Sigma Lithium Q2 Results: Production Boosted, Customer Base Expanded, Guided Cost Structure Achieved Ahead Of Schedule

Sigma Lithium Corp. SGML, the global lithium producer dedicated to powering the next generation of electric vehicles, reported Q2 earnings, with an increase in the volume of lithium sold and cost cuts ahead of schedule. 

During the second quarter, Sigma Lithium sold 52,572 tons of its Quintuple Zero Green Lithium or 5.0 Green Lithium, with the company making two full shipments, with an additional sale FOB to Brazil Port totaling 17,270 tons at the end of the second quarter. The company continued a strategy initiated in the first quarter when it delivered 8,700 tonnes in a similar FOB Brazil Port sale agreement. Sigma Lithium has developed enhancements to the flowsheet to increase recoveries and operational efficiency, which is already reflected in production levels in July and August, the company said. Revenue in the second quarter came in at $45.9 million.

Boosting Production 

Lithium concentrate production in the second quarter totaled 49,389 tons, compared to 54,168 tons in the first quarter. The change is primarily related to the replacement of a crusher module which occurred in June. Production has since normalized and continued to increase in July and August, reported the company. For the third quarter, Sigma Lithium expects to produce roughly 60,000 tons of 5.0 Green Lithium.

"Operationally, the company has invested in improving the throughput and recovery at our Greentech plant, which will bear fruit in the third quarter further increasing the efficiency of the operations," said Ana Cabral, Co-Chairperson and CEO of Sigma Lithium, in an earnings release. "As a result, we are forecasting our 3Q sales to reach 60,000 tons, which will bring the extra benefit of a further decrease of our unit costs." 

The company also celebrated its first full year of shipments at Grota do Cirilo during the quarter, reaching a regular cadence of 22,000 tons of shipments. Sigma Lithium also says it delivered the second-highest operational employee safety index globally, achieving the high standards equivalent to the second place in ICMM rankings (International Council of Metals and Mining).

Diversifying And Cutting Costs 

Beyond improving production, Sigma Lithium diversified its customer base in the second quarter, engaging new South Korean and Japanese industrial, trading and battery manufacturing companies. The lithium producer credits the new customers to its established track record of being a reliable supplier to the battery supply chain.  

On the cost-cutting front, Sigma Lithium engaged in several strategies that enabled it to meet its targets ahead of schedule and boost margins. During the quarter, it internalized additional logistics and commercial functions, which resulted in cost savings of about $20 a ton per shipment. The enhanced commercial capabilities allowed Sigma to capture stronger market opportunities as they arose during the quarter. 

Sigma Lithium also benefited from a variety of pricing mechanisms during the quarter. It deployed fixed prices, fixed floating ratios and provisional price models in its negotiations which helped it close deals. Going forward, Sigma Lithium said it will continue to remain flexible with its commercial strategy to maximize the value of its premium product.

Margins Improving 

All those efforts resulted in what Sigma Lithium says is the second-highest FOB unit cash margins among lithium producers in the second quarter, at 54%. Year to date, cash unit operating costs have declined by 22%, enabling the company to reach its cost-cutting targets early. Sigma had $99 million in the bank as of the middle of August. 

"This quarter, we achieved operational excellence on key fronts: Continuing to deliver the sales volume cadence of a seasoned producer, maintaining premiumization of our 5.0 Green Lithium while further diversifying our commercial relationships by selling to new geographies such as Japan and South Korea," said Cabral. "We focused on increasing our robust cash margins, maintaining our draconian cost discipline culture, leading Sigma to achieve our 2024 cash cost guidance this quarter, ahead of schedule."

Featured photo by Vardan Papikyan on Unsplash.

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