Sigma Lithium Provides Update on Pre-Construction, Project Financing and Participation at UN Climate Change Conference COP25
10 Décembre 2019 - 1:41PM
Sigma Lithium Resources Corporation (
TSXV: SGMA)
(
OTCQB: SGMLF) ("
Sigma" or the
"
Company") is pleased to provide an update on its
operational and corporate activities, the status of its ongoing
efforts to further advance the Grota do Cirilo Project towards
construction and to meet its sustainable development ESG goals.
This update follows the filing, on November 29, of its financial
statements (“
3Q Statements”) and Management
Discussion and Analysis (the “
3Q MD&A") of its
financial and operating results for the three and nine months ended
September 30, 2019.
OPERATING AND CORPORATE HIGHLIGHTS: SUBSEQUENT EVENTS TO
3Q 19
Sigma’s Chief Strategy Officer Speaks
at World Climate Summit during the United Nations
Climate Change Conference COP 25 in Madrid about
“Leadership in Responsible Mining”.
- Sigma Lithium is pleased to
announce today that Ana Cabral-Gardner, Chief Strategy Officer
presented at the World Climate Summit during the United Nations
Climate Change Conference COP 25 on the panel covering the theme of
“Leadership in responsible mining - mitigating the impacts of
resource extraction” on November 8, in Madrid.
- She discussed the case study of
Sigma as an ESG “green lithium” company and the role played by
Sigma’s investors in providing the capital and the leadership to
drive implementation of environmental and social best practices. Ms
Cabral-Gardner highlighted how these key issues are part of a
broader movement spearheaded by ethical and ESG-focused investors
driving sweeping changes in practices across the mining industry as
a whole.
- Excerpts from Ms Cabral-Gardner’s
speech include:
- “In battery materials, we start
with a consumer who is very knowledgeable about carbon emissions
and this is why he is buying an electric car to begin with. That
consumer is demanding carbon neutrality, carbon consciousness and
sustainability, throughout the value chain...when one thinks about
the cathodes… it will be counterintuitive to buy a car to
decarbonize the environment if upstream you are burning coal to
produce lithium, nickel or using child labor to produce
cobalt.”
- “In this [EV] industry a paradigm
is being broken [from the ICE days], whereby now ‘upstream matters’
and therefore, upstream practices matter too. So ultimately, in the
very last step of the value chain…the OEM hears this [message from
the consumer], because they are tuned into what their customer
wants. So there is a “push for provenance” in battery materials,
and at Sigma we sense that in the contracts [for lithium offtakes].
Sigma is in binding offtake discussions with some of the EV
industry leading participants in great part because of the
[differentiation] of the “green lithium’ Sigma is 100% hydro, it is
100% environmentally conformed to dry stacking and other best
practices. So even though the green price differentiation hasn’t
yet happened in metals and it isn’t expected, it has been
translated into displacement value: you get the best contracts, you
get to sell the big volumes…”
- “Sigma produces environmentally
sustainable high-quality high-grade lithium concentrate from its
pilot plant on site in Brazil… and the Company has some of the
world’s largest and richest deposits of spodumene ore... and we set
out to develop it since the very beginning six years ago as an ESG
green mining case study, pioneering amongst lithium companies … and
we did that by focusing 15% of the capex towards always keeping up
with best environmental practices [management and rehabilitation]
and obviously focusing on the way [electric] power was sourced to
beneficiate the material [lithium].”
- “Four examples of actions include
dry-stacking tailings management from inception at the pilot plant
to investing in water recirculation equipment that would lead the
company to recycle 90% of the water…so there is an enormous focus
on water efficiency. And then there is energy efficiency, 100% of
the energy is green, power is sourced from hydro.”
- “More importantly there is the “S”
in ESG, the Company works in a region with the second-lowest IDH
[index of human development] in Brazil and one of the lowest in the
world... So [Sigma] is transformational as we become the largest
investor by a factor of 20x in the region with massive social
impact. This has been our mission and just demonstrates that with
the right purpose and the right will we can become a great example
even though we are a relatively small mining company on a small
budget.
