Vulcan Energy Resources : 31 Dec 23 Annual Report

VULCAN'S ANNUAL REPORTING SUITE

1 JANUARY 2023 TO 31 DECEMBER 2023

This Annual Report (Report) forms part of the Company's Annual Reporting Suite for the period 1 January 2023 to 31 December 2023. The Annual Reporting Suite includes the Annual Report, Sustainability Report, Group Management Report (Konzernlagebericht), Taskforce on Climate related Financial Disclosure Report (TCFD) and Corporate Governance Statement. This Annual Report covers Vulcan's operations, including those under exploration and development and those operated through subsidiaries as well as our strategic approach to sustainability. Vulcan is dual listed on the Australian Securities Exchange (ASX), and the regulated market of the Frankfurt Stock Exchange (FSE), in the Prime Standard market segment. Consistent with the regulatory and reporting obligations of the FSE, Vulcan's Annual Reporting Suite also includes the Group Management Report (Konzernlagebericht). The Konzernlagebericht has been prepared in accordance with the Deutscher Rechnungslegungs Standard Nr. 20 (DRS 20). The Reporting Suite incorporates our updated Sustainability Report for 1 January 2023 to 31 December 2023, developed with reference to industry standards including the Global Reporting Initiative (GRI) Standards and the United Nations Sustainable Development Goals (UNSDGs). Vulcan is a signatory to the United Nations Global Compact (UNGC), and the Sustainability Report outlines the Company's ongoing commitment to ensuring progress towards the ten principles of the UNGC. All references to Vulcan Energy Resources, Vulcan, the Company, Vulcan Group, or the Group are in reference to Vulcan Energy Resources Ltd (ABN 38 624 223 132) and its subsidiaries. All information and references in this Report are related to the full financial year, 1 January 2023 to 31 December 2023, unless otherwise stated. The Materiality Assessment and TCFD Report has been achieved with the assistance of global consultancy firm ERM. The sustainability data provided in this Report has not been externally assured. For any questions about Vulcan's sustainability approach, please [e-mail] visit https://v-er.eu/.

Currency References

Currency is expressed in Euros (€) unless otherwise stated. (An average AUD/EUR exchange rate of 0.6144 has been used in the Remuneration report for the financial year ended 31 December 2023).

Forward Looking Statement

This Report contains certain forward-looking statements. Often, but not always, forward-looking statements may be identified by the use of forward-looking words such as "may", "will", "expect", "intend", "plan", "estimate", "target", "propose", "anticipate", "continue", "outlook" and "guidance", or other similar words. By their nature, forward-looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause actual results, performance and achievements to be materially greater or less than estimated, including those generally associated with the lithium industry and/or resources exploration companies. Any such forward-looking statements, opinions and estimates in this Report (including any statements about market and industry trends) are based on assumptions and contingencies, all of which are subject to change without notice, and may ultimately prove to be materially incorrect. Forward-looking statements are provided as a general guide only and should not be relied upon as, and are not, an indication or guarantee of future performance. Neither Vulcan nor any of its directors, officers, agents, consultants, employees or advisors give any representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information, opinions, forward looking statements and conclusions contained in this Report.

Approval

This Report has been approved for release by the Board of Directors.

CONTENTS

About Vulcan 4

Chair's Message 6

CEO's Message 8

Defining 'Zero Carbon Lithium' 12

FY2023 Key Milestones Addressed 14

Delivering Europe's first integrated lithium

and renewable energy company 16

Operations Overview 18

Corporate Overview 34

Sustainability Overview 36

Corporate Governance 52

Directors' Report 54

Remuneration Report 68

Auditor's Independence Declaration 92

Financial Statements 93

Independent Auditor's Report 163

ASX Additional Information 168

Corporate Directory 173

Appendix 174

ABOUT VULCAN: EMPOWERING A CARBON NEUTRAL FUTURE

WE ARE ONE VULCAN

FOUNDED IN 2018, VULCAN'S PURPOSE IS TO EMPOWER A CARBON NEUTRAL FUTURE, THROUGH THE EFFICIENT CO-PRODUCTION OF LITHIUM, HEAT AND RENEWABLE ENERGY FROM GEOTHERMAL BRINE. VULCAN IS FOCUSED ON DELIVERING THE WORLD'S FIRST INTEGRATED ZERO CARBON LITHIUMTM AND RENEWABLE ENERGY PROJECT.

