Electra secures C$17.5 million funding from Ontario for cobalt refinery

TORONTO - Electra Battery Materials Corporation (NASDAQ:ELBM; TSX-V:ELBM), currently valued at $15.31 million in market capitalization, has signed a term sheet for C$17.5 million in proposed funding from Invest Ontario to support construction of its cobalt sulfate refinery in Temiskaming Shores, according to a company statement released Friday. InvestingPro analysis indicates the company operates with a significant debt burden, carrying $51.88 million in total debt, while maintaining a weak financial health score.

The facility, once operational, aims to be the first in North America dedicated to producing battery-grade cobalt sulfate, with planned annual production of 6,500 tonnes - enough to support manufacturing of up to 1 million electric vehicles per year.

The Ontario commitment forms part of an estimated C$100 million investment needed to complete refinery construction. This funding replaces a previously announced US$20 million strategic corporate investment from September 10.

"We are grateful for the support from Invest Ontario, which will help accelerate construction," said Electra CEO Trent Mell.

The funding is part of a broader government support package that includes a US$20 million award from the U.S. Department of Defense announced in August 2024 and ongoing discussions with the Government of Canada. Combined, Electra’s potential government funding totals approximately US$48 million (C$64 million).

Vic Fedeli, Ontario’s Minister of Economic Development, Job Creation and Trade, said the investment "will establish an integral link in the province’s critical mineral processing supply chains."

The refinery is expected to create more than 50 new jobs at the facility. Currently, over 90% of global cobalt sulfate supply originates from China, according to the company.

To support its financing plan, Electra has launched a restructuring targeting a 60% reduction in convertible debt and a US$30 million equity raise. The company’s stock has declined 66.55% over the past year, with InvestingPro data showing concerning cash burn rates. Subscribers to InvestingPro can access 10+ additional financial health indicators and expert analysis.

The term sheet signed with Invest Ontario does not constitute a binding agreement, and there is no guarantee that final agreements will be reached. With a current ratio of 0.05, InvestingPro analysis reveals that short-term obligations exceed liquid assets, highlighting potential risks in the company’s financial position. Get real-time alerts and in-depth financial analysis with an InvestingPro subscription.

In other recent news, Electra Battery Materials Corporation has disclosed details of a $30 million financing package as part of its financial restructuring efforts. The financing involves a private placement of at least 40 million units, with each unit comprising one common share and one purchase warrant. Additionally, Electra has entered into an agreement with its lenders to convert 60% of its convertible debt to equity, which will significantly reduce its outstanding debt from approximately $67 million to about $27 million. The company has also completed an early works program at its cobalt refinery, preparing the site for a full construction restart.

In leadership changes, Electra has appointed retired U.S. Navy Rear Admiral Gerard Hueber and former Alpha CEO David Stetson to its Board of Directors. Hueber previously managed a substantial naval portfolio at Raytheon, while Stetson led Alpha Metallurgical Resources through significant financial growth and restructuring. These appointments are part of Electra’s strategy to strengthen its financial position. The company is working with Cantor Fitzgerald Canada Corporation and ECM Capital Advisors Ltd. as co-lead agents for the financing. These developments reflect Electra’s ongoing efforts to restructure and advance its projects.

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