Will Sigma Lithium Resources Corp (CVE: SGMA) have the greenest large-scale mining development project in the world?
It may be fair.
The Grota do Cirilo project in Brazil has several advantages. First of all, it is the largest hard rock lithium deposit in the Americas. Second, all mining and processing activities will use clean hydroelectric power. Third, 90% of the water used in the treatment plant will be recycled on the farm. Fourth, no hazardous chemicals are used to separate the lithium from the host rock. And fifth, if the current discussions are ultimately successful, a significant portion of the resulting dry residue from the pile will be recycled into the ceramics industry.
It’s not a bad start. But add to the equation that lithium itself plays a central role in the ongoing green revolution through its use in electric cars, and Sigma Lithium’s green credentials really stand out.
It is also good on the social level, in the medium term, he heads a development committee focused on attracting industries to their city that could, for example, recycle Sigma residues, ultimately making them “residue-free”. “. In the immediate term, it is helping the vulnerable community with activities that include donating tons of disinfectants and disinfectants to local hospitals, and continued distribution of thousands of food baskets to poor communities in the state of Minas Gerais, where Grota do Cirilo is located.
So how did the stars align so well in creating this project, and why isn’t the company consistently on everyone’s list of major lithium companies?
After all, when it does kick off, production in 2022 will catapult Sigma into the ranks of serious lithium players, and once a second phase of production kicks off, production will be on a scale similar to that of the famous billion dollar names. like SQM (NYSE: SQM) and Pilbara Minerals (ASX: PLS).
The answers are pretty straightforward.
First, it is a company that has been tightly owned since its inception, to the point where only around 43% of the shares float freely on the Venture Exchange. An impending move to a major US stock exchange is likely to increase visibility and revenue, but don’t hold your breath at this point for any further stock issuance – the company is already fully funded for production.
Nonetheless, the re-listing in the US is likely to coincide with the start of a significant revaluation of the company as execution risk decreases.
“We have been working on detailed engineering and pre-construction work to further increase the precision of construction investments,” says Ana Cabral-Gardner, Co-President and Chief Strategy Officer of Sigma. “The plan is to start production in the summer of 2022.”
It’s not very far now in terms of standard mining development timelines, and so it’s perhaps not surprising to learn that three of the top five lithium buyers in the world have already made deals with Sigma.
“We have pre-sold all of our phase one production,” says Cabral-Gardner. “And the market changed so much in 2021 that we could also have pre-sold all of our phase two production.”
Large buyers, she says, appreciate the continuity afforded by large-scale allowing them to project at least five years in advance to ensure long-term security of supply. In Sigma’s case, production is expected to last over twenty years or more, and plans are already in place to accelerate the initial production rate.
Phase Two will likely follow quickly from the start of Phase One, given the current heat in commodity markets. It will bring production from the initial rate of 220,000 tonnes of ore per year to 440,000 tonnes, or 65,000 tonnes of lithium carbonate equivalent.
So it’s greener than almost any other project, and the product has buyers. But what about the economy?
Here again, Sigma and Grota do Cirilo score well. The grades and purity are extremely good, which means that the yields per tonne of rock will be very favorable. Due to the high quality of the spodumene, it uses a simpler processing plant, and with hydropower, it means that the operating costs are reduced to a very low level. the world, with those big crystals of high purity spodumene.
This all adds up to a situation, she said, where Sigma “is in a unique position to become a core supplier to the global lithium market.”
Also keep in mind that the current production plans are only a fraction of the potential offered to Grota do Cirilo. The project includes nine formerly operated mines, of which only two will come into production in phases one and two. These two mines alone will bring Sigma to the level of SQM today. Thus, by gradually bringing others into service, the company has the flexibility to grow further and keep pace with demand for lithium, thus preserving its putative position as “new major”.
That’s why, says Cabral-Gardner, “Sigma is very relevant and very big. “
The green identifiers are in the bag. And as far as investors are concerned, the plan is “to be incredibly profitable with significant operating margins.”
In today’s complex mining and ESG environment, this looks like a rare win-win situation.