Electra Battery Materials Corporation Q2 FY2023 earnings call

• Strengthened balance sheet with $21.5 million gross proceeds from two concurrent private placements. - Completed re-baseline engineering report for cobalt refinery project, addressing supply chain issues, inflation, etc. - Scoping study on black mass processing showed compelling economics with estimated cost of CAD 8.1 million and good return. - Progress on black mass trial, including first plant scale test in North America and commercial shipment of MHP. - Extended and expanded supply agreement with LG Energy Solution from 3 years to 5 years, increasing supply from 7,000 tons to 19,000 tons. - Signed MOU with Three Fires for battery recycling in Ontario, aiming for localizing supply chain. - Reduced costs by staff reductions, salary cuts, etc.

No specific segment performance data on absolute terms and revenue contribution % provided in the transcript.

• Withdrew Q1 guidance related to commissioning and CapEx due to supply chain issues, inflation, etc. - Planning to accelerate black mass strategy while securing capital for cobalt refinery. - Anticipating progress on summary report from black mass trial, receiving key equipment for cobalt sulfate plant, and funding decisions from government agencies.

• Supply chain issues from COVID, damaged vessel, inflation. - Uncertain economic conditions and commodity price volatility.

Q: With the black mass plant-scale recycling trial, can you provide some color or at least as much as you can and are willing to in a public forum like this, as to what parameters get tested? And also, how many adjustments or rather like trials or however you want to call it, can be done in a given week. Or does this mostly just depend on what actually gets changed?

A: Trent Mell started, then Mark Trevisiol added.

Q: In your written earnings presentation, a word Iron Creek was not mentioned once. In the press release, the only time beside the company description at the very bottom that Iron Creek is mentioned, there's a single sentence where it actually states that you're having lower exploration expenses for the site. I'm going to just assume that this is more of a coincidence? Or is there a shift of focus that maybe haven't really picked up on.

A: Trent Mell responded.

Q: Looking at your CapEx estimate, the $155 million to $167 million, can you clarify how much of that is needed for the black mass recycling versus the cobalt hydroxide or even the expansion if that's still on the table?

A: Trent Mell and Mark Trevisiol responded.

Q: Just on the black mass recycling. Can you provide any color on what that ramp to the 2,500 tonne-a-day rate might look like and touch on sources of feedstock?

A: Trent Mell and Mark Trevisiol responded.

Q: This is Surya Sankarasubramanian from Red Cloud Securities. We read the news about Ford's investment in a new plant in Bécancour yesterday valued at around CAD 1.2 billion. So I was just wondering what the -- how it impacts your plans in terms of whether you're prioritizing your PFS maybe changing time lines? Or you also saw that half the government funding was -- I mean, half the funding was from loans from the government. So that has any implications for your clients as well?

A: Trent Mell responded.

Q: Good morning. It sounds like you've made some good progress during the quarter, so congrats on that. Just a couple of questions. One on black mass and one on the cobalt refinery. First, on the black mass, -- so the -- I don't know if you actually answered the ramp-up question. When do you think you'll start to construction or not construction, but development of that? And when will you actually start seeing the cash flow because you've got sort of a guidance of years one, two, three, four with averaging about $10 million a year. But when would year one be, what's your current thinking on when year one is? And also, it sounds like you're going to be revising that study to -- with some updated numbers later this year -- I think, later this year. And like what will be the main changes there?

A: Trent Mell and Mark Trevisiol responded.

Q: And then if I could ask one more then on the refinery. So you did the -- you had that extended and expanded contract with LG or modified with LG, which is great. But what about -- I mean, they're obviously interested in the product, but I mean we've seen other sort of customers come up with some financing to help construct some of these -- operate the battery plants. We see it in some other type in the battery and the supply chain. Is there any discussion around LG coming up with some funding to get the refinery construction complete?

A: Trent Mell responded.