By adapting existing technologies to efficiently extract lithium from geothermal brine, Vulcan aims to deliver a local source of sustainable lithium for Europe, built around a carbon neutral strategy with exclusion of fossil fuels. Already an operational renewable energy producer, Vulcan will also provide renewable electricity and heat to local communities. Vulcan's combined geothermal energy and lithium resource is the largest in Europe1, with licence areas focused on the Upper Rhine Valley, Germany.

Purpose

Strategically placed in the heart of the European electric vehicle market to decarbonise the supply chain, Vulcan is rapidly advancing the ZERO CARBON LITHIUM™ Project to target timely market entry, with the ability to expand to meet the unprecedented demand that is building in the European markets. Guided by our Values of Climate Champion,

Determined and Inspiring, and united by a passion for the environment and leveraging scientific solutions, Vulcan has a unique, world-leading scientific and commercial team in the fields of lithium chemicals and geothermal renewable energy.

Vulcan is committed to partnering with organisations that share its decarbonisation ambitions and has binding lithium offtake agreements with some of the largest cathode, battery, and automakers in the world. As a motivated disruptor, Vulcan aims to leverage its multidisciplinary expert team, leading geothermal technology and position in the European EV supply chain to be a global leader in producing carbon neutral lithium. Vulcan aims to be the largest, most preferred, strategic supplier of lithium chemicals and renewable power and heating from Europe, for Europe; to empower a carbon neutral future.

We will empower a carbon neutral future

Mission

Becoming Europe`s leading ZERO CARBON LITHIUM™ business & enabling energy security through geothermal energy

1 According to public, JORC-compliant data. See Upgrade of Zero Carbon Lithium™ Project Resources, 29 September 2023

ZERO CARBON LITHIUMTM

Empowering

VULCAN

DELIVERING EUROPE'S GREEN ENERGY AND MOBILITY TRANSITION

Geother m al Energy

a carbon

neutral future

5

DURING THE YEAR, YOUR RENEWABLE ENERGY AND ZERO CARBON LITHIUM™ COMPANY, LED BY CEO CRIS MORENO AND OUR EXCEPTIONAL LEADERSHIP TEAM, SUCCESSFULLY TRANSITIONED TO BEING EXECUTIONREADY TO BUILD THE NEXT PHASE OF GROWTH. WE STAND AT AN EXCITING JUNCTURE, WITH YOUR COMPANY POISED AND READY TO EXECUTE PHASE ONE OF OUR ZERO CARBON LITHIUM™ PROJECT, PENDING COMPLETION OF FINANCING DURING 2024, AND IN DOING SO TO DECARBONISE TWO TRADITIONALLY CARBON-INTENSIVE INDUSTRIES: ENERGY AND BATTERY RAW MATERIALS. OUR COMPANY AND PROJECT HAS INHERENT COMMERCIAL AND TECHNICAL ADVANTAGES WHICH MAKES US WELL PLACED FOR THE YEARS TO COME.

As my first message as Executive Chair, I would like to take this opportunity to thank Gavin Rezos for his invaluable contributions as Chair since 2019, and the entire Vulcan Board for their continued guidance. Your Board, leveraging its expertise and experience spanning the lithium, chemicals, renewable energy, battery supply chain, and finance sectors, has steered Vulcan's transition throughout 2023 to being execution ready.

As a business, we are committed to the stable, firmed supply of renewable energy, through two avenues:

• • Our current baseload geothermal renewable energy production already underpins the grid; and

• • Our planned lithium production for batteries can provide "firming" for other, intermittent forms of renewable energy, as well as enabling the decarbonisation of transport.

