Sigma Lithium Secures Operating License For Grota do Cirilo, Production To Begin “Within Days”

Sigma Lithium (NASDAQ: SGML), a Canadian mineral developer, has secured a license in Brazil to manufacture and sell lithium from its Grota do Cirilo project.

The operating license was issued by the Minas Gerais Council of Environmental Policy, Conselho Estadual de Politica Ambiental (COPAM), in March 2023, with Sigma Lithium hoping to begin production this month.

Sigma Lithium CEO Ana Cabral-Gardner told Reuters that the Vancouver-based company should be producing “within days” and transporting lithium “within weeks.”

The lithium producer obtained an installation and commissioning license, which permits it to construct and install a phase one mine and plant, conduct trial mining, test the plant, and stockpile the product as part of the commissioning and capacity increase.

Production is planned to gradually ramp up in the coming months, reaching an annual capacity of 270,000 tonnes of spodumene concentrate by July. Sigma also said the detailed engineering work on the Phase 2 & 3 expansion continues, targeting to triple the annual throughput up to 766,000 tpa.

Sigma expects the mine’s first phase of production to generate $455 million in yearly free cash flow.

In 2021, Sigma contracted to supply at least 60,000 tonnes to LG Energy Solution beginning this year. The remaining production will be sold on the spot market to customers who would most likely process the metal in China, and Sigma is presently “ascertaining which client would get the first shipment,” according to Cabral-Gardner.

Because lithium demand is low in biofuel-focused Brazil, Cabral-Gardner stated that Sigma’s project is “geared to enable the energy transition in the northern hemisphere.”

Lithium carbonate prices have fallen 60% year to date to less than CNY 215,000 in April, the lowest in 17 months, as robust output and sluggish demand raised forecasts of a supply surplus this year.

In recent months, rumors have circulated that Tesla or Chinese lithium rival Ganfeng Lithium Group may make a bid for Sigma, but Cabral-Gardner declined to expound on takeover discussions.

“I’m focused on what I can control, which is getting this company to production,” said Cabral-Gardner, who also serves as the managing partner of A10 Investimentos, which owns 45% of Sigma.

Sigma Lithium last traded at $36.80 on the Nasdaq.

Information for this briefing was found via Sedar, Reuters, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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