Sigma Lithium Corp (SGML)

[TradingCharts]

Sigma Lithium said Monday, April 10, that it received an operating license from Brazilian regulators to sell and export lithium and that its metal production for electric vehicle batteries should begin within days.

The approval for Sigma to operate its Grota do Cirilo hard rock lithium mine and processing equipment was confirmed by the State Secretariat for Environment and Development (SEMAD), the environmental regulator of the Brazilian state of Minas Gerais.

The Vancouver-based company should be producing "in a few days" and shipping lithium "in a few weeks," Ana Cabral-Gardner, Sigma's chief executive, told Reuters.

U.S.-listed Sigma shares closed slightly higher on Monday after the news, having fallen more than 4% earlier in the day.

Rumors have surfaced in recent months that Tesla or Chinese lithium rival Ganfeng Lithium Group could bid on Sigma. Cabral-Gardner declined to comment when asked if Sigma is in any acquisition discussions. "I'm focused on what I can control, which is bringing this company into production," said Cabral-Gardner, who is also managing partner of A10 Investimentos, which owns 45% of Sigma's shares.

Production is expected to increase slowly in the coming months and reach an annual production rate of 270,000 tonnes of spodumene concentrate in July.

In 2021, Sigma agreed to supply at least 60,000 tonnes to LG Energy Solution starting this year. The remaining production is expected to be sold in the spot market to customers who will likely process the metal in China, and Sigma is currently "determining which customer will receive the first shipment," Cabral-Gardner said.

Because lithium demand is low in Brazil, focused on biofuels, Cabral-Gardner said Sigma's project is "geared towards enabling energy transition in the northern hemisphere."

Sigma has projected that the mine will achieve an annual free cash flow of US$455 million for its first phase of production.

Seven analysts recommend buying Sigma shares and believe it should trade 69% higher than current levels.
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