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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 doCirilo 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) | |||
Financial Metrics | Average Annual (US$M) | ||
Gross Revenue | |||
After-Tax Earnings | |||
% After-Tax Earnings Margin | 79 % | 76 % | 65 % |
SIGNING DEFINITIVE AGREEMENTS FOR UP TO
Sigma Lithium also announces signing of definitive agreements for up toUS$100 million senior secured pre-export financing (the "Debt Financing") withSynergy Capital , one of the Company's current shareholders, based in theUnited 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.
The Production Expansion Study demonstrated robust Project economics, highlighted by an after-tax NPV8% of
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.
"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
Co-CEO and Co-Chairperson
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) | |
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 | |
Average Annual After-Tax Free Cash Flow | |
Costs per tonne of Lithium Concentrate | |
Total Cash Cost at Production | |
All-in Sustaining Cost (CIF China) | |
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 | |
Greentech Plant Processing costs | |
G&A costs | |
Transportation costs (Mine to CIF China) | |
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) | |||
Avg. Battery Grade Sustainable Lithium Price (US$/t) | |||
Avg. Battery Grade Sustainable Lithium Production (t) | 277,000 | 768,200 | 491,000 |
Estimated Revenue, Operating Cost and After-Tax Earnings | |||
Gross Revenue (US$ M) | |||
Less: Realization costs (US$ M) | ( | ( | ( |
(-) CFEM Royalty (US$ M) | ( | ( | ( |
(-) Other Royalties (US$ M) | ( | ( | ( |
(-) Commercial Discount (US$ M) | - | - | - |
Net Revenues (US$ M) | |||
Less: Site Operating Costs (US$ M) | ( | ( | ( |
(-) Mining (US$ M) | ( | ( | ( |
(-) Processing (US$ M) | ( | ( | ( |
(-) Transport (US$ M) | ( | ( | ( |
(-) Selling, General & Administration (US$ M) | ( | ( | ( |
(-) Depreciation (US$ M) | ( | ( | ( |
EBIT (US$ M) | |||
% EBIT Margin | 94 % | 90 % | 77 % |
(-) Taxes (US$ M) | ( | ( | ( |
After-Tax Earnings (US$ M) | |||
% After-Tax Earnings Margin | 79 % | 76 % | 65 % |
The Debt Financing will fully fund the Company until
The initial drawdown of
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
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 =
3. Mining costs:
4. Processing costs:
5. G&A:
6. Exchange rate
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
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
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 =
3. Mining costs:
4. Processing costs:
5. G&A:
6. Exchange rate
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
3. Mineral Resources are reported assuming open pit mining methods, and the following assumptions: lithium concentrate (6% Li2O) price of
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
The mining and mineral reserve estimates in this news release have been reviewed and approved by
The financial information in this news release has been reviewed and approved by
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FORWARD-LOOKING STATEMENTS
This news release includes certain "forward-looking information" under applicable Canadian and
Neither the
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