Sigma Lithium updates Phase 1 FS, showing $1.6bn after-tax NPV for Brazil project

Sigma Lithium (NASDAQ: SGML, TSXV: SGML) has provided an updated Phase 1 feasibility study for its wholly owned Grota do Cirilo project in Minas Gerais, Brazil, host to the the largest lithium hard-rock deposit in the Americas.

The Phase 1 study reveals an after-tax net present value of $1.6 billion, potentially increasing to $1.9 billion, with an internal rate of return of 424%. The study assumes a base case scenario of 230,000 tonnes (34,000 tonnes lithium carbonate equivalent) of 6% lithium concentrate production per year for a period of eight years.

The updated economics demonstrate that Phase 1 is financially robust, even as a standalone
project and before factoring in a potential Phase 2 production expansion, Sigma said. The key factors influencing the study outcome include a high average mill feed grade of 1.55% Li₂O (mineral reserve grade) and Phase 1 plant DMS (dense medium separation) process recoveries of 60.4%.

The updated Phase 1 capex is $123.1 million, which is in line with expectations compared to the $113.6 million estimated in 2019. Sigma remains fully funded to finalize construction of commercial production plant.

The Phase 2 deposit has the potential for additional production of 220,000 tonnes per year (33,000 tonnes LCE), which is estimated to scale up the company’s total annual production to 450,000 tonnes per year (67,000 tonnes LCE) of battery-grade sustainable lithium.

The production expansion potential is based on an initial mineral reserve estimate of 21.8 million tonnes for the Phase 2 deposit and a 30% increase in the Phase 2 mineral resource, as well as additional DMS metallurgical test results that achieved lithium recoveries of approximately 60%.

In total, Sigma has increased its mineral resources to 58.9 million tonnes, including 50.4 million tonnes of measured and indicated resources at 1.40% lithium oxide. Total mineral reserves are estimated at 33.6 million tonnes, including 25.3 million tonnes of proven reserves at an average grade of 1.44% lithium oxide.

According to the company, Phase 2 construction of production plant foundation earth works could commence concurrent with the Phase 1 commissioning. An updated Phase 2 pre-feasibility study with combined Phase 1 and Phase 2 economics is expected in the second quarter of 2022.