SIGMA LITHIUM REPORTS 1Q 2024 RESULTS: MAY SHIPMENT PRICED AT $1,290, INCREASED 25% FROM 1Q; PRODUCTION COSTS AT $397/t, 2ND LOWEST IN INDUSTRY
In Q1 2024, Sigma Lithium (SGML) reported a 25% price increase for its May shipment to $1,290/t. Revenues from Q1 sales of Quintuple Zero High Purity Lithium Concentrate reached $49.1 million, with sales volumes totaling 52,857/t and production volumes at 54,168/t. The company achieved a 16% reduction in cash costs from Q4 2023, with FOB cash costs at $462/t and plant gate costs averaging $397/t. Pro forma EBITDA margin stood at 35.3%, with a reported adjusted EBITDA of $5.9 million. Sigma's Board has approved the construction of a second Greentech Industrial Plant to boost production capacity to 520,000/t annually. The operational life at Grota do Cirilo has been extended to 25 years, and proven and probable reserves increased by 40% to 77 million tonnes.
- May shipment price increased by 25% to $1,290/t.
- Total Q1 revenue from sales was $49.1 million.
- Production volumes totaled 54,168/t in Q1.
- Plant gate cash costs reduced by 16% to $397/t.
- FOB cash costs at $462/t in Q1.
- Pro forma EBITDA margin achieved was 35.3%.
- Reported adjusted EBITDA for Q1 stood at $5.9 million.
- Final investment decision made for second Greentech Plant, increasing capacity to 520,000/t annually.
- Operational life extended to 25 years at Grota do Cirilo.
- Proven and probable reserves increased by 40% to 77 million tonnes.
- Cash and cash equivalents increased to $108.2 million.
- Net income for Q1 was a loss of $7.0 million.
- Quarterly revenue decreased to $37.2 million from $37.7 million in Q4 2023.
- Average realized selling price dropped to $930/t from $1,067/t in Q4 2023.
- Production volumes decreased from 59,938/t in Q4 2023 to 54,168/t in Q1.
- Cash unit operating costs not fully meeting the $370/t plant gate guidance.
- Net debt position increased by $13 million in Q1.
- Total short and long-term loans and liabilities stood at $201 million.
Insights
Sigma Lithium's 1Q24 financial performance underscores a mix of improvements and challenges. The company achieved a noteworthy 25% increase in sales prices from 1Q24 to May, reaching
However, the company also reported net losses of $7 million for the quarter, primarily influenced by provisional price adjustments and depreciation. These adjustments reduced revenues by
From a liquidity perspective, Sigma strengthened its balance sheet, ending the quarter with
Retail investors should note the robust EBITDA margins—15.8% adjusted EBITDA and 35.3% pro forma EBITDA—but also remain cautious due to the net loss and ongoing capital requirements. The company's strategic moves to increase production capacity and extend operational life are promising for long-term growth, but short-term profitability remains under pressure.
The lithium market's dynamics significantly influence Sigma Lithium's results. The company's strategic focus on Quintuple Zero High Purity Lithium Concentrate positions it well in a market where demand for high-grade lithium is increasing, especially for electric vehicles. The pricing strategy tied to LME/Fastmarkets lithium hydroxide benchmarks allows Sigma to capture upward price movements, evidenced by the 11% price increase from April to May.
Moreover, the planned expansion of the Greentech Industrial Plant to double production capacity by 2025 aligns with increasing global lithium demand projections. Extending the operational life of the Grota do Cirilo complex to 25 years also cements Sigma's long-term viability in the market.
However, investors should be aware of the price volatility and the provisional adjustments impacting revenues. The market recovery post-Lunar New Year and the firm's ability to adapt its pricing strategy to market dynamics are positive indicators, but the inherent fluctuations in lithium prices necessitate a cautious approach.
Overall, Sigma's strategic initiatives and market positioning highlight its potential in the growing lithium market, though the volatility in short-term pricing and profitability metrics warrant attention.
