THE deepening relationship between Australia and the European Union looks set to benefit Vulcan Energy Resources, with the Export Finance Australia government business offering the company up to A$200 million (US$126 million) for the development of its Zero Carbon Lithium brine project in Germany.

The conditional, non-binding letter of support is expected to support the phase one development, which was previously expected to cost more than A$2 billion to develop.

Vulcan is in the market looking to finalise its debt and equity financing following completion of its revised bridging study in the coming weeks.

The developer already has in-principle backing from government agencies in France, Italy and Canada, and is looking for funding from the German government in its next public funding round. 

Managing director Cris Moreno said it was encouraging to have secured substantial in-principle support from government-backed export credit agencies in Europe and now Australia, describing it as "a tangible and powerful symbol" of the strong support from its recent market sounding program.

He remains confident the company will secure finance for phase one that will build on its 27.7Mt grading at 175 milligrams per litre resource for the initial Lionheart development area.

It recently retooled its plans to focus on a single direct lithium extraction plant co-located at its existing geothermal facility, but it still aims to recover 24,000tpa of lithium hydroxide equivalent from the brines.

It elected to defer its second extraction plant and a new geothermal facility to reduce upfront capex as it works to achieve commercial production in 2025.

Vulcan has more than A$200 million cash remaining and offtake agreements with Stellantis, Volkswagen, Renault, Umicore and LG Energy Solution.

Product testing from its pilot plant is imminent. 

The stock has traded between A$2.20 and A$8.10 over the past year and was last priced at A$2.25, capitalising the developer at A$394 million.