Electra Battery Materials Corporation (TSX-V:ELBM, NASDAQ:ELBM) said Three Fires Group Inc has committed to invest up to C$20 million in its battery materials park north of Toronto.
The terms and figures of the strategic investment are expected to be confirmed after a review and the approval of Three Fires Group’s shareholder First Nation and funding sources, and consultations with the federal and provincial governments.
“Following a successful black mass recycling trial at our battery materials park in Temiskaming Shores, the strategic investment by Three Fires will help us to prioritize our focus and accelerate development of a permanent 2,500 tonne per annum recycling refinery, resulting in near-term cash flow at a low capital intensity while we continue to advance the cobalt sulfate refinery,” Electra CEO Trent Mell said in a statement.
“We see this strategic relationship as an opportunity to position Electra as a platform for greater participation by First Nations in the transition to a low-carbon economy, particularly relating to lithium-ion battery recycling. This would include participation at the board level and all levels of the organization, ensuring that Electra’s business strategy and ESG practices are aligned with the values and priorities of Canada’s First Nations.”
The investment is expected to be funded through a non-brokered private placement of units in Electra at $1.10 each. Each unit will consist of one common share of and one common share purchase warrant which may be exercised at a price of $1.74 each over a 24-month period.
“Under the terms of the proposed strategic investment, Three Fires would purchase units and Electra will grant Three Fires the right to nominate up to two members of Electra’s board of directors upon closing, and the right to participate in future equity offerings, including to maintain its pro rata percentage ownership in the company,” Electra said.
The investment is also subject to Electra securing additional financing of at least $10 million, for which Electra and Three Fires are currently in discussions with government and third-party stakeholders, the company added.
“In the event Electra satisfies this condition with the issuance of additional units, Electra could issue up to a maximum of 17,241,379 units in the placement.,” the company said.
The company’s refinery complex is in northern Ontario, where the electricity grid mostly runs on renewable energy sources, making Electra a low-carbon emitter. Electra’s recycling plant is estimated to be five times less carbon intensive than a comparable plant using a pyrometallurgical process in a jurisdiction with an electricity grid similar to China’s.
The Three Fires Group focuses on generating wealth and prosperity from economic and infrastructure opportunities for current and future generations while Electra is a processor of low-carbon, ethically-sourced battery materials.
"We are excited for this opportunity as a strategic path forward in allaying our shareholder First Nation’s concerns around the rapidly growing EV battery manufacturing sector in southwestern Ontario,” added Phil Lee, CEO of Three Fires.
“We are confident that our joint venture with Electra will provide a turn-key solution that is mutually beneficial for Canada, the Province of Ontario, First Nations, and industry partners such as VW and LG-Stellantis. Our solution, which would cost approximately US$30 million to develop, includes the building of a primary recycling facility located in southern Ontario that will shred lithium-ion batteries, process battery scrap, and provide a steady supply of black mass to be refined by Electra at its refinery.”
Contact the author at jon.hopkins@proactiveinvestors.com