Electra ‘fully funded’ to build Ontario cobalt refinery

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

The Canadian battery metals developer said Wednesday it has closed a $34.5 million (C$48 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 sulphate refinery located in Temiskaming Shores, Ont. The existing facility is seen as a critical asset that will strengthen the region’s battery and defence 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 sulphate facility,” said CEO Trent Mell. “This marks a turning point for Electra and a critical step in reducing foreign dependence in the battery supply chain.”

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, Mell said.

Electra is looking to advance several other projects during the construction phase, including a cobalt project in Idaho that could serve as a possible future source of U.S.-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

Electra’s Ontario facility will be the first facility on the continent to produce battery-grade cobalt sulphate, the company said. Once operational, it is expected to produce up to 6,500 tonnes of the material annually, enough to support production of batteries for about 1 million vehicles, or to supply strategic sectors such as national defence, 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, about $60 million was still required to complete the project.

With markets improving this year, Electra has focused on raising capital to finish building the facility.

To date, it has received federal government support from both sides of the border, including a $20 million award last year from the U.S. Department of Defense and a C$17.5 million ($12.5 million) commitment from Ontario.

The $34.5 million financing, comprising the sale of 46 million units priced at 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. It had initially 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.

Electra shares fell 2.1% to C$2.26 Thursday afternoon in Toronto. That gave the company a market capitalization of about C$41 million.