Sigma Lithium Corp (TSX-V:SGML, NASDAQ:SGML) told investors it achieved positive operating profit as it reported its first results since it started generating revenue, transitioning to a leading global lithium producer.
Announcing third-quarter results, the company said it generated revenue of US$96.9 million from the sale of 38,000 tonnes of its Triple Zero Green lithium concentrate and 16,500 tonnes of lithiated Green By-products, marking a major milestone in its journey to become one of the largest lithium ore producers globally.
Adjusted cash operating costs for the quarter amounted to $505 per tonne at the mine gate and $577/tonne FOB (free on board) at the port of Vitoria, excluding royalties.
The company noted that operating leverage in the quarter was impacted by the ramp process, particularly in July, when Greentech Plant throughput was minimal.
For October, the company's on-site operating cash costs per tonne were $425, while the FOB Vitoria cost was $485/tonne.
Adjusted underlying earnings (EBITDA) totaled US$54.6 million, for an adjusted EBITDA margin of 56%. It also achieved net income of $36.4 million and a net profit margin of 37%.
The company noted that its low cost of production due to operational efficiency and overall discipline helped drive significant financial margins and the ability to generate free cash flow.
"Looking ahead we expect to deliver increasing production volumes at a lower cost with a high standard of quality and purity,” Sigma Lithium co-chairperson and CEO Ana Cabral commented in a statement.
“Our cost and purity advantages, combined with our industry-leading sustainability practices, provide Sigma Lithium with a preferential position in the marketplace. We believe this gives us the flexibility to expand our production capacity regardless of evolving market conditions to more efficiently utilize our existing cost structure.”
The company said it continues to progress towards completing its Definitive Feasibility Study (DFS) and Final Investment Decision (FID) for its Phase 2 and 3 expansions.
The expansion would lift the Greentech Plant's nameplate throughput potential to 766,000 tonnes from the current level of 270,000 tonnes. It still expects 2023 production to approach 130,000 tonnes through the sale of Triple Zero Green Lithium and equivalent by-products.
“As production increases, so too should shareholder value as we continue our mission to sustainably power the next generation of electric vehicle batteries,” Cabral added.
Exploration update
Sigma Lithium also noted recent positive results from its Phase 4 exploration program that could significantly expand the Grota do Cirilo resource, saying the project’s mineral resource estimate could increase by 25%, potentially reaching 110 million tonnes.
The company is conducting exploration drilling at its mineral concessions, encompassing five former artisanal mines and 57 pegmatites, out of a total of 200 mapped within the company's mineral concessions.
The Accelerated Plan will include drilling exploratory core diamond drill holes into each of these targets.
Strategic review process
Under the final round of a strategic review process, the company said remaining interested parties have "agreed in principle" to preserve its environmental and social sustainability-centered business model in a potential strategic transaction.
It said a final decision on the strategic review is expected by the end of the year and that its board of directors is committed to maximizing value for shareholders, employees and communities of Sigma Brazil at Vale do Jequitinhonha through the review.
Sigma Lithium ended the quarter with US$28.2 million in cash and cash equivalents.
The company's TSX-V listed shares were up 9.3% at C$37.25 in late Wednesday morning trade. On Nasdaq, its stock gained 11.7% to $27.61.
~Updated with share price movement~
Contact the author at stephen.gunnion@proactiveinvestors.com