SIGMA Lithium Resources Corporation (“
Sigma” or
the “
Company”)
(TSX-V: SGMA)
(OTC- QB: SGMLF) is pleased to announce the
successful completion of the first phase of early contractor
involvement (the “
ECI”) with Duro Felguera S.A of
Spain (“
DF”), which provided an updated
multicurrency gross maximum price (the "
Multicurrency
GMP") of US$22.8 million (US Dollars) and R$182.1 million
(Brazilian Reais) for the engineering, procurement and construction
(“
EPC”) of the Grota do Cirilo lithium project in
Brazil (the “
Project”). The Multicurrency GMP is
lower than estimated in the Feasibility Study Report, as outlined
below.
As part of the ECI, DF: (i) updated its due
diligence on the Project based on the more recent documentation and
information provided by the Company, (ii) reconfirmed quantities
and pricing in the overall expected capital expenditure
(“Capex”) for the Project provided in the
Feasibility Study Report (defined below), (iii) established the
Multicurrency GMP for the process plant and associated
infrastructure and (iv) submitted a Multicurrency GMP proposal and
schedule to progress to the next phase.
Sigma and DF have entered into a memorandum of
understanding (the “MOU”) which includes (among
its provisions) the following:
- Multicurrency GMP. The
construction cost for plant and infrastructure in the Multicurrency
GMP of US$59 million (the USD:BRL translation was calculated
utilizing the exchange rate of US$ 1 = BRL 5.05) is lower than the
US$66 million estimated in the NI 43-101 Technical Report on Grota
do Cirilo Project Feasibility Study filed on SEDAR on November 6,
2019 (the “Feasibility Study
Report”). The approximate 30% devaluation of the
Brazilian Real since then had the overall effect of decreasing the
Capex of the Project, a material portion of which is expected to be
sourced domestically in Brazil and is, therefore, to be denominated
in Brazilian Real.
- EPC Contract. DF will prepare a
proposal for a contract for the EPC for the Project (the
“EPC Contract”). The EPC Contract is to include a
multicurrency Lump Sum Turnkey Price (“LSTK
Price”), which is to be based on the Multicurrency GMP of
US$22.8 million (US Dollars) and R$182.1 million (Brazilian
Reais) for the engineering, have a break-down by currency and is
not to exceed the Multicurrency GMP.
- Mediation of Financial Services:
DF’s services are to include assisting the Company in obtaining
Project financing by introducing and supporting the Company with
different potential lenders, including export financing &
development government agencies.
- Subcontractor: The MOU contemplates
that Primero Group Americas, a subsidiary of Primero Group of
Australia, will be the subcontractor to execute engineering
services for the Project.
Sigma’s Chief Executive Officer Calvyn Gardner
said: “We look forward to working closely with Duro Felguera, which
will join Primero as an EPC partner to build our Grota do Cirilo
Project. An engineering construction company with the right
skillset is critically important to the success of the Project –
including through value engineering analysis and procurement
efficiency measures – which are expected to provide savings and
reduce the total estimated infrastructure capital cost of the
Project. DF’s expertise in successfully managing lump sum turnkey
fixed price EPC contracts was palpable during our negotiations. The
Multicurrency GMP in US dollars and Brazilian Real, eliminating
procurement cost volatility and simplifying the Project financing
structure, is a clear indication of DF’s experience in EPC contacts
in Brazil.”
FIRST QUARTER 2020 FINANCIAL RESULTS
Sigma’s financial statements and MD&A for
the three months ended March 31, 2020 were filed on SEDAR on June
11, 2020.
