Financial Data and Key Metrics Changes - The company reported a cash position of $8.4 million at the end of the year, down from $19.7 million at September 30, primarily due to investments in the refinery project and other operational costs [6][16][17] - The earnings per share for the quarter was positive at $0.31, driven by a fair value gain on derivative liability connected to convertible debt [16][17] - The company expects the final estimated capital for the refinery project to be higher than the previously guided $105 million due to inflationary pressures and supply chain issues [71][87] Business Line Data and Key Metrics Changes - The company is focusing on the commissioning of its cobalt sulfate refinery and has made significant progress in its black mass recycling operations, targeting high-value metals from shredded lithium-ion batteries [15][90] - The first nickel cobalt MHP product has been produced, and the company is also recovering lithium carbonate, manganese, copper, and graphite [29][90] - The company is achieving better efficiencies in plant scale operations compared to bench scale testing, indicating improvements in recovery rates and production rates [91] Market Data and Key Metrics Changes - The company noted that 68% of nickel, 73% of cobalt, and 93% of manganese are currently refined in China, highlighting the opportunity for domestic refining in North America [31] - The Inflation Reduction Act (IRA) is expected to significantly bolster the onshoring of the supply chain, with $391 billion earmarked for climate and energy initiatives [78][79] - Goldman Sachs projects EV sales to reach 73 million units by 2040, indicating a substantial increase in demand for battery materials and recycling [80] Company Strategy and Development Direction - The company aims to establish itself as a leading battery materials refiner, not just for cobalt but also for other cathode materials and recycling [31][90] - The strategy includes a proof partner build model to focus on refining processes rather than building extensive infrastructure, which is expected to create a closed loop of battery materials [21] - The company is also exploring opportunities for a second refinery adjacent to Vale's nickel plant in Quebec, indicating plans for future expansion [98] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by high inflation and supply chain delays, which have impacted project timelines and costs [12][71] - The company remains optimistic about the future, citing strong macroeconomic trends and the importance of recycling in the battery supply chain [78][80] - Management emphasized the importance of cash management and ongoing fundraising efforts to support operational needs [17][85] Other Important Information - The company has completed approximately 95% of procurement for the refinery project and has a workforce of 31 personnel on site [88] - There have been zero lost time incidents reported, indicating a strong health and safety culture [89] - The company is actively engaging with 20 different partners for battery recycling feedstock, showcasing a robust supply chain strategy [42] Q&A Session Summary Question: Can you elaborate on the higher capital spend compared to expectations? - Management acknowledged that delays and inflation have led to notable increases in capital expenditures, but specific numbers were not provided [24][25] Question: Is the company comfortable with a minimum cash balance of $2 million? - Management indicated that while $2 million is not ideal, it provides flexibility for fundraising activities [26] Question: When will a decision be made about starting a recycling plant? - Management expects to provide a more detailed look at the opportunity in Q2, following ongoing modeling and data collection from the demonstration plant [35][37] Question: What is the status of contracts for black mass? - Management confirmed that they are favoring higher quality feedstocks and are selling products on commercial terms, with Glencore being a preferred option [52][54] Question: How has the relationship with LG Energy progressed? - Management expressed optimism about the relationship, viewing it as a potential step towards a larger partnership in the future [61]
Electra Battery Materials (ELBM) - 2022 Q4 - Earnings Call Transcript