TORONTO - Electra Battery Materials Corporation (NASDAQ: ELBM; TSX-V: ELBM), specializing in the processing of low-carbon, ethically-sourced battery materials, announced it has received a $20 million grant from the U.S. Department of Defense. This funding is part of the Title III of the Defense Production Act and aims to enhance domestic production capabilities.
The grant will facilitate the construction of North America's sole cobalt sulfate refinery near Toronto, in Temiskaming Shores. The refinery is designed to produce battery-grade materials for lithium-ion batteries, a market currently dominated by China, which produces over 80% of the world's battery-grade cobalt.
Electra's CEO, Trent Mell, expressed gratitude for the U.S. government's support, emphasizing the importance of a resilient North American battery supply chain for national security. The company's $250 million refinery project is already in progress, with construction underway and most of the required equipment on site.
Once operational, the facility is expected to produce 6,500 tonnes of cobalt annually, enough to support the manufacture of over 1 million electric vehicles (EVs) each year. A significant portion of the refinery's capacity has already been committed to LG Energy Solution, which will purchase up to 80% of the output for the first five years. The remaining production capacity is currently being negotiated with several interested buyers.
The cobalt for the refinery will be sourced from Glencore (OTC:GLNCY) and Eurasian Resources Group mines in the Democratic Republic of the Congo (DRC), providing an alternative to shipping these materials to China.
Electra also revealed plans to expand its production to other battery materials, further strengthening the North American supply chain. In 2023, the company successfully operated a demonstration plant that recovered lithium, nickel, cobalt, and other critical minerals from recycled batteries. Additionally, Electra is considering the development of a second cobalt sulfate facility in Bécancour, Quebec, and a nickel sulfate plant in a strategic North American location.
The Defense Production Act Title III funding aims to secure robust domestic supply chains and reduce dependence on foreign manufacturing, particularly in areas critical to national defense.
This announcement is based on a press release statement from Electra Battery Materials Corporation, which is developing key resources to support the electric vehicle supply chain in North America.
In other recent news, lithium-ion battery resource recovery company, Li-Cycle Holdings Corp., has appointed Craig Cunningham as its new Chief Financial Officer. Cunningham, who has been serving as the interim CFO since March, brings substantial experience from the battery materials and mining sectors to his permanent role at Li-Cycle. His focus will be on supporting Li-Cycle's growth and enhancing shareholder value.
In parallel, Electra Battery Materials Corporation has received a $5 million contribution from Natural Resources Canada to further develop its proprietary battery materials recycling technology. The funding supports the advancement of a project aimed at recycling critical metals from battery scrap, a process vital for the growing electric vehicle (EV) supply chain in North America.
Following the release of Electra's first-quarter financials for 2024, H.C. Wainwright adjusted its outlook on the company, lowering its price target but sustaining a Buy rating on the stock. The financials revealed a net loss of C$12.2 million, an improvement compared to the previous year, largely due to a decrease in the financial liability of the company's convertible notes.
Furthermore, Electra is making strides to become North America's first refiner of battery-grade cobalt sulfate. The company has secured most of the necessary equipment for its refinery project in Ontario and established a long-term supply agreement with Eurasian Resources Group for cobalt hydroxide feed material. These recent developments highlight the company's ongoing efforts in the battery materials sector.
InvestingPro Insights
As Electra Battery Materials Corporation (ELBM) advances its strategic efforts in securing North America's battery material supply chain with U.S. government support, the financial health and market sentiment surrounding the company provide additional context for investors.
InvestingPro Tips for ELBM indicate that the company is grappling with significant financial challenges. It operates with a heavy debt burden and is quickly burning through cash, which may raise concerns about its long-term financial sustainability. Analysts are not optimistic about the company's profitability in the near term, as ELBM is not expected to be profitable this year and has not been profitable over the last twelve months. These concerns are underscored by the fact that ELBM's short-term obligations exceed its liquid assets, suggesting potential liquidity risks.
The InvestingPro Data metrics offer a snapshot of ELBM's current market position. The company's market capitalization stands at $30.77 million, reflecting its size within the industry. The negative P/E ratio of -0.54, adjusted to -0.94 over the last twelve months as of Q2 2024, indicates that the company has been operating at a loss. Furthermore, the stock has experienced significant volatility, with a notable return over the last week of 11.12%, but a substantial decline over the last six months of -47.59%.
Investors seeking a deeper dive into ELBM's financials and additional InvestingPro Tips can find more detailed analysis and metrics on InvestingPro's platform, which includes a total of 10 tips for the company. This comprehensive analysis can help investors make more informed decisions regarding Electra Battery Materials Corporation's stock and its role in the burgeoning EV supply chain ecosystem.
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