- But why? Because being in battery
materials… the purpose of that value chain is to decarbonize at the
“mobility-end” of the value chain. So if we do not behave
accordingly by being 100% green and by powering the energy with
100% green energy and enforcing those practices all along, we would
not be a sustainable member of that [EV] value chain.
Signs a CAD6.6 million Revolving Credit
Facility with A10 Investimentos to Meet ESG Goals and Further
Advance Second Deposit into Pre-Feasibility.
- A10 Investimentos and its
affiliates (“A10 Group”) continues to support Sigma in meeting its
development and construction timetable as well as strategic
environmental and social ESG goals. On November 29, A10 Group
provided Sigma with a CAD6.6 million (USD5 million) senior
unsecured revolving credit facility to complete the pre-feasibility
study for the Barreiro deposit, to meet the current social-economic
obligations under the environmental licensing as well as for
general corporate purposes. The facility bears interest at 11% per
annum (calculated in US Dollars from the day funds are drawn) and
it has a one-year term, which is the maturity day for all funds
drawn, if any. Each disbursement under the facility is subject to
A10 Group’s approval.
- This credit facility is a related
party transaction for Sigma for purposes of Multilateral Instrument
61-101 (“MI 61-101”) and Policy 5.9 of the TSX Venture Exchange
(which incorporates by reference MI 61-101) because Ana
Cabral-Gardner, Marcelo Paiva and Anna Hartley are officers and/or
directors of Sigma as well as principals of the A10 Group. In
accordance with applicable law, the credit facility agreement was
reviewed and unanimously approved by the directors of Sigma other
than those related to the A10 Group. The credit facility, which is
not convertible into securities of Sigma, is exempt from the formal
valuation and minority approval requirements under MI 61-101
because the fair market value of the transaction is below 25% of
Sigma’s market capitalization. It is also exempt from the minority
approval requirements under MI 61-101 because the facility is on
reasonable commercial terms and is not convertible into securities
of Sigma
- Selection of Global Engineering Contractor for
Construction of Plant on a ‘Lump Sum Turnkey Basis’ Capped by a
Gross Maximum Price
- Sigma invited global engineering
firms to conduct due diligence and submit proposals for engineering
and procurement services for the construction of the commercial
production plant (the “Plant”) and the production
complex. The Plant will be based on the design prepared by Primero
Group Ltd for the FS Technical Report (as defined below) for the
Xuxa Deposit, supporting a 1.5 Mtpa lithium concentrate processing
operation with an output capacity of approximately 220,000 tonnes
per year.
- Sigma requested that the
construction costs described in the proposals be fixed price lump
sum turnkey not exceeding a gross maximum price to be determined
following due diligence. By securing the EPC contacts as gross
maximum price, Sigma is seeking to manage the capex budget during
construction, and thus, avoid the risk of cost overruns.
- Due to Primero Group’s previous
experience in building similar lithium processing plants in Western
Australia, as well as the depth of analysis conducted to prepare
the Plant design in the FS Technical Report, Sigma believes the
gross maximum price proposals will be in line with the capital
expenditures outlined in the FS Technical Report.
Barreiro Pre-Feasibility
Study, Project Financing and Capital
Structure
- Pre-Feasibility Barreiro: Sigma
continues its pre-feasibility study for the Barreiro deposit.
Subject to completion of all related feasibility studies and
assessments, Sigma aims to increase Project production capacity of
high-quality battery-grade 6% lithium concentrate to 440,000 tonnes
per year from an initial 220,000 tonnes.
- Project Financing and Capital
Structure: Sigma expanded the group of financial institutions
involved in the discussions of project financing to five commercial
banks, one Brazilian development bank and one international
development bank. The Company is actively engaged in structuring
the debt and equity financing package for the construction of the
Plant targeting a cost-effective and optimized capital structure
that matches the risk and ESG profile of the Project.
