TORONTO - Electra Battery Materials Corporation (NASDAQ:ELBM; TSX-V:ELBM), a developer of battery materials, has announced the receipt of a non-binding term sheet for $5 million in financing. The funds are earmarked for early development work at the company's Ontario Refinery project and for general corporate purposes.
The financing involves the sale of secured convertible notes worth $4 million and common shares totaling $1 million at $0.543 per share. Accompanying the notes are 4,545,454 detachable common share purchase warrants, each allowing the purchase of one common share at C$1.00 for 24 months post-issuance.
Electra's CEO, Trent Mell, expressed optimism about the financing's role in the final phase of construction for North America's only cobalt sulfate refinery. The refinery, once operational, has the potential to produce cobalt sulfate sufficient for one million electric vehicles annually, which is significant given the policy focus on reducing reliance on China for EV materials.
The notes, maturing on November 12, 2027, will carry a 12% annual interest, payable quarterly, and are on par with the existing notes issued on February 13, 2023. They will also be backed by most of the company's subsidiaries and assets. Noteholders will have the option to convert their notes into common shares at $0.62445 per share, a 15% premium over the share price in the financing.
The financing is contingent on customary definitive documentation and regulatory approvals. The securities issued will not be registered under the U.S. Securities Act of 1933 and will be subject to resale restrictions.
In addition to the financing, Electra plans to amend the terms of 10,796,054 existing share purchase warrants, reducing the exercise price to C$0.85 per share and adjusting the acceleration clause.
Electra focuses on processing low-carbon, ethically-sourced battery materials and aims to onshore the EV supply chain in North America. The company's strategy includes integrating black mass recycling and exploring nickel sulfate production.
The completion of the financing is subject to certain conditions and there is no assurance that the terms set out will be finalized. This news is based on a press release statement from Electra Battery Materials Corporation.
In other recent news, Electra Battery Materials Corporation has made significant strides in its operations. The company formed a recycling venture with Indigenous-owned Three Fires Group, establishing Aki Battery Recycling for the production of battery black mass from lithium-ion battery scrap. The initiative aims to reintroduce recovered minerals into the supply chain, potentially reducing the carbon footprint of electric vehicles and lessening North America's dependence on foreign mineral sources.
Electra also secured a $20 million non-binding term sheet from a strategic partner and a $20 million grant from the U.S. Department of Defense, both aimed at the completion of North America's first battery-grade cobalt refinery. The company's CEO, Trent Mell, participated in Indonesia's first critical minerals conference, discussing Indonesia's role in the global energy transition.
Additionally, Electra established a long-term supply agreement with Eurasian Resources Group for cobalt hydroxide feed material. In its first-quarter financials for 2024, Electra reported a net loss of C$12.2 million, leading H.C. Wainwright to adjust its outlook on the company, lowering its price target but maintaining a Buy rating on the stock. These developments highlight Electra's ongoing efforts in the battery materials sector and its commitment to strengthening the North American supply chain.
InvestingPro Insights
Electra Battery Materials Corporation's recent financing announcement comes at a critical juncture for the company, as revealed by InvestingPro data and tips. With a market capitalization of just $30.57 million, ELBM is operating in a challenging financial environment.
InvestingPro Tips highlight that ELBM is "quickly burning through cash" and "operates with a significant debt burden." These factors underscore the importance of the newly announced $5 million financing for the company's operations and development plans. The tip noting that "short term obligations exceed liquid assets" further emphasizes the timely nature of this capital infusion.
Despite these challenges, ELBM has shown resilience in its stock performance. InvestingPro data indicates a strong 35.23% return over the last three months and a 28.46% gain over the past six months. This positive momentum aligns with the company's strategic moves to secure financing and advance its Ontario Refinery project.
However, investors should note that ELBM "suffers from weak gross profit margins" and is "not profitable over the last twelve months," according to InvestingPro Tips. The company's P/E ratio of -1.42 for the last twelve months ending Q2 2024 reflects these profitability challenges.
For a more comprehensive analysis, InvestingPro offers 11 additional tips on ELBM, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.