Selected consolidated financial information is
presented as follows:
(in CAD $thousands except per share
information) |
Three months ended |
Three months ended |
|
March 31, 2020 |
March 31, 2019 |
General and Administrative Expenses |
(425.0) |
(1,072.9) |
Net Loss |
(263.1) |
(1,455.0) |
Net Comprehensive Loss |
(1,983.0) |
(1,620.4) |
Loss per Common Share - Basic and Diluted |
0.00 |
(0.02) |
|
Three months ended |
Three months ended |
|
March 31, 2020 |
December 31, 2019 |
Cash and Cash Equivalents |
60.7 |
103.6 |
Total Assets |
19,483.1 |
20,927.2 |
Total Liabilities |
(12,198.0) |
(12,187.9) |
The Company’s net loss totaled $263,138 for the
three months ended March 31, 2020, with basic and diluted loss per
share of $0.00. This compares with a net loss of $1,454,976 with
basic and diluted loss per share of $0.02 for the three months
ended March 31, 2019. The decrease in net loss of $1,191,838 was
principally because of a decline in general and administrative
expenses, which totaled $425,041 for the three months ended March
31, 2020 (three months ended March 31, 2019 - $1,072,919). Despite
the decrease in net loss, net comprehensive loss, which totaled
$1,983,034 (three months ended March 31, 2019 - $1,620,376) rose on
a year-over-year basis due to cumulative translation adjustments
resulting from exchange rate variations.
The Company’s total liabilities of $12,198,019
at March 31, 2020 include mostly (i) deferred revenue of $4,007,100
received as part of the production prepayment memorandum of
understanding with Mitsui & Co. Ltd., (ii) payables to
suppliers of $2,410,931 and (iii) indebtedness to related
parties of $5,271,399 (consisting primarily of $3,055,901 in a note
payable for the acquisition of the final 11% interest in the now
fully-owned Brazilian operating subsidiary of the Company (Sigma
Mineração S.A.) and $1,268,865 in amounts drawn and accrued
interest on a credit facility with A10 Group, a group of companies
owned by certain directors of the Company (the “A10 Credit
Facility”)).
Management believes that the Company has access
to sufficient funds for its planned expenditures for the next 12
months and to meet certain ongoing obligations with third parties.
The Company has considerable flexibility in terms of the pace and
timing of Project costs and how expenditures have been, or may be,
adjusted, limited or deferred subject to current capital resources
and the potential to raise further funds. The CAD$6.6 million (US$5
million) A10 Credit Facility provides additional support for the
Company’s needs. As of June 8, 2020, $1,455,268 (US$1,076,700) had
been drawn in total and $45,973 (US$34,014) in calculated interest
and $43,927 (US$32,500) in commitment and disbursement fees had
been accrued on the facility, resulting in a liability of
$1,545,168 (US$1,143,214). Moreover, management believes that,
within the next 12 months, it will be able to access financing that
will support the Company in meeting its construction timetable and
funding its detailed engineering.
NEXT STEPS FOR SIGMA IN 2020 (SUBJECT TO
COVID-19 DEVELOPMENTS)
It is not possible to reliably estimate the
length and severity of the COVID-19 pandemic or its ultimate impact
on the financial results and condition of the Company in future
periods. However, as per federal government decree, the
activities of both operational and pre-operational mining companies
in Brazil are not subject to the COVID-19 related physical movement
restrictions and shelter-in-place, lockdowns and state border
restrictions imposed by certain states and municipalities.
However, due to international travel
curtailments, the Company has been prioritizing Project activities
that can be mostly executed with Brazilian-based personnel and that
require a limited amount of inbound and outbound travel to and from
Brazil. As announced on 19 May 2020, the Company’s short and
medium-term goals have not been materially impacted by the COVID-19
pandemic and excellent progress is being made on the
pre-construction execution activities to advance the Project. Sigma
plans to:
- Continue to work closely with the
international and Brazilian financial institutions as well as with
Brazilian development banks in order to finalize the debt and
equity financing for the construction of the Project.
- Finalize negotiations with DF to
conclude the EPC FEED Contract and initiate the detailed front-end
engineering design and the EPC of the Project in the second phase
of the ECI.
