Sigma Lithium (TSXV: SGML) has made the final decision to double its production capacity of lithium concentrate despite depressed prices on global markets.
The expansion, which is expected to cost approximately $100 million, is expected to nearly double current production capacity from 270,000 tonnes per year to 520,000 tonnes per year of lithium. The additional 250,000 tonnes per year of 5.5% chemical grade course lithium concentrate translates to an additional 34,000 tonnes per year of lithium carbonate equivalent.
Funding for the expansion is expected to come from cash on hand, along with free cash flow generated from future shipments of concentrate. As of March 30, the company says it has $109 million in cash and cash equivalents, which exceeds the funding requirements of the expansion.
The total build and commissioning time frame for the expansion is expected to be just ten months, with earthworks slated to begin this month.
2023 financial results
The decision to move forward with the construction of its phase two expansion however is overshadowed by the fact that the company has failed to file its audited financial statements for the year ended December 31, 2023. The statements, along with its annual information form, were due on March 31.
The company says it was unable to file on time due to the start of commercial production (which occurred in early 2023), and the related additional audit procedures it is required to undergo as a result. In place of audited results, unaudited data was provided.
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In the fourth quarter, Sigma is reporting the production of 59,938 tonnes of concentrate, and the sale of 64,670 tonnes. Average selling price of the concentrate came in at $1,067 per tonne, while posting reported revenues of $37.7 million for the quarter. The company meanwhile reported “pro-forma” revenues of $67.5 million for the quarter, which excludes a $30 million provisional price adjustment related to a September 2023 shipment of concentrate.
Sigma reported a net loss of $9.5 million for the quarter and EBITDA for the quarter amounted to negative $4.5 million. Adjusted EBITDA came in at $31.3 million.
For the full fiscal year, Sigma produced 105,141 tonnes of concentrate, while reporting revenues of $135.1 million. On a full year basis the net loss shook out to $28.3 million, while EBITDA was $24.5 million. Adjusted EBITDA amounted to $49.1 million.
Sigma Lithium last traded at $17.56 on the TSX Venture.
Information for this briefing was found via Nikkei Asia, Sedar, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
