Electra Battery Materials Corporation (TSX-V:ELBM, NASDAQ:ELBM) has reported financial results for the fourth quarter and year ended December 31, 2022, with both periods showing net income versus a net loss in 2021, and has provided an update on the commissioning of its cobalt refinery and its black mass recycling trial.
“2022 was a remarkable year for Electra, filled with achievements and developments that augur extremely well for our company and our prospects of becoming a key link in the North American EV battery supply chain,” commented Trent Mell, Electra’s CEO in a statement.
“Most notably, we made considerable progress towards our vision of commissioning North America’s first cobalt sulfate refinery, we launched a plant-scale black mass recycling trial at our refinery complex north of Toronto that has already produced a number of encouraging results, and we signed a three-year strategic supply agreement with LG Energy Solution, the world’s second-largest EV battery manufacturer.
"Equally significant, we benefitted from the adoption of the US Inflation Reduction Act, which has provided a boost for our industry and includes a number of incentives that will spur further growth of the EV supply chain in North America for years to come,” he said.
READ: Electra Battery Materials produces lithium from battery recycling trial, significantly improving its project economics
Mell added: ”Although some of our progress was impeded by supply chain disruptions, receipt of damaged equipment, and the impact of inflationary price pressures on our refinery project, we remain particularly encouraged by our near- and long-term prospects. Most notably, we anticipate completion of a re-baseline engineering report on our refinery project as well as the first shipment of products produced in our black mass trial in the near term.
“Over the longer term, we are encouraged by the opportunity to expand into the production of related battery materials, including nickel sulfate at our refinery complex in Ontario, and by the prospects of developing a new cobalt sulfate refinery as part of the battery industrial park being built in Bécancour, Quebec.”
Mell concluded: “Key to our ongoing success will be to leverage our hydrometallurgical process expertise and the benefits of operating in North American jurisdictions where low-carbon production is possible due to an abundance of renewable energy sources.”
Looking at the company's Q4 2022 financials, net income for the period was $10.3 million or $0.31 per share, compared to a net loss of $15.5 million or $0.55 per share for Q4 2021. Net income in Q4 2022 was driven by a gain of $11.9 million on the fair value of the embedded derivative liability portion of Electra’s convertible debt and an impairment reversal of $1.3 million recognized on the planned sale of the remaining Cobalt Camp exploration patents to Kuya Silver.
For full-year 2022, Electra reported net income of $12.6 million or $0.38 per share, compared to a net loss of $34.9 million or $1.26 per share for the year ended December 31, 2021. Net income in FY2022 was driven by a gain of $27.7 million on the fair value of the embedded derivative liability portion of Electra’s convertible debt.
Electra held cash and marketable securities of $8.4 million as of December 31, 2022, down from $19.7 million as of September 30, 2022. The cash balance at the end of Q4 2022 does not include the remaining $5.1 million of government investments expected to be received or the net proceeds of US$14 million received from the convertible debt financing completed in February 2023.
During the period, Electra raised gross proceeds of US$5.5 million (around C$7.3 million) through an overnight marketed offering of 2.35 million units with each unit comprised of one common share and one share purchase share warrant entitling the holder to purchase one common share at a price of US$3.10 through November 15, 2025. Gross proceeds raised through the offering will be used to fund the commissioning of Electra’s cobalt sulfate refinery.
Operationally, the company launched a black mass recycling trial at its Ontario refinery complex to recover high-value elements found in shredded lithium-ion batteries, including lithium, nickel, cobalt, copper, manganese, and graphite, using Electra’s proprietary hydrometallurgical process.
It also acquired the option to purchase the CAS cobalt-copper project in Idaho, located in close proximity to the company’s other exploration projects in Idaho, for up to US$1.5 million payable over 10 years upon completion of specific milestones.
Black mass trial and refinery progress
Since its year-end. Electra has successfully completed the first plant-scale recycling of black mass material in North America and confirmed the recovery of critical metals, including lithium, nickel, cobalt, copper, manganese, and graphite, needed for the EV battery supply chain using Electra’s proprietary hydrometallurgical process. To date, Electra has produced high-quality nickel-cobalt mixed hydroxide and lithium carbonate products in its black mass recycling trial at its refinery complex.
Based on preliminary results achieved to date, Electra will extend its black mass trial through to June 2022 beyond the initial target of 75 tonnes.
As of March 31, 2023, Electra had made the following key developments in its cobalt refinery project:
- Completed commissioning of the analytical lab, feed material handling system, including the ball mill and mixing station, filter presses, and reagent handling systems.
- Completed 90% to 95% of all procurement.
- Completed the erection of the solvent extraction building.
- Completed the construction of the cobalt sulfate loadout facility.
- Increased the project owners’ team to 31 personnel, which includes tradespeople, engineers, operators, lab technicians, and office support staff.
A first shipment of MHP product is expected to be delivered to downstream clients for evaluation purposes in early Q2 2023.
Pending completion of the black mass trial and evaluation of project economics expected in Q2, success could pave the way towards commercialization. Using the existing refinery footprint, infrastructure and plant equipment, Electra could quickly expand throughput to 2,500 tonnes per year of black mass under a continuous operation scenario. A desktop study is underway, and results will be shared once available. A larger facility of 5,000 tonnes or more per annum of black mass is another option Electra may consider with a commercial funding partner.
Electra said it will host a conference call on April 5, 2023, at 8.30am ET to review its fourth-quarter performance and discuss near-term outlook. Dial-in and webcast details are: North American dial-in number 1-800-319-4610; International dial-in number 1-604-638-5340; webcast and slide presentation https://ElectraBMC.com/category/events/,
Electra Battery Materials is a processor of low-carbon, ethically-sourced battery materials. Currently commissioning North America’s only cobalt sulfate refinery, Electra is executing a multi-pronged 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.
Contact the author at jon.hopkins@proactiveinvestors.com