Sigma Lithium’s Ana Cabral is our Mining Person of the Year

Sigma Lithium‘s (TSXV: SGML; NASDAQ: SGML) advance from IPO in 2018 to first production at its Grota do Cirilo mine in Brazil this year has been impressive — as reflected in the tripling of its share price since January 2022, as well as takeover rumours earlier this year (involving Tesla, no less). 

The now $5.3-billion market cap company expects to churn out 130,000 tonnes spodumene concentrate this year for a hungry lithium market, and near-term expansion plans to triple production. But to get here, it’s had to consistently deliver on its promises, not an easy thing to do in a nascent and volatile market.  

That’s why Sigma Lithium CEO and co-founder Ana Cabral is The Northern Miner’s Mining Person of the Year for 2022. (Our announcement for the award has been timed to coincide with our first monthly issue of TNM dated October 2023 and our Canadian Mining Symposium in London, U.K.)

Cabral, a Brazilian with a 20-year plus background as a senior banker, including as a managing director and head of Latin American Capital Markets at Goldman Sachs, has been central to Sigma’s success, shepherding the company to its newfound status as one of the biggest hard rock producers in the Americas. 

When the US$130-million initial mine in Minas Gerais state reaches full production this year, an annualized 270,000 tonnes spodumene concentrate at 5.5% lithium oxide (Li₂O), it will be the largest hard rock spodumene producer outside of Australia. And, if it goes ahead with planned phase 2 and 3 expansions — an announcement was expected at press time in late September — Grota do Cirilo would become a top five producer as soon as 2025, scaling up to 104,000 tonnes lithium carbonate equivalent (LCE) annually over a 13-year mine life from 37,000 tonnes LCE this year.  

‘Obsession with discipline’ 

Influenced by her time in banking, Cabral has sought to run Sigma with the collaborative spirit — and generous employee stock option plans — of a tech company. 
The ownership mentality that comes along with that has been key to the company’s quick progress, she says. It’s also helped the team maintain an unrelenting focus on execution that has allowed Sigma to navigate some choppy waters.  

For instance, after Sigma went public in 2018, a downdraft in lithium prices pulled them down to lows of around US$5,000 per tonne in 2020. (At press time prices were hovering below US$27,000 after soaring above US$70,000 per tonne last year.)  

Sigma succeeded over that period – which Cabral calls “the worst bear market in lithium,” by simply doing what it said it would do. 

“We brought this obsession with discipline, which we saw sometimes lacked in the sector,” she said. “We didn’t have the luxury that Australian and Canadian companies do, we were a Brazilian company and so we never thought of the capital markets being open as a given. The given was there won’t be open capital markets — so we need to rely on our own private ability to fund this, and on achieving the next milestone to actually go back for more funding.” 

Those milestones included starting up a pilot plant and filing an initial resource in 2018; tripling the resource, delivering a feasibility study for first phase production and getting environmental permits in 2019; and raising US$10 million in equity and announcing a US$60 million debt offering in 2020. 

That set the stage for a listing on the NASDAQ in 2021, two more equity offerings of $178.7 million (the second upsized three times), and at the end of the year, the start of construction. The company completed a US$100-million financing in 2022 and completed a phase 2/3 production expansion study that pegged capex at US$155 million to boost production to 104,200 tonnes LCE annually. 

The company shipped its first concentrate in July this year. 

Cabral has also embedded ESG as a core part of Sigma’s identity. Far from green hushing — where companies avoid drawing attention to their sustainability initiatives and accomplishments for fear of blowback — Sigma puts its green credentials up front, labelling its spodumene concentrate “green lithium” for achieving net zero carbon, 100% recycling of water and no tailings pond (the company produces dry stack tailings with a portion sold as a 1.3% lithium oxide byproduct). It also opted for processing via dense media separation (DMS) alone, avoiding the increased capex, complexity and use of sulphuric acid that would have come with a flotation plant, while still achieving recoveries of over 60%. 

2012 purchase 

Cabral, a math whiz from a young age whose father was a metallurgical engineer in Brazil’s navy and whose mother was a microbiologist with Johnston & Johnston, studied economics before earning her MBA from Columbia Business School and a masters in finance degree from London Business School. 

