Electra Battery Materials is retrofitting what will be the first battery-quality cobalt refinery in N. America. Commissioning is expected in 2027. Electra has receive financial support from the U.S. Dept. of War (DoD), the government of Canada, and Invest Ontario.
The Company has a $700M off-take agreement in place with LG Energy Solution, and feedstock contracts with Glencore & Eurasian Resources Group (ERG). Management is expanding & retrofitting a valuable cobalt sulfate refining complex in Ontario, Canada.
Importantly, the complex is permitted & fully-funded. Technical risk of the expansion is relatively low. Unlike junior miners developing mines with 10-20 year lives, Electra’s complex could easily be operating into the 2100s, reinventing itself as needed.
Electra also has a strategic cobalt & copper (“Cu”) project in the U.S. state of Idaho. The resource size is not large, but there’s ample room to grow it with drilling. As it stands, it’s already one of the largest cobalt deposits in the U.S.
From Nov 21-24 I had the opportunity to speak with CEO Trent Mell, who provided insightful responses to eight questions. I reminded convinced that Electra’s tangible hard assets, most notably the Ontario cobalt refining complex, are undervalued in the market.
But, don’t take my word for it. Please continue reading and decide for yourself. The Company’s market cap (125M shares, vs. 225M fully-diluted) is US$115M, (+ US$27M in debt) but the replacement value of the cobalt complex alone is north of US$250M.
Electra’s share price soared along with Rare Earth Element (“REE”) & critical material stocks, but has since sold off significantly. Do you think Electra should be in the same investment basket as REE stocks?
While our share price has at times moved with the broader critical materials sector, Electra’s business model is fundamentally different from early-stage, exploration-focused companies. Our cobalt sulfate refinery complex is a tangible, meaningfully-constructed asset with a defined role in North American battery supply chains.
Because our value is tied to processing infrastructure, not exploration outcomes, our risk profile is quite different from companies whose valuations rely on future discoveries.
Given recent volatility in Electra’s shares, name a few fundamental factors investors should focus on to understand the company’s long-term value proposition.
Yes, short-term trading swings can distract from the fundamentals that drive Electra’s value. The Ontario refinery complex is already meaningfully built and strategically located, while Iron Creek provides a U.S.-based source of copper & cobalt at a time when both countries are prioritizing secure supply chains.
Recreating a facility like our refinery today would require substantially more time, capital, and permitting. Added government support further reduces funding risk and underscores the strategic importance of our assets.
Investors who look through daily volatility will see that Electra is positioned at the intersection of the enduring need for electrification and urgent supply-chain security.
When was the third-party US$250M replacement cost assessment for the Ontario refinery complex done? If years ago, isn’t the replacement cost higher due to inflation? Have timelines to design, permit, fund, construct & commission a major facility like Electra’s lengthened?
The US$250M replacement estimate reflects the scale, flexibility, and uniqueness of the Ontario refinery complex. With capital-cost inflation continuing across the sector, rebuilding a comparable facility today would almost certainly cost more.
While timelines for designing, permitting, funding, and constructing large-scale processing facilities remain substantial, recent government interest in expediting critical minerals projects has largely focused on mining.
There are very few near-construction refining projects available, much less ones as advanced as Electra’s. This is why our already-permitted head start remains a key strategic advantage.
If the mining of REEs takes off across Canada and the U.S., could Electra’s refinery complex in Ontario be retrofitted to also process, separate, refine REEs? Would REE processing require a lot of work, time, capital to make happen?
In principle, hydro-metallurgical facilities can be engineered to handle different feedstocks, including rare earths, but doing so would require additional engineering, time & capital. REE processing also involves specialized circuits & separation technologies that differ from battery-materials flowsheets.
So, while our site has strong infrastructure advantages, power, water, road/rail, a permitted industrial footprint, any potential REE capability addition would be a substantial strategic expansion, not a simple retrofit, and would require clear market demand and the right partnerships.
Although Electra’s Idaho assets are strategically well positioned as the U.S. wants to onshore copper & cobalt production, is the project too small to move the needle?
Iron Creek’s value is driven by its strategic relevance. The U.S. is actively working to onshore copper & cobalt supply, and a domestic source of both metals in a single, politically secure jurisdiction is rare.
The project offers optionality, exploration upside beyond the currently defined zone, alignment with national policy objectives, and the potential to integrate with downstream North American processing infrastructure. Iron Creek is positioned to be a flexible, scalable U.S. project of clear strategic importance.
Earlier this month copper was added to the U.S. critical materials list. Please comment on any U.S. government support that Electra’s Iron Creek project in Idaho could (potentially) receive?
The addition of copper to the U.S. critical materials list creates even more policy momentum behind domestic development, which directly benefits a project like Iron Creek.
The rapidly evolving U.S. framework could open the door to several potential opportunities for support, from federal grants & cost-share initiatives aimed at securing strategic metals, to low-interest loans or loan guarantees that reduce the cost of capital for qualified projects.
There may also be state & federal programs designed to streamline permitting or support exploration activities for critical minerals.
In short, the policy direction is increasingly aligned with the type of copper-cobalt asset Electra is advancing in Idaho. We continue to explore all possibilities to unlock the value of our Idaho assets.
Would your team consider making an acquisition of another critical materials project? What metals/materials & jurisdictions is Electra focused on?
Electra continuously evaluates opportunities that would strengthen its position in critical materials and align with supply-chain priorities in North America. We also remain disciplined.
Any potential acquisition must complement our existing cobalt & copper platform,
enhance long-term cash flow potential, and fit within our operational & geographic footprint.
Please reiterate near-term catalysts in Idaho (copper/cobalt), and in Ontario, (the cobalt refining complex).
In Idaho, Electra is focused on the technical & geological work needed to continue de-risking the Iron Creek project, alongside advancing permitting activities and deepening engagement with U.S. government stakeholders and potential partners who share an interest in strengthening domestic copper & cobalt supply.
In Ontario, our priorities center on advancing construction of the cobalt refinery complex and unleashing the strategic value of a North American refining solution. We will continue to provide regular updates on our progress as we advance the construction of North America’s cobalt sulfate refinery.
Thank you Trent, Electra is fully-funded for productive growth, with optionality to expand well into next year. Exciting times ahead.
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