Electra Battery Materials Corporation (NASDAQ: ELBM; TSX-V:
ELBM) (“Electra” or the “Company”) today released updated
economics and capital spend estimates for its refinery complex
currently under construction north of Toronto.
Pending completion, Electra’s refinery complex will be the first
in North America to integrate the production of critical minerals,
including cobalt sulfate and nickel sulfate, needed for the
electric vehicle battery supply chain and the processing of black
mass material designed to recover high value elements found in
recycled lithium-ion batteries, including lithium, nickel, cobalt,
manganese, graphite, and copper.
“Consistent with our recent disclosure, we completed a
re-baseline engineering report to fully determine the impacts
supply chain delays, inflationary price pressures, and scope
changes have had on the capital budget required to complete our
cobalt refinery project,” said Trent Mell, CEO of Electra. “In
tandem, we also completed a desktop scoping study to assess the
potential economics to process black mass material from recycled
lithium-ion batteries at our refinery complex.
“As expected, the capital spend requirements for completing our
refinery project have risen beyond our initial forecasts due to
higher material and labor costs, scope expansion, and supply chain
disruptions over the past 18 months. Offsetting this development
are the compelling economics identified by our desktop scoping
study to build a permanent black mass processing operation, given
its low capital intensity estimated at US$6 million and its high
rate of internal return of more than 120%. Leveraging existing
infrastructure, equipment, permits, and personnel, Electra can
quickly transition from a plant-scale demonstration facility to a
scalable, continuous battery recycling operation in 12 months from
financing.
“Development of both studies marks a significant step towards
the completion of our integrated refinery complex and reduces
considerable uncertainty from our efforts to secure the remaining
capital needed from various stakeholders. We can now accelerate our
funding efforts with government, commercial, and strategic
partners, and prioritize the processing of black mass material
given the anticipated payback of less than two years and estimated
EBITDA of US$10 million per year,” Mr. Mell also said.
Black Mass Economics
Electra launched a black mass trial late in 2022 at its Ontario
refinery complex to recover high-value elements found in shredded
lithium-ion batteries. Using its proprietary hydrometallurgical
process, Electra successfully completed the first plant-scale
recycling of black mass material in North America and confirmed the
recovery of a number of critical metals, including lithium, nickel,
cobalt, copper, manganese, and graphite, needed for North America’s
EV battery supply chain, surpassing initial expectations.
To date, Electra has produced quality nickel-cobalt mixed
hydroxide, graphite, and lithium carbonate products in its black
mass recycling trial. The Company expects to begin commercial
shipments of product to customers in Q2 2023.
Electra completed an 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 Phase 1 facility could
be scaled over time as the market for battery recycling
expands.
Highlights from Electra’s desktop scoping study include:
- Capital spend is estimated at approximately US$6 million.
- The internal rate of return is estimated at 127%.
- EBITDA is estimated to be in the range of US$9.6 to US$12.6
million per year beginning in the first full year of
operations.
- The payback period is estimated at between 1 and 2 years.
Electra’s desktop scoping study was based on a number of
assumptions, including annual processing of 2,500 tonnes of black
mass, metal prices using analysts’ long-term forecasts, recovery
rates consistent with those achieved to date, and US$9.2 million of
committed capital comprised of US$5.9 million for capital costs and
US$3.3 million in working capital.
At this time, black mass recycling capabilities remain at the
evaluation stage and the decision to commercialize these
capabilities remains subject to financing and additional
engineering work to incorporate process modifications arising from
the demonstration plant and the successful evaluation of samples by
customers. Subject to these two conditions, expansion to 2,500
tonnes per annum could occur in 2024 pending the securing of
financing for the project and installation of additional vessels
and equipment within the existing footprint of the refinery complex
being utilized for the black mass trial.
From an ESG perspective, Electra’s hydrometallurgical recycling
plant is estimated to be five times less carbon intensive than a
comparable production facility using a pyrometallurgical process
with a similar electricity grid as found in China and four times
lower than a similar facility in the state of Michigan.
Electra’s proprietary hydrometallurgical process produces less
waste and enables the recovery of high value lithium and
by-products that pyrometallurgical process cannot recover.
Refinery Project Capital Spend Update
Electra launched a project in June 2021 to expand and
recommission an idled refinery capable of producing 5,000 tonnes of
cobalt contained in cobalt sulfate per year. Electra’s refinery,
which is located in Temiskaming Shores, Ontario, is a fully
permitted facility with the capacity, once fully constructed, to
expand to 6,500 tonnes of cobalt contained in cobalt sulfate per
year.
Electra’s progress on its refinery project is reflected the
following achievements:
- Completed 98% of detailed engineering.
- Completed 85% of process equipment procurement (in fabrication
or delivered).
- Completed 90% of site infrastructure and foundations.
The project has been de-risked through the delivery of most long
lead equipment and by commissioning the legacy refinery operations
for the black mass demonstration plant. There remains, however, a
significant amount of construction work to complete and commission
the solvent extraction plant and the crystallizer circuit.
On February 14, 2023 Electra announced that due to the receipt
of damaged equipment critical to the completion of the refinery
project, ongoing supply chain disruptions causing delays in the
delivery of equipment, including components to process control
systems, and inflationary pressure on capital costs, 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
management (EPCM) contractor, has now been completed and has been
reviewed by an independent, third-party estimator.
The re-baseline engineering report has determined that the total
capital costs is now estimated at US$110 to $121 million, of which
approximately US$48.6 million has been spent as of April 30, 2023.
The increase in capital costs has been driven by changes in scope,
including increasing production capacity from 5,000 to 6,500 tonne
per annum of cobalt contained in cobalt sulfate, supply chain
disruptions, and inflationary price pressures over the past 18
months that negatively impacted all aspects of the refinery
project, including contractor labour rate, costs for concrete,
steel, piping, and freight. The Company had disclosed previously
that estimated capital costs for completing its refinery project
would be between US$76 and US$80 million.
Selected additional capital costs for completing the refinery
project include:
- US$18.8 million for solvent extraction and crystallization
mechanical equipment.
- US$7.4 million for indirect construction costs.
- US$7.3 million for equipment replacement and installation.
- US$5.7 million for construction management and permit
costs.
- US$4.1 million for engineering and procurement.
- US$3.7 million for higher freight rates.
The Company will require additional capital to complete
construction and final commissioning. Discussions are underway with
various commercial partners, government agencies and other parties
to address the funding shortfall. Until such time as additional
funding is secured, operational costs related to the development of
the refinery are expected to be less during the next 12 months than
in previous comparable periods. As at March 31, Electra held cash
and marketable securities totaling $12.9 million.
The timeline for completing the refinery project will be
contingent on securing the needed capital.
Electra will provide regular updates on the progress of capital
raise efforts and status its refinery complex projects.
Strategic Business Review Process
During the quarter, Electra initiated a process to evaluate
potential strategic alternatives to maximize shareholder value, and
retained BMO Capital Markets to assist with the process. The
Company’s Board of Directors will evaluate a range of alternatives
identified by the process, including but not limited to a potential
equity/debt investment from a strategic partner, sale of all or
selected portions of the Company’s assets, and merger opportunities
with other entities.
During this process, the Company intends to continue processing
black mass while implementing cost control measures and limiting
expenditures on the cobalt refinery project, with a view to
preserving liquidity until a strategic process is complete. There
can be no assurance that the strategic review process will
culminate in any transaction or alternative.
About Electra Battery Materials
Electra is a processor of low-carbon, ethically-sourced battery
materials. Currently building 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.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Cautionary Note Regarding Forward-Looking Statements
This news release may contain forward-looking statements and
forward-looking information (together, “forward-looking
statements”) within the meaning of applicable securities laws and
the United States Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, are
forward-looking statements. Generally, forward-looking statements
can be identified by the use of terminology such as “plans”,
“expects”, “estimates”, “intends”, “anticipates”, “believes” or
variations of such words, or statements that certain actions,
events or results “may”, “could”, “would”, “might”, “occur” or “be
achieved”. Such forward-looking statements include, without
limitation, statements regarding the potential for additional
funding from the Federal government of Canada and the government of
Ontario and the quantum and terms thereof, adjustments of interest
rates on the occurrence of certain events which may impact the
attributes of the notes and warrants issued under the Note
Offering, including but not limited to a “green bond” designation,
and the effective conversion rate of the Notes and Warrants, which
is subject to adjustment in certain circumstances, the listing of
the Common Shares underlying the notes and the warrants issued
under the Note Offering on TSXV and NASDAQ, and the expected use of
proceeds of the Offering. Forward-looking statements are based on
certain assumptions, and involve risks, uncertainties and other
factors that could cause actual results, performance, and
opportunities to differ materially from those implied by such
forward-looking statements. Among the bases for assumptions with
respect to the potential for additional government funding are
discussions and indications of support from government actors based
on certain milestones being achieved. Factors that could cause
actual results to differ materially from these forward-looking
statements are set forth in the management discussion and analysis
and other disclosures of risk factors for Electra Battery Materials
Corporation, filed on SEDAR at www.sedar.com and with on EDGAR at
www.sec.gov. Other factors that could actual results to differ
materially include changes with respect to government or investor
expectations or actions as compared to communicated intentions, and
general macroeconomic and other trends that can affect levels of
government or private investment. Although the Company believes
that the information and assumptions used in preparing the
forward-looking statements are reasonable, undue reliance should
not be placed on these statements, which only apply as of the date
of this news release, and no assurance can be given that such
events will occur in the disclosed times frames or at all. Except
where required by applicable law, the Company disclaims any
intention or obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20230511005286/en/
Joe Racanelli Vice President, Investor Relations
info@ElectraBMC.com 1.416.900.3891
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