Sigma Lithium Announces Exceptional PEA Results Supporting Doubling Planned Production Capacity to 440,000tpa (66,000 LCE) ______________________________________________________________________________________________________________
SIGMA LITHIUM ANNOUNCES EXCEPTIONAL PEA RESULTS SUPPORTING
DOUBLING PLANNED PRODUCTION CAPACITY TO 440,000tpa (66,000 LCE)
______________________________________________________________________________________________________________
PHASE 2 PRODUCTION HIGHLIGHTS
Project’s near-term production capacity of battery grade high-purity green lithium will be potentially
doubled:
o Production is planned to increase from 220,000 tpa (33,000 LCE) planned for 2022 in Phase 1, to
440,000 tpa (66,000 LCE), within approximately one year.
o Phase 2 production has a projected life of mine of approximately 13 years: vertically integrated to
Sigma’s second deposit, Barreiro with 20.5 Mt of measured & indicated high-grade and high-purity
lithium resources at 1.43% Li2O.
o Low-risk execution strategy: Phase 2 construction is planned to start once Phase 1 concludes
commissioning and ramps up production in 2022.
o The Company has significantly advanced multiple Project workstreams with the objective of
preparing for Phase 2 production after 2023.
PHASE 2 FINANCIAL HIGHLIGHTS
Phase 2 has the potential to more than double total NPV of the Project to US$844 million:
o NPV of Phase 2 Production US$449 million.
o Low initial capital expenditures of US$44.5 million.
Phase 2 after-tax cash flow generation during 13 years is projected as follows:
o Net revenue of US$2.1 billion (annualized US$165 million).
o After Tax Free Cash Flow of US$ 766 million (annualized US$60 million).
o EBITDA of US$1 billion (annualized US$83 million).
o IRR of 208%.
Located close to Atlantic emerging supply chain for electric vehicles in North America and Europe, Phase 2
would enable Sigma to continue to be amongst the lowest cost producers in the industry.
o PEA projects Phase 2 average total cash cost to be US$256/t (FOB Plant, life of mine) and US$360/t
(CIF China Port, life of mine).
PHASE 1 CONSTRUCTION UPDATE
All Detailed Engineering and Pre-Construction workstreams continued to advance to achieve production in
the third quarter of 2022. https://vimeo.com/554389108 to Video with 3D rendering of Production Plant
o Construction site early works are ongoing (clearing and grubbing, laydowns & topsoil removal).
o Concluded all field Pre-Construction activities for the Production Plant.
o Completed trade-off studies for the optimization and expandability/scalability of the overall plant
design, evaluating multiple design options, performing tests and analysis to select the preferred
option.
o Concluded the definition of the streamlined scope and design of the non-process, non-plant
infrastructure (building infrastructure).
o Completed several critical workstreams involved in the Pre-Construction of the Phase 1 Mine within
the scheduled and budgeted parameters, including all field-based activities required for the
geotechnical as well as hydrogeological validations.
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VANCOUVER, British Columbia, June 2, 2021 (GLOBE NEWSWIRE) -- Sigma Lithium Resources Corporation (“ Sigma” or the
“Company”) ( TSX-V: SGMA ) ( OTC- QB: SGMLF ) is pleased to announce the exceptional results of a Preliminary Economic
Assessment (the “PEA”) for an expansion of its Grota do Cirilo Project (the “ Project”), doubling its annual production capacity
of battery-grade, high-purity, environmentally sustainable 6% lithium concentrate (“ Green Battery Grade Lithium
Concentrate”) to approximately 440,000 tpa (66,000 LCE).
The expansion of Project achieves significant operational economies of scale resulting from adding a second environmentally
friendly dense media separator processing line train to its digitally automated production plant (the “ Production Plant”). The
second line is expected to produce an average of 222,000 tpa (33,000 LCE) of Battery Grade Green Lithium Concentrate
(“Phase 2”), doubling the initial planned annual production capacity of 220,000tpa (33,000 LCE) (“ Phase 1”).
