Mr. Trent Mell reports

ELECTRA ANNOUNCES $20 MILLION STRATEGIC INVESTMENT PROPOSAL

Electra Battery Materials Corp. has provided an update on its financing strategy for North America's first battery-grade cobalt refinery. The company has received a non-binding term sheet for a $20-million prepayment facility from an arm's-length strategic player in the battery material sector. Several other financing discussions have been advancing alongside this proposal to raise the $60-million for project completion plus amounts for working capital and operations during the construction and commissioning phases. (All dollar amounts are in U.S. dollars.)

Electra chief executive officer Trent Mell commented, "Interest from sophisticated strategic partners indicates strong confidence in Electra; and, with the continued support of investors, governments and downstream customers, we are well positioned to realize our vision of a North American battery materials supply chain."

The strategic investment announced today is equal to the $20-million award Electra received from the U.S. Department of Defense pursuant to Title III of the Defense Production Act (DPA) last month. More than 90 per cent of battery-grade cobalt is produced by Chinese companies today and none in North America.

Electra owns a low-carbon, permitted hydrometallurgical refining complex north of Toronto that historically produced nickel and cobalt. The facility is being expanded and modified to provide North America battery makers with a domestic source of cobalt sulphate for lithium-ion batteries. The refining complex was also the location of a year-long battery recycling demonstration plant in 2023. The company estimates that an additional $60-million in capital costs are required to complete the $250-million cobalt facility.

If consummated, the investment would comprise an immediate investment of $10-million and a follow-on investment of $10-million during the refinery's commissioning phase. As partial compensation, Electra would provide marketing rights for a portion of future production until the facility is repaid. This investment is intended to provide working capital and general and administrative coverage over and above the remaining construction costs. The transaction is subject to conditions precedent, including developments in parallel financing discussions that are well advanced.

Electra continues to make steady progress in securing other non-dilutive sources of financing, including government programs, to complete the construction and commissioning of the refinery. Once fully commissioned, Electra's facility could produce up to 6,500 tonnes of cobalt per year, which could support the production of over one million EVs (electric vehicles) annually. LG Energy Solution intends to purchase up to 80 per cent of capacity over the first five years of operation.

At this time, the strategic investment term sheet is a non-binding proposal, and a confirmation of the proposal was received on Sept. 3, 2024. The progression to binding documentation is subject to finalization of diligence and negotiation of customary closing materials and is progressing in line with all parties' agreed timeline. Discussions with other strategic partners are expected to continue until today's proposal becomes binding.

Electra's near-term priority is to recommission and expand its low-carbon Canadian cobalt refinery, which has already been derisked through the delivery of long-lead equipment and the operation of a black mass demonstration plant in the legacy refinery. The company's longer-term vision includes nickel production and battery recycling, thereby onshoring additional critical mineral refining processes needed for the North American electric vehicle battery supply chain.

Company update

The company also announces that, in accordance with its long-term incentive plan approved by shareholders at its Aug. 13, 2024, annual general meeting, it has granted an aggregate of $96,250 (Canadian) in deferred share units (DSUs) in connection with director remuneration, which is issued in lieu of cash compensation otherwise payable. DSUs vest after 12 months but may not be exercised until a director ceases to serve the company. DSU grants ensure alignment of interests with the company's shareholders.

About Electra Battery Materials Corp.

Electra is a processor of low-carbon, ethically sourced battery materials. Currently focused on developing North America's only cobalt sulphate refinery, Electra is executing a phased strategy to onshore the electric vehicle supply chain and provide a North American solution for EV battery material refining. In addition to building North America's only cobalt sulphate refinery, its strategy includes integrating black mass recycling, potential cobalt sulphate processing in Becancour, Que., and exploring nickel sulphate production potential within North America.

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