Electra Provides Refinery Update and Files 2023 Financial Reports - Seite 2

“Canada surpassing China as the world’s most promising jurisdiction for manufacturing lithium-ion batteries, underscores the strategic value of our refinery for North America,” Mr. Mell concluded. “We have a vision for both the near- and the long-term, and we remain committed to a staged approach, including future plans for a second refinery in Bécancour, Quebec and exploring nickel sulfate refining in North America.”

Highlights and Developments

• Most of the critical equipment needed for completion of the cobalt sulfate refinery, such as pressure vessels, tanks, and structural steel, were delivered to the refinery complex in Ontario. Installation of the equipment delivered to the site will occur once Electra secures the remaining capital required for its refinery project.
• A cobalt supply agreement with LG Energy Solution was extended and expanded in 2023 and Electra will now supply LG Energy Solution with 19,000 tonnes of battery grade cobalt over a five-year period beginning in 2025.
• The Company also signed a binding letter of intent in early 2024 with Eurasian Resources Group S.A.R.L. (“ERG”) for long-term supply of ERG’s cobalt hydroxide to the refinery, further supporting efforts to onshore the battery supply chain and reduce reliance on foreign refiners. With this agreement, Electra has sufficient cobalt hydroxide feed material to meet the refinery’s annual capacity.
• Electra successfully completed a year-long plant-scale recycling program of Black Mass material, believed to be the first in North America, and successfully recovered critical metals, including lithium, nickel, cobalt, copper, manganese, and graphite, needed for the EV battery supply chain using Electra’s proprietary hydrometallurgical process.
• Electra produced a mixed hydroxide precipitate (MHP), at contained metal grades for nickel and cobalt above quoted market specifications and has shipped approximately 28 tonnes of MHP product to customers to date.
• Recovery rates for all targeted metals improved during the recycling trial, with recovery for manganese improving by more than 50% from results achieved in a lab setting. The metal content in the MHP increased 5 to 10% over the course of the trial. An increase in metal content results in a higher value saleable product, thereby improving the potential economics of continuous recycling operations.
• During the fourth quarter of 2023, Electra signed a memorandum of understanding with Rock Tech Lithium for the development of a partnership to supply recycled lithium product from Electra’s refinery to Rock Tech’s lithium refineries for upgrading to battery-grade lithium chemicals.
• Electra completed a re-baseline engineering report in the second quarter of 2023 to assess remaining refinery scope, construction schedule, and capital expenditures. The re-baseline engineering report estimated that the total capital costs are C$155 to C$167 million, of which approximately C$85.6 million had been capitalized as of December 31, 2023.
• A memorandum of understanding was signed with the Three Fires Group to form a joint venture focused on the primary recycling (shredding) of battery waste in Ontario, underpinned by Electra’s propriety black mass refining capabilities to recover high value critical metals. Under the joint venture, Electra and the Three Fires will collaborate to source and process battery waste generated by manufacturers of battery cells, electric vehicles, and energy storage systems at a future facility in southern Ontario, to produce black mass material that will be further refined using Electra’s proprietary hydrometallurgical process at its refinery.
• In the second quarter of 2023, Electra completed a desktop scoping study to evaluate the potential economics of developing a standalone black mass process plant within its refinery complex capable of processing 2,500 tonnes of black mass material per annum. The facility could be scaled over time as the market for battery recycling expands.
• Electra was notified in September 2023 by The Nasdaq Stock Market LLC (“Nasdaq”) that it did not meet the minimum bid price of US$1.00 per share required for continued listing on the Nasdaq and the Company was given to March 19, 2024, to regain compliance. On March 21, 2024, Electra announced an extension from the Nasdaq to September 16, 2024, to regain compliance.
• On February 9, 2024, the Company announced that it has received a C$5 million funding commitment from the Government of Canada towards the construction of North America’s first cobalt sulfate refinery. The investment will be provided in the form of a grant from the Federal Economic Development Initiative for Northern Ontario (FedNor).
• In February 2023, Electra retired US$36 million of convertible debt and closed a convertible debt offering for an aggregate of US$51,000 principal amount of 8.99% senior secured convertible notes due February 2028 (the 2028 Notes). The Company received net proceeds of approximately US$13.7 million towards costs associated with the refinery development. Noteholders also received an aggregate of 10,796,054 common share purchase warrants exercisable for five years at an exercise price of US$2.48 per common share.
• In January 2024, the common share purchase warrants were amended to align more closely with market conditions. The exercise price was reduced to C$1.00 per common share and an acceleration clause added. As partial consideration for the amendments, the holders of the senior secured convertible notes agreed not to exercise certain adjustment provisions they held in connection with the 2028 Notes. As a result, the 2028 Notes were not re-priced at a lower exchange rate and no amendments were made in respect of the debt conversion ratio. The amendments reduce potential dilution in Company capitalization in the event the 2028 Notes are converted into equity, while the cashless exercise feature will serve to concurrently reduce the dilutive effect of future exercises of warrants.
• On February 27, 2024, the Company announced that Electra and the holders of the 2028 Notes had also entered into an agreement to postpone unpaid interest due August 15, 2023 and February 15. Additional details are set out in the 2023 Note Offering and subsequent amendment and Indenture are filed on Sedar+ (www.sedarplus.com). Following receipt of approval from the TSXV to issue common shares in satisfaction of US$401 of interest payable in accordance with this agreement, on March 21, 2024, the Company issued an aggregate of 843,039 Shares at a deemed issue price of $0.6439 per share.
• Due to market conditions and the delay to the completion of the refinery project, the Company recorded a non-cash asset impairment charge which is reflected in the fourth quarter and full year 2023 earnings results. Under IFRS, this charge could be reviewed in future periods, as conditions evolve.
• Period-end cash position of C$7.6 million.

Electra’s current priority is recommissioning and expanding its refinery, and its long-term vision includes additional phases to potentially provide recycled battery materials and battery grade nickel to the North American and global electric vehicle battery market: