Sigma Lithium Corp. Q1 FY2025 earnings call

• Strategic Positioning: Sigma is strategically well-positioned in Brazil with an established industrial and mining jurisdiction, producing lithium oxide concentrate with higher margins. - Operational Efficiency: Delivered 68,300 tons of production, outperforming 2025 all-in sustaining cost targets by 6% at $622 per ton. Achieved over 700 days with zero accidents with lost time. - Production and Costs: EBITDA increased 3.5 times year-over-year while sales were up 17%, demonstrating cost efficiency. All-in sustaining costs decreased by 20% year-over-year. - Expansion Progress: Completed approximately 32% of construction on the second industrial processing plant, funded by a subsidized BNDES loan with a 16-year term and low interest rate. The closed water circuit from the Jequitinhonha River is a key component of the plant's infrastructure.

Sigma Lithium reported $48 million in revenue for the first quarter of 2025, representing a 28% year-over-year increase due to higher sales volumes. Cost of sales was $34 million, resulting in a cash gross margin of 35%. EBITDA for the quarter was $10 million, and adjusted EBITDA (excluding non-cash stock-based compensation) reached $11 million. The company also reported a net income of nearly $5 million or $0.04 per share. The cash position at the end of the quarter was $31 million.

• Expansion: Continues construction of the second plant, with plans to utilize cost-effective infrastructure. Anticipates further reduction in interest cost per ton as production scales up. - Offtake Flexibility: 100% of production is uncommitted, providing flexibility to sign offtake agreements with prepayment structures. Can sign offtake agreements for up to three offtakes at current market prices while still having 30,000 tons of production remaining. - Cost Reduction: Expect to further lower costs through economies of scale, including reducing SG&A and interest expenses as production increases.

• Market Volatility: Dependence on lithium market price cycles could impact financial performance. - Construction Delays: Delays in the construction of the second plant could affect production timelines and cash flow. - Regulatory Changes: Changes in regulatory environments in Brazil could impact operational costs and permits.

Q: Was there a conscious decision to produce 5.0% spodumene concentrate this quarter, and what are market assumptions?

A: Ana Cabral stated it was a conscious decision to adjust grades to match spot market demand, as higher grades aren't properly rewarded in the lithium market. The company can adjust grades due to a recycling circuit that increases mass exponentially, lowering costs.

Q: When planning to draw on the BNDES loan and what's the financial plan?

A: Reimbursements to BNDES have been submitted, but disbursement is pending. Short-term debt is repaid using cash generation, with decisions based on quarterly cash availability and lithium market prices. The company has flexibility to use uncommitted production for offtake agreements for liability management.

Q: Target percentage of production for offtakes and typical duration?

A: There's flexibility in offtake agreements, with typical durations of at least three years. Agreements are negotiated individually based on conditions, and offtakes can help with liability management by providing lower interest rates compared to current debt.