Electra Battery Materials Stock

Electra Battery Materials Corporation engages in the business of battery materials refining and the acquisition and exploration of resource properties.

The company focuses on building a diversified portfolio of assets that are highly leveraged to the cobalt market with assets located primarily in North America, with the intent of providing a North American supply of battery materials.

The company has two significant North American assets comprising a primary cobalt refinery located in Ontario, Canada (the Refinery); and the Iron Creek cobalt-copper project located in Idaho, the United States, the company's flagship mineral project (the Iron Creek Project). It also controls a number of properties in Ontario known as the Cobalt Camp.

The company has been progressing plans to recommission and expand the Refinery with a view to becoming the only refiner of battery grade cobalt sulfate in North America. Its primary focus for 2022 is advancing the expansion and recommissioning of the company's Refinery (Phase 1 of the company's four-phased approach to build the Battery Materials Park (as defined below)) and continuing to expand its cobalt-copper resource at Iron Creek.

The Refinery and the Battery Materials Park

The company is working towards restarting its wholly owned cobalt Refinery in Ontario, Canada, as the first phase in a four-phase strategy to create North America's only fully integrated, localized and environmentally sustainable battery materials park (the Battery Materials Park), which will provide battery grade nickel and cobalt, recycled battery materials and precursor material to the North American and global electric vehicle battery market. The company is pursuing a four-phased approach to build the Battery Materials Park, as follows:

Phase 1 entails an expansion and recommissioning of the company' s Refinery. The company anticipates the refinery will produce at an initial rate of 5,000 tonnes per annum of battery cobalt contained in cobalt sulfate from cobalt hydroxide intermediate product supplied from Glencore and China Molybdenum Co., Ltd (CMOC) mining operations in the Democratic Republic of Congo. The company has purchased larger equipment such that a step up in production to 6,500 tonnes per annum in the future is possible.

Phase 2 entails the recycling of black mass from spent lithium-ion batteries supplied by various black mass producers (battery shredders) in the United States and elsewhere.

Phase 3 entails the construction of a nickel sulfate plant, thereby providing all of the necessary components (other than manganese) to attract a precursor manufacturer to establish a facility adjacent to these refining operations.

Phase 4 entails the construction of a precursor cathode active materials facility pCAM, potentially in conjunction with an industry partner, to produce a nickel-cobalt-manganese pCAM product for the electric vehicle supply chain.

On May 4, 2020, the company announced positive results from an engineering study performed for the Refinery by Ausenco (the 'Refinery Study'). The Refinery Study outlined the Refinery's ability to reach annual production of 25,000 tonnes of battery grade cobalt sulfate from third party feed.

The construction and commissioning of the refinery continued through 2022.

Through March 15, 2023, the company completed recommissioning of analytical lab, feed material handling system (including ball mill and mixing station), leach circuit, filter presses, and reagent handling systems; completed the erection of the solvent extraction building; and completed construction of the cobalt sulfate loadout facility.

The company received approval for its Air and Noise permit and its Permit to Take Water, the company has received final approvals for its Industrial Sewage Works permit amendment and its revised Refinery closure plan. An update to the Permit to Take Water is in progress to ensure the volumes match the Industrial Sewage Works Permit, which will need to be completed in the advance of operation.

The company continues to make progress towards achieving its intention of providing the world's most sustainable battery materials for the electric vehicle market. The company continues to work with engineering firms, its commercial partners, process experts and financial advisers to finalize and execute on the plans for its phase one recommissioning and expansion of the Refinery.

The Iron Creek Project

Following the completion of the acquisition of U.S. Cobalt Inc. (US Cobalt), the company owns 100% of the Iron Creek Project, which is located about 42 kilometres southwest of Salmon, Idaho, within the historic Blackbird cobalt-copper district of the Idaho cobalt belt. The project consists of seven patented Federal lode claims that straddle Iron Creek, and a surrounding group of 83 unpatented Federal lode claims. As noted above, the company announced a new mineral resource estimate for the Iron Creek Project in Idaho, the U.S. in January 2020. The new mineral resource estimate was based on infill drilling and limited step-out drilling which included the conversion of 49% of resources from the inferred mineral resource category to the indicated mineral resource category while also increasing the overall tonnage. The indicated mineral resource is now 2.2M tonnes grading 0.32% cobalt equivalent (0.26% cobalt and 0.61% copper) containing 12.3M pounds of cobalt and 29.1M pounds of copper. The inferred mineral resource is now 2.7M tonnes grading 0.28% cobalt equivalent (0.22% cobalt and 0.68% copper) for an additional 12.7M pounds of cobalt and 39.9M pounds of copper. In April 2020, the company announced additional staking added 43 new claims to its Idaho land package. The company further increased its property position around Iron Creek in May 2021, with the acquisition of the West Fork Property and the announcement of the Redcastle property earn-in agreement. In June 2021, the company announced the commencement of its 2021 Idaho exploration program encompassing 4,500 metres of drilling, geophysical surveys, and bedrock geological mapping. Together, the patented and unpatented claims cover an area of approximately 5,900 acres.

