Sigma completed raising the equity funding required to build the Grota do
Sigma also signed with Duro Felguera (“DF”) a contract for front-end engineering design, which includes an agreement for DF to offer Sigma its engineering, procurement and construction (“EPC”) services (the “FEED Contract”) with a multi-currency lump sum turnkey guaranteed maximum price in US Dollars and Brazilian Reais (the “Multicurrency GMP”), structured to capture procurement savings resulting from the 40% devaluation of the Brazilian Real in 2020.
The Project will be designed to produce 220,000 tonnes per year of high purity battery grade 6% lithium concentrate in its first phase (the “First Phase of Production”), followed by an additional 220,000 tonnes per year in its second phase estimated to initiate in 2023 (the “Second Phase of Production”), doubling the planned production capacity of the Company to 440,000 tonnes per year.
“The merit for Sigma’s exceptional achievements during these unprecedented times belongs to the entire team. Their unwavering commitment to take Sigma to production and bring economic prosperity to the impoverished Jequitinhonha valley drove them to give their very best and to never relent, even in the most trying moments. Our agile and non-hierarchical corporate culture continued to foster superb collaboration across all areas, providing Sigma with unique speed to simultaneously tackle multiple execution workstreams,” said
“I would personally like to recognize the outstanding contribution our team continues to make to the success of the project for the benefit of all stakeholders," added
NEXT STEPS FOR SIGMA IN 2020
The Company’s plans for the next four months are as follows:
- Initiate the detailed engineering for constructing the Project’s plant, mine and associated infrastructure for the First Phase of Production, where engineering contractors will:
- Finalize a selected set of engineering deliverables to achieve 30% engineering definition
- Advance long lead and critical equipment procurement to “Ready for Award” contract status
- Advance site preparation (civil works) and complete the contracting strategy for construction
- Optimize and reduce the contingency applied to the Multicurrency GMP to determine a fixed price “lump sum turnkey cost” for the EPC of the commercial processing plant and associated process infrastructure
- Obtain a complete and firm proposal for the EPC contract and execute the EPC contract
- Following the approval of the study Plano de Aproveitamento Economico (“PAE”) for the Project’s second deposit, Sigma will accelerate the first steps of the Second Phase of Production, which is estimated to come onstream in 2023:
- Initiate the environmental licensing process by conducting the environmental impact study for the deposit and filing it with the environmental agency in the
state of Minas Gerais - Finalize a pre-feasibility study for the deposit, validating its economic potential and the estimates for production costs outlined in the PAE using the parameters of Canada’s National Instrument 43-101
- Initiate the environmental licensing process by conducting the environmental impact study for the deposit and filing it with the environmental agency in the
- Conclude formalizing the binding take or pay agreement with Mitsui & Co. Ltd for the First Phase of Production, increasing it to 160,000 tonnes per year of lithium concentrate.
- Although Sigma has secured the funding package for the development of the First Phase of Production, subject to finalizing certain agreements, the Company plans to continue to work closely with the Brazilian financial institutions with which it has been in discussions to access funding to potentially accelerate the Second Phase of Production.
SECOND QUARTER 2020 FINANCIAL RESULTS
Sigma’s financial statements and MD&A for the three and six months ended
Selected consolidated financial information is presented as follows:
(in CAD $ except per share information) | Three months ended | Three months ended |
General and administrative expenses | (445,626) | (1,633,794) |
Foreign exchange gain | 544,846 | 312,301 |
Other expenses | (240,815) | (86,961) |
Net Loss | (141,595) | (1,408,454) |
Cumulative currency translation adjustment | (724,454) | (205,999) |
Net loss and comprehensive loss | (866,049) | (1,614,453) |
Loss per common share - basic and diluted | 0.00 | (0.02) |
| | |
Cash and cash equivalents | 150,316 | 103,640 |
Exploration and evaluation assets | 17,801,865 | 19,388,092 |
Other assets | 1,098,955 | 1,435,466 |
Total Assets | 19,051,136 | 20,927,198 |
Suppliers | 2,682,165 | 2,966,609 |
Debits with related parties | 5,457,833 | 4,790,861 |
Deferred revenue | 4,007,100 | 4,007,100 |
Other liabilities | 243,247 | 423,353 |
Total Liabilities | 12,390,345 | 12,187,923 |
- The significant reduction in net loss on a year-over-year basis was mainly due to cost saving initiatives by management.
