Sigma Lithium Corp (NASDAQ:SGML) Doubling Production Capacity

Sigma Lithium Corp (NASDAQ:SGML) stock rose 1.06% (As on April 2, 11:28:40 AM UTC-4, Source: Google Finance) after the company announced the Final Investment Decision to initiate construction of a second production line at its Greentech Industrial Plant, aiming to increase its annual lithium production capacity from 270,000 tonnes to 520,000 tonnes by 2025. The expansion, known as the Phase 2 Industrial Greentech Plant, comes with a capital expenditure of $100 million.

Construction activities for the Phase 2 Industrial Plant are set to begin this month, with the mobilization of approximately 200 workers and equipment for earthworks, foundation, and infrastructure. The commissioning of the plant is scheduled by the end of 2024, with the first production expected in the first quarter of 2025.

Sigma Lithium’s cash balance as of March 30, 2024, stood at $109.4 million, which is expected to cover the capital expenditure for the expansion, supplemented by unused trade finance lines and anticipated free cash flow. Additionally, a letter of intent from the Brazilian National Development Bank (BNDES) is expected to provide further financial flexibility later in the year.

In 2023, the company transitioned from a construction site to a major producer with a reported adjusted EBITDA of $49.1 million, representing a 36.4% margin. The fourth quarter saw $29 million in free cash flow generation, with cash operating costs averaging $549 per tonne FOB Vitoria. The company, which has completed its first operational year as the world’s 6th largest integrated producer of lithium concentrate, reported unaudited full-year 2023 revenues of $135.1 million, driven by the sale of over 102,500 tonnes of concentrate. The average realized price for concentrate sold in 2023 was $1,321 per tonne, with the fourth quarter average at $1,067 per tonne. As of March 30, 2024, the company had cash and cash equivalents of $109 million and $89 million in unutilized available liquidity through trade finance agreements. Capital expenditures stood at $6.5 million in the quarter, reflecting incremental investments made to Greentech Plant to boost efficiency.

Sigma Lithium’s expansion is anticipated to significantly contribute to the supply of lithium concentrate, critical for powering electric vehicles. The company has already secured environmental licensing for the Phase 2 Greentech Industrial Plant and has planned the procurement of critical long lead items to ensure manufacturing timetables.

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