FIRST QUARTER 2024 HIGHLIGHTS ($ USD)
- Strengthened commercial position in May, achieving a premium price of USD
$1,290 9% of lithium hydroxide quoted at LME, delivering:11% price increase from April25% price increase from 1Q24 realized sales price (USD$930 $1,035 6% basis)
- Revenues from volumes of Quintuple Zero High Purity Lithium Concentrate sold in 1Q totaled
$49.1 million - Sales volumes totaled 52,857/t
- Production volumes totaled 54,168/t
- Reduced reported cash cost by
16% from 4Q23, approaching 3Q cost guidance:- FOB cash costs of
$462 $420 - Cash costs at industrial plant gate averaging
$397 $370
- FOB cash costs of
- Robust 1Q24 EBITDA margins:
35.3% margins on pro forma EBITDA(3) of$17.4 million 15.8% margins on reported 1Q adjusted EBITDA of$5.9 million
- Board of Directors made a Final Investment Decision to build a second Greentech Industrial Plant that will increase production capacity to 520,000/t of Quintuple Zero Green Lithium from the current 270,000 t/year.
- Extended operational life to 25 years at the Company's
100% owned Grota do Cirilo industrial-mineral complex at an industrial throughput of 520,000 t/year: Increase of40% in proven and probable mineral reserves to 77 million tonnes (from 54.8 million tonnes).
Conference Call Information
The Company will conduct a conference call to discuss its financial results for the first quarter at 12:00 p.m. EST on Thursday, May 16, 2023. Participating on the call will be Co-Chairperson and Chief Executive Officer, Ana Cabral. To register for the call, please proceed through the following link Register here. For access to the webcast, please Click here.
Ana Cabral, Co-Chairperson and CEO said: "During 2024, Sigma has delivered on several key milestones aimed at doubling industrial capacity by 2025. We made the final investment decision to initiate construction of a second Greentech plant, and we extended operational life to 25 years at Grota do Cirilo by increasing our audited proven and probable mineral reserve by
She added: "Operationally, our team has been progressing consistently towards achieving robust cash flow generation for 2024. We continue to premiunize the price of our Quintuple Zero Green Lithium, increasing May prices by
Key Performance Metrics for Quarter Ended 31 March 2024 ($ USD)
Unit | 1Q24 | 4Q23 | |
Concentrate Produced | tonnes | 54,168 | 59,938 |
Concentrate Grade Produced | % | 5.4 % | 5.3 % |
Concentrate Sold | tonnes | 52,857 | 64,670 |
Reported Revenue | 37,202 | 37,688 | |
Average Reported Selling Price | $/t | 704 | 583 |
Revenue for Business Conducted in 1Q | 49,141 | 67,500 | |
Average Realized Selling Price in 1Q | $/t | 930 | 1,067 |
Unit Operating Cost (1) | $/t | 397 | 478 |
Adjusted EBITDA (2) | 5,878 | 1,295 | |
Net Income | (6,962) | (9,500) | |
Cash and Cash Equivalents | 108,191 | 48,584 |
Sigma Lithium made two full shipments of its Quintuple Zero Green Lithium concentrate during the first quarter as the March shipment was concluded in the first week of April.
- Sales were supplemented by an additional sale to Glencore AG of volumes at port totalling 8,700/t at the end of the quarter.
- Revenues associated with volumes sold in the first quarter totaled
$49 million $930 - Reported revenues for the first quarter totaled
$37.2 million C ).$50.4 million - Provisional price adjustments reduced 1Q24 revenues by USD
$12 million $30 million
- Provisional price adjustments reduced 1Q24 revenues by USD
Cash unit operating costs(1) for lithium concentrate produced at the Company's Grota do Cirilo operations in the first quarter averaged USD
- This is a nearly
16% improvement from the reported FOB costs in 4Q23 and is an important step to meeting Company cost targets of$370 $420 - Sigma Lithium has already seen an improvement in its cost structure given productivity actions taken, and notes that production at the processing plant was the primary hinderance to achieving guided costs during the first quarter. The Company reiterates its expectation to achieve guidance within 2Q24 for 3Q average realization.
The Company delivered first quarter adjusted EBITDA of
- This number includes
$0.5 million C ) of non-recurring expenditures, including those associated with the strategic review, and$0.7 million $2.3 million C ) in non-cash stock-based compensation expenses.$3.1 million
1Q24 results had a
Net income in the quarter was a loss of
Operational Update and Phase 2 Expansion
Lithium concentrate production in the first quarter totaled 54,168 tonnes, compared to the 59,938 tonnes produced in 4Q23. No single factor weighed materially on production, but it was impacted, in part, by holiday seasonality and fewer work days. Sigma maintained a delivery schedule of approximately 35 days. The Company has successfully continued to improve Greentech plant efficiency in 2024, and notes that production improved sequentially through the course of the first quarter.