Phase 1 is described in the Sigma’s technical report titled “Grota do Cirilo Lithium Project, Ara çuaí and Itinga Regions, Minas
Gerais, Brazil, National Instrument 43-101 Technical Report on Feasibility Study Final Report” dated October 18, 2019 (the
“2019 Feasibility Study Report”).
The exceptional PEA results demonstrate the cost benefit of vertically integrating the second production line and utilizing as a
feedstock spodumene ore from the Project’s second deposit Barreiro (the “Second Deposit” or “Barreiro”), mining an average
of 1.68Mt per year during 12.7 years of mine life. Barreiro is a high-purity, high-grade lithium deposit, with 20.485Mt of
measured & indicated mineral resources at 1.43% Li 2O and 1.909Mt of inferred mineral resources and shallow, near surface
mineralization ideal for open pit mining. The Second Deposit’s mineral reserve is expected to be declared later this quarter
when the ongoing pre-feasibility study (“ PFS”) is completed.
The PEA projects capital expenditures of US$44.5 million (year 0) including plant and mine construction, based on an optimized
mine plan. Incremental expenditures of US$28.9 million (additional mine stripping on year 5) and US$9.6 million (additional
mine stripping on year 6) is expected to be covered by the Company’s internal cash flow generation. As Phase 2 construction
is planned sequentially to the commissioning and production ramp up of Phase 1, the Company is expected to be fully
operational with Phase 1 by the time Phase 2 is commissioned. Therefore, additional working capital for commissioning of the
second DMS line as well as certain deferred capital expenditures may potentially also be covered by the internal cash flow
generation of the business.
According to the PEA, Phase 2 could potentially double total estimated NPV of the Project to US$844 million:
o NPV of Phase 2 Production is estimated to be US$449 million by the PEA.
o NPV of Phase 1 Production is estimated to be US$395 million by the 2019 Feasibility Study Report ( calculated
with price curves starting from US$650/t in 2021, below current market prices at CIF China port, and operational
expenditures reductions limited by the sensitivity analysis in 2019 to be 20%, despite Brazilian currency
devaluation since 2019 of approximately 35% )
Barreiro, the Project’s second deposit, has a similar exceptional mineralization to the Project’s first deposit, Xuxa, with large
crystals of coarse spodumene. As a result, the lithium achieves outstanding recoveries in an environmentally friendly DMS
plant, with similar flowsheet (and capital costs) to the first production line, without requiring a significantly more capital-
intensive flotation process.
During Detailed Engineering for Phase 1, the Company evaluated operational and capital expenditure trade-offs to be achieved
in the expansion of the Production Plant capacity, including design features to allow for the seamless incorporation of a second
production line.
Metallurgical HLS tests performed on the spodumene ore for Phase 2 in sizes of 6.3mm and 10mm achieved excellent lithium
recoveries of 70.2% and 66.1%, respectively, producing a 6% Li 2O battery-grade spodumene concentrate within the highest
levels of specifications demanded by the chemical lithium market without the use of flotation or hazardous chemical reagents,
in the concentration process. This is consistent with Sigma’s intention to continue to process its lithium ore in a “green”
environmentally friendly and sustainable manner .
The Company has been working with SGS and Primero to prepare a PFS for the Phase 2 production, targeting its completion in
June 2021, further continuing towards feasibility analysis in the second half of 2021. The Company and Primero completed all
the metallurgical and variability DMS pre-feasibility test work at SGS laboratories.
The Project is located in one of the world’s largest mining provinces in southeast of Brazil: with full mining infrastructure and
highways linking the Project to a commodities shipment capable port. Site infrastructure has been mostly in place and is
currently being upgraded for Phase 1 production. The Project is powered by 100% clean energy: transmission towers and lines
on site link the Project to a hydroelectricity plant 50km away.
SIGMA PHASED PRODUCTION APPROACH FOR THE PROJECT AND COMMERCIAL STRATEGY
As a result of the substantial size of its mineral resources, the Company has sub-divided the development of the Project into
an incremental and phased build-out.
Sigma is working to advance Phase 2 to a construction ready status by the end of 2021 or early 2022. Phase 2 construction is
projected to commence once the commissioning and production ramp up of Phase 1 is completed, which is expected in the
third quarter of 2022.