Phase One of our project will significantly increase our geothermal energy production, which is a reliable and renewable source of heat and power, and produce lithium on a commercial scale from the same deep brine reservoir.

Meeting Europe's renewable heating challenge

The heat sector accounts for over half of Germany's energy demand, and renewable energy accounts for only 15% of heat production, a share that has been static for years2. Power is relatively straightforward to decarbonise, whereas heat is the "elephant in the room" of decarbonisation. In 2023, geothermal renewable energy gained increased momentum. The EU Parliament recently called for a European strategy on geothermal energy, leading to the adoption of a resolution to accelerate the deployment and investment in geothermal energy, approved by an overwhelming majority of 531 in favour, and only two against3.

The market potential for geothermal heating in Germany is approximately 25% of total heat demand, according to the Fraunhofer Institute4. This means unprecedented amounts of geothermal production needs to be built. German chancellor Olaf Scholz has supported this with a target for geothermal energy capacity to be increased tenfold by 20305.

Your Company is already helping to meet this challenge.

We are already a commercial geothermal renewable energy producer, and through our operating subsidiary have over a decade of successful operation. We have a highly experienced project development and execution team, including our in-house well delivery and drilling group, Vercana. Through the hard work of our executive leadership team led by Cris, we are now ready to build a much larger geothermal energy project, surrounding the existing operation, as part of Phase One. After this, we aim to "print and repeat" further phases of production across Central Europe, towards our target to supply more than one million people with geothermal renewable heat by 20306.

• 2https://shorturl.at/bkU08

• 3https://www.euractiv.com/section/energy/news/eu-parliament-calls-for-european-strategy-on-geothermal-energy/

• 4https://shorturl.at/bkU08

• 5https://www.n-tv.de/politik/Bundesregierung-will-den-Erdwaerme-Turbo-zuenden-article24348800.html

• 6 Based on average per capita heat consumption in Germany of 6,200 kWh (https://www.destatis.de/).andthe estimated capacity for heat production from Vulcan's long term development areas, in a pure heat (no power) scenario.

Lithium: rising to meet the challenge, through strategic advantages

With our integrated approach, through more geothermal energy production comes the opportunity for more lithium production.

Our industry is still a small one in terms of volume, growing at a very fast compound annual growth rate, as Electric Vehicles (EVs) move from a previously niche market, steadily towards the complete replacement of Internal Combustion Engines (ICEs). We have seen, and are likely to continue to see, short term supply-demand imbalances as this small market grows very quickly, which can cause dramatic rises and falls in lithium pricing. We saw this in 2021 with a tenfold rise in lithium prices, and we saw it in 2023, with prices down around 85% YOY7, which created challenging conditions for the industry as a whole. We expect to continue to see this continued volatility for the rest of the decade. This short-term instability is not helpful for the lithium industry or the end-users of our products, and for this reason, Vulcan had previously taken the step in 2021-2022 to lock in offtake agreements with Stellantis, Renault, LG, Umicore and Volkswagen, some ofOur URVBF strategy is to leverage our strengths to grow our production in a modular, stepwise manner. The co-product of all of this is more renewable heating for local communities, a win-win.

Technology

Over the last three years, the team have successfully piloted and proven our lithium production and conversion from our existing geothermal operations. The Vulcan team has used commercial aluminate-based adsorbent technology, used in the industry for over 25 years, which it has adapted, optimised, and greatly improved. This has resulted in the creation of a technology arm within Vulcan, and the development of VULSORB®, our industry-leading lithium extraction technology. This has implications beyond our own projects and production in Europe. Vulcan can assist other companies and countries in improving their lithium production globally, both from a cost and sustainability perspective, by deploying our technology worldwide and start to realise shareholder value from our technological assets. This will be an increasing focus for Vulcan beyond the team's immediate Phase One financing efforts.

which involve fixed pricing and/or floor-ceiling mechanisms. Looking aheadThis gives us stability and some degree of insulation from an oscillating lithium market in the years to come and supports our project financing. It is good for us, our customers, and ultimately for EV customers.

