Electra Advances Battery Material Financing with New Proposal

Electra Battery Materials Corporation's Strategic Investment Update

Electra Battery Materials Corporation (NASDAQ: ELBM; TSX-V: ELBM) has recently made headlines with its $20 million strategic investment proposal aimed at advancing its financing strategy for North America’s pioneering battery-grade cobalt refinery. This announcement is particularly significant as it demonstrates the company's commitment to establishing a robust battery materials supply chain in the region.

A Promising Non-Binding Term Sheet

In a recent communication, Electra revealed that it has acquired a non-binding term sheet from a reputable entity within the battery materials sector for a $20 million prepayment facility. This move is part of a broader strategy to secure a total of $60 million in funding, which is necessary for project completion alongside additional amounts designated for operational capital during the refinery's construction and commissioning phases.

Statements from Leadership

Electra's CEO, Trent Mell, expressed optimism regarding the interest shown from sophisticated partners in the industry. He emphasized the importance of this support from investors, governments, and downstream customers in helping Electra move closer to its goal of creating a sustainable battery materials supply chain in North America.

The Importance of Cobalt Production

Cobalt is a critical component in the production of lithium-ion batteries. Currently, over 90% of battery-grade cobalt is sourced from Chinese manufacturers, leaving a significant gap in North American production capabilities. Electra's facility, located north of Toronto, is being expanded to produce cobalt sulfate specifically for local battery manufacturers.

Past Achievements Leading to Future Goals

The company's existing refining complex has historically produced nickel and cobalt, and it operated a battery recycling demonstration plant in 2023. Electra estimates that it requires an additional $60 million in capital expenditure to finalize the $250 million development of its cobalt facility.

Investment Breakdown and Strategic Goals

The proposed investment consists of an immediate $10 million infusion, followed by another $10 million investment when the refinery enters its commissioning phase. In exchange, Electra will grant certain marketing rights for future production until the investment is fully repaid. This arrangement aims to bolster working capital and cover some of the administrative costs above the necessary construction expenses.

Ongoing Efforts in Securing Financing

Electra continues to pursue other non-dilutive financing avenues, including government programs, to ensure the successful construction and commissioning of the refinery. When operational, Electra's facility could produce up to 6,500 tonnes of cobalt annually, enough to support the manufacturing of over one million electric vehicles (EVs) each year. Notably, LG Energy Solution plans to procure up to 80% of this capacity in the initial five years of operation.

Next Steps and Future of Electra

At present, the strategic investment term sheet remains a non-binding proposal, with a confirmation received recently. The transition to a binding agreement will depend on thorough due diligence and the negotiation of standard closing protocols. Discussions with additional strategic partners are expected to progress until this proposal is fully finalized.

Electra is laser-focused on its goal of recommissioning and expanding its low-carbon Canadian cobalt refinery, which has already mitigated risks through the delivery of long-lead equipment and the successful operation of a black mass demonstration plant. Looking ahead, Electra's long-term vision includes integrating nickel production and enhancing battery recycling efforts, further solidifying the essential refining processes required to support North America's electric vehicle battery supply chain.

Company Update on Incentives

Furthermore, Electra has announced the issuance of C$96,250 in deferred share units (DSUs) as part of its Long-Term Incentive Plan. This plan received approval from shareholders during their annual meeting. The DSUs, awarded to directors in lieu of cash compensation, will vest after one year and can only be exercised upon the director's departure from the Company, ensuring alignment of interests with the shareholders.

About Electra Battery Materials

Electra Battery Materials Corporation stands at the forefront of the low-carbon battery materials sector, dedicated to the development of North America’s only cobalt sulfate refinery. The company's phased strategy aims to enhance domestic processing capabilities for EV battery materials. Their initiatives include the potential for cobalt sulfate processing in Canada and exploring nickel sulfate production opportunities, creating a more integrated supply chain for battery manufacturers.

Frequently Asked Questions

What is the purpose of the $20 million investment proposal?

The proposal aims to secure funding for the construction and operation of North America's first battery-grade cobalt refinery.

How does this investment benefit Electra and the region?

The investment will help Electra establish a domestic cobalt supply chain, reducing reliance on foreign production and supporting the electric vehicle industry.

What is the expected annual production capacity of Electra's facility?

Electra's facility aims to produce up to 6,500 tonnes of cobalt per year, sufficient for over one million electric vehicles annually.

Who are Electra's strategic partners?

While the term sheet is with an unnamed strategic player, LG Energy Solution intends to purchase a significant portion of the refinery's capacity in the coming years.

What incentives has Electra created for its directors?

Electra has granted deferred share units (DSUs) to its directors, aligning their interests with those of the company's shareholders.

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