Electra Battery Materials (TSX-V:ELBM) has received a non-binding term sheet for a US$20 million ($30 million) prepayment facility from an “arms-length strategic player” in the battery materials sector.
The strategic investment term sheet is a non-binding proposal and a confirmation of the proposal was received on 3 September 2024.
Electra owns a low-carbon, permitted hydrometallurgical refining complex north of Toronto that historically produced nickel and cobalt. The facility is being expanded and modified to provide North American battery makers with a domestic source of cobalt sulphate for lithium-ion batteries.
The refining complex was also the location of a year-long battery recycling demonstration plant in 2023.
Electra estimates that an additional US$60 million in capital costs will be required to complete the US$250 million cobalt facility. As such, several other financing discussions have been advancing alongside the aforementioned proposed financing.
If consummated, the investment would be comprised of an immediate investment of US$10 million and a follow-on investment of US$10 million during the refinery’s commissioning phase.
As partial compensation, Electra will provide marketing rights for a portion of future production until the facility is repaid. The transaction is subject to conditions precedent, including developments in parallel financing discussions that are well advanced.
The strategic investment is equal to the US$20 million Electra received from the US Department of Defense pursuant under the Defense Production Act in August.
Electra CEO Trent Mell says interest from sophisticated strategic partners indicates strong confidence in the company, and with the continued support of investors, governments and downstream customers, Electra is well-positioned to realise its vision of a North American battery materials supply chain.
More than 90% of battery grade cobalt is currently produced by Chinese companies and none in North America, the company notes.
Electra continues to make steady progress in securing other non-dilutive sources of financing, including government programs, to complete the construction and commissioning of the refinery.
Electra’s near-term priority is to recommission and expand its low-carbon Canadian cobalt refinery, which has already been derisked through the delivery of long lead equipment and the operation of a black mass demonstration plant in the legacy refinery.
Once fully commissioned, the company’s facility could produce up to 6,500 tonnes of cobalt per year, which could support the production of over 1 million EVs annually. LG Energy Solution intends to purchase up to 80% of capacity over the first five years of operation.
Write to Adam Orlando at Mining.com.au
Images: Electra