Her experience with the natural resources sector began when as an associate in New York she volunteered to work on the privatization of Vale (NYSE: VALE) in the 1990s — at the time a Brazil state-owned company. She later also worked on Vale’s acquisition of Inco in 2006, in addition to an estimated 150 other transactions. 

Sigma’s story began just over a decade ago, when Cabral purchased a majority interest in the asset that’s now known as Grota do Cirilo from the Brazilian family that held it in 2012. 

It was actually Sigma’s former co-CEO and co-founder, Calvyn Gardner that originally flagged the project, and Cabral who purchased a majority interest with her own funds from a Brazilian family that held it in 2012. 

Until earlier this year, Cabral (formerly Cabral-Gardner) shared co-CEO duties with Gardner, a former Anglo American executive and cofounder of mining-focused private equity firm Hardac Investments. Formerly a couple, the two split in 2020, but kept running the company together. 

“He was there on site doing technical work and early development and then I was running just about everything else — from institutional relations to finance to law to environmental, social, the whole lot — and keeping a close eye on timetables and schedule.” 

In return for running the exploration program from 2012 to 2016, Gardner earned a minority stake in the original Sigma as a free carry interest. 

But by 2016, Sigma was running out of money, and in the wake of the Mariana tailings dam collapse in late 2015, prospects for financing were scarce. In 2017, Sao Paulo-based A10 Investimentos, a private equity firm Cabral co-founded in 2013, invested to keep the company going. A10 remains the controlling shareholder of Sigma, holding 43.6% of the company. 

Whereas most private equity firms in mining provide cash, advice and other resources to mining companies, A10 got involved as investor-operators. (A10 cofounder Marcelo Paiva is the company’s co-chair with Cabral.) 

The Sigma concessions had a long, 30-year history of producing tin, tantalum and lithium. However, 10 years ago, the deposits were thought to be small scale. 

“We took a huge amount of risk. So much risk that when we went to the geological service in the country, nothing was mapped out,” Cabral said. “We were told there’s no lithium in Brazil. Don’t bother. The lithium is in Bolivia, Chile, Argentina.” 

Since 2017, Sigma’s drilled over 120,000 metres, proving that assessment wrong. Its first phase operations have a measured and indicated resource of 17.4 million tonnes grading 1.55% Li₂O for 667,000 tonnes LCE. Global resources, including Phase 2 and 3, are pegged at 85.6 million tonnes averaging 1.43% Li₂O, with an initial phase 4 resource estimate due out in September. The deposit is now one of the largest hard rock deposits in the Americas.  

The initial phase of the mine has a relatively short mine life of eight years. However, even on its own, it’s expected to be quite profitable. According to an updated feasibility-level economic analysis published this year, it has an after-tax net present value of US$5.6 billion (using a discount rate of 8%), with an internal rate of return of 1,282%. Including the phase 2 and 3 expansions, the project has a 13-year mine life and an NPV of US$15 billion.

Sigma expects to recognize revenue and report positive operating profits in the third quarter. 

Legal action 

Along with Sigma’s success, however, has come some setbacks. In August, the company filed a lawsuit in New York district court against Cabral’s former co-CEO and husband, Calvyn Gardner, as well as his daughter-in-law. 

The suit alleges confidential documents were accessed from a data room with the intent of scuppering M&A talks with potential buyers, Reuters reported. Sigma’s seeking the return of the documents and unspecified damages. 

Cabral says she can’t comment on the legal action. 

However, the lawsuit apparently hasn’t deterred Sigma’s suitors. In September, Sigma publicly addressed the takeover talk, which began earlier this year with rumours that Tesla was pursuing the company. 

In a statement in September, the company said it had been approached by companies in the energy, battery, auto and lithium refining sectors with different types of strategic proposals and that it continues to engage with them, although no deal is assured. 

Cabral said Sigma is “humbled and pleased” by the strong strategic interest in the businesses, and just a few days later Sigma announced a new sales agreement with Glencore. 

Even so, Cabral describes the ride to get the company to this point as “brutal.” 

“Sigma is a company whose time has finally come,” she said. “We have the product for the ages, but we’ve been at it for 10 years and it was really, really hard — blood, sweat and tears.”