Fuse Cobalt and Electra Battery sign raw material supply MoU

Fuse Cobalt and Electra Battery sign MoU to supply cobalt raw material from Fuse’s Teledyne and Glencore Bucke projects in Cobalt, Ontario

Fuse Cobalt, the Canadian exploration company focused on high value metals for battery manufacture, has announced a Cobalt Raw Material Supply Agreement with Electra Battery Materials Corporation.

 

Supply of cobalt raw material

In a statement, Fuse Cobalt said that the non-binding Memorandum of Understanding was effective from 9th August 2022 and explained that the agreement is focused primarily on Fuse’s Teledyne and Glencore Bucke Cobalt Exploration projects, which are located in Cobalt, Ontario in close proximity to Electra’s cobalt sulfate refinery in Temiskaming Shores, Ontario.

The agreement will see the supply of cobalt raw material from either one or both of Fuse’ Glencore Bucke and Teledyne mining projects. It is expected to provide a ‘Made in North America’, low greenhouse gas emissions cobalt sulfate solution, which is capable of supplying the continent’s growing lithium-ion battery capacity.

Domestic source of cobalt raw material produced with low-carbon emissions 

"This MOU is the first step towards a potential Definitive Agreement to supply cobalt raw material for Electra's nearby cobalt refinery and sets out the terms by which we will exchange information with Electra to advance a potential transaction to involving the supply of cobalt raw materials,” said Robert Setter, Fuse CEO. “The end result of this collaboration will be the execution of a Definitive Agreement to provide cobalt feed stock to the Electra Cobalt Refinery which is roughly a stone's throw away from our two cobalt exploration properties in Ontario."

The MoU is anticipated to lay the framework for a future Transaction contemplating the following elements:

  • Electra commits to purchase up to 2 kpta (kilo tonnes) per annum of cobalt contained in raw material from Fuse Cobalt's 'Glencore Bucke' and/or 'Teledyne' operations to Electra's Cobalt Camp Refinery
  • Fuse Cobalt will use commercially reasonable efforts to achieve commercial production on or before 1st January 2028, which may be extended by agreement of the parties for up to 12 months following which Electra has a right to terminate the agreement and Fuse Cobalt may elect to sell to other parties
  • The purchase price to be paid by Electra for cobalt in raw material will be linked to Fastmarkets MB's standard-grade metal price multiplied by a payable mechanism to be agreed prior to completion of the Transaction
  • Electra and Fuse Cobalt agree to collaborate on ways to extract copper by-product on a profit share basis

Trent Mell, Electra's CEO stated: "Having a domestic source of cobalt raw material produced ethically and with low-carbon emissions will help us to better address the demand for onshore EV battery materials. We look forward to working with Fuse Cobalt as they advance development of their projects and begin production."

However, the transaction is subject to a Definitive Agreement which is in turn subject to the following conditions:

  • Fuse to develop a processing flowsheet designed to produce a cobalt material which is suitable for further processing to battery grade cobalt sulphate at Electra's refinery
  • Fuse to align with and abide by Electra's Supply Chain Policy, Environmental Policy, Sustainability Policy, and Human Rights Policy, as outlined in Appendix A of this MOU. Within 12 months of first production, furthermore, Fuse Cobalt commits to starting the process to become Responsible Minerals Initiative certified through the Responsible Minerals Assurance Process
  • Fuse to successfully complete a bankable feasibility study of either or both of the aforementioned primary cobalt projects
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