SGML

Sustainability and Safety Leadership

• 100% renewable energy use, no tailings dams, no drinking water use, no hazardous chemicals utilized
• Over 1,100 consecutive accident-free days, 0 TRIFR, and a top-tier global safety and environmental record
• Proactive rehabilitation of waste rock piles via artificial vegetation germination, meeting the highest G7 sustainability standards

Operational Execution and Efficiency

• Surpassed Q2 production guidance by 6%, delivering 35,400 tons of high-grade lithium oxide concentrate
• Completed the first stage of fleet upgrades, increasing haulage capacity by 40% year-to-date; second stage 98-ton excavators and 75-ton trucks will deploy in Q3 2026 to further boost productivity
• Redesigned the mining pit shell to unlock an 83% larger high-grade ore block (1.1 million tons of 1.4% grade fresh ore), enough to produce 200,000 additional tons of lithium oxide concentrate
• Achieved record production recovery rates at the cleantech processing plant, with full utilization of both main and reprocessing circuits now possible

• Full-year 2026 all-in sustaining cash cost guidance was lowered to $668 per ton, reflecting better-than-expected cost execution in Q2 2026
• 2027 full-year all-in cash cost guidance is maintained at $620 per ton as production volumes increase
• Production guidance for Plant 1 (including reprocessing circuits) remains 330,000 tons of high-grade lithium concentrate per year by the end of 2027, with the overall timeline pushed forward only 3 months
• Installed capacity will reach 580,000 tons per year by end-2027 after the completion of Plant 2; if both Plant 2 and Plant 3 are approved for simultaneous construction in January 2027, total installed capacity will reach 830,000 tons per year by end-2028 (otherwise sequential construction will still hit 830,000 tons by end-2028)
• 12-month forward production guidance for Plant 1 remains 240,000 tons of high-grade lithium concentrate per year

Sigma Lithium operates as a single-segment producer of lithium oxide concentrate, with no additional product segments broken out in the call. In Q2 2026, the company generated a record $55 million in net revenues, delivered 35,400 tons of lithium oxide concentrate (a 52% increase quarter-over-quarter), achieved a 60% gross margin, a record 47% EBITDA margin, and a 32% operating margin. Year-to-date (first half 2026) net revenues totaled $97 million, with $27 million in cash generated from operations. All-in sustaining cash costs for Q2 2026 were $668 per ton, plant gate costs were $401 per ton, CIF costs were $452 per ton, and realized net SC5 lithium price was $2,089 per ton.

• A temporary operational suspension related to negotiations with the state of Minas Gerais (stemming from what management calls false regulatory accusations) currently halts mining activities, and industrial processing was also paused during negotiations
• Negotiations for a mine restart are ongoing, with a best-case restart as early as the following week and a worst-case timeline of two additional weeks of suspension
• There is regulatory and reputational risk associated with the local inspection accusations, which management is seeking to fully clear via negotiation rather than a simple settlement
• The timing of capital deployment for Plant 2 and Plant 3 is contingent on market conditions and final approval, introducing minor timing uncertainty to the 2028 capacity expansion target

Q: What was Q2 2026 production split between high-grade and lower-grade/lithium byproducts? What would cash flow look like in Q3 if the mine remained halted, and what are the best/worst case timelines for restart and ramp-up?

A: All Q2 2026 sold production was high-grade concentrate, with the quarter's lower-grade output held to sell in Q3 for a clean earnings reporting period. Q3 will have at least ~$60 million in confirmed cash flow from delayed Q2 sales plus the held lower-grade material. The best-case restart timeline is the following week, the worst case is two additional weeks; negotiations are constructive and management is holding out for full clearance of false accusations rather than a quick settlement.

Q: How much of the offtake prepayments has Sigma received to date, what operations are suspended during the Minas Gerais negotiation, why was disclosure timely, and what is the status of lower-grade/midling sales?

A: To date, $60 million of the $96 million 70,500 ton offtake prepayment has been received; proceeds from the second offtake (once increased and finalized) will be 100% used to repay remaining debt, likely by the end of Q3. Management issued an immediate press release when the suspension notification was received; the suspension initially paused both mining and processing, and operations will restart once a final agreement is reached. Lower-grade material is being processed and shipped during the suspension, sold via competitive spot bidding rather than long-term offtake, with current healthy bids for 300,000 tons of high-purity lithium fines at $65 per ton.

Q: Is the adjusted timeline for Phase 2 and 3 plant construction driven by mining plan changes or funding considerations?

A: The minor 3-month timeline shift is not driven by negative changes; instead, optimization work on the existing Plant 1 reprocessing circuit confirmed that the existing single plant can reach 330,000 tons per year of capacity with a full supply of fresh ore, a level that was demonstrated in Q2's 35,400 ton quarterly production. Delays to reaching full fresh ore output stemmed from prior issues with a former mining contractor, which have been fully resolved via in-house (primarized) mine operations.