Sigma Lithium Corp (TSX-V:SGML, NASDAQ:SGML) has hailed positive results from a study that looked at potentially tripling the production of battery-grade sustainable lithium concentrate from its Grota do Cirilo project currently being built in Brazill.
The study results came as the company also revealed it has struck a deal for up to US$100 million of pre-export debt financing.
The expansion study envisages a production increase of lithium concentrate at the project from 270,000 tonnes per annum (tpa) - 36,700 tpa LCE - beginning in 2023 to 768,000 tpa - 104,200 tpa LCE - in the second year.
The expansion triples the combined project's after-tax net present value to US$15.3 billion, which includes output from phase 1, which is nearing commissioning initiation, combined with the phase 2 and phase 3 mines.
The after-tax internal rate of return (IRR) of the combined project was pegged at 1,273%, the average annual revenue was put at US$2.5 billion, and the operating life at 13 years.
READ: Sigma Lithium making significant progress in construction of Greentech plant at Groto do Cirilo
"With Phase 1 rapidly progressing towards production in the near term, we are delighted to share the outstanding achievements of our team towards increasing near-term production of Battery Grade Sustainable Lithium on two critical fronts: completion of technical studies for project expansion and debt financing," said Ana Cabral-Gardner, the co-CEO and co-chairperson of Sigma Lithium, in a statement.
"More importantly, we shall be able to remain at the low end of the cost curve," she added.
The debt financing will fully fund Sigma until August 2023, which includes starting detailed engineering and commencing construction of the project expansion, noted the company in a wide-ranging update. Sigma also revealed that the initial drawdown of US$60 million under the debt financing was expected to close this year.
The financing is by way of a multi-draw term loan and contemplates a 48-month maturity date and a borrowing rate of 12-month Bloomberg Short-Term Bank Yield Index (BSBY) plus 6.95% a year, which may be increased by an additional 3.5% a year to the extent that there is a delay in the satisfaction of certain conditions subsequent, it added.
The total capex for the project expansion in the study was estimated at US$155 million and could be fully funded using a portion of the US$100 million debt financing agreed with Synergy Capital, one of the company's current shareholders, and after-tax free cash flow once production starts in early 2023.
Sigma also highlighted an increase to the proven and probable mineral reserves at the project by 63% to 54.8 million tonnes (Mt) of lithium spodumene, while maintaining high-grade at 1.44% lithium oxide.
The total project measured and indicated (M&I) mineral resources (inclusive of reserves) increased to 77 Mt grading 1.43% lithium oxide and 12.1 Mt of inferred mineral resources grading 1.45% lithium oxide.
Sigma Lithium is a Canadian company focused on powering the next generation of electric vehicle (EV) batteries with environmentally sustainable and high-purity lithium. Its wholly-owned Grota do Cirilo project in Brazil is currently in construction.
It includes a state-of-the-art, green-tech processing plant that uses 100% renewable energy, 100% recycled water and 100% dry-stack tailings. The project also represents one of the largest and highest-grade hard rock lithium spodumene deposits in the Americas.
Contact the writer at giles@proactiveinvestors.com