Electra Battery Materials Corp V.ELBM

LG Deal - 19,000 tonnes

[555rookie555]

We don't know the price of the cobalt sulfate in the deal but after a quick search I found average price out of China is $8,375.-8,512. 

Value of the deal at these prices would be: $8400x 19,000 = $159,600,000. Revenue only. 

I would assume a discount had to be applied in the deal, and I would also assume it didn't have to be too drastic since ELBM has an offtake agreement for a global distributor for any amount of material produced (that isn't sold), and there are logistical savings for LG to purchase from a plant 4 hours north of them rather than China..... Still, applying a 25% market discount would leave $119,700,000 revenue. 

Assume 50% margin = approximately $59.85 million EBITA
# shares outstanding: 35.55 million
Earnings per share = $1.68

P/E = $2.70 SP / $1.68 = 1.6 PE

Not sure what is a suitable PE ratio for this industry, but sinve it feeds EV makers I assume PE would land close to 6-8 after one or two years of operations (by 2026/2027).

Expected ROI (by 2027) = 7 / 1.6 = 4.375 x 100 = 437% / 3 years = 145% simple ROI per year from here up (if financing and the rest of the project execution and operational startup runs smoothly).

Holding long for now.

[Silverad0]

I went into the office yesterday planning to dump about 10,000 shares. For once I listened to my gut.  Amazing.  now had I used the $10G cash to by more shares yesterday. If only.  now what do I buy with the $10G?

[doogie57]

I bought some NBM.

[MTwallet]

There won't be a definitive price for the product. It will change on a daily metal price. 

[MrGreenIT]

Thanks for this calculation. It provides some useful baseline information. Do you mind if I share it on My ELBM SubReddit https://www.reddit.com/r/ELBM/  with Attribution to you and this group. Disclosure: ELBM LONG HOLDER

[555rookie555]

Sure, I'm just a newbie, not a professional though. 

[MrGreenIT]

Thanks.  There was another post that followed regarding the tonnage contained vs refined product and lso your optomistic 50% margin assumption. I will mention those two adjustments. Overall still these are impressive numbers for the CO Sulphate plant and don't yet consider the emerging new run rate recycling revenue. Keep Holding On Long Green is in Good's Green rewards. 

[ElJ]

I caution that there appears "lots of gaps" with the attempted calculations of estimated direct earnings to Electra, based on the deal that: "Electra will supply LG Energy Solution with 3,000 tonnes of cobalt contained in a cobalt sulfate product in 2025 and a further 4,000 tonnes in each of the following years through 2029 for a total of 19,000 tonnes: Remember that Electra

[MrGreenIT]

Thanks for this calculation. 555rookie555  Do you mind if I share it on My ELBM SubReddit https://www.reddit.com/r/ELBM/  with Attribution to you and this group? It provides some useful baseline information.  Double post because I placed comment in the wrong string. Sorry Disclosure: ELBM LONG HOLDER 555rookie555

[RudeyT]

The deal is actually 19,000 tonnes of cobalt contained in cobalt sulphate, not 19,000 tonnes of cobalt sulphate. 20.5% cobalt content in cobalt sulphate, meaning 92,000 tonnes of cobalt sulphate = ~CAD700M price that TM tweeted earlier.   You can email ELBM to confirm, but Im fairly certain this is the case.   But do not assume 50% margin. Refining margins are very small, maybe 5

[555rookie555]

Thanks for the correction Rudey. I had to look back to the engineering studies from a few years ago. Looks like they advertised operational costs of $2.36 per pound.  https://www.nsenergybusiness.com/news/first-cobalt-announces-13-operating-cost-reduction-for-canadian-cobalt-refinery-project/

[WernHerr]

increase of outstanding share by about 19M. How come? ELBM announcement: "...best-efforts" private placement (the "Marketed Offering") for the sale of up to 9,090,909 Units of the Company..." "The Company has granted the Agents an option, exercisable up to 48 hours prior to the Closing Date, which is exercisable to sell up to 1,363,636 additional Units..." So