Sigma Lithium Corp. (SGML), a leading global lithium producer dedicated to powering the next generation of electric vehicles, reported strong second-quarter earnings, highlighting significant growth and a commitment to operational excellence. The company exceeded expectations by increasing the volume of lithium sold, cutting costs ahead of schedule, and expanding its customer base.
During the second quarter, Sigma Lithium sold an impressive 52,572 tons of its high-quality Quintuple Zero Green Lithium (5.0 Green Lithium). This achievement was driven by two full shipments and an additional sale FOB (Free On Board) to Brazil Port totaling 17,270 tons at the end of the quarter. The company continues to execute its strategic plan, building upon a similar FOB Brazil Port sale agreement that resulted in the delivery of 8,700 tonnes in the first quarter.
Sigma Lithium’s unwavering commitment to operational efficiency is evident in the continuous enhancements to its flowsheet, designed to boost recoveries and increase production efficiency. These enhancements are already reflected in the company’s impressive production levels achieved in July and August. Revenue for the second quarter reached $45.9 million, demonstrating strong market demand for Sigma Lithium’s premium product.
Production of lithium concentrate in the second quarter totaled 49,389 tons, a slight decrease from the first quarter’s 54,168 tons. The decrease is primarily attributed to the replacement of a crusher module in June, which has since been rectified. Production has normalized and continues to rise in July and August. Looking ahead, Sigma Lithium anticipates producing approximately 60,000 tons of 5.0 Green Lithium in the third quarter.
Ana Cabral, Co-Chairperson and CEO of Sigma Lithium, highlighted the company’s focus on operational optimization in an earnings release. “Operationally, the company has invested in improving the throughput and recovery at our Greentech plant, which will bear fruit in the third quarter further increasing the efficiency of the operations,” said Cabral. “As a result, we are forecasting our 3Q sales to reach 60,000 tons, which will bring the extra benefit of a further decrease of our unit costs.”
Beyond its dedication to production optimization, Sigma Lithium celebrated its first full year of shipments at Grota do Cirilo during the quarter, achieving a steady cadence of 22,000 tons of shipments. Additionally, the company achieved a remarkable feat in employee safety, earning the second-highest operational employee safety index globally, reaching the high standards equivalent to second place in the International Council on Metals and Mining (ICMM) rankings.
In the second quarter, Sigma Lithium successfully diversified its customer base, engaging with new South Korean and Japanese industrial, trading, and battery manufacturing companies. These new partnerships are a testament to Sigma Lithium’s established track record of being a reliable supplier to the battery supply chain.
Sigma Lithium’s commitment to cost optimization has resulted in significant achievements. The company implemented several strategies that enabled it to meet its cost-cutting targets ahead of schedule and enhance margins. This includes internalizing additional logistics and commercial functions, leading to cost savings of about $20 per ton per shipment. The enhanced commercial capabilities allowed Sigma to capitalize on strong market opportunities as they arose throughout the quarter.
Sigma Lithium also benefited from various pricing mechanisms during the quarter. The company employed fixed prices, fixed floating ratios, and provisional price models in its negotiations, effectively securing favorable deals. Looking ahead, Sigma Lithium intends to maintain its flexible commercial strategy to maximize the value of its premium product.
Sigma Lithium’s concerted efforts in production optimization, customer diversification, and cost reduction have resulted in impressive financial outcomes. The company achieved the second-highest FOB (Free On Board) unit cash margins among lithium producers in the second quarter, reaching a remarkable 54%. Year-to-date, cash unit operating costs have decreased by 22%, allowing the company to reach its cost-cutting targets ahead of schedule. As of mid-August, Sigma had $99 million in cash reserves, demonstrating its strong financial position.
“This quarter, we achieved operational excellence on key fronts: Continuing to deliver the sales volume cadence of a seasoned producer, maintaining premiumization of our 5.0 Green Lithium while further diversifying our commercial relationships by selling to new geographies such as Japan and South Korea,” said Cabral. “We focused on increasing our robust cash margins, maintaining our draconian cost discipline culture, leading Sigma to achieve our 2024 cash cost guidance this quarter, ahead of schedule.”
Sigma Lithium’s strong second-quarter performance reinforces its position as a leading player in the rapidly growing lithium market. The company’s unwavering commitment to operational excellence, customer satisfaction, and sustainable practices positions it for continued success in meeting the global demand for battery-grade lithium.
