Up 10% in a month. Is this ASX lithium stock finally back on track?

Shares in Vulcan Energy Resources Ltd (ASX: VUL) are back in focus after the company released an operational update that appears to be lifting investor confidence.

The Vulcan share price is up 5.29% today to $4.38, adding to gains of around 10% over the past month. The move follows successful production test results from the company's first new Lionheart well in Germany.

A key production milestone achieved

According to the release, Vulcan reported successful production flow test results from its LSC-1b sidetrack well. The well forms part of Phase One of the Lionheart Project in Germany's Upper Rhine Valley.

The production test equipment was run at full capacity, confirming the well can deliver strong flow rates. Vulcan said the results support a potential production rate of 105 to 125 litres per second, in line with assumptions in its field development plan.

Earlier drilling results were encouraging, but a previous completion issue meant production performance could not be confirmed at the time. That issue has now been resolved, allowing Vulcan to successfully test the well's production and flow rates.

Why Lionheart is so important

Phase One of the Lionheart Project is central to Vulcan's strategy of producing carbon-neutral lithium for European electric vehicle batteries.

Once operational, the project is expected to produce around 24,000 tonnes of lithium hydroxide per year, enough for roughly 500,000 electric vehicle batteries annually. It also includes the co-production of renewable energy, with around 275 GWh of power and 550 GWh of heat per year.

The company has already secured project financing, and construction for Phase One is now underway. First commercial lithium production is targeted for 2028, with Vulcan aiming to position itself as a strategic supplier to Europe's battery and EV supply chain.

Execution on the ground

The update also pointed to strong drilling performance. The well was completed safely, ahead of schedule, and without any lost-time incidents.

Management said key measures such as reservoir quality, lithium grade, temperature, and pressure are meeting or beating expectations. That should make the next stages of the project easier to execute as Vulcan moves from drilling into the build phase.

What investors are weighing up next

Even after the recent rise, Vulcan shares are still well below their 2024 highs. That shows many investors remain cautious about execution, timelines, and funding.

This latest update helps ease one of the biggest concerns. It shows the Lionheart wells can deliver flow rates that look commercially viable.

If Vulcan keeps meeting key milestones through 2026 and 2027, today's share price could look much more attractive in hindsight.

The post Up 10% in a month. Is this ASX lithium stock finally back on track? appeared first on The Motley Fool Australia.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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