Electra receives $20 million funding proposal for Ontario cobalt refinery

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

Several other financing talks are ongoing to fund its cobalt refinery project in Ontario, for which an additional $60 million is required to complete the construction and commissioning phases, the company added.

“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 stated in a news release.

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

In August, Toronto-based Electra was awarded $20 million by the US 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. Prior to that, the company received C$5 million from the Canadian government for its recycling project.

The new investment, in the form of a prepayment, would bring in an immediate investment of $10 million and a follow-on investment of $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.

The funding announcement sent Electra Battery Materials’ shares 28.2% higher by 11:15 a.m. in Toronto, trading at a near 52-week high of C$0.91. Its market capitalization is C$50.3 million.