Sigma Lithium Announces Final Investment Decision And Initiation Of Construction To Double Production Capacity To 520,000t/Y; Capital Expenditure For Phase 2 Industrial Greentech Plant Is Targeted To Be $100M

Author: Benzinga Newsdesk | April 01, 2024 08:39am

PHASE 2 FINAL INVESTMENT DECISION ($ USD)

The capital expenditure ("Capex") for Phase 2 Industrial Greentech Plant is targeted to be USD $100 million, aiming to increase the Company's total annual lithium capacity by 250,000 tonnes of Quintuple Zero Green Lithium to 520,000 tonnes in 2025. Combined, Sigma Lithium would produce enough lithium concentrate to power roughly 1.8 million electric vehicles(3).

The Company is also pleased to announce that it shall commence mobilization for construction on site of approximately 180 workers and construction equipment to build the earthworks, foundation and infrastructure installation of its Greentech dense media separation production plant (the "Production Plant"). The Company has quoted FEL3 the critical long lead items required for the Project and begun planning orders from respective suppliers to secure manufacturing timetables.

Completion of this stage of the construction civil works (earthworks and the concrete plant drainage channels and civil works) is expected to be concluded within approximately six months, by the Brazilian construction firm of Promon Engenharia Ltda. ("Promon"), which successfully constructed the Phase 1 Industrial Greentech Plant and delivered it on time and on budget.

The Company is also announcing that it has identified approximately 35 critical long lead items required for the Project and plans to begin ordering them from respective suppliers, placing deposits to secure manufacturing timetables. Prices and FEL-3 quotes for these long lead items have been in line with the FEL-2 capex estimates in the feasibility study included in the Company's most recently filed technical report.

The total build and commissioning timeline for Phase 2 Industrial Greentech Plant is expected to be approximately 10 months. With earthworks commencing in April, the Company expects construction and assembly on an accelerated plan to begin in 4Q24.

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    • This would lead to first commercial production thereafter.
    • Phase 2 flow sheet will be modified to incorporate the improvements to the Company's industrial cleantech implemented during current operations to optimize processes.
    • This should also translate into a faster commissioning and ramp schedule of the Phase 2 Industrial Greentech Plant.

Sigma Lithium plans to finance the capital expenditures laid out in Figure 1 below with cash on hand and expected free cash flow generation from future shipments of lithium concentrate.

• As of March 30, 2024, the Company had USD $109 million in cash and cash equivalents, covering the $100 million capex budget.
• Supplementing Sigma Lithium's current cash balance is anticipated future cash flow generation, as current market prices afford the Company substantial opportunity to accrue cash with each additional shipment of its Quintuple Zero Green lithium concentrate.
• The letter of intent issued by the BNDES to Sigma Brazil provides additional financial flexibility, as it can reimburse the capital expenditures, as they are incurred through the construction and commissioning cycle.  

ADDITIONAL STAGES OF CONSTRUCTION

Phase 2 Industrial Greentech Plant has been designed to produce up to 250,000 tonnes per annum of high purity 5.5% chemical grade coarse lithium concentrate ("Quintuple Zero Green Lithium"), equivalent to approximately 34,000 tonnes per year of lithium carbonate equivalent ("LCE").

The Company´s Board of Directors has approved an initial total of USD $8.4 million of construction disbursements, to be entirely funded from the Company´s cash and construction savings account. The approvals include:

• Execution of civil works of earth moving for foundations, land adaptation and protective drainage of the construction site of the Production Plant.
• Continuity of certain construction-related engineering services throughout the second quarter of 2023.

The Company is currently negotiating an agreement for the engineering, procurement, and construction management of the Production Plant and associated infrastructure with Promon.

Company Co-Chairperson and CEO Ana Cabral stated: "2023 marked an incredible year for Sigma Lithium and the culmination of nearly a decade of hard work by the Sigma Lithium team. The Company is delighted to announce that it concluded its first year of production with positive cash adjusted EBITDA and cash operating profit, despite the sharp decline in lithium prices during 2023. This is a testament to our financial discipline in managing production costs. Irrespectively of the market, Sigma Lithium is a low-cost producer of a superior product with measurable "value in use" that brings cost savings for its clients.

"It is a tremendous milestone for Sigma Lithium to initiate the construction of the Phase 2 Industrial Plant, we proved the capabilities of our highly experienced project and technical teams to significantly advance Sigma Lithium's operations. Our team has worked tirelessly this year on several fronts including detailed engineering and pre-construction, while tackling the successful commissioning and ramp up of Phase 1 Greentech Plant to full scale design capacity. Following the completion of the front-end engineering and design and environmental licensing, we have been able to quote FEL-3 Capex in line with our FEL-2 estimates in our pre-feasibility study. This ability to deliver simultaneously on many fronts is the hallmark of our teams at Sigma."

"By advancing the Phase 2 construction schedule as planned, Sigma Lithium is in a position to generate cashflow while delivering large quantities of low cost chemical grade lithium concentrate at a critical supply juncture for the lithium market and the battery industry, given focus on achieving price parity between EVs and ICE cars, lowering production costs. Customer demand has been beyond the quantities produced by Phase 1, as indicated by the premiumization of our Lithium. The high-quality of our lithium products offer great commercial advantages due to their high-purity, low levels of iron and alkalines and coarse particle size. In the current price environment, the Company is in the perfect position to gain market share creating value for our shareholders and, resulting from our consistent production profile, maximum commercial flexibility resulting from freely available units and low-cost operating model," Ana concluded.

Figure 1: Phase 2 project capex as compared to Phase 1 expenditures.

Capex (Million USD)	Phase 1	Phase 2
Industrial Site Construction	16.600	16.423
Earthworks	7.200	7.200
Infrastructure	9.400	9.223
Industrial Plant	68.689	61.811
Crushing System	19.933	21.222
DMS System	31.033	30.826
Assembly Direct and Construction Management	3.040	3.403
Civil Direct and Construction Management	6.632	5.411
Substation	8.051	949
Environmental	11.902	10.946
Water Recycling	3.259	3.089
Tailings Dry Stack	4.671	5.660
Sewage & Water	3.972	2.196
R&D Engineering Design	9.144	5.019
Engineering	9.144	5.019
Construction Management	6.465	6.388
Construction Management	5.708	5.476
Procurement	757	913
(=) Construction Capex	112.800	100.588

Posted In: SGML