SÃO PAULO - Sigma Lithium (TSXV:SGML) Corporation (NASDAQ: SGML, TSXV: SGML, BVMF: S2GM34) has announced the Final Investment Decision to initiate construction of a second production line at its Greentech Industrial Plant, aiming to increase its annual lithium production capacity from 270,000 tonnes to 520,000 tonnes by 2025. The expansion, known as the Phase 2 Industrial Greentech Plant, comes with a capital expenditure of $100 million.
The company, which has completed its first operational year as the world's 6th largest integrated producer of lithium concentrate, reported unaudited full-year 2023 revenues of $135.1 million. The average realized price for concentrate sold in 2023 was $1,321 per tonne, with the fourth quarter average at $1,067 per tonne.
Construction activities for the Phase 2 Industrial Plant are set to begin this month, with the mobilization of approximately 200 workers and equipment for earthworks, foundation, and infrastructure. The commissioning of the plant is scheduled by the end of 2024, with the first production expected in the first quarter of 2025.
Sigma Lithium's cash balance as of March 30, 2024, stood at $109.4 million, which is expected to cover the capital expenditure for the expansion, supplemented by unused trade finance lines and anticipated free cash flow. Additionally, a letter of intent from the Brazilian National Development Bank (BNDES) is expected to provide further financial flexibility later in the year.
In 2023, the company transitioned from a construction site to a major producer with a reported adjusted EBITDA of $49.1 million, representing a 36.4% margin. The fourth quarter saw $29 million in free cash flow generation, with cash operating costs averaging $549 per tonne FOB Vitoria.
Sigma Lithium's expansion is anticipated to significantly contribute to the supply of lithium concentrate, critical for powering electric vehicles. The company has already secured environmental licensing for the Phase 2 Industrial Plant and has planned the procurement of critical long lead items to ensure manufacturing timetables.
This news is based on a press release statement from Sigma Lithium.
InvestingPro Insights
Sigma Lithium Corporation (NASDAQ: SGML) has shown a remarkable gross profit margin of 64.59% in the last twelve months as of Q3 2023, according to recent data from InvestingPro. This impressive margin underlines the company's ability to manage its production costs effectively, which is crucial as it embarks on the expansion of its Greentech Industrial Plant. The expansion is expected to more than double its annual lithium production capacity, potentially enhancing Sigma Lithium's profitability in the long term.
While the company has been navigating through a period of high price volatility, with the stock price taking a significant hit over the last six months, showing a price total return of -60.05%, the short-term outlook appears more optimistic. InvestingPro Tips indicate a significant return over the last week, with a 9.37% increase in stock price, which may signal growing investor confidence as construction for the Phase 2 Industrial Plant kicks off.
Investors should note that Sigma Lithium operates with a moderate level of debt and its liquid assets exceed short-term obligations, providing a stable financial footing for the company's ambitious growth plans. However, analysts do not expect the company to be profitable this year, and the stock has been trading at a high revenue valuation multiple, which could suggest caution among value-focused investors.
For those interested in a deeper analysis, InvestingPro offers additional insights, including more InvestingPro Tips for Sigma Lithium, which can be accessed at Investing.com/pro/SGML. To get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24. There are currently 15 additional InvestingPro Tips listed for Sigma Lithium on InvestingPro, providing a comprehensive view of the company's financial health and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.