SIGMA LITHIUM ANNOUNCES LOADING 22,000t SHIPMENT TO LX INTERNATIONAL AT PREMIUM FIXED FORMULA: 9% OF LME LITHIUM HYDROXIDE

Rhea-AI Summary

Sigma Lithium has announced the loading of its ninth shipment, totaling 22,000 tonnes of Quintuple Zero Green Lithium concentrate, at the Port of Vitoria. This shipment was sold to LX International, previously known as LG International, at a premium price calculated as 9% of the LME lithium hydroxide benchmark. This formula, which is final and non-provisional, is based on a fixed-floating calculation. The auction process used for price discovery is designed to ensure transparency and equitable distribution of risk and reward across the supply chain.

Sigma Lithium's management sees this deal as a significant step in commercial diversification and relationship building with South Korean industrial groups, particularly LG Group. The shipment's price surpasses the previous shipment's rate of 8.75% and reflects the company's strategy of maximizing value creation through high-purity lithium concentrate. The price formula will depend on LME lithium hydroxide prices one month after the shipment lands.

Positive

• Sigma Lithium achieved a premium price of 9% of LME lithium hydroxide, higher than the previous 8.75%.
• Loaded 22,000 tonnes of high-purity Quintuple Zero Green Lithium for shipment.
• First sale to LX International, enhancing commercial diversification.
• Auction process used for price discovery ensures transparency and fair risk-reward distribution.
• Deal reflects significant progress in monetizing the commercial premium of high-purity lithium.

Negative

• The final price depends on LME lithium hydroxide benchmark prices one month after landing, introducing uncertainty.

Insights

Financial Analyst

The announcement from Sigma Lithium reveals a strategic milestone by securing a significant shipment to LX International at a premium price. The fixed-floating price formula of 9% of lithium hydroxide quoted on the LME signifies a substantial improvement from the previous rate of 8.75% in April 2024. This price increment indicates Sigma Lithium's strong negotiating position and the desirability of their high-purity product.

In the short term, this positive pricing strategy should enhance revenue and profit margins. Investors should note that a higher premium price typically translates into stronger financial health for the company. The auction-based price discovery method utilized here adds transparency and may also suggest robust demand and competition for Sigma's product.

Long-term implications include strengthening relationships with industrial giants like LX International. This partnership might provide continuous revenue streams and more stable cash flow, especially critical in the volatile commodity markets. Retail investors should also consider the broader market context, where lithium demand is expected to rise due to the expanding EV market.

However, the reliance on the LME benchmark introduces some uncertainty, as it exposes the final revenue to market fluctuations. Investors should keep an eye on lithium hydroxide price trends to gauge future performance.

Market Research Analyst

This shipment marks a significant step for Sigma Lithium in diversifying its commercial partnerships, particularly with LX International, a major player in South Korea's industrial landscape. By tapping into this market, Sigma is not just expanding its customer base but also reinforcing its presence in a region known for advanced technology and automotive industries.

The company's engagement in an auction-based price discovery process is noteworthy, as it suggests a fair and competitive approach that can attract more buyers and increase market confidence. This method aligns well with current market practices aimed at maximizing transparency and risk-reward distribution across the supply chain.

For retail investors, it’s essential to understand that such strategic partnerships and transparent pricing mechanisms can significantly enhance a company's market position and investor perception. Moreover, given the ongoing global shift towards electric vehicles, the importance of secure and high-purity lithium supplies cannot be overstated. This shipment's contribution towards LG Group's battery manufacturing underscores Sigma's role in this pivotal industry trend.

While this is positive news, investors should remain cautious about potential market and regulatory shifts that could impact future shipments and pricing.

HIGHLIGHTS

• Sigma Lithium announces the loading of its ninth shipment, totaling 22,000 tonnes of its high purity Quintuple Zero Green lump lithium concentrate ("Quintuple Zero Green Lithium"), at the Port of Vitoria. The shipment was sold to LX International, formerly known as LG International.
• Sigma Lithium achieved a premium price calculated using a fixed-floating formula of 9% of lithium hydroxide quoted at LME. The price formula is final and non-provisional. Premium prices were achieved through a negotiated, "auction-price discovery" process.
  • The auction process maximizes transparency, leads to a more equitable and fair distribution of risk-reward across the supply chain, and ultimately increases value creation for the Company, an integrated industrial miner-processor of lithium concentrate.
  • In this fixed-floating formula, the final price for the ninth shipment will depend solely on the fluctuations of LME lithium hydroxide benchmark prices one month after the landing of the shipment (M+1).
• Sigma Lithium will continue to drive its commercial strategy, maintaining control over allocation of the sales of its Quintuple Zero Green Lithium amongst the bidders.

SÃO PAULO, May 22, 2024 /PRNewswire/ -- Sigma Lithium Corporation ("Sigma Lithium" or the "Company") (NASDAQ: SGML, BVMF: S2GM34, TSXV: SGML), a leading global lithium producer dedicated to powering the next generation of electric vehicles with carbon neutral, socially and environmentally sustainable lithium concentrate, announces it has commenced loading its ninth shipment of Quintuple Zero Green Lithium, totaling 22,000 tonnes, at the Port of Vitoria. The Company sold its entire ninth shipment directly to LX International ("LXI"), formerly named LG International.

