Electra Strengthens North American Critical Minerals Position in Notable 2024

2024 marked a pivotal year for Electra Battery Materials Corporation (NASDAQ: ELBM; TSX-V: ELBM) as the company positioned itself to play a crucial role in North America's battery supply chain. Securing significant government funding, forming strategic partnerships, and making technological advancements in battery recycling underscored the year's achievements. While construction of North America's first cobalt sulfate refinery remained the company's primary focus, Electra also made notable progress in battery recycling initiatives and exploration of its Idaho copper-cobalt properties. With key financial support from the U.S. Department of Defense and ongoing discussions with strategic investors, Electra strengthened its foundation for completing its flagship refinery project and advancing its long-term vision of creating a North American battery materials supply chain independent of China.

Corporate Developments

Leadership Additions and Transitions

Electra made strategic additions to its leadership team throughout 2024 to support its growth objectives. In January, the company welcomed back Heather Smiles as Vice President, Investor Relations and Corporate Development, bringing nearly 15 years of experience in investor relations, capital markets, and strategic planning.

In October, the company appointed Michael Green as Construction Director to lead the final phase of construction for the Ontario refinery. With over 30 years of experience in construction management for large-scale infrastructure, mining, and power generation projects, Green's expertise was brought in to ensure timely completion of the cobalt refinery.

In December, Electra announced the appointment of Marty Rendall, CFA, as its new Chief Financial Officer, succeeding David Allen upon his retirement effective January 1, 2025. Rendall brings extensive experience in the mining industry, having played a pivotal role in transforming Victoria Gold from a small exploration company into a leading Canadian gold producer with an enterprise value exceeding C$1 billion at its peak.

In August, the company engaged Altitude Capital Consultants Inc., led by renowned Canadian capital markets experts Michael Wekerle and Gene McBurney, to provide capital markets strategy and analysis of market opportunities.

Strategic Partnerships

A significant corporate development came in September when Electra formed Aki Battery Recycling, a joint venture with the Indigenous-owned Three Fires Group. This partnership aims to produce battery black mass through the responsible recycling of lithium-ion battery scrap and waste material, which would then be processed at Electra's refinery to recover critical minerals for new batteries. The Three Fires Group will lead capital resourcing and site selection for the facility, while Electra will provide technical and commercial leadership.

In April, Electra signed a binding letter of intent with Eurasian Resources Group S.A.R.L. (ERG) for a long-term supply of cobalt hydroxide to the Ontario refinery. Starting from 2026, under the three-year agreement, ERG will deliver 3,000 tonnes per annum of IRA-compliant cobalt to Electra's refinery. With this agreement, Electra secured sufficient cobalt hydroxide feed material to meet all of the refinery's annual capacity.

Operational Developments

Refinery Progress

Throughout 2024, Electra continued to focus on completing the construction of North America's first cobalt sulfate refinery in Temiskaming Shores, Ontario. The company reported that most of the critical equipment needed for completion, such as pressure vessels, tanks, and structural steel, had been delivered to the refinery complex.

The project advanced to a stage where the company is now seeking the final approximately US$60 million to complete construction of the estimated US$200-250 million facility. Once fully commissioned, the refinery could produce 6,500 tonnes of cobalt per year, which would support the production of over 1 million electric vehicles annually.

In October, the company initiated early works and winter preparations at the Ontario Refinery project site, supported by a US$5 million financing completed in November.

Battery Recycling Advancements

Building on its 2023 black mass demonstration plant success, Electra continued to advance its battery recycling capabilities in 2024. In February, the company reported that optimizations to its battery recycling process had resulted in improved recoveries of lithium, nickel, cobalt, and other critical minerals.

A significant milestone came in September when Electra announced it had successfully achieved greater than 99% purity, or technical grade, lithium carbonate product from its recycling process. This achievement bolstered the company's ability to produce high-quality, technical and battery-grade products from its black mass recycling project, potentially marking the first such achievement in North America at a plant scale.

Idaho Copper-Cobalt Properties

Electra made notable progress with its Idaho properties in 2024. In July, the company announced the discovery of a previously unknown copper surface showing, the Malachite Hill Copper Showing, on an unexplored boundary area of its Redcastle Agreement claims. The company also extended its Redcastle Property Agreement, pushing its main exploration expenditure commitments by two years, to 2026 and 2028 respectively.

A significant development came in November when Electra secured a 10-year exploration permit for its Idaho copper and cobalt properties, including the Iron Creek project. Approved by the U.S. Forestry Service, this permit covers 91 designated drill pad locations and hundreds of potential drill targets, enhancing project certainty and offering greater planning flexibility compared to annual permits.

