Sigma Lithium Corporation, a leading global lithium producer dedicated to powering the next generation of electric vehicles with socially and environmentally sustainable lithium concentrate, presented its strategic vision at its 2024 Investor Day held at Nasdaq. The Investor Day Company detailed its path to significant volume growth and value creation by reinforcing its operational capabilities and expanding on the merits of its low cost and capital efficient growth profile.
CEO and Co-Chairperson Ana Cabral notes: “We are in a very advantageous competitive position: Sigma Lithium is the industry’s third lowest-cost lithium concentrate producer, benefiting from processing ingenuity and a low-cost operational jurisdiction. We are building another carbon neutral Greentech lithium plant in Brazil, with BNDES, the country’s development bank, fully funding our construction. Therefore, we can continue to deliver on our successful track record to comfortably expand capacity and meet the significant long-term demand requirements of our clients, even with the current low-price environment.”
She continued, “Our financial resilience is supported by Sigma Lithium’s positioning in the most profitable segment of the lithium supply chain, away from the fierce competition and capital-intensive downstream lithium chemicals. All the while, our Greentech plant produces metallurgically superior lithium materials, enabling us to maximize the “value in use” of each unit of lithium we deliver to customers.”
“Getting here was the result of relentless dedication of our team over the last two years, building the Greentech plant and delivering the production ramp up. Therefore, the main hurdles have been crossed, and executing on this growth is “replicating the same strategy”, with our highly experienced team in place. We are very enthusiastic about the many opportunities ahead for Sigma Lithium,” she concluded.
Volume growth predicated on low-risk investments
With Sigma’s phase 1 commissioning and commercial ramp up complete, the Company outlined brownfield investments to debottleneck production volumes. This includes steps to improve ultrafines processing and allow for reprocessing of nearly 200,000t of 1.5% grade stockpiled material. The Company has also invested to upgrade its network of crusher screens to reduce maintenance expenses and improve the purity profile of ore processed by its Greentech facility. All in, Sigma targets a 10% gain in annual production from these initiatives.
On a larger scale, Sigma Lithium laid out its plans to more than triple its current 37,000 tonnes of lithium carbonate equivalent (LCE) production by the end of 2026 following the construction of its phase 2 and 3 expansions. For the Phase 2 project, which is under construction now, the Company is targeting 250,000 tonnes of lithium concentrate capacity, or 34,000 tonnes of LCE. Its larger phase 3 expansion is expected to add 400,000 tonnes to headline concentrate capacity, or 54,000t LCE. These growth projects utilize nearly identical processing flowsheets as the first phase and will benefit from the existing infrastructure at Sigma. All in, Sigma Lithium expects to lift its total production volume to 920,000 tonnes of concentrate, or 125,000t LCE, by 2027. At this scale, Sigma would improve its standing as a leading producer of lithium materials.
The Company has significantly derisked its business profile over the past 12 months by proving its dense media separation (DMS) process, establishing its incredibly reliable shipment schedule, and demonstrating a highly attractive operating and capital cost model. This leaves the Company in an excellent position to execute against these next growth projects.
In addition to the phased buildout of its integrated Greentech complex, the Company continues to explore entry into the lithium sulfate intermediates market by 2027. Through lithium sulfate production, Sigma Lithium seeks to become the linchpin in a new global battery materials chain that is zero carbon, capital efficient, and reduces dependence on China. By doing so, the Company could further monetize its superior product quality profile, which is undervalued in today’s market without stepping far enough downstream as to compete directly in the intensely competitive segment of lithium chemicals business.
Growth leverages the benefits of scale and supports robust earnings growth profile
As the Company commissions additional capacity, it expects to benefit from significant cost leverage through its on and off-site fixed-overhead and G&A expenses. When using the prevailing consensus sell-side estimates for lithium concentrate price, the model supports robust earnings and margin expansion. Based on our current forecast, the combination of volume growth and this price deck drives an adjusted cash EBITDA for Sigma of $420mm in 2025 and nearly $700mm in 2027.
Attractive financing in place to support these initiatives
Supporting this growth profile is the recent commitment by the BNDES for a BRL487mm development loan to fully fund the construction of Sigma’s phase 2 Greentech plant. The loan carries a sub-treasury interest rate of 7.53% in Brazilian Reals, or ~2.5% on a USD basis at prevailing swap rates. It also features an 18-month amortization forgiveness window. With a 12 month build and commissioning timeline, the Company expects to be generating earnings from its new operations before the BNDES debt begins to amortize.
The development bank commitment is more than just a loan package; it is an opportunity to partner with the BNDES over time. Sigma has the opportunity, should it choose, to tap these capital pools again to help finance its phase 3 and downstream initiatives. With greater scale and lower costs, the Company expects to rapidly de-lever its balance sheet, freeing up room for the additional subsidized leverage to fund the successive buildouts.
Investments to increase production are supported by comprehensive mine plan
Supporting this wave of expansion is 110Mt of audited mineral resources and what the Company and its external auditors believe is a balance in excess of 150Mt considering its target pipeline and known pegmatite formations.
This resource represents more than just tonnage, but also optionality in the Company’s mine plan. Given investments made in the mine, Sigma preserves the option to commission its Phase 2 asset with ore from the Xuxa mine, its upcoming Barreiro mine or a mix of both. At this point, the most likely strategy will be to utilize Xuxa, as the geology and minerology are known and best mining practices are used. This will also allow for optimal DMS commissioning for its Phase 2 operations and a deferred capex outlay to pre-strip the second mine.
Over time, the geology team will work to build density among the core resource portfolio. Targeted drilling initiatives show extensions to the phase 2 Barreiro mine, which could take the contained resource to 45mm tonnes, up from 29mm tonnes currently. Co-development of the phase 3 and 4 mines would similarly provide room for site scale at 60mm tonnes of combined resource.