Another point to note is that Vulcan is targeting one of the lowest costs of production in the industry. This cost advantage is because we leverage waste heat naturally contained in our lithium brine source to drive our lithium production, and because we are net producers, not consumers, of renewable energy.

Stability on lithium pricing, combined with a very low cost of production, gives Vulcan a strong basis for the future.

During 2023, the leadership team has taken the Phase One project to successful completion of a high-quality Bridging Engineering Study. At 24,000 tonnes per annum of lithium hydroxide production capacity, Phase One alone will produce enough lithium for our automotive and battery customers in

Over the next 12 months, your Company will be focused on:

• • Completing the financing of Phase One of the ZERO CARBON LITHIUM™ Project and moving into execution and construction.

• • Progressing the pipeline of future phases of renewable energy and lithium production throughout the Upper Rhine Valley (URV).

• • Progressing the global deployment strategy of our lithium production technology.

On behalf of the Board and our OneVulcan team, I would like to thank you all for your support on this exciting journey, and I look forward to Vulcan continuing to deliver shareholder value, whilst growing a world-leading, sustainability driven business.

Europe to supply around half a million electric vehicles per Dr Francis Wedinannum. This will make a significant contribution to Europe's critical raw materials independence for the energy transition. All this, whilst producing one of the most sustainable, and low cost, lithium products in the world. This is just Phase One: Vulcan's project areas in the Upper Rhine Valley Brine Field (URVBF) contain the largest lithium resource in Europe8.

Executive Chair

• 7https://www.ft.com/content/0fb27a1a-d149-4d66-87cf-a1e3feecb5e5

8

According to public, JORC-compliant data.

I am excited to share Vulcan's 2023 Annual Report with you, my first as Managing Director and CEO of the Vulcan Group. The past year has seen remarkable progress towards executingour plan to deliver the ZERO CARBON LITHIUM™ Project. I'd also like to take this opportunity to thank Dr Francis Wedin and the Board for their guidance throughout this year and the Vulcan team for their support as I transitioned to the role of their CEO. I can honestly state that I am very proud to be leading your Company.

Reflections on 2023

Safety

Safety is at the core of all that we do. 2023 did not deliver satisfying safety results. Ingraining a safety culture that ensures safety is top of mind for all our people is our core priority for 2024. We believe all incidents and injuries are preventable. Therefore, we will focus on identifying, managing, and eliminating risks where possible and growing a culture of making every day a zero-incident day. Under the guidance of the Vulcan Board, our leadership team has adopted a comprehensive approach, combining top-down and bottom-up strategies. We will focus on measuring leading indicators to identify and prevent potential issues while also leveraging lagging indicators to learn and guide our efforts in fostering a resilient safety-first culture tailored to our Phase One project execution and beyond.

OneVulcan Team

The year saw a significant shift for our team as we transitioned from a development company to an integrated project development, execution, and operations company. Our team grew to 371 exceptional individuals, each bringing unique experience from various relevant sectors, including the oil and gas, geothermal, and lithium chemical industries.

Our "Level One" executive team was finalised with highly experienced talent, including bringing in a Vice President for Project Execution, Supply Chain and Subsurface, who, with the whole leadership team, will guide our project and people through its execution phase.

At Vulcan, we pride ourselves on diversity. We are an international business spanning 29 nations, sharing a passion and dedication to bring our Phase One ZERO CARBON LITHIUM™ Project to life. During the year, we took a companywide initiative to reassess our values and move forward with those that resonate with us most. I was thrilled with the alignment across the business and why, as a OneVulcan team, we collectively embraced the values of 'Climate Champion,' 'Determined,' and 'Inspiring' in our daily lives.