This phased approach to development of the Project increases financial flexibility and reflects the Company’s ethos and
discipline in managing construction risk, while seeking to create substantial shareholder value. It also reduces commercial risk
by aligning commercial integration of the Project’s production growth profile with the demand of its customers in the lithium-
ion battery supply chain.
As a result of the high quality and low impurities of its lithium products, the Company has experienced significant commercial
success with various customers in the electric vehicle supply chain. As a result, the Company made a decision to accelerate the
required studies for the development of Phase 2, to potentially respond to a significant increase in demand from its customers,
following the significant improvement in the outlook of global demand for ESG-sustainable lithium products.
By demonstrating its ability to expand production in the near term, the Company seeks to take advantage of the current strong
demand, and solidify its unique commercial advantage in delivering environmentally, socially sustainable and low carbon high
purity lithium products to like-minded cathode and battery producers.
The technical report for the PEA will be filled on SEDAR (and will also be available at www.sigmalithiumresources.com within
45 days of this news release. Readers are encouraged to read the technical report in its entirety, including all qualifications
and assumptions related to the PEA results announced in the news release.
FIRST QUARTER 2021 RESULTS: PHASE 1 CONSTRUCTION & PROJECT DEVELOPMENT UPDATE
The Company has reported unaudited financial and operating results for the first quarter ended March 31, 2021 (“ 1Q 2021”).
Overall, the Company made significant progress towards construction, despite the circumstances created by the COVID-19
pandemic.
Highlights of Phase 1 construction update include:
All Detailed Engineering and Pre-Construction workstreams continued to advance to achieve production in the third
quarter of 2022.
o At the end of Detailed Engineering, the Project will move to the Implementation/Deployment Stage (FEL 3 /
Class 3) in the third quarter of 2021, with increased accuracy from the capital estimates included in the
Feasibility Study Report.
o Strict COVID-19 health and safety protocols are in place. Without any cases of COVID-19 reported at site
since April 30, 2021.
Construction site early works are ongoing (clearing and grubbing, laydowns & topsoil removal):
o Followed by additional topsoil removal and foundation preparations, once results and geotechnical
modelling of Production Plant foundation are concluded.
Concluded all field Pre-Construction activities for the Production Plant.
o Primero conducted a review of the current designs, assessing the impact on the foundation design and
earthwork quantities, based on the geotechnical assessment for the civil engineering and concluded that the
soil condition does not create any risk for construction of the foundations of the Production Plant.
Completed trade-off studies for the optimization and expandability/scalability of the overall plant design, evaluating
multiple design options, performing tests and analysis to select the preferred option.
o Expansion design features are being determined in order to allow for the incorporation of a second
production line for Production Phase 2.
Concluded the definition of the streamlined scope and design of the non-process, non-plant infrastructure (building
infrastructure).
Completed several critical workstreams involved in the Pre-Construction of the Phase 1 Mine within the scheduled
and budgeted parameters.
o This includes all field-based activities required for the geotechnical validation at detailed engineering level,
as well as critical field work of hydrogeological validation.
All remaining state permits required to commence construction are forecasted to be issued by the third quarter of
2021.
Highlights of ESG:
Significantly advanced the life cycle analysis and carbon credits audit workstreams, planning to publish results in the
third quarter of 2021, including more information on its carbon in-setting and offsetting strategy.
Continued to progress on the creation and structuring of an independent agency for private investment promotion
and economic diversification of the region (“ Investment Agency”), with institutional support from the development
bank of the state of Minas Gerais (“ BDMG”), from the secretary of special development projects (“ INDI”) and from
the Mayors of the two municipalities.
Expanded humanitarian relief during the months of COVID-19 pandemic for the population living in extreme
vulnerability in the region, as follows:
o Distributed 1,200 basic food baskets in two months, feeding approximately 2,400 people per month.
o Agreed to extend the initiative in a collaboration with Rotary Club, distributing an additional 1,000 food
baskets (feeding an additional 4,000 people).
o Repeated COVID-19 prevention initiatives from March 2020, and distributed 12,000 units of hospital
disinfectant, as well as 2,400 hand sanitizers “family size”, totaling 840 kg of the product.
o Initiatives funded at cost as a result of financial sponsorship from Sigma’s key shareholders and stakeholders.
