Electra Battery Materials Reports on 2022 Q4 and Year End 2022

Electra Battery Materials Corporation reported its financial results for the quarter and year ended December 31, 2022, and provided an update on the commissioning of its cobalt refinery and its black mass recycling trial. All amounts are in Canadian currency unless otherwise stated.

“2022 was a remarkable year for Electra, filled with achievements and developments that augur extremely well for our Company and our prospects of becoming a key link in the North American EV battery supply chain,” said Trent Mell, Electra’s CEO. 

“Most notably, we made considerable progress towards our vision of commissioning North America’s first cobalt sulfate refinery, we launched a plant-scale black mass recycling trial at our refinery complex north of Toronto that has already produced a number of encouraging results, and we signed a three-year strategic supply agreement with LG Energy Solution, the world’s second-largest EV battery manufacturer,” explained Mell.

“Equally significant, we benefitted from the adoption of the U.S. Inflation Reduction Act, which has provided a boost for our industry and includes a number of incentives that will spur further growth of the EV supply chain in North America for years to come, ” Mell added.

ELECTRA Q4 2022 HIGHLIGHTS AND DEVELOPMENTS               

During the Q 4 2022 net income for Electra during the period was $10.3 million or $0.31 per share. These compared to a net loss of $15.5 million or $0.55 per share for Q4 2021. Net income in Q4 2022 was driven by a gain of $11.9 million on the fair value of the of the embedded derivative liability portion of Electra’s convertible debt and an impairment reversal of $1.3 million recognized on the planned sale of the remaining Cobalt Camp exploration patents to Kuya Silver.

Electra  held cash and marketable securities of $8.4 million as of December 31, 2022, down from $19.7 million as of September 30, 2022. Electra’s cash balance at the end of Q4 2022 does not include the remaining $5.1 million of government investments expected to be received or the net proceeds of US$14 million received from the convertible debt financing completed in February 2023.

In terms of financing, Electra Battery raised gross proceeds of US$5.5 million (about CAD$7.3 million) through an overnight marketed offering of 2.35 million units with each unit comprised of one common share and one share purchase share warrant entitling the holder to purchase one common share at a price of US$3.10 through November 15, 2025. Gross proceeds raised through the offering will be used to fund the commissioning of Electra’s cobalt sulfate refinery. 

Among the major achievements for Electra was the launching of a black mass recycling trial at the company’s Ontario refinery complex to recover high-value elements found in shredded lithium-ion batteries, including lithium, nickel, cobalt, copper, manganese, and graphite, using Electra’s proprietary hydrometallurgical process.

Electra also acquired the option to purchase the CAS cobalt-copper project in Idaho, property located near the Company’s other exploration projects in Idaho, for up to US$1.5 million payable over 10 years upon completion of specific milestones.

Over the year 2022, Electra’s income was $12.6 million or $0.38 per share. These compared to a net loss of $34.9 million or $1.26 per share for the year ended December 31, 2021. Net income in FY2022 was driven by a gain of $27.7 million on the fair value of the embedded derivative liability portion of Electra’s convertible debt.

Electra also signed a major  a three-year agreement to supply 7,000 tonnes of battery grade cobalt to LG Energy Solution, a leading global manufacturer of lithium-ion batteries for electric vehicles.
Total incurred costs for the refinery construction project in 2022 were $71 million.

A benefit Signed a benefits agreement with the Métis Nation of Ontario that will provide employment, training, procurement, and business opportunities related to the construction and expansion of Electra’s battery materials refinery north of Toronto.

Strengthened the management team with the appointment of Renata Cardoso as Vice President Sustainability and Low Carbon, Craig Cunningham as Chief Financial Officer, Dave Marshall as Vice President, Engineering, and Joe Racanelli as Vice President, Investor Relations. The additions bring collectively 100 years of relevant sector experience and subject matter expertise to Electra.

