Electra shares up on US$20M funding bid for Ontario cobalt refinery

Electra Battery Materials (NASDAQ: ELBM; TSXV: ELBM) said on Tuesday it has received a US$20 million investment proposal from an unnamed arm’s-length party, matching the funding amount it recently secured from the U.S. government. Its shares jumped. 

Several other financing talks are ongoing to fund its cobalt refinery project in northern Ontario, for which an additional US$60 million is required to complete the construction and commissioning phases, the company added. The plant is located in Temiskaming Shores, about 500 km north of Toronto. 

“Interest from sophisticated strategic partners indicates strong confidence in Electra, and with the continued support of investors, governments and downstream customers, we are well-positioned to realize our vision of a North American battery materials supply chain,” CEO Trent Mell said in a release.

The funding news comes just three weeks after Toronto-based Electra was awarded US$20 million by the U.S. Department of Defense pursuant to Title III of the Defense Production Act (DPA) to build its cobalt refinery, expected to be the first of its kind in North America. The company has previously received $10 million for its refinery from the Canadian government in investments in 2020 and last February, and $5 million from the Ontario government.

Electra shares gained more than 17% to 83¢ apiece on Tuesday in Toronto, valuing the company at $47.4 million. Its shares traded in a 52-week range of 41¢ to 98¢. 

Electra has historically produced nickel and cobalt at its low-carbon, permitted hydrometallurgical refining complex. The facility is currently being expanded and modified to provide North America’s battery makers with a domestic source of cobalt sulphate for lithium-ion batteries. The complex was also the site of a year-long battery recycling demonstration plant. It is estimated that the entire cobalt facility will cost US$250 million to build.

US$10M follow-on cash

The new investment, in the form of a prepayment, would bring in an immediate investment of US$10 million and a follow-on investment of US$10 million during the commissioning phase. As partial compensation, Electra would provide marketing rights for a portion of future production until the facility is repaid.

The proposed investment is subject to certain conditions, including developments in other ongoing financing discussions, which Electra says are well advanced. The company also notes it is making progress with other non-dilutive sources of financing, including government programs, to complete the construction and commissioning of the refinery.

Once fully commissioned, Electra’s facility could produce up to 6,500 tonnes of cobalt per year, which it estimates could support the production of over 1 million electric vehicles annually. South Korea’s LG Energy Solution has announced it intends to purchase up to 80% of capacity over the first five years of operation.