Corporate:
As at the date of this MD&A, the Company has $41.3 million (US$33.6 million) in cash and cash equivalents, out of
which approximately $33.8 million (US$28 million) is held in a construction segregated savings account.
o Additionally, it has an undrawn credit line balance of US$4,037,150 under the US$5,000,000 unsecured
revolving credit facility (the “A10 Credit Facility”)
The Company has announced that it is considering a potential listing of the Common Shares in a major U.S. stock
exchange market with a view to increasing access to U.S. capital markets and enhancing overall shareholder value.
Consistent with its retention policies to manage human capital as well as with its ethos of aligning incentives amongst
all stakeholders and shareholders, most of the compensation of the Company’s key personnel is equity based.
o To that regard, the Company grated an aggregate of 996,333 Restricted Share Units to officers and an
aggregate of 385,000 Restricted Share Units to key employees and consultants. As per the ESOP, Ana Cabral-
Gardner and Calvyn Gardner were not awarded equity compensation.
Calvyn Gardner, Sigma CEO said that “ We continue to progress updating the current Feasibility Study Report with the pre-
feasibility for the Phase 2, which would be fully integrated into the production complex for the Phase 1, currently in pre-
construction. The previous work undertaken when completing our 2019 Feasibility Study Report, as well as detailed engineering
phase of pre-construction for Phase 1, means that substantial plant engineering design as well as mining cost databases are
available to support the technical studies required for this update, expediting and de-risking its execution.”
Ana Cabral-Gardner, Sigma President and Chief Operating Officer stated that “The doubling of Sigma’s near-term planned
capacity to 66,000 LCE, with low additional capex has the potential to significantly transform our scale and relevance. It further
increases our uniqueness as a global supplier of environmentally sustainable green lithium concentrate, while consolidating
our strategic importance upstream as a source of high-purity green lithium products for our current and new customers, as
they advance their plans for cathodes and battery cell production facilities in Europe and the United States, effectively building
a sizable Atlantic lithium supply chain”.
Figure 1a: Plant 3D layout of the industrial complex and production facility for Phase 1 and Phase 2
Figure 1b: Plant 3D layout of the industrial complex and production facility for Phase 1 and Phase 2
1 - SUMMARY OF PROJECT FINANCIAL PERFORMANCE RESULTS
1.1 Project Economics
An economic analysis for Phase 2 was developed using the discounted cash flow method and was based on the data and
assumptions for capital and operating costs for mining, processing and associated infrastructure. The basis for forecasted
spodumene concentrate lithium pricing was provided by Roskill’s arm’s length price curve with an internal adjustment starting
with 2022 price of US$750/t (below current 2021 spot market). Although approximately 70% of the Company’s operational
costs are incurred in Brazilian reais, the assumptions were fixed in USD, the base currency for the financial model. Key
assumptions and results of the economic evaluation are displayed in the tables 1 and 2 below .
