Sigma Lithium updates Grota do Cirilo feasibility, creates US$1.6B after-tax NPV

Sigma Lithium (NASDAQ: SGML, TSXV: SGML) has released 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 US$1.6 billion (using a discount rate of 8%), potentially increasing to US$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 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% lithium oxide (mineral reserve grade) and Phase 1 plant DMS (dense medium separation) process recoveries of 60.4%.

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

 The study used an average life-of-mine lithium carbonate price of US$1,954 per tonne. All-in sustaining costs were projected at US$463 per tonne. 

The Phase 2 deposit has the potential for additional production of 220,000 tonnes per year or 33,000 tonnes lithium carbonate-equivalent (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 averaging 1.4% lithium oxide 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 resources to 58.9 million tonnes, including 50.4 million tonnes of measured and indicated resources at 1.4% 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 1.4% 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 prefeasibility study with combined Phase 1 and Phase 2 economics is expected in the second quarter of 2022.