Sigma Lithium Achieves Outstanding Project Expansion And Financing Milestones
Increases Mineral Reserves By 63%, Triples Npv To Us$ 15.3 Billion And Secures Us$ 100 Million Debt FinancingINVESTOR VIDEO CONFERENCE CALL
December 6, 2022 at 10AM (EST)
Registration Link for Zoom video call below:
https://us06web.zoom.us/j/83014247697
Zoom Meeting ID: 830 1424 7697
HIGHLIGHTS OF PLANNED PRODUCTION EXPANSION
- Sigma Lithium announces positive economic results of its study to potentially triple integrated production (the "Production Expansion Study") of Battery Grade Sustainable Lithium Concentrate from 270,000 tpa (36,700 tpa LCE) commencing in 2023 to 768,000 tpa (104,200 tpa LCE) in the second year at the Company's 100% owned Grota do Cirilo Project (the "Project").
- The Project expansion may potentially position Sigma Lithium as one of the world's largest fully integrated lithium producers (from mine to lithium materials).
- The Production Expansion Study demonstrated robust Project economics, highlighted by an after-tax NPV8% of US$ 15.3 billion, incorporating production from Phase 1 (nearing commissioning initiation) combined with Phase 2 and Phase 3.
- Total Capex for the Project expansion is estimated at US$ 155 million and could be fully funded as follows:
- A portion of the US$ 100 million Debt Financing
- After-tax free cash flow once production is initiated in early 2023.
- The Construction of the Project expansion could potentially be initiated with earthworks and ordering of long lead items in the first quarter of 2023, once a final decision is made by the Company.
- At the expanded capacity, the key economics of the Project are as follows:
| Year 1 | Years 2-8 | Years 9-13 | |
| Key Metrics & Assumptions | Average Annual | ||
| Battery Grade Sustainable Lithium Production (t) | 277,000 | 768,200 | 491,000 |
| All In Sustainable Cash Costs CIF China (per tonne) | $458 | $539 | $491 |
| Financial Metrics | Average Annual (US$M) | ||
| Gross Revenue | $1,599 | $3,620 | $1,029 |
| After-Tax Earnings | $1,233 | $2,682 | $650 |
| % After-Tax Earnings Margin | 79 % | 76 % | 65 % |
SIGNING DEFINITIVE AGREEMENTS FOR UP TO US$100 MILLION DEBT FINANCING
- Sigma Lithium also announces signing of definitive agreements for up to US$100 million senior secured pre-export financing (the "Debt Financing") with Synergy Capital, one of the Company's current shareholders, based in the United Arab Emirates.
- The Debt Financing will fully fund the Company until August 2023, including the initiation of detailed engineering and the initiation of construction of the Project Expansion.
- The Debt Financing has a 4-year maturity date and interest rate of BSBY plus 6.95% per annum (12-month Bloomberg Short Term Bank Yield Index).
- The initial drawdown of $60 million under the Debt Financing is expected to close this year.
MINERAL RESERVES INCREASED BY 63% AND MINERAL RESOURCE INCREASE
- Increased proven and probable mineral reserves by 63% to 54.8 Mt of lithium spodumene, while maintaining high grade at 1.44% lithium oxide.
- Total Project measured and indicated mineral resources (inclusive of reserves) increased to 77.0 Mt grading 1.43% lithium oxide and 12.1 Mt of inferred mineral resources grading 1.45% lithium oxide.
- Increased Project life to 20 years (at the current planned production rate).
- Phase 3 proven and probable mineral reserve estimate of 21.2 Mt, while maintaining a high grade at 1.45% lithium oxide.
- Phase 3 measured and indicated mineral resources (inclusive of reserves) updated to a total of 26.7 Mt maintaining a high grade at 1.49% lithium oxide.
VANCOUVER, Dec. 4, 2022 - SIGMA Lithium Corp. ("Sigma Lithium" or the "Company") (NASDAQ: SGML, TSXV: SGML), dedicated to powering the next generation of electric vehicles with high-purity lithium environmentally and socially sustainable lithium, is pleased to announce the positive economic results of its study ("Production Expansion Study") for a potential integrated production increase of Battery Grade Sustainable Lithium Concentrate from 270,000 tpa (36,700 tpa LCE) commencing in 2023 to 768,000 tpa (104,200 tpa LCE) in the second year at the Company's 100% owned Grota do Cirilo Project (the "Project"), currently in construction in Minas Gerais, Brazil.
The Production Expansion Study demonstrated robust Project economics, highlighted by an after-tax NPV8% of US$15.3 billion, incorporating production from Phase 1 (nearing commissioning initiation) combined with Phase 2 and Phase 3.
