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 financing.
SIGMA Lithium Corporation (“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, 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.
Ana Cabral-Gardner, Co-CEO and Co-Chairperson of Sigma Lithium, said:
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.
“More importantly, we shall be able to remain at the low end of the cost curve.”
Calvyn Gardner, Co-CEO and Co-Chairperson 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
Table 2: Annual Combined Project Integrated Estimated Revenue and Operating Costs
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
Note:
- Mineral Reserves were estimated using Geovia Whittle 4.3 software and following the economic parameters listed below:
- Sale price for Lithium concentrate at 6% Li2O = US$3,500/t concentrate FOB Mine.
- Mining costs: US$2.43/t mined.
- Processing costs: US$10.7/t ore milled.
- G&A: US$4.00/t ROM (run of mine).
- Exchange rate US$1.00 = R$5.30.
- Mineral Reserves are the economic portion of the Measured and Indicated Mineral Resources.
- 94% Mine Recovery and 3% Mine Dilution
- Final slope angle: 35°to 52° based on Geotechnical Document presented in Section 16.
- Strip Ratio = 16.01 t/t (waste)/mineral reserve..
- 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.
- 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
Note:
- Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Inferred mineral resources are exclusive of the Measured and Indicated resources.
- 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.
- A fixed density of 2.72 t/m3 was used to estimate the tonnage from block model volumes.
- 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.
- 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.
- Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due to rounding.
- The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
- Mineral Resources are inclusive of Mineral Reserves
Table 5: Updated Consolidated Project Mineral Reserves
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
Note:
- Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Inferred mineral resources are exclusive of the Measured and Indicated resources.
- 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.
- 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.
- 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.
- Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due to rounding.
- The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
- 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).
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 FINANCING, VANCOUVER, BC, December 4, 2022