Local Community

Throughout the year, our regional, political and development teams were actively involved across the regions of our Phase One operations and future phases. The teamDuring the year, we further advanced our high-performance lithium extraction technology, VULSORB®. Vulcan aims to magnify its decarbonising impact on the global lithium supply chain beyond Vulcan's immediate projects in the URV.

engaged extensively with the local community, industry, and Project resultspoliticians, providing information on our integrated project, the benefits of renewable local heating and the 'green' jobs we aim to bring to the local community. I am incredibly proud of the hard work of our external engagement teams. The results became evident later in the year with the positive decision by the Landau City Council to execute an agreement to allow Vulcan to begin construction of our integrated commercial Geothermal renewable energy and Lithium Extraction Plant (G-LEP). Construction is on track to start at the end of 2024.

Project readiness

In September last year, we broke ground at our Central Lithium Electrolysis Optimisation Plant (CLEOP) in the Höchst Industrial Park which is also the location of our Commercial Central Lithium Plant (CLP). CLEOP will be assembled on-site in the first quarter of 2024, with commissioning to commence thereafter, allowing for the first tonnes of carbon-neutral lithium hydroxide to be produced. In November 2023, we opened our Lithium Extraction Optimisation Plant (LEOP) in Landau, Germany, in a ceremony attended by local community, shareholders, politicians, strategic partners and industry. Representing a €40m investment to date by Vulcan, LEOP is a training facility to ensure operational readiness. The start of operations at LEOP will signify the first lithium chemicals to be produced in Europe with an entirely locally sourced value chain.

In mid-November, we released the results of our Bridging Engineering Study for Phase One with five key outcomes:

• 1. We reduced the overall CAPEX.

• 2. We retained the low operating cost.

• 3. We simplified our planned operations for Phase One.

• 4. We improved our financial case.

• 5. We are now EXECUTION READY.

Financing

Towards the end of 2023, Vulcan started its debt and project level equity financing, supported by BNP Paribas. It followed positive market sounding throughout the year from commercial banks, development banks, and government-backed export credit agencies. This included a A$200 million (~€120 million) non-binding Letter of Support from Export Finance Australia (EFA), and an indication of strong ECA support from Canada, Italy, and France during 2023. In February 2024, we also announced a proposed financing from the European Investment Bank (EIB) of up to €500m (~A$825m). This progression in EIB's financial appraisal is a positive step forward in the financing process of our Phase One project.

EXECUTION READY

AS WE LOOK TOWARDS 2024, THE YEAR WILL BE PIVOTAL AS WE FOCUS ON EXECUTING ON OUR PHASE ONE PROJECT PLAN, SUBJECT TO SUCCESSFUL COMPLETION OF FINANCING.

IT'S A HEADS-DOWN STRATEGY FOCUSED ON DELIVERING OUR ZERO CARBON LITHIUM™ PROJECT THAT WILL SEE US POSITIONED AS ONE OF THE MOST COMPETITIVE AND SUSTAINABLE LITHIUM PRODUCERS GLOBALLY.

Our immediate focus is on producing the first lithium chemicals to specification from our optimisation plants, once commissioning of our CLEOP is complete. Our key EPC and EPCM contracts have all progressed well and are ready for award upon full financing and final permits being received with the aim to start construction in the second half of the year.

Vulcan's project provides a unique, tangible benefit that literally "flows" into local communities, including renewable heating for district heating networks and employment. Throughout 2024, we will continue to work closely with the local communities, and we aim to operate, engaging with them to provide further information on our ZERO CARBON LITHIUM™ Project. This means we will continue our active community stakeholder engagement and immerse ourselves within the communities.

2024 Phase One ZERO CARBON LITHIUM™ Project objectives

• • A safety-first culture with clear KPIs and targets to drive our performance.

• • Producing the first tonnes of Lithium Hydroxide Monohydrate ( LHM) to specification at CLEOP.

• • Completion of Phase One debt and project level equity financing.

• • Commencing construction of our integrated Geothermal and Lithium Extraction Plant (G-LEP).

• • Commence drilling at our first well sites.

I would like to thank you and the entire Vulcan community for your continued support. We look forward to keeping you updated with our latest developments throughout the year as we continue to methodically execute our plan to deliver the world's first integrated renewable energy and ZERO CARBON LITHIUM™ Project.

Cris Moreno

Managing Director and CEO