Battery Grade Sustainable Lithium Concentrate production expansion could be achieved by the addition to the Greentech Lithium Plant of a single larger additional dense media separation module paired with a proportional crushing module. Increase in mining feedstock for the integrated production expansion of the Greentech Lithium Plant shall be achieved by the construction of the Phase 2 and Phase 3 Mines.
Sigma Lithium also announces the signing of definitive agreements for up to US$100 million senior secured pre-export financing (the "Debt Financing") with Synergy Capital, one of the Company's current shareholders, based in the United Arab Emirates.
"With Phase 1 rapidly progressing towards production in the near term, we are delighted to share the outstanding achievements of our team towards increasing near-term production of Battery Grade Sustainable Lithium on two critical fronts: completion of technical studies for Project Expansion and debt financing," says Ana Cabral-Gardner, Co-CEO and Co-Chairperson of Sigma Lithium. "More importantly, we shall be able to remain at the low end of the cost curve."
Co-CEO and Co-Chairperson Calvyn Gardner adds, "We are very happy with the results of the Phase 2 and 3 expansion plans at Grota do Cirilo, which cements Sigma Lithium as potentially one of the largest lithium producers globally. Further, our ability to continue to maintain the high grades of the mineral resources, as we expand integrated production demonstrates the significant additional growth potential of the Company."
Sudhir Maheshwari, Managing Partner of Synergy Capital says: "We are extremely pleased that our multi-year partnership with Sigma Lithium has reached a major milestone, as the Company is set to start lithium production in a few months."
The technical report for the Production Expansion Study (the "Updated Technical Report") will be filed on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and the Company's corporate website within 45 days of this news release. Readers are encouraged to read the Updated Technical Report in its entirety, including all qualifications and assumptions related to the Updated Technical Report announced in this news release.
Table 1: Combined Project Economic Analysis
| Base Case | 5.5% Li2O |
| Economic Analysis | |
| After-Tax Net Present Value (@ 8% Discount Rate) | US$15.3 Billion |
| After-Tax Internal Rate of Return | 1,273 % |
| Payback Period | 1 month |
| Revenues, Cash Flow and Capex | |
| Operating Life | 13 years |
| Battery Grade Sustainable Lithium Run-Rate Production | 766,000 tpa |
| Lithium Carbonate Equivalent Run-Rate Production | 104,200 tpa LCE |
| Average Annual Revenue | US$2.5 Billion |
| Average Annual After-Tax Free Cash Flow | US$1.8 Billion |
| Costs per tonne of Lithium Concentrate | |
| Total Cash Cost at Production | US$401/t |
| All-in Sustaining Cost (CIF China) | US$523/t |
| Phase 1 Lithium Recovery Rate (DMS) | 65.0 % |
| Phase 2 Lithium Recovery Rate (DMS) | 57.9 % |
| Phase 3 Lithium Recovery Rate (DMS) | 50.6 % |
| Integrated Costs (per tonne of lithium concentrate) | |
| Mining costs | US$215/t |
| Greentech Plant Processing costs | US$53/t |
| G&A costs | US$22/t |
| Transportation costs (Mine to CIF China) | US$120/t |
| Spodumene Ore Mined Feedstock for Greentech Plant | |
| Total quantity mined (plant feed) | 54.8 Mt |
| Annual run of mine (ROM) plant feed | 4.2 Mtpa |
Table 2: Annual Combined Project Integrated Estimated Revenue and Operating Costs
| Year 1 | Years 2-8 | Years 9-13 | |
| Key Metrics & Assumptions | |||
| Avg. Battery Grade Lithium Hydroxide Price (US$/t) | $64,150 | $52,293 | $23,272 |
| Avg. Battery Grade Sustainable Lithium Price (US$/t) | $5,774 | $4,706 | $2,094 |
| Avg. Battery Grade Sustainable Lithium Production (t) | 277,000 | 768,200 | 491,000 |
| Estimated Revenue, Operating Cost and After-Tax Earnings | |||
| Gross Revenue (US$ M) | $1,599 | $3,620 | $1,029 |
| Less: Realization costs (US$ M) | ($45) | ($102) | ($29) |
| (-) CFEM Royalty (US$ M) | ($32) | ($72) | ($21) |
| (-) Other Royalties (US$ M) | ($13) | ($30) | ($8) |
| (-) Commercial Discount (US$ M) | - | - | - |
| Net Revenues (US$ M) | $1,554 | $3,518 | $1,000 |
| Less: Site Operating Costs (US$ M) | ($99) | ($353) | ($233) |
| (-) Mining (US$ M) | ($25) | ($160) | ($119) |
| (-) Processing (US$ M) | ($15) | ($41) | ($25) |
| (-) Transport (US$ M) | ($33) | ($92) | ($59) |
| (-) Selling, General & Administration (US$ M) | ($8) | ($17) | ($10) |
| (-) Depreciation (US$ M) | ($18) | ($42) | ($21) |
| EBIT (US$ M) | $1,455 | $3,165 | $767 |
| % EBIT Margin | 94 % | 90 % | 77 % |
| (-) Taxes (US$ M) | ($222) | ($483) | ($117) |
| After-Tax Earnings (US$ M) | $1,233 | $2,682 | $650 |
| % After-Tax Earnings Margin | 79 % | 76 % | 65 % |
US$100 MILLION DEBT FINANCING
The Debt Financing will fully fund the Company until August 2023, including the initiation of detailed engineering and initiation of construction of the Project expansion. The Debt Financing is also expected to fund working capital requirements for the entire commissioning period of the Greentech Plant as well as for general corporate purposes.
