Fuse Cobalt, Electra enter MOU for raw material supply

Fuse Cobalt (TSXV: FUSE; US-OTC: FUSEF) has signed a memorandum of understanding with Electra Battery Materials (TSX: ELBM; NASDAQ: ELBM) for the supply of raw cobalt material.

Fuse is exploring the Teledyne and Glencore Bucke projects located in Cobalt, Ont., which are near Electra’s cobalt sulphate refinery in Temiskaming Shores.

The MOU contains the framework of a future transaction that would see Electra purchase up to 2,000 tonnes per year of cobalt contained in raw material for its cobalt refinery from either one (or both) of Fuse’s mining projects in northeastern Ontario. The cobalt refinery is currently on track for commissioning in December 2022. Once complete, it would be one of two major cobalt sulphate refineries located outside China, with a target annual production of 6,500 tonnes of cobalt (from 32,500 tonnes of cobalt sulphate).

Fuse will use commercially reasonable efforts to achieve commercial production on or before Jan. 1, 2028, which may be extended by mutual agreement for up to 12 months, following which Electra has a right to terminate the agreement, and Fuse may elect to sell to other parties.

The purchase price to be paid by Electra for cobalt in raw material will be linked to Fastmarkets MB’s standard-grade metal price multiplied by a payable mechanism to be agreed prior to completion of the transaction. Electra and Fuse have also agreed to collaborate on ways to extract copper by-product on a profit share basis.

“Having a domestic source of cobalt raw material produced ethically and with low-carbon emissions will help us to better address the demand for onshore EV battery materials,” Trent Mell, Electra’s CEO, stated in a news release. “We look forward to working with Fuse Cobalt as they advance development of their projects and begin production.”

The signing of a definitive agreement between the parties will be subject to Fuse meeting certain conditions, including the successful completion a bankable feasibility study and development of a processing flowsheet to produce cobalt material that is suitable for further processing to battery-grade cobalt sulphate at Electra’s refinery.