- Following the approval of the PAE
(Plano de Aproveitamento Econômico), initiate the environmental
licensing process for the Barreiro deposit, Sigma’s second deposit
slated for development (the “Barreiro deposit”)
and finalize the ongoing pre-feasibility study for the Barreiro
deposit, validating the economic potential and production costs
outlined in the PAE. Mining the Barreiro deposit, subject to
completion of all related feasibility studies and assessments, has
the potential to double the planned production capacity of the
Project to 440,000 tonnes of lithium concentrate per
year.
- Continue ongoing negotiations with
offtake customers in order to enter into binding off-take
agreements (interested parties to date include companies from the
lithium, chemicals, battery and automotive sectors).
INDEPENDENT QUALIFIED
PERSON
The technical and scientific information in this
press release has been reviewed and approved by Marc Antoine
Laporte, P.Geo., M. Sc., of SGS Canada Inc. Mr. Laporte is a
Qualified Person as defined by National Instrument 43-101 and is
independent of Sigma.
ABOUT SIGMA LITHIUM
Sigma is a Canadian company and produces
environmentally sustainable battery-grade lithium concentrate on a
pilot scale since 2018, shipping high-quality above 6% Li2O coarse
lithium concentrate samples to potential customers in Asia. Based
on the technical report titled “Grota do Cirilo Lithium Project,
Araçuaí and Itinga Regions, Minas Gerais, Brazil, National
Instrument 43-101 Technical Report on Feasibility Study Final
Report”, dated October 18 2019 and with an effective date of
September 16th, 2019, a larger-scale lithium concentration
commercial production plant will contemplate a capacity of 220,000
tonnes annually of battery-grade low-cost lithium concentrate and
Sigma will be amongst the lowest-cost producers of lithium
concentrate globally.
To secure a leading position supplying the clean
mobility and green energy storage value chain, Sigma has adhered to
the highest standards of environmental practices in line with its
core values and mission since starting activities in 2012. Sigma’s
production process is powered by hydroelectricity and the Company
utilizes state-of-the-art dry-stacking tailings management and
water-recycling techniques in its beneficiation process. Its
corporate mission is to execute its strategy while embracing strict
ESG principles. Sigma’s shareholders include some of the largest
ESG-focused institutional investors in the world.
FOR ADDITIONAL INFORMATION PLEASE
CONTACT
Sigma Lithium Resources
Corporationwww.sigmalithiumresources.com
Company Contact:Anna HartleyDirector of Investor
Relations44 7866 458 093anna.hartley@sigmaca.com
FORWARD-LOOKING STATEMENTS
This news release includes certain
"forward-looking statements" under applicable Canadian securities
legislation including statements relating to the ultimate duration,
impact and severity of the COVID-19 pandemic (including its impact
on financial markets and national and multinational economies
generally, and its impact on the growth of the electric vehicle
market and other impacts on the demand for lithium products) and
other forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable, are subject to known and unknown
risks, uncertainties, and other factors which may cause the actual
results and future events to differ materially from those expressed
or implied by such forward-looking statements. All statements that
address future plans, activities, events, or developments that the
Company believes, expects or anticipates will or may occur are
forward-looking information, including statements regarding the
potential development of resources and drilling plans which may or
may not occur. Forward-looking statements and information contained
herein are based on certain factors and assumptions regarding,
among other things, the ability to complete the Annual Filings and
Interim Filings; the market price of the Company's securities,
metal prices, exchange rates, taxation, the estimation, timing and
amount of future exploration and development, capital and operating
costs, the availability of financing, the receipt of regulatory
approvals, environmental risks, title disputes, litigation risks,
failure of plant, equipment or processes to operate as anticipated,
accidents, labour disputes, claims and limitations on insurance
coverage and other risks of the mining industry, changes in
national and local government regulation of mining operations, and
regulations and other matters including the COVID-19 pandemic.
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
statements. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result 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 our public filings available
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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