AlsterResearch Update: Vulcan Energy - Short-seller report seems unfounded

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What’s it all about?

Vulcan is confronted with a short-seller report that challenges the credibility and reliability of the company’s PFS (Pre-feasibility study, published January 2020). Vulcan has rejected the challenges. The short seller indeed raises reasonable questions (flow rate, recovery rate, seismicity issues, extraction method, local opposition). Those were questions we addressed to Vulcan in January/February 2020, concerning the extraction method also until spring of this year. The short seller’s conclusions seem poorly drawn. Analogies and comparisons with projects and existing plants in the region, based on outdated technology (drillings in 1980, other drilling projects conducted into granite and overpressurised wells), deny any learning curve effect. We see nothing new in the accusations and confirm our view: Vulcan Energy provides a rare opportunity to benefit from the strongly growing lithium growth trajectory and, by the same token, to participate in a project directly located in Germany, a heartland of automotive industry. We confirm our PT of AUD 22.00, equivalent to EUR 14.21, and reiterate our BUY recommendation. Upside 76%.