On April 1, 2024, the Board of Directors announced a Final Investment Decision ("FID") for the Company's Phase 2 Greentech Plant expansion. The project is expected to add 250,000 tonnes of production capacity to the current 270,000-tonne Phase 1 operation. Earthworks engineering is ongoing. Building and commissioning are expected to occur within 12 months of the FID announcement, with the first commercial production expected in 2Q25. The total expected capex for the Phase 2 construction is
Ninth Shipment Scheduled for the week of May 20
The Company is also announcing today that it has finalized pricing discussions for its ninth shipment of Quintuple Zero Green Lithium concentrate scheduled for the week of May 20th. The 22,000/t shipment will be priced at the formula of
The current value of the May shipment reflects an
A similar price discovery process was followed through closed private bidding for the fixed portion of the price formula, though the final economics will depend on LME/ Fastmarkets lithium hydroxide benchmark at one month after the landing of the shipment. Sigma Lithium will continue to adapt its marketing strategy to maximize the commercial value of its premium Quintuple Zero Green Lithium
Sigma Lithium Commercial Director Catarina Noci, stated: "The economics for our May shipment represent a continuation in the market recovery that started in the days following the Lunar New Year. Indications from the market point to a firm outlook for lithium concentrate as we enter the price discovery process for our next shipment in June. Demand for our Quintuple Zero Green Lithium continues to be robust as a result of its superior chemical properties and coarse particles. We will evolve our pricing strategy to follow market dynamics in order to capture as much as possible of the 20
Balance Sheet & Liquidity
Sigma Lithium ended the first quarter with
Capital expenditures during the first quarter totaled
Free cash flow was a modest drag as a result of lower market prices in the quarter, higher receivables, as well as the conclusion of the March shipment taking place in the first week of April (resulting in one less shipment made during the 1Q24 compared with 4Q23).
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 is currently working to expand production via a Phase 2 concentrate line and associated mine which would add another 250,000 tonnes of Quintuple Zero Green Lithium capacity annually. The project produces lithium concentrate at its state-of-the-art Greentech lithium plant that uses
Please refer to the Company's National Instrument 43-101 technical report titled "Grota do Cirilo Lithium Project Araçuaí and Itinga Regions,
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
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.
Figure 1: Income Statement Summary
Three Months Ended | Three Months Ended | ||
( | CAD | USD | |
Revenue | 50,408 | 37,202 | |
Operating costs | (38,722) | (28,642) | |
Gross profit | 11,686 | 8,560 | |
G&A expense | (5,882) | (4,363) | |
Sales expense | (1,166) | (861) | |
Stock-based compensation | (3,066) | (2,266) | |
ESG and other operating expenses | (1,887) | (1,400) | |
EBIT | (315) | (329) | |
Financial income and FX (expenses), net | (9,614) | (7,104) | |
Income (loss) before taxes | (9,929) | (7,433) | |
Income taxes and social contribution | 585 | 471 | |
Net Income (loss) for the period | (9,344) | (6,962) | |
Weighted avg diluted shares outstanding | 110,460,681 | 110,460,681 | |
Earnings per share | $ (0.08) | $ (0.06) |
Figure 2: Balance Sheet Summary
Three Months | Twelve | Three Months | Twelve | ||
( | CAD | CAD | USD | USD | |
Assets | |||||
Cash and cash equivalents | 146,393 | 64,403 | 108,191 | 48,584 | |
Trade accounts receivable | 39,276 | 29,693 | 29,027 | 22,400 | |
Other current assets | 51,114 | 48,580 | 37,776 | 36,647 | |
Total current assets | 236,783 | 142,676 | 174,993 | 107,631 | |
Property, plant and equipment | 236,824 | 239,742 | 175,023 | 180,856 | |
Other non-current assets | 107,613 | 104,820 | 79,530 | 79,074 | |
Total Assets | 581,220 | 487,238 | 429,546 | 367,561 | |
Liabilities & Shareholder Equity | |||||
Financing and export prepayment | 127,149 | 28,907 | 93,968 | 21,807 | |