Released highlights of a scoping study prepared by a global engineering firm that supports the creation of an integrated electric vehicle battery materials park in Ontario consisting of nickel, cobalt, manganese refining, recycling of battery black mass material, and precursor cathode active material (pCAM) manufacturing. The scoping study assessed the economics and carbon footprint of various nickel feed options to develop an integrated facility producing 10,000 tonnes per annum of battery grade nickel sulfate and pCAM components essential to the production of EV batteries.

Confirmed cobalt mineralization at its Ruby prospect, which is located 1.5 kilometres from Electra’s primary Iron Creek deposit, following receipt of assay results from the summer exploration program in the Idaho Cobalt Belt. Assay results and exploration work completed to date support the launch of a more extensive drill campaign to determine the full extent of Ruby’s mineralization.

Commenced trading on Nasdaq Capital Market under the ticker symbol "ELBM" on April 27, 2022.
Announced preliminary discussions with the Government of Quebec to construct a new cobalt sulfate refinery in Bécancour, Quebec that will integrate with an emerging battery materials park in the province.

Electra’s plant-scale recycling of black mass material in North America was completed in February 2023 and confirmed the recovery of critical metals, including lithium, nickel, cobalt, copper, manganese, and graphite, needed for the EV battery supply chain using Electra’s proprietary hydrometallurgical process. To date, Electra has produced high quality nickel-cobalt mixed hydroxide and lithium carbonate products in its black mass recycling trial at its refinery complex.

The company’s commitment to operating in sustainable manner was highlighted when it Issued its inaugural Sustainability Report and committed to net-zero greenhouse emissions by 2050.
As of March 31, 2023, Electra has made the following key developments in its refinery project:
Completed commissioning of the analytical lab, feed material handling system, including the ball mill, and mixing station, filter presses, and reagent handling systems.

By April 1, 2023, the company completed 90 to 95 percent of all procurement and completed the erection of the solvent extraction building. The construction of the cobalt sulfate loadout facility was completed, and Electra secured employees to work at its Electra Battery Materials plant. The company hired 31 personnel, which includes tradespeople, engineers, operators, lab technicians, and office support staff.

On February 14, 2023, Electra announced that due to the receipt of damaged equipment critical to the completion of the refinery project and ongoing supply chain disruptions causing ongoing delays in the delivery of equipment, including components to process control systems, the Company withdrew its previous guidance relating to the refinery project’s estimated capital spend and construction timelines. Subsequent inspection of the damaged equipment has determined that the falling film evaporator vessel is suitable for installation. The damaged equipment will require onsite repairs before it can be commissioned.
 
Also on February 14, 2023, Electra announced the launch of a re-baseline engineering report to identify the refinery’s updated project scope, scheduling, and capital expenditures. 

This updated re-baseline engineering work, which has been undertaken by the refinery project’s engineering, procurement, and construction (EPC) contractor, continues. The findings will be reviewed by an independent third-party estimator and presented to the Company’s board. Although results are still pending, management anticipates that the capital costs will be higher due to inflation, construction delays and the completion of detailed engineering.
 
Given inflationary price pressures over the past year that have negatively impacted all aspects of the refinery project, including contractor labour rates and costs for concrete, steel, and piping, Electra expects that the re-baseline engineering report will conclude that capital costs for completing the refinery project will be higher than the $105 million budget previously disclosed. 

The Company will require additional capital to complete final commissioning. Discussions are underway with various commercial partners, government agencies and other parties to address the funding shortfall.
 
Electra will provide an update on its refinery project once the re-baseline engineering report is completed.
 
Electra is a processor of low-carbon, ethically sourced battery materials. Currently commissioning North America’s only cobalt sulfate refinery, Electra is executing a multipronged strategy focused on onshoring the electric vehicle supply chain. Keys to its strategy are integrating black mass recycling and nickel sulfate production at Electra’s refinery located north of Toronto, advancing Iron Creek, its cobalt-copper exploration-stage project in the Idaho Cobalt Belt, and expanding cobalt sulfate processing into Bécancour, Quebec. For more information visit www.ElectraBMC.com.

Contact:
Joe Racanelli
Vice President, Investor Relations
info@ElectraBMC.com
+1.416.900.3891

 

 

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