The initial drawdown of $60 million under the Debt Financing is expected to close this year. The remaining drawdown is subject to certain remaining conditions precedent.
The Debt Financing is available by way of a multi-draw term loan and contemplates a 48-month maturity date and a borrowing rate of 12-month BSBY plus 6.95% per annum (which may be increased by an additional 3.5% per annum to the extent that there is a delay in the satisfaction of certain conditions subsequent).
- The Debt Financing is a senior secured obligation, secured by, among other things, all assets of Sigma Brazil including a pledge of all of the shares of Sigma Brazil, as well as a guarantee from the Company until certain release conditions are met.
- Amounts borrowed under the Debt Financing must be repaid by 50% of net cash generated from export receivables generated from operating and investing activities of the Company.
- Furthermore, the Debt Financing must be permanently repaid in part, to the extent any additional debt financing is raised by Sigma Brazil exceeding the threshold of approximately US$ 120 million.
- The Debt Financing is otherwise due in full on the Maturity Date, subject to the prior occurrence of an event of default or change of control transaction.
The definitive agreements for the Debt Financing include other customary financing terms and conditions, including those related to security, fees, prepayment premiums, representations, warranties, covenants, and conditions.
MAIDEN PHASE 3 MINERAL RESERVES AND UPDATED MINERAL RESOURCES
The Phase 3 mineral reserve has been declared as a result of the positive economic results of the analysis to be published in the Updated Technical Report. The Phase 3 mineral resource was updated after Sigma Lithium completed an additional 13 drillholes (3,531 meters), which enabled the conversion of previous Inferred mineral resource estimates into the Indicated category down-dip and at the top of the south zone of the deposit. The additional drilling also allowed the Company's geological and metallurgical engineering consultant, SGS Canada Lakefield ("SGS"), to model two small satellite zones, one in the hanging wall of the north zone and one in the hanging wall of the south zone.
Table 3: Maiden Phase 3 Mineral Reserve Estimate
| Maiden Phase 3 Mineral Reserves | ||||
| Cut-off Grade (% Li2O) | Category | Tonnes (Mt) | Grade (% Li2O) | Contained LCE (kt) |
| 0.5 % | Proven | 2.2 | 1.53 % | 82 |
| 0.5 % | Probable | 19.0 | 1.44 % | 677 |
| 0.5 % | Proven & Probable | 21.2 | 1.45 % | 759 |
Note:
1. Mineral Reserves were estimated using Geovia Whittle 4.3 software and following the economic parameters listed below:
2. Sale price for Lithium concentrate at 6% Li2O = US$3,500/t concentrate FOB Mine.
3. Mining costs: US$2.43/t mined.
4. Processing costs: US$10.7/t ore milled.
5. G&A: US$4.00/t ROM (run of mine).
6. Exchange rate US$1.00 = R$5.30.
7. Mineral Reserves are the economic portion of the Measured and Indicated Mineral Resources.
8. 94% Mine Recovery and 3% Mine Dilution
9. Final slope angle: 35°to 52° based on Geotechnical Document presented in Section 16.
10. Strip Ratio = 16.01 t/t (waste)/mineral reserve..
11. Mineral Reserves have been classified using the 2014 CIM Definition Standards. The Qualified Person for the estimate is Porfírio Cabaleiro Rodriguez, BSc. (MEng), FAIG, an employee of GE21.
