Impact: Very Positive
Sigma Lithium announced the Final Investment Decision (FID) for the Phase 2 expansion at its Grota Do Cirilo Li project in Brazil, to double production from the current run rate of 270k tpa to 520k tpa. The US$100M Capex for Phase 2 commissioning is expected to be entirely financed from the current cash balance of US$109.5M, and cash flow. Commissioning is expected by YE24 followed by first production in Q1/25. Sigma also reported Q4 and FY/23 financial and operating results. EPS of neg. C$0.11 missed our estimates and consensus of C$0.54 and C$0.28, respectively, due to provisional price adjustment associated with the Sep/23 shipment, and non-recurring G&A expenses. Despite ramp-up financials, initial operating achievements are impressive for a new mine as Sigma continues to deliver on multiple fronts, including the conclusion of Phase 2 FID. Grota do Cirilo mine is already one of the world’s largest low-cost Li concentrate producers and Phase 2 commissioning is expected to further solidify its position in the industry. The strategic review remains ongoing, but in our view, management would not give the company away during this low-price environment, and we expect Sigma to go alone until the market turns.