- The devaluation of the Brazilian Real led to a foreign exchange gain due to its’ positive impact on Real-denominated liabilities. It also led to a negative cumulative currency translation adjustment, which was added to comprehensive loss. The latter resulted mostly from the devaluation’s negative impact on the value of exploration and evaluation assets, which are held by Sigma’s wholly owned Brazilian subsidiary
Sigma Mineracao S.A. (“SMSA”) and are denominated in Brazilian Reais.
- At
June 30, 2020 , the Company’s liabilities consisted mostly of (i)C$2.7 million in payables and accrued interest owed to suppliers, (ii)C$4.0 million in deferred revenue, which was received from Mitsui & Co. Ltd. as an initial disbursement under the abovementioned offtake agreement; and (iii)C$5.5 million in debits with related parties. Debits with related parties included primarilyC$2.3 million in the balance and accrued interest of a note payable issued for the acquisition of a remaining 11% interest in SMSA; andC$2.6 million in amounts drawn, fees and accrued interest on a credit facility with theA10 Group (a group of companies owned by certain directors of the company) (the “A10 Credit Facility”).
- At
June 30, 2020 , the company hadC$0.15 million in cash and cash equivalents. The A10 Credit Facility, which was set up onNovember 29, 2019 atUS$5 million for a one-year term, hadUS$3.5 million still undrawn. Also, onJune 30, 2020 , Sigma’s balance sheet did not reflect the cash inflows and subsequent results of the abovementioned Offering, which was completed in August and had gross proceeds ofUS$13.3 million .
INDEPENDENT QUALIFIED PERSON
The technical and scientific information in this press release has been reviewed and approved by
ABOUT SIGMA LITHIUM
Sigma is a Canadian company and has been producing environmentally sustainable battery-grade lithium concentrate on a pilot scale since 2018 and shipping high-quality above 6% Li2O coarse lithium concentrate samples to potential customers in
To secure a leading position supplying the clean mobility and green energy storage value chain, Sigma has adhered to the highest standards of environmental practices in line with its core values and mission since starting activities in 2012. Sigma’s production process is powered by hydroelectricity and the Company utilizes state-of-the-art dry-stacking tailings management and water-recycling techniques in its beneficiation process. Its corporate mission is to execute its strategy while embracing strict ESG principles. Sigma’s shareholders include some of the largest ESG-focused institutional investors in the world.
FOR ADDITIONAL INFORMATION PLEASE CONTACT
www.sigmalithiumresources.com
Company Contact:
Director of Investor Relations
(
anna.hartley@sigmaca.com
FORWARD-LOOKING STATEMENTS
This news release includes certain "forward-looking statements" under applicable Canadian securities legislation including statements relating to the ultimate duration, impact and severity of the COVID-19 pandemic (including its impact on financial markets and national and multinational economies generally, and its impact on the growth of the electric vehicle market and other impacts on the demand for lithium products) and other forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. All statements that address future plans, activities, events, or developments that the Company believes, expects or anticipates will or may occur are forward-looking information, including statements regarding the potential development of resources and drilling plans which may or may not occur. Forward-looking statements and information contained herein are based on certain factors and assumptions regarding, among other things, the ability to complete the Annual Filings and Interim Filings; the market price of the Company's securities, metal prices, exchange rates, taxation, the estimation, timing and amount of future exploration and development, capital and operating costs, the availability of financing, the receipt of regulatory approvals, environmental risks, title disputes, litigation risks, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, claims and limitations on insurance coverage and other risks of the mining industry, changes in national and local government regulation of mining operations, and regulations and other matters including the COVID-19 pandemic. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. For more information on the risks, uncertainties and assumptions that could cause our actual results to differ from current expectations, please refer to our public filings available at www.sedar.com.
Neither the
Source:
2020 GlobeNewswire, Inc., source