12. The estimate of Mineral Reserves may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
Table 4: Updated Phase 3 Mineral Resource Estimate
| Updated Phase 3 Mineral Resources | ||||
| Cut-off Grade (% Li2O) | Category | Tonnes (Mt) | Grade (% Li2O) | Contained LCE (kt) |
| 0.5 % | Measured | 2.4 | 1.56 % | 93 |
| 0.5 % | Indicated | 24.3 | 1.48 % | 889 |
| 0.5 % | Measured & Indicated | 26.7 | 1.49 % | 984 |
Note:
1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Inferred mineral resources are exclusive of the Measured and Indicated resources.
2. Mineral Resources have an effective date of October 31, 2022 and have been classified using the 2014 CIM Definition Standards. The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS Canada employee.
3. A fixed density of 2.72 t/m3 was used to estimate the tonnage from block model volumes.
4. Mineral Resources are reported assuming open pit mining methods, and the following assumptions: lithium concentrate (6% Li2O) price of US$1,500/t, mining costs of US$2.20/t for mineralization and waste, crushing and processing costs of US$10.70/t, general and administrative (G&A) costs of US$4.00/t, metallurgical DMS recovery of 60%, 2% royalty payment, pit slope angles of 55º, and an overall cut-off grade of 0.5% Li2O.
5. All Resources are presented undiluted and in situ, constrained by continuous 3D wireframe models, and are considered to have reasonable prospects for eventual economic extraction.
6. Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due to rounding.
7. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
8. Mineral Resources are inclusive of Mineral Reserves
Table 5: Updated Consolidated Project Mineral Reserves
| Consolidated Project Mineral Reserves | ||||
| Cut-off Grade (% Li2O) | Category | Tonnes (Mt) | Grade (% Li2O) | Contained LCE (kt) |
| 0.5 % | Proven | 27.4 | 1.44 % | 979 |
| 0.5 % | Probable | 27.3 | 1.43 % | 962 |
| 0.5 % | Proven & Probable | 54.8 | 1.44 % | 1,941 |
Note:
1. Mineral Reserves were estimated using Geovia Whittle 4.3 software and following the economic parameters listed below:
2. Sale price for Lithium concentrate at 6% Li2O = US$1,500/t concentrate FOB Mine (Xuxa and Barreiro); US$3,500/t concentrate FOB Mine (NDC).
3. Mining costs: US$2.20/t mined (Xuxa); US$2.19/t (Barreiro); US$2.43/t mined (NDC).
4. Processing costs: US$10.7/t ore milled (Xuxa, Barreiro and NDC).
5. G&A: US$4.00/t ROM (run of mine) (Xuxa, Barreiro and NDC).
6. Exchange rate US$1.00 = R$5.00 (Xuxa and Barreiro); R$5.30 (NDC).
7. Mineral Reserves are the economic portion of the Measured and Indicated Mineral Resources.
8. 82.5% Mine Recovery and 3.75% Mine Dilution (Xuxa); 95% Mine Recovery and 3% Mine Dilution (Barreiro); 94% Mine Recovery and 3% Mine Dilution (NDC)
9. Final slope angle: 34° to 72° (Xuxa); 35° to 55° (Barreiro); 35° to 52° (NDC) based on Geotechnical Document presented in Section 16.
10. Strip Ratio = 16.6 t/t waste/mineral reserve (NDC); 12.5 t/t waste/mineral reserve (NDC); 16.0 t/t waste/mineral reserve (NDC).
11. Mineral Reserves have been classified using the 2014 CIM Definition Standards. The Qualified Person for the estimate is Porfírio Cabaleiro Rodriguez, BSc. (MEng), FAIG, an employee of GE21.
12. The estimate of Mineral Reserves may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
Table 6: Updated Consolidated Project Mineral Resources
| Updated Consolidated Project Mineral Resources | ||||
| Cut-off Grade (% Li2O) | Category | Tonnes (Mt) | Grade (% Li2O) | Contained LCE (kt) |
| 0.5 % | Measured | 37.1 | 1.43 % | 1,312 |
| 0.5 % | Indicated | 39.9 | 1.43 % | 1,411 |
| 0.5 % | Measured & Indicated | 77.0 | 1.43 % | 2,723 |
| 0.5 % | Inferred | 12.1 | 1.45 % | 434 |
Note:
1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Inferred mineral resources are exclusive of the Measured and Indicated resources.
2. Mineral Resources have an effective date of October 31, 2022 and have been classified using the 2014 CIM Definition Standards. The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS Canada employee.
3. Mineral Resources are reported assuming open pit mining methods, and the following assumptions: lithium concentrate (6% Li2O) price of US$1,500/t, mining costs of US$2.20/t for mineralization and waste, crushing and processing costs of US$10.70/t, general and administrative (G&A) costs of US$4.00/t, metallurgical DMS recovery of 60%, 2% royalty payment, pit slope angles of 55º, and an overall cut-off grade of 0.5% Li2O.
