Vulcan Energy Resources (ASX:VUL) extended the timeline of its Phase One Lionheart project to make way for the potential participation of the German government in funding the construction, according to a Wednesday filing with the Australian bourse.

The company now targets to finalize the agreement and begin full construction in the second half of the year, the filing said.

The German government is conducting detailed due diligence in line with Vulcan Energy's application to participate in the 1 billion euro German Raw Materials Fund, which aims to back projects supporting the German domestic economy through the long-term procurement of critical raw materials.

Vulcan Energy's shares were down 5% in recent trade.