BASE METALS

Sigma grows Brazilian resource

Sigma Lithium has increased the mineral resource at its Brazilian Grota do Cirilo lithium project by some 46% to 85.7 million tonnes, adding 26.8 million tonnes of high-grade 1.49% lithium oxide in phase 3, while it stays the course for production by years’ end.

 Sigma pilot plant

Sigma pilot plant

Sigma's Co-CEO Ana Cabral-Gardner said the quality of the phase 3 resource could potentially allow the company to maintain the "high production yields" using a similar Greentech plant to the one it is constructing for phase 1.

The green-tech processing plant is to use 100% renewable energy, 100% recycled water, and 100% dry-stack tailing, Sigma says.

Co-CEO Calvyn Gardner said: "We … remain focused on delivering Battery Grade Sustainable Lithium following the commissioning of our Greentech plant at the end of 2022".

"Phase 1 plant construction continues to advance on schedule and on budget, with civil engineering under way and construction of key infrastructure items continuing in June," he said.

The phase 3 MRE is comprised of 23.3 million tonnes of measured and indicated mineral resources grading 3.5 million tonnes of inferred mineral resources grading 1.48% Li2O.

"Overall, we view this update very positively as it sets the stage for identifying a potential Phase 3 production profile that should extend the mine life with additional capital and likely be strongly accretive to valuations," Toronto-based Red Cloud Securities said.

"Assuming a combined Phase 1 + 2 production rate of 531,000 tonnes per annum concentrate, we estimate an additional 10-11 years of production from these new resources beyond the current 13-year LOM," it said.

Sigma, which has generally seen a firm upward trend in its share price since the beginning of 2021, has several catalysts on the horizon.

"We believe that the release of upcoming drill results, technical studies, and more importantly, near term production are likely to help drive the stock in the near-term," Red Cloud said.

Those catalysts include a phrase 3 preliminary economic estimate and phase 2 definitive feasibility study, both expected in Q3; phase 1 production in December, and phase 2 production in 2024, Red Cloud noted.

A consolidated phase 1 definitive feasibility study and phase 2 pre-feasibility study on Sigma's 100%-owned project released in May showed an after-tax NPV8% of US$5.1 billion, an after-tax IRR of 589%, and a 13-year operating life with average annual after-tax cash flow of US$595 million.

Sigma's share price fell 6% day on day to C$20.85 (US$16.06) on June 23. The stock had been trading below C$3 prior to 2021. The company has a market capitalization of C$2.1 billion.

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