- Feasibility Study of Xuxa Deposit
and Plant: On November 7th, 2019 Sigma filed its National
Instrument 43-101 technical report on the feasibility study on the
Xuxa deposit (the “FS Technical Report”), which is dated October 18
2019 and has an effective date of September 16 2019, on
SEDAR.° The FS Technical Report (titled “Grota do Cirilo
Lithium Project, Araçuaí and Itinga Regions, Minas Gerais, Brazil,
National Instrument 43-101 Technical Report on Feasibility Study
Final Report”) supports an average annual production for 9.2 years
of 220,000 tonnes of coarse green and high-quality battery grade 6%
lithium concentrate (“Lithium Concentrate”) at the Xuxa deposit and
Plant with projected cash operating costs of US$ 238 per tonne of
Lithium Concentrate (cash cost CIF China of US$ 342 per tonne of
Lithium Concentrate), among the lowest costs globally. ° The
FS Technical Report positive results projected for the Xuxa deposit
an after tax NPV of US$ 249 million, an IRR of 43%, payback period
of 3.1 years and a Capex of US$ 98.4 million. The positive
economics of the FS Technical Report provides a strong platform for
Sigma to continue to develop its extensive mineral properties,
which include nine past-producing lithium mines.
THIRD-QUARTER FINANCIAL HIGHLIGHTS
This section should be read in conjunction with the Q3
Statements and the Q3 MD&A, which are available on the
Company’s website and SEDAR. Selected consolidated financial
information is presented as follows:
(In CAD million, except per share information) |
3Q 2019 |
3Q 2018 |
9M 2019 |
9M 2018 |
Total assets |
20.24 |
|
18.02 |
|
20.24 |
|
18.02 |
|
Exploration and evaluation assets |
17.44 |
|
7.77 |
|
17.44 |
|
7.77 |
|
Cash and cash equivalents |
1.50 |
|
9.44 |
|
1.50 |
|
9.44 |
|
Working capital |
(4.21 |
) |
5.66 |
|
(4.21 |
) |
5.66 |
|
Total liabilities |
11.55 |
|
6.41 |
|
11.55 |
|
6.41 |
|
Shareholders’ equity |
8.69 |
|
11.62 |
|
8.69 |
|
11.62 |
|
General and administrative expenses |
1.01 |
|
2.33 |
|
3.71 |
|
6.06 |
|
Net income/(loss) for the period |
(1.99 |
) |
(3.16 |
) |
(4.86 |
) |
(11.33 |
) |
Basic and fully diluted income/(loss) per share |
(0.02 |
) |
(0.04 |
) |
(0.07 |
) |
(0.27 |
) |
- Net income for the three months
ended September 30, 2019 was a loss of CAD1.99 million, which
declined from a loss of CAD3.16 million in the three months ended
September 30, 2018. The improvement was mainly due to a 57%
year-on-year fall in general and administrative expenses driven by
a reduction in corporate support costs and personnel in Brazil
following the FS completion. The Company continues to assess these
costs to ensure that cost-effective choices are being made.
- Exploration and evaluation assets
were up by 124% on a year-on-year basis to CAD 17.44 million as of
September 30 2019. The increase reflects mostly the completion of a
substantial drilling programme undertaken at Sigma’s Grota do
Cirilo property, which more than tripled the amount of measured and
indicated mineral resources to 45.7 million tonnes as discussed in
the Company’s press release dated January 10th, 2019.
- The Company does not generate cash
from mining operations. During the nine months ended September
30th, 2019, the Company received a Pre-Payment from Mitsui &
Co. Ltd. (“Mitsui”) in the amount of CAD 4,007,100 (US$3,000,000).
In addition, broker warrants were exercised providing cash proceeds
of CAD 137,695. The Company’s aggregate operating, investing and
financing activities during the nine months ended September 30th,
2019 resulted in a net cash and cash equivalents position of CAD
1,503,303 and a negative working capital of CAD
4,214,713.
- The rise in total liabilities from
CAD6.41 million as of September 30th, 2018 to CAD 11.55 million as
of September 30th, 2019 was mostly due to the addition of CAD4.01
million (USD 3.00 million) in deferred revenue, which corresponds
to an initial tranche of a Pre-Payment made by Mitsui & Co.