Table 1.1.1: Financial Results Summary for Phase 2 During the Estimated Life of Mine
Financial Summary Unit Total
Net Present Value (NPV 8%) After-Tax US$ M $ 449
Internal Rate of Return (IRR) After-Tax % 208%
After-Tax Payback Period Years 0.4
Capital Intensity (Initial Capex/ Annual Production) US$ per tonne $200 per tonne
NPV: Capex (ratio) Ratio X:1 10:1
Table 1.1.2: Key Assumptions Utilized in the Project Economics
Assumptions Unit Total
Annual Lithium Concentrate Production at 6% tonnes 222,147
Project Estimated Life (Integrated Mine/Plant) years 12.7
Discount Rate % 8
Total Royalty (1) % 3
Average Corporate Tax (2) % 15.3
CAPEX
Year 0 (plant construction and starter mining pit) US$ M 44.5
Year 5 (pit expansion) US$ M 28.9
Year 6 (pit expansion) US$ M 9.7
OPEX
Average total cash cost (FOB Plant) US$/t 256
All-in sustaining cost (“AISC”) CIF China US$/t 360
Average Selling Price US$/t 750
(1) CFEM and NSR#1 Royalties
(2) Sudene Corporate Tax Benefit During 8 first years. 34% for the following years
Table 1.1.3: Phase 2 Estimated Revenue, Operating Costs and EBITDA
Production: Total tonnes of lithium concentrate 2,870,444 tonnes
Average Price for project life $750/t
Annualized
US$ M
Total
US$ M
Gross Revenue $ 170 US$ 2,153
Less: Total Royalties ($5) ($61)
(-) CFEM ($3) ($43)
(-) Net Smelter Royalties ($1) ($18)
Net Revenues $165 $2,092
Less: Site Operating Costs ($84) ($1,066)
(-) Mining ($45) ($571)
(-) Processing ($12) ($156)
(-) Selling, General & Administration ($1) ($8)
(-) Transportation Costs ($24) ($299)
(-) Depreciation ($2) ($32)
EBIT $81 $1,026
% EBIT Margin 49% 49%
(+) Depreciation $2 $32
EBITDA $83 $1,058
% EBITDA Margin 51% 51%
(-) Taxes ($16) ($203)
(+/-) WC ($0) ($3)
(-) Capex ($7) ($85)
After-Tax Free Cash Flow $60 $767
% Margin 37% 37%
1.2 - Capital and Operating Costs
SGS and GE-21 completed the Class 5 estimate (+/- 30%) of the capital and operating costs, incorporating engineering from
the ongoing detailed engineering and FEED (front end engineering design) of Sigma’s Phase 1 Production Plant. The Capex has
been prepared to reflect optimized site layouts, mine scheduling, plant and equipment design and installation. Phase 2
development significantly leverages the Production Plant infrastructure that will be constructed for Phase 1. Site infrastructure
has been mostly in place (Sigma’s assets are from a brownfield project) and is currently being upgraded for Phase 1.
Operating cost estimates were provided by GE-21 and are based on an owner-operated model and have an accuracy of +/-30
%. The crushing contracting, substation rental, mobile equipment rental and product transport operating costs were
incorporated in the overall operating cost.
The cash operating costs were developed based on third party contract mining and outsourced crushing, as well as on the
Phase 2 Plant processing cost. The Phase 2 Production is forecasted to have very low operating costs at US$256 per tonne of
concentrate as a result of its high grade, high DMS recoveries, low levels of impurities, low cost of electricity and general low
country costs. Table 1.2.1 shows the anticipated average operating costs over the LOM. Table 1.1.3 presents the forecast
revenue and costs on both a total and average LOM basis.
Table 1.2.1: Operating Cost Estimate
Cost Category
LOM Average
US$/t
Mining $ 199
Processing 54
SG&A 3
Sub-Total $ 256
Transportation by Truck Mine to Port 34
Shipping to China Port (average) 70
Sub-Total 104
Total $ 360
The CAPEX has been prepared to reflect optimized site layouts, mine scheduling, plant and equipment design, supply and
installation. Phase 2 development significantly leverages the plant infrastructure that will be constructed for Phase 1. Site
infrastructure has been mostly in place (Sigma’s assets are from a brownfield project) and is currently being upgraded for
Phase 1.
The Company has evaluated operational and capital expenditure trade-offs to be achieved as a result of possible design
alternatives for the crushing circuit to be installed at the Production Plant. These trade-offs aim to further de-risk and optimize
the construction of the Production Plant. The scalability of the Production Plant was also studied to determine expansion
design features to allow for the incorporation of a second production line for Phase 2 high-grade green lithium production.
The total initial development CAPEX for Phase 2 is estimated to be US$ 44.5 million. The estimate is detailed in Table 1.2.2 and
includes processing, mine equipment purchases, infrastructures, contingency and other direct and indirect costs. Incremental
expenditures of US$28.9 million (additional waste mine stripping in year 5) and US$9.6 million (additional waste mine stripping
in year 6) can be funded by internal cash flow generation.