SIGMA Lithium Resources Corporation (“
Sigma” or
the “
Company”)
(TSX-V: SGMA)
(OTC- QB: SGMLF) is pleased to announce the
signing of a front-end engineering design contract (“
FEED
Contract”) with Duro Felguera S.A of Spain
(“
DF”) for the second phase of early contractor
involvement (“
ECI”) for the engineering,
procurement and construction (“
EPC”) of
Sigma’s Grota do Cirilo lithium project in Brazil (the
“
Project”).
Sigma and DF have received a letter of intent
from the Spanish Export Credit Insurance Agency (CESCE) to provide
financing for up to 85% of the amount of the FEED Contract.
Primero Group of Australia
(“Primero”) will be the nominated engineering firm
in the Contract. DF and Primero are expected to undertake the work
between August 2020 and November 2020. Sigma is currently
mobilizing to site geotechnical drilling companies. Sigma
anticipates commencing construction of the Project in the fourth
quarter of 2020.
Early Contractor Involvement and EPC
Contract
The ECI Phase 2 – Front End Engineering Design:
DF and Primero will perform detailed engineering, enhancing and
improving the design and efficiencies in the processing plant,
thereby further reducing risk. DF and Primero will also perform all
of the work involved in completing the EPC contract, targeting an
improved EPC lump sum turnkey price for the construction.
DF offered Sigma its EPC services as a fully
integrated package, provided that the final lump sum turnkey price
is within the Multicurrency GMP, as defined below, and certain
technical and commercial parameters are met during the second
phase.
The ECI Phase 1 - Guaranteed Maximum Price: this
phase was successfully completed by DF and Primero, as announced on
June 15, 2020. DF provided a multicurrency guaranteed maximum price
for the EPC of the Project, on a lump sum turnkey basis, in the
combined amounts of US$ 23 million and R$ 182 million, totaling US$
58 million (at US$ 1.00 = R$ 5.20) (the “Multicurrency
GMP”).
The Multicurrency GMP 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 approximate 40% devaluation of the Brazilian Real since
then had the overall effect of decreasing the capital expenditures
of the Project, a material portion of which is expected to be
sourced domestically in Brazil and is, therefore, to be denominated
in Brazilian Reais.
A Summary of The ECI Approach:
- ECI Phase I – Guaranteed Maximum Price (Already Completed):
- Review and assimilate all of the existing design and data
- Stress test and optimize the design through reviews, specific
value engineering and trade-off studies
- Reconfirm quantities and pricing
- Initiate selected engineering deliverables to achieve nominally
25% engineering definition
- Formulate a Multicurrency GMP for the plant and associated
process supporting infrastructure
- Submit a proposal and schedule to progress to the next
phase
- ECI Phase II – Front End Engineering Design:
- Progress and finalize a selected set of engineering
deliverables to achieve nominally 30% engineering definition
- Advance long lead, critical equipment and site preparation
(civil works) packages to “Ready for Award” status
- Complete the contracting strategy for construction
- Optimize and reduce contingency applied to the Multicurrency
GMP in order to formulate a Lump Sum Turnkey
(“LSTK”) cost estimate for the EPC of the process
plant and associated process infrastructure
- Submit a complete and firm proposal with schedules to Sigma for
the EPC LSTK contract
- Finalize negotiation of the Terms and Conditions of the EPC
Contract
- Execution of the EPC LSTK Contract
Sigma’s Chief Executive Officer, Calvyn Gardner,
said: “We are extremely pleased to have Duro Felguera and Primero
as our EPC partners. The fixed price lump sum turnkey EPC Contract
will mitigate cost overrun risks for our Grota do Cirilo Project.
The combination of their significant experiences will help Sigma
manage construction risk at the Project: DF has a successful track
record of managing lump sum turnkey fixed price EPC contracts in
Brazil and globally. Primero will bring its vast experience in
building state of the art lithium processing plants in
Australia.” He added: “Duro Felguera also brings to the
Project the financial support of CESCE, the Spanish Export Credit
Agency, enabling the commencement of detailed engineering and EPC
work already in August”
ABOUT SIGMA LITHIUM
Sigma is a Canadian company producing
environmentally sustainable battery-grade lithium concentrate,
which it has done 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 timing for the
filing of the quarterly continuous disclosure documents 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 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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