Sigma Lithium has demonstrated significant progress in monetizing a commercial premium that reflects the value in use for its customers generated by its high purity Quintuple Zero Green Lithium. The achieved fixed formula of 9% of lithium hydroxide quoted at LME represents a meaningful increase over previous prices achieved. As a reference, the price for the Company's shipment in April 2024 was equivalent to 8.75% of lithium hydroxide price quoted at LME.

This inaugural shipment to LXI highlights the management team's ability to conduct commercial diversification and strengthen our client relationships with South Korean industrial groups. Tracing the supply chain and its industrial participants, Sigma infers that the lithium hydroxide refined with Sigma's Quintuple Zero Green Lithium is ultimately directed to the battery manufacturing of LG Group, who the Company believes sells its EV batteries to EU and US Automakers.

ABOUT SIGMA LITHIUM

Sigma Lithium (NASDAQ: SGML, TSXV: SGML, BVMF: S2GM34) is a leading global lithium producer dedicated to powering the next generation of electric vehicle batteries with carbon neutral, socially and environmentally sustainable chemical-grade lithium concentrate.

Sigma Lithium operates at the forefront of environmental and social sustainability in the EV battery materials supply chain and is currently producing Quintuple Zero Green Lithium concentrate from its Grota do Cirilo Project in Brazil. Phase 1 of the project entered commercial production in 2Q23 and has an annual capacity of 270,000 tonnes of concentrate (36,700 LCE annually). The Company has issued a Final Investment Decision formally approving plans to nearly double capacity to 520,000 tonnes of concentrate through the addition of a Phase 2 concentrate mine and associated mine. The project produces lithium concentrate at its state-of-the-art Greentech lithium plant that uses 100% renewable energy, 100% recycled water and 100% dry-stacked tailings.

Please refer to the Company's National Instrument 43-101 technical report titled "Grota do Cirilo Lithium Project Araçuaí and Itinga Regions, Minas Gerais, Brazil, Amended and Restated Technical Report" issued March 19, 2024, which was prepared for Sigma Lithium by Homero Delboni Jr., MAusIMM, Promon Engenharia; Marc-Antoine Laporte, P.Geo, SGS Canada Inc; Jarrett Quinn, P.Eng., Primero Group Americas; Porfirio Cabaleiro Rodriguez, (MEng), FAIG, GE21 Consultoria Mineral; and William van Breugel, P.Eng (the "Updated Technical Report"). The Updated Technical Report is filed on SEDAR and is also available on the Company's website.

For more information about Sigma Lithium, visit https://www.sigmalithiumresources.com/

Sigma Lithium
LinkedIn: Sigma Lithium
Instagram: @sigmalithium
Twitter: @SigmaLithium

FORWARD-LOOKING STATEMENTS 

This news release includes certain "forward-looking information" under applicable Canadian and U.S. securities legislation, including but not limited to statements relating to timing and costs related to the general business and operational outlook of the Company, the environmental footprint of tailings and positive ecosystem impact relating thereto, donation and upcycling of tailings, timing and quantities relating to tailings and Green Lithium, achievements and projections relating to the Zero Tailings strategy, achievement of ramp-up volumes, production estimates and the operational status of the Groto do Cirilo Project, and other forward-looking information. All statements that address future plans, activities, events, estimates, expectations or developments that the Company believes, expects or anticipates will or may occur is forward-looking information, including statements regarding the potential development of mineral resources and mineral reserves which may or may not occur. Forward-looking information contained herein is based on certain assumptions regarding, among other things: general economic and political conditions; the stable and supportive legislative, regulatory and community environment in Brazil; demand for lithium, including that such demand is supported by growth in the electric vehicle market; the Company's market position and future financial and operating performance; the Company's estimates of mineral resources and mineral reserves, including whether mineral resources will ever be developed into mineral reserves; and the Company's ability to operate its mineral projects including that the Company will not experience any materials or equipment shortages, any labour or service provider outages or delays or any technical issues. Although management believes that the assumptions and expectations reflected in the forward-looking information are reasonable, there can be no assurance that these assumptions and expectations will prove to be correct. Forward-looking information inherently involves and is subject to risks and uncertainties, including but not limited to that the market prices for lithium may not remain at current levels; and the market for electric vehicles and other large format batteries currently has limited market share and no assurances can be given for the rate at which this market will develop, if at all, which could affect the success of the Company and its ability to develop lithium operations. 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 information. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether because 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 the current annual information form of the Company and other public filings available under the Company's profile 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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SOURCE Sigma Lithium Corporation

FAQ

What is the significance of Sigma Lithium's shipment on May 22, 2024?

Sigma Lithium's ninth shipment, totaling 22,000 tonnes of high-purity Quintuple Zero Green Lithium, was sold at a premium price to LX International.

What price formula did Sigma Lithium use for its shipment to LX International?

Sigma Lithium used a fixed-floating formula of 9% of the LME lithium hydroxide benchmark, with the final price depending on LME prices one month after landing.

How does Sigma Lithium ensure transparency in its pricing?

Sigma Lithium used an auction process for price discovery, which maximizes transparency and ensures equitable risk-reward distribution across the supply chain.

What was the previous pricing for Sigma Lithium's shipments?

In April 2024, the price for Sigma Lithium's shipment was 8.75% of the LME lithium hydroxide benchmark.

How does this shipment to LX International benefit Sigma Lithium?

The shipment enhances Sigma Lithium's commercial diversification and strengthens relationships with South Korean industrial groups, like LG Group.