Accounts payable | 62,918 | 59,826 | 46,499 | 45,131 | |
Other current liabilities | 32,047 | 33,640 | 23,691 | 25,377 | |
Total current liabilities | 222,114 | 122,373 | 164,159 | 92,315 | |
Financing and export prepayment | 145,488 | 141,999 | 107,522 | 107,121 | |
Other non-current liabilities | 8,344 | 8,582 | 6,167 | 6,474 | |
Total non-current liabilities | 153,832 | 150,581 | 113,689 | 113,595 | |
Total shareholders' equity | 205,274 | 214,284 | 151,699 | 161,651 | |
Total Liabilities & Shareholders' Equity | 581,220 | 487,238 | 429,546 | 367,561 |
Figure 3: Cash Flow Statement Summary
Three Months Ended | Three Months Ended | ||
( | CAD | USD | |
Operating Activities | |||
Net income (loss) for the period | (9,344) | (6,962) | |
Adjustments | 20,487 | 15,261 | |
Interest payment on loans and leases | (15,194) | (11,266) | |
Adjustments to income (loss) for the period | (4,051) | (2,967) | |
Change in working capital | (11,341) | (8,449) | |
Net Cash from Operating Activities | (15,392) | (11,416) | |
Investing Activities | |||
Purchase of PPE | (5,303) | (3,952) | |
Addition to exploration and evaluation assets | (2,248) | (1,667) | |
Other | (55) | (41) | |
Net Cash from Investing Activities | (7,606) | (5,660) | |
Financing Activities | |||
Proceeds of loans, net | 106,862 | 79,237 | |
Other | (846) | (627) | |
Net Cash from Financing Activities | 106,016 | 78,610 | |
Effect of FX | (1,028) | (1,927) | |
Net (decrease) increase in cash | 81,990 | 59,607 | |
Cash & Equivalents, Beg of Period | 64,403 | 48,584 | |
Cash & Equivalents, End of Period | 146,393 | 108,191 |
Endnotes:
(1) | Cash Operating Costs per tonne include mining, crushing, processing, and site administration expenses. When shown as Freight on Board (FOB), these expenses include transport and port charges. For clarity, non-site G&A, and royalty costs are excluded unless otherwise noted. |
(2) | Adjusted EBITDA represents a cash operating profit metric that nets revenues against cost of goods sold, selling, general, administrative and other cash operating expenses. Adjusted EBITDA also excludes stock-based compensation and certain non-recurring expenses, such as those related to the Company's strategic review. |
(3) | Pro forma Adjusted EBITDA utilizes the same formula as Adjusted EBITDA, though it backs out the implications of the provisional price adjustment to associated revenues and costs. The Company believes this is a more accurate reflection of business conducted within the quarter. |
Reconciliation
To provide investors and others with additional information regarding the financial results of Sigma Lithium, we have disclosed in this release certain non-IFRS operating performance measures of EBITDA, EBITDA margin, Adjusted EBITDA, and Adjusted EBITDA margin. These non-IFRS financial measures are a supplement to and not a substitute for or superior to, the Company's results presented in accordance with IFRS. The non-IFRS financial measures presented by the Company may be different from non-GAAP/IFRS financial measures presented by other companies. Specifically, the Company believes the non-IFRS information provides useful measures to investors regarding the Company's financial performance by excluding certain costs and expenses that the Company believes are not indicative of its core operating results. The presentation of these non-
Figure 4: Adjusted EBITDA Bridge
Three Months Ended | Three Months Ended | ||
( | CAD | USD | |
Revenues | 50,408 | 37,202 | |
Cost of goods sold | (38,722) | (28,642) | |
Gross Profit | 11,686 | 8,560 | |
G&A expense | (5,882) | (4,363) | |
Sales expenses | (1,166) | (861) | |
Stock-based compensation | (3,066) | (2,266) | |
ESG & other operating expenses, net | (1,887) | (1,400) | |
EBIT | (315) | (329) | |
Depreciation & Amortization | 4,622 | 3,443 | |
EBITDA | 4,307 | 3,114 | |
EBITDA (%) | 8.5 % | 8.4 % | |
Non-recurring expenses | 678 | 499 | |
Accounting Services | 443 | 324 | |
Other G&A | 235 | 174 | |
Stock-based compensation | 3,066 | 2,266 | |
Adjusted EBITDA | 8,051 | 5,878 | |
Adjusted EBITDA (%) | 16.0 % | 15.8 % |
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SOURCE Sigma Lithium
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