The Cobalt Camp

On March 1, 2021, the company completed its transaction with Kuya to sell a portion of its silver and cobalt mineral exploration assets its Cobalt Camp and form a joint venture to advance the remaining mineral assets comprising the Cobalt Camp. The Cobalt Camp is approximately a five-hour drive from Toronto, Ontario. On December 31, 2022, the company signed an option agreement to sell its interest in the Joint Venture created with Kuya related to the Cobalt Camp mineral assets. Kuya completed the acquisition under the option on January 5, 2022 completing the sale of the mineral assets. The Cobalt Camp is not material property.

Iron Creek Project

The company retained InnovExplo Inc. (InnovExplo) to prepare an updated mineral resource estimate for the Iron Creek Project located in Lemhi County, Idaho, the U.S., and a supporting Technical Report.

The Iron Creek Project is located about 18 miles or 30km southwest of Salmon, Idaho, the U.S.A., within the historic Blackbird cobalt-copper district of the Idaho Cobalt Belt.

The Iron Creek Project consists of seven patented lode mining claims that straddle Iron Creek, and a surrounding group of 416 unpatented lode mining claims. Together the patented and unpatented claims cover an area of 8,075 acres (32.68 kilometer square (km2)).

The patented mining claims, which are 100% held by Idaho Cobalt, are described as Iron No.118, Iron No.135, Iron No.136, Iron No.143, Iron No.144, Iron No.182 and Iron No.189 of the Idaho Mineral Survey No. 3613, located in portions of Section 20 and Section 21, Township 19 North, Range 20 East, B.M., Parcel #RP9900000109A, Blackbird Mining District, Lemhi County, Idaho.

On March 12, 2021, the company, through Idaho Cobalt Company (Idaho Cobalt), a wholly-owned subsidiary of the company, purchased the JA1 to 103 unpatented mining claims, and as such holds 100% of such claims, from with Arizona Lithium Company (Arizona).

On March 21, 2021, the company, through Idaho Cobalt, entered into an earn-in and joint venture agreement with Borah Resources and Phoenix Copper for the SCOB1 to 30 unpatented mineral claims (Redcastle). Under the agreement, the company may earn a 51% interest in Redcastle on or before the third anniversary of the effective date of the agreement. It may earn a 75% interest on or before the by the fifth anniversary. If, after the joint venture is formed, the ownership interest of a party is reduced to 10% or below, such interest will be converted to a 2.5% NSR dilution royalty. The other party will have the right to buy-down the dilution royalty, and shall retain a right of first refusal on any proposed sale of the dilution royalty to a third party. The Redcastle agreement is subject to a mutual area of interest provision.

On March 22, 2022, the Issuer through Idaho Cobalt entered into a Property option agreement with Richard Fox to acquire the CAS1-46, IRON1-7, IRON14-15, and IRON31-61 unpatented mining claims (CAS), payable over 10 years upon the completion of specific milestones. Richard Fox retains a 1.5% NSR royalty, which the Issuer may purchase within one year of commercial production from the CAS property. The Fox agreement is subject to a mutual area of interest provision.

The unpatented mining claims included within the Iron Creek Project have no expiration date if the annual claim maintenance fees are paid by August 31 of each year. These fees have been paid in full to September 1, 2023. The patents are not subject to annual claim-maintenance fees, but applicable real and immovable property taxes are payable to Lemhi County annually.

The Iron Creek Project is situated in the Blackbird copper-cobalt ± gold mining district, the Idaho Cobalt Belt (ICB), in the eastern part of the Salmon River Mountains, central Idaho. Pyrite is the most widespread of the sulphide minerals observed on the Iron Creek Project.

Exploration

The company commenced exploration of the Iron Creek Project in 2016 through its subsidiaries with a compilation of historical geological, drilling, geophysical and geochemical data. In 2017 and 2018, the company rehabilitated about 1,260ft of underground workings in Adit-1 and Adit-2, including diamond-core drill approximately 35,000ft (10,670m) from surface along a 1,500ft (460m) strike length of the upper zone, twinning historical holes to confirm and increase confidence in historical estimates of cobalt mineralization; and re-habilitate the underground workings of the Adit-1 and Adit-2 for underground diamond drilling and channel sampling.

