speaker #2: Okay, good question. So, look, Vulcan has secured, as you're aware, the €2.2 billion financing package. And that basically supports the execution, the startup, and the ramp-up of Project Lionheart.
Speaker #2: Now, that $2.2 billion package is made up of different facilities. So it supports the CAPEX, it supports owners' costs—i.e., our people, standby budget, financing costs, etc.
Speaker #2: This is a very normal and standard project finance process, where capital gets released when you provide an on-track assessment for equity and for debt.
Speaker #2: And as per our quarterly, and based on what we've done so far, we've started successfully drawing down on the strategic equity and grant funding, and then in the future, with the debt.
Speaker #2: So today, all I can say is that we're absolutely on track, which enables us to release that capital from equity, grants, and lenders as part of that broader process.
Speaker #2: So today, we're doing well, right? Well, thank you again, everyone, for dialing in and participating. We'll be doing the quarterly—each and every quarterly now.
Speaker #2: We think we're moving into a period of real interest for the company and our shareholders. Obviously, we will be moving very quickly into the heart and the meat of the capital project and execution.
Speaker #2: And, of course, we want to keep our shareholders up to date on the performance of that. But I'm really, really proud of the Vulcan team.
Speaker #2: So a big shout-out to everybody at Vulcan Energy. Really proud of what we're doing and how we're performing. Let's continue that, and keep delivering this on time and on budget.
