Sigma Lithium tables Brazil expansion plan, US$100 million financing

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Sigma Lithium [SGML-TSXV, NASDAQ] has released the results of a project expansion study at its Grota de Cirilo project in Brazil and said it has increased its mineral reserves by 63%. The company also said has secured a US$100 million debt financing deal with Synergy Capital, one of the company’s shareholders, based in United Arab Emirates.

Sigma is focused on powering the next generation of electric vehicles with environmentally-sustainable and high purity lithium.

 The company is currently in construction at its 100%-owned Grota do Cirilo Project in Brazil. The project is located in northeastern Minas Gerais State, 450 kilometres northeast of Belo Horizonte. It includes a state of the art, green-tech processing plant that uses 100% renewable energy, 100% recycled water and 100% dry stack tailings. It represents one of the largest and highest-grade hard rock lithium spodumene deposits in the Americas.

The mine layout and operation was based on two independent open pit areas, including Pit 1 in the north and Pit 2 in the south.

In its latest news release, the company said consolidated proven and probable reserves stand a 54.8 million tonnes of grade 1.44% Li20.

In a recent update, the company said it remains on track to initiate commissioning of the crushing plant by year end and is planning to commence commercial production in April 2023.

On December 2, 2022, Sigma Lithium shares closed at $45.81, and currently trade in a 52-week range of $54.23 and $10.72.

However, Sigma has released the results of a study that forsees a potential increase of battery-grade sustainable lithium concentrates from 270,000 tonnes per year (36,700 tonnes per year LCE) commencing in 2023 to 768,000 tonnes annually (104,200 tonnes per year LCE) in the second year.

The company said the expansion could be achieved via the addition to the Greentech Lithium Plant of a single larger additional dense media separation module paired with a proportional crushing module. The increase in mining feedstock for the integrated production expansion of the Greentech Lithium Plant will be achieved by construction of the Phase 2 and Phase 3 mines.

Meanwhile, Sigma said the debt financing will fully fund the company until August, 2023, including the initiation of detailed engineering and initiation of the project expansion. The debt financing is also expected to fund working capital requirements for the entire commissioning period of the Greentech Plant as well as for general corporate purposes.

The debt financing is available by way of a multi-draw term loan and contemplates a 48-month maturity date and a borrowing rate of 12-month BSBY plus 6.95% per annum (which may be increased by an additional 3.5% per year to the extent that there is a delay in the satisfaction of certain conditions, subsequent.

The debt financing is a senior secured obligation, secured by, among other things, all assets of Sigma Brazil, including a pledge of all the shares of Sigma Brazil, as well as a guarantee from the company until certain release conditions are met.

The initial drawdown of US$60 million is expected to close this year.

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