Adit-1 was fully rehabilitated and both portals of Adit-2 were excavated and partly rehabilitated during 2017. In the first quarter of 2018, the rehabilitation of Adit-2 was completed.

A total of 133 channel samples each 5.0ft (1.5m) in length were collected from both ribs along the crosscut and drift. The samples were collected using air-powered chisels, with average sample weights of about 7.3lb (3.3kg). The underground channel samples were transported by one of the company's geologists from Adit-1 to the laboratory of American Assay Laboratories (AAL) in Sparks, Nevada.

During 2018, the company initiated mineralogical and petrographic studies of mineralized material from the upper zone. A total of 20 samples of drill core from 13 of the 2017 and 2018 drill holes were sent to SGS Minerals in Lakefield, Ontario for detailed mineralogical descriptions.

Drilling

The Iron Creek Project database has 169 holes drilled from 1969 through to January 2022.

That total includes five sets of underground channel samples entered the database as 'drill holes'. Of the 169 drill holes, 117 (excluding the five sets of underground channel samples) were drilled and/or sampled by the company and were used in the estimate in some fashion. Five holes were lost and drilled again. The total footage drilled within the Iron Creek Project is at least 139,906ft (42,642 metre (m)).

In 2022, the company commenced drilling with Titan Drilling out of Elko, Nevada using a track mounted LF-70 operating on two 10 hour shifts each day. The company completed six holes for 1,674 m. One hole was completed on the east side of the Iron Creek Project to infill between the edge of the resource boundary and the drill intercepts in the 2021 step out program. The remaining 3 collars with two wedges were completed on the Ruby target to evaluate the depth extent of Ruby zone. All holes were collared with HQ diameter core and three were reduced to NQ diameter for core recovery and extensions. All holes intercepted significant cobalt mineralization confirming the depth extent and continuity of the Ruby zone.

The mineral resource area of the Iron Creek Project covers an area of a 1,652 m strike length and a 780 m width, and extends to a height of 852 m. The DDH database contains 86 surface (26,304.8m) and 31 underground DDHs (5,670.8m). The database contains 23,308 sampled intervals taken from 29,481m of drilled core. All the sampled intervals were assayed for copper and cobalt. The database also includes lithological, alteration as well as structural descriptions and measurements taken from drill core logs.

The Cobalt Camp

On March 1, 2021, the company announced that it completed its transaction with Kuya Silver Corp (Kuya) to sell a portion of its silver and cobalt mineral exploration assets its Cobalt Camp and form a joint venture to advance the remaining mineral assets comprising the Cobalt Camp. The Cobalt Camp is approximately a five-hour drive from Toronto, Ontario. On December 31, 2022, the company signed an option agreement to sell its interest in the Joint Venture created with Kuya related to the Cobalt Camp mineral assets. Kuya completed the acquisition under the option on January 5, 2022, completing the sale of the mineral assets.

Environmental Protection

The company's Refinery expansion and exploration activities are subject to various levels of federal, provincial, state, and local laws and regulations relating to the protection of the environment, including requirements for closure and reclamation of mining properties.

The Refinery has active permits and is subject to a reclamation bond and closure plan.

The Iron Creek Project is located within Salmon National Forecast, under the administration of the United States Forest Service (USFS). The company manages all activities on site to ensure all work is performed in compliance with existing environmental regulations.

Environmental and Social Governance

The Refinery is projected to have a lower quartile carbon intensity cobalt by virtue of hydro powered mining operations supplying its hydro powered refining operation. In October 2020, results were released from an independent Life Cycle Assessment (LCA), which affirmed the low carbon footprint of the Refinery. The report concluded that the environmental impacts associated with refining cobalt at the Refinery will be materially lower than the published impacts of a leading Chinese refiner.

The Refinery

The Refinery is 100% owned by Cobalt Camp Refinery Limited (CCRL), a subsidiary of the company. The Refinery is under development with permit amendments mostly complete. The refinery business plan involves modifying the existing flowsheet to treat cobalt hydroxide feed material to produce cobalt sulphate used in the manufacture of batteries for electric vehicles. The flowsheet changes from the feasibility study were supported by bench and pilot scale metallurgical test work. The company intends to refurbish and expand the refinery to produce, first 5,000 tpa of production capacity of cobalt contained in cobalt sulfate before expanding to 6,500 tpa of production capacity (6.5 thousand tpa) within twelve months of operations.

The Refinery is located in Lorrain Township near the town of North Cobalt, Ontario.

