EQS-Adhoc: Vulcan Energy Resources Limited: Vulcan has signed Term Sheet Agreement with Nobian for proposed strategic partnership for Central Lithium Plant including equity financing

Vulcan Energy Resources Ltd. (Vulcan or the Company) has signed a Term Sheet agreement with Nobian GmbH (Nobian) for the formation of a 50/50 joint venture over, and equity financing of, Vulcan’s Central Lithium Plant (CLP), which forms part of Vulcan’s Zero Carbon Lithium™ Project (Transaction). The Transaction is subject to the parties entering into definitive agreements, which are targeted to be completed within 10 weeks from the date of the Term Sheet.

As part of its project financing, Vulcan has split Phase One of its planned integrated 24,000tpy Lithium Hydroxide Monohydrate (LHM) and renewable energy project into two separate special purpose vehicles (SPVs):

SPV1 includes the plant and infrastructure associated with the production of renewable energy and lithium chloride (LiCl) and includes land, wells, pipelines, geothermal and lithium extraction plants. SPV1’s output includes renewable energy and LiCl, the latter which is sold to SPV2.

SPV2 includes the CLP which converts LiCl into LHM, with a by-product of HCl. LHM will be sold to the Company which will then distribute it to Vulcan’s offtakers.

The Term Sheet provides that, subject to execution of definitive agreements for the Transaction and the satisfaction of other conditions, Nobian shall contribute EUR 161 million (approximately A$265m) in cash as equity to fund capital expenditure (CAPEX) for the CLP, to acquire 50% of SPV2 joint venture, on the basis of an agreed pre-money valuation of EUR 322 million for the SPV2.

As per Vulcan's definitive feasibility study (DFS) published in February 2023, SPV2’s CAPEX requirement is estimated at EUR 322 million. It is expected that Nobian's equity contribution, alongside expected project debt finance to be obtained by the Company, will fully cover the funding requirement for the CLP.

The Company is targeting a debt-to-equity ratio of 65:35 for the overall funding of Phase One. Based on the DFS, SPV1’s Net Present Value (NPV) represents 77% of Phase One total NPV whilst SPV2’s NPV represents 23%.

1618357  26-Apr-2023 CET/CEST