Financial Developments

Government Funding

Electra secured significant financial support from government sources in 2024. In February, the company received a C$5 million investment from the Government of Canada towards the construction of the cobalt sulfate refinery, provided as a grant from the Federal Economic Development Initiative for Northern Ontario (FedNor).

In June, Electra was awarded another C$5 million from Natural Resources Canada to support the development of its proprietary battery materials recycling technology, accelerating the next phase of its recycling project.

The most substantial government support came in August when Electra received a US$20 million award from the U.S. Department of Defense under Title III of the Defense Production Act. This funding was provided to support the construction and commissioning of North America's only cobalt sulfate refinery, highlighting the strategic importance of the project for North American supply chain security.

Financing Activities

Throughout the year, Electra engaged in various financing activities to support its operations and projects. In February, the company restructured the terms of its US$51 million in 8.99% senior secured convertible notes due February 2028, amending the terms of 10,796,054 outstanding common share purchase warrants to better align with current market conditions.

In August, the company announced that all accrued interest owing to August 15, 2024, on the convertible notes would be "paid-in-kind," not in cash, and added to the outstanding principal amount of the notes, resulting in the issuance of additional notes in the principal amount of US$6.5 million.

In September, Electra received a non-binding term sheet for a US$20 million prepayment facility from an arms-length strategic player in the battery materials sector, intended to provide working capital and general and administrative coverage over and above the remaining construction costs.

In October, the company announced a US$5 million financing proposal from holders of its existing secured notes, which was completed in November. The financing consisted of secured convertible notes in the principal amount of US$4 million and US$1 million of common shares, with the funds enabling the company to initiate early works and winter preparations at the Ontario Refinery.

In December, Electra announced a four-to-one reverse share split, effective December 31, 2024, to support its efforts to regain compliance with Nasdaq's minimum bid price requirement of US$1.00 per share and to potentially attract institutional investors with minimum share price thresholds.

Innovation Highlights

Recycling Technology Advancements

Electra's innovation efforts in 2024 centered on advancing its proprietary battery recycling technology. The company reported continued refinements to its process parameters for nickel-cobalt mixed hydroxide precipitate (MHP) production, with metal concentration in the final MHP product reaching nearly 50% nickel and cobalt, well above quoted market standards.

The company also improved its lithium carbonate product quality by nearly 20% from its initial processing, with quality approaching "technical grade" lithium carbonate. Manganese recovery rates were further improved to approximately 95% by strategically modifying the use and sequencing of reagents.

By September, Electra announced it had successfully achieved greater than 99% purity for its lithium carbonate product, reaching technical grade specifications - a significant milestone in North American battery recycling capabilities.

Future Outlook

Looking ahead to 2025 and beyond, Electra has outlined a clear strategic direction focused on several key priorities:

1. Completing the financing package and construction of the Ontario cobalt refinery to produce 5,000 tonnes per annum of battery cobalt initially, with plans to increase to 6,500 tonnes annually.
2. Expanding battery recycling operations through the Aki Battery Recycling joint venture, establishing a steady supply of black mass for processing at Electra's refinery.
3. Advancing exploration of the Idaho copper-cobalt properties, leveraging the new 10-year permit to explore critical mineral resources.
4. Evaluating expansion to a second cobalt sulfate facility in Bécancour, Quebec, and a strategically located North American nickel sulfate refinery.

Electra's CEO, Trent Mell, emphasized that the company is positioned to be a foundational component of the North American battery supply chain. With LG Energy Solution having secured up to 80% of the refinery's production and partnerships with major suppliers like ERG and Glencore ensuring feedstock supply, Electra appears well-positioned to capitalize on the growing demand for domestically processed battery materials.

The geopolitical landscape continues to underscore the importance of Electra's mission. With over 80% of battery grade cobalt currently produced in China, Electra's refinery project represents a critical step toward reducing North America's dependence on foreign supply chains for essential battery materials.

In the company's 2024 shareholder letter, Trent Mell noted that Electra was one of the few critical minerals companies to post a positive share price performance year-over-year, positioning the company to capitalize on its investments and lead in critical minerals refining and recycling as it enters 2025.

The company's success in securing significant government funding and strategic partnerships, combined with its technological advancements in battery recycling, suggests that Electra is making meaningful progress toward its vision of creating a more secure and sustainable critical minerals supply chain for North America.

As the electric vehicle industry continues to grow globally, with demand expected to increase by 22% in 2024 according to Rho Motion, Electra's positioning at the forefront of North American battery material processing presents both challenges and opportunities in the coming years.

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