Metallurgical Testing

Phase I - Initial Testing

Metallurgical testing was completed at SGS Canada Inc. (SGS) between Q4 2018 and Q2 2020. The test work program was managed by the company with input from Ausenco Engineering Canada In (Ausenco). For purposes of the Refinery Study, the initial phase of test work was conducted under 17070-01 and 17070-03 programs.

The programs evaluated two different cobalt hydroxide feed materials.

The purpose of the 17070-01 campaign was to demonstrate that battery-grade cobalt sulphate could be produced from a cobalt hydroxide feedstock using most of the current flowsheet at the refinery. The definition of a battery-grade cobalt sulphate product was based on specifications received by Electra from potential end users.

The program achieved a high purity cobalt sulphate product with a cobalt grade of 20.8 %w/w, with impurity levels that the company within range of lithium-ion battery market specifications.

The purpose of the 17070-03 program was to provide data for the Refinery Study, such as process conditions and operating targets for the various unit operations. The tests conducted included re-leaching and neutralisation, impurity solvent extraction (ISX), CoSX, solid/liquid separation testing, environmental and tailings testing.

Following the SX testwork performed at SGS and METSIM modelling by Ausenco, results were provided to Solvay to evaluate the SX processes on a continuous basis. The modelling results were incorporated into the basis of design.

Phase II - Testing and Piloting

After the Refinery Study, the company continued to advance metallurgical testwork with SGS, including pilot plant testing using new sample material from Kamoto Copper Company SARL (KCC; majority owned by Glencore's Katanga Mining) in the DRC, which better represents the material that would be expected to be processed through the refinery when in operation. This testwork yielded recoveries significantly higher than those from the Refinery Study analysis.

The pilot study consisted of the following unit operations, such as Leaching; Solvent Extraction; and Effluent Treatment.

The solvent extraction pilot study resulted in removing the impurities from the leach liquor and generating a concentrated cobalt sulfate product solution that is used to produce battery grade cobalt sulfate crystals. The waste streams of the solvent extraction pilot were treated using lime in a separate continuous pilot run, and the effluent generated from this study was found to meet the discharge limits prescribed by the Ontario Ministry of Environment, Conservation and Parks. The gypsum residue generated as a solid waste will be stored in the on-site tailings storage facility.

Recovery Methods

The refinery takes in cobalt hydroxide feed containing anywhere from 30 to 50% of contained cobalt. The refinery uses sulfuric acid to leach the cobalt hydroxide material into solution. Following the leaching process the liquor is neutralized before being sent to solvent extraction circuits where further impurities are removed. The final liquid from solvent extraction contains a high percentage of cobalt and that product is put through a crystallization process where battery grade cobalt sulphate is produced as the plants final product which then goes to market.

The process design is consistent with other operations, including:

Vale, Long Harbour: impurity SX followed by cobalt solvent extraction (CoSX).

WMC, Bulong Refinery: CoSX with Cyanex 272 followed by sulphide precipitation and impurity SX with D2EHPA.

Finland, Terrafame: crystallisation of high purity cobalt sulphate heptahydrate.

Environmental Permits and Social or Community Impact

The company has regularly kept local municipalities and Indigenous communities apprised of their activities. Local municipalities with an interest in the Refinery include the Township of Coleman, the Town of Cobalt, and the City of Temiskaming Shores. The company has engaged the following Indigenous communities to keep them informed and obtain their input on recommencing operations at the refinery, and the permits relating to the refinery comprising Matachewan First Nation (MFN); Temagami First Nation (TemFN); Timiskaming First Nation (TFN); M e tis Nation of Ontario (MNO); and Beaverhouse First Nation (BFN).

The Refinery requires 3 key environmental permits to operate and an approved closure plan prior to certain construction aspects. The company received final approved and acceptance of its closure plan by the Ministry of Northern Development, Mines, Natural Resources and Forestry in March 2022 and approval for an updated plan in November 2022.

The company received new or amended environmental permits, including Permit to Take Water (PTTW) in May 2021; Air and Noise Environmental Compliance Approval in October 2021; and Industrial Sewage Works Environmental Compliance Approval in February 2021.

The company is amending its PTTW to match the water volumes in the recently approved Industrial Sewage Works permit.

History

The company was incorporated under the Business Corporations Act of British Columbia in 2011 and in 2018, the company filed a Certificate of Continuance into Canada and adopted Articles of Continuance as a Federal Company under the Canada Business Corporations Act. The company was formerly known as First Cobalt Corp. and changed its name to Electra Battery Materials Corporation in 2021.