Ltd. of Japan, which is part of a USD 30 million Pre-Payment
facility agreed in exchange for production offtake rights, as
outlined in Sigma’s press release dated April 5 2019.
ABOUT SIGMA LITHIUM
Sigma is a Canadian company and produces
environmentally sustainable battery-grade lithium concentrate on a
pilot scale since 2018, shipping high-quality above 6% Li2O coarse
lithium concentrate samples to potential customers in Asia. Based
on the technical report titled “Grota do Cirilo Lithium Project,
Araçuaí and Itinga Regions, Minas Gerais, Brazil, National
Instrument 43-101 Technical Report on Feasibility Study Final
Report”, dated October 18 2019 and with an effective date of
September 16th, 2019 (the “FS Technical Report”), a larger-scale
lithium concentration commercial production plant will contemplate
a capacity of 220,000 tonnes annually of battery-grade low-cost
lithium concentrate. Sigma will be amongst the lowest-cost
producers of lithium concentrate globally. Sigma is on track to
achieve commercial production by 2021 of its “green” 6%
battery-grade lithium-concentrate with low impurities, which will
be engineered to customer specifications in the fast-growing
lithium-ion battery supply chain.
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.
QUALIFIED PERSONS
The FS Technical Report was prepared by leading
mining consultancies and professional service firms SGS Geological
Services, Worley Parsons and GE21 Consultoria Mineral. Individuals
who were responsible for parts of the FS Technical Report, each of
whom is a qualified person as defined by National Instrument 43-
101 and independent of Sigma, were: (i) Marc Antoine Laporte,
P.Geo., M. Sc., of SGS Canada Inc., (ii) Ara Erzingatzian, P.Eng,
of Primero Group Americas Inc., (iii) Kiedock Kim, P.Eng. Lead
Process Engineer, of Primero Group Americas Inc. (iv) Porfirio
Cabaleiro Rodriguez, Mining Engineer of GE21 (v) Frederic Claridge,
M.S., P.Eng., Senior Technical Director, Advisian Americas, a
division of WorleyParsons Canada Services Ltd., (vi) Lucas Duerte,
P.Eng., MSc, PMP.
FOR ADDITIONAL INFORMATION PLEASE
CONTACT
Sigma Lithium Resources Corporation:
www.sigmalithiumresources.com
Ana Cabral Chief Strategy Officer 55 11
2985-0089 ana.cabral@sigmaca.com
Anna HartleyDirector of Investor Relations44
7866 458 093anna.hartley@sigmaca.com
FORWARD-LOOKING STATEMENTS This
news release contains forward-looking statements relating to
Sigma’s objectives, the potential for increased resources,
concentration plant construction and expected production levels,
achieving sustainable production and other statements that are not
historical facts. Readers are cautioned not to place undue reliance
on forward-looking statements, as there can be no assurance that
the plans, intentions or expectations upon which they are based
will occur. By their nature, forward-looking statements involve
numerous assumptions, known and unknown risks and uncertainties,
both general and specific, that contribute to the possibility that
the predictions, forecasts, projections and other forward-looking
statements will not occur, which may cause actual performance and
results in future periods to differ materially from any estimates
or projections of future performance or results expressed or
implied by such forward-looking statements. These assumptions,
risks and uncertainties include, among other things: the state of
the economy in general and capital markets in particular, the
availability of project financing on reasonable terms, investor
interest in the business and future prospects of Sigma and the
settlement of definitive offtake and other commercial
agreements.
The forward-looking statements contained in this
news release are made as of the date of this news release. Except
as required by law, Sigma disclaims any intention and assumes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by applicable securities law. Additionally,
Sigma undertakes no obligation to comment on the expectations of,
or statements made, by third parties in respect of the matters
discussed above. The key risks and uncertainties that could cause
actual results or the material factors and assumptions applied in
preparing forward-looking information to differ materially from
predictions, forecasts, projections, expectations or conclusions
are discussed in the “Risk Factors” section of Sigma’s annual
information form for the year ended December 31, 2018. We caution
that the foregoing list is not exhaustive of all possible
factors.
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 TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release.
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