Electra Battery Materials Corp. [ELBM-TSXV, NASDAQ] said it has received a non-binding term sheet from holders of the existing secured notes issued by the company in February, 2023, for a financing transaction which would result in gross proceeds of US$5 million.
The company said these funds will enable it to initiate certain early works and winter preparations at the Ontario Refinery project site in Temiskaming Shores, Ontario and for general corporate purposes.
Electra Battery shares were unchanged Friday at 74 cents and trade in a 52-week range of 98 cents and 21 cents.
Electra said the financing will consist of the offer and sale of secured convertible notes in the principal amount of US$4.0 million and US$1.0 million worth of common shares priced at US$0.543 per share The notes will be issued with 4.54 million detachable common share purchase warrants, entitling the holders to acquire an equivalent number of common shares at a price of $1.00 (Canadian) for 24 months following issuance. The notes will rank pari passau to the existing notes, will bear interest at a rate of 12% per annum, payable quarterly in cash, and will mature on November 12, 2027.
The notes will also be guaranteed by substantially all of the company’s subsidiaries and will be secured on a first lien basis by substantially all of the assets of the company and its subsidiaries. At the option of the holder, the notes will be convertible into common shares at an effective conversion price of US$0.62445 per share, representing a 15% premium to the price of the shares issuable in connection with the financing.
Conversion of the notes and the new warrants will be restricted to the extent it will result in a holder owning more than 9.9% of the outstanding common shares of the company.
Electra Battery has a five-year deal to supply battery-grade cobalt to lithium-ion battery manufacturer LG Energy Solution (LGES).
Electra, a company previously known as First Cobalt Corp, has pledged to supply LGES with 3,000 tonnes cobalt contained in a cobalt sulfate product in 2025 and a further 4,000 tonnes in each of the following years through 2009, for a total of 19,000 tonnes under an agreed pricing mechanism. That material will be supplied from a cobalt sulfate refinery located in Temiskaming Shores, near the Sudbury, Ont., Nickel Basin.
The refinery is currently under construction and also running a plant-scale black mass recycling trial to recover high value elements contained in expired lithium-ion batteries, including lithium, nickel, cobalt, manganese, and graphite. Electra recently said results from its plant-scale trial have met or exceeded results achieved previously in the lab setting. Electra anticipates commercialization of its black mass recycling capabilities in 2024, pending completion of funding commitments.
First Cobalt acquired the facility three years ago when it bought US Cobalt Inc. for about $150 million.
