Electra ‘fully funded’ to build North America’s first cobalt refinery

Electra Battery Materials (NASDAQ, TSXV: ELBM) says it is now fully funded to complete the construction and commissioning of what would be the first cobalt sulfate refinery in North America.

On Wednesday, the Canadian battery metals developer said it has closed a $34.5 million financing and $40 million debt equitization, marking a “major transformation” of its balance sheet and funding outlook.

With over $80 million now secured from investors and government commitments, Electra has obtained all the capital required to complete its cobalt sulfate refinery located in Temiskaming Shores, Ontario, seen as a critical asset that will strengthen the region’s battery and defense supply chains.

“With construction of our cobalt refinery now fully funded and our balance sheet reset, we are entering the execution phase with the resources and focus needed to deliver North America’s first cobalt sulfate facility,” said Trent Mell, CEO of Electra. “This marks a turning point for Electra and a critical step in reducing foreign dependence in the battery supply chain.”

Mell noted that more than 90% of global cobalt sulphate production currently comes from China, highlighting the urgency to “a resilient, transparent, and domestically controlled supply chain” for industries such as automotive, defense, energy and infrastructure.

The company is also looking to advance several projects during the construction phase, including a cobalt project in Idaho that could serve as a possible future source of US-sourced feedstock and a black mass recycling program to recover critical minerals from production scrap. Both are seen as key projects to the company’s strategy of building a domestic critical minerals supply chain.

Stalled cobalt refinery

According to Electra, its cobalt sulfate refinery in Ontario will be the first facility on the continent to produce battery-grade cobalt sulfate. Once operational, it is expected to produce up to 6,500 tonnes of the material annually, enough to support production of batteries for approximately 1 million vehicles, or to supply strategic sectors such as national defense, energy storage and grid infrastructure.

Construction of the $250 million refinery has been held back since August 2023 due to cost overruns and supply chain disruptions. At the time, approximately $60 million was still required to complete the project.

With markets improving this year, Electra has been focused on raising this capital to finish building the facility, from which it expects to produce about 6,500 tonnes of battery-grade cobalt per year, enough to support the manufacturing of a million electric vehicles.

To date, it has received federal government support from both sides of the border, including a $20 million award last year from the US Department of Defense and a recent funding on a similar scale (C$17.5 million) from the Canadian government.

The $34.5 million financing, comprising the issuance of 46 million units priced at $0.75 per unit, is part of a debt-to-equity restructuring that Electra announced two months ago, a move that it said would improve the company’s capital structure. Initially, it had planned to issue 40 million units for $30 million. The $40 million debt equitization would reduce the company’s total debt from $67 million to $27 million, simplifying its capital structure, Electra said in a press release.

Shares of Electra Battery Materials fell by 4.8% by midday Thursday in Toronto following the financing completion, giving the company a market capitalization of C$39.5 million.