4. All Resources are presented undiluted and in situ, constrained by continuous 3D wireframe models, and are considered to have reasonable prospects for eventual economic extraction.
5. Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due to rounding.
6. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
7. Mineral Resources are inclusive of Mineral Reserves
QUALIFIED PERSONS
The technical and scientific information related to geology and mineral resource estimates in this news release has been reviewed and approved by Marc-Antoine Laporte P.Geo., M.Sc., of SGS. Mr. Laporte is a Qualified Person as defined by National Instrument 43-101 and is independent of Sigma Lithium.
The mining and mineral reserve estimates in this news release have been reviewed and approved by Porfirio Cabaleiro Rodriguez P.Eng, Mining Engineer of GE21 Consultoria Mineral Brazil. Mr. Rodriguez is a Qualified Person as defined by National Instrument 43-101 and is independent of Sigma Lithium.
The financial information in this news release has been reviewed and approved by Noel O'Brien B.E., MBA, F AusIMM, who is a Qualified Person as defined by National Instrument 43-101 and is independent of Sigma Lithium.
ABOUT SIGMA LITHIUM
Sigma Lithium (NASDAQ: SGML, TSXV: SGML) is a Canadian company dedicated to powering the next generation of electric vehicle batteries with environmentally sustainable and high-purity lithium.
Sigma Lithium is currently in construction at its wholly owned Grota do Cirilo Project in Brazil, which includes a state-of-the-art, green-tech processing plant that uses 100% renewable energy, 100% recycled water and 100% dry-stack tailings. The project also represents one of the largest and highest-grade hard rock lithium spodumene deposits in the Americas. Sigma Lithium has been at the forefront of environmental and social sustainability in the EV battery materials supply chain.
For more information about Sigma Lithium, visit https://www.sigmalithiumresources.com/
ABOUT SYNERGY CAPITAL
Synergy Capital is a specialist private equity manager investing across the capital structure in the industrial, metals and infrastructure sectors globally. The firm focuses on critical sectors that generate strong positive human and economic impact, which are central to enabling the net-zero carbon transition and the development of sustainable infrastructure and resilient traceable supply chains. For more information, visit: www.synergycapital.co.uk
Synergy Management (DIFC) Limited is regulated by the Dubai Financial Services Authority (DFSA).
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FORWARD-LOOKING STATEMENTS
This news release includes certain "forward-looking information" under applicable Canadian and U.S. securities legislation, including but not limited to statements relating to the general business and operational outlook of the Company; and other forward-looking information. All statements that address future plans, activities, events, estimates, expectations or developments that the Company believes, expects or anticipates will or may occur is forward-looking information, including statements regarding the potential development of mineral resources and mineral reserves which may or may not occur. Forward-looking information contained herein is based on certain assumptions regarding, among other things: general economic and political conditions (including but not limited to the impact of the continuance or escalation of the military conflict between Russia and Ukraine, and economic sanctions in relation thereto); the stable and supportive legislative, regulatory and community environment in the jurisdictions where the Company operates; the ability to obtain required financing on acceptable terms; anticipated trends and effects in respect of the COVID-19 pandemic and post-pandemic; demand for lithium, including that such demand is supported by growth in the electric vehicle market; the Company's market position and future financial and operating performance; the Company's estimates of mineral resources and mineral reserves, including whether mineral resources will ever be developed into mineral reserves; and the Company's ability to develop and achieve production at its mineral projects. Although management believes that the assumptions and expectations reflected in the forward-looking information are reasonable, there can be no assurance that these assumptions and expectations will prove to be correct. Forward-looking information inherently involves and is subject to risks and uncertainties, including but not limited to that the Company may not develop its mineral projects into a commercial mining operation; the market prices for lithium may not remain at current levels; and the market for electric vehicles and other large format batteries currently has limited market share and no assurances can be given for the rate at which this market will develop, if at all, which could affect the success of the Company and its ability to develop lithium operations. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether because of new information, future events or otherwise, except as required by law. For more information on the risks, uncertainties and assumptions that could cause our actual results to differ from current expectations, please refer to the current annual information form of the Company and other public filings available under the Company's profile at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
SOURCE Sigma Lithium
FOR ADDITIONAL INFORMATION PLEASE CONTACT:
Jamie Flegg, Chief Development Officer, (Toronto) +1 (647) 706-1087, jamie.flegg@sigmaca.com; James Neal-Ellis, Vice President, Corporate Development & Investor Relations, (Toronto) +1 (416) 219-6475, james.nealellis@sigmaca.com