Q1 2023 Sigma Lithium Corporation Earnings Call
Credibly cash accretive exercise, producing and Sallie Mae product byproduct.
Therefore, you can see the the the analysis that's being conducted in the context of detail engineering about two more lines trains, perhaps stream more line trains where can you put that in light of the elevation of the terrain you can see the ROM pad here. So that's the elevated portion. So we can probably we can.
Build them in perpendicular to the current circuit most.
Most likely that will be the case, because we have a bigger area there with the right elevation or the wrong pet. So these are the conversations and the analysis that are taking place right now they are being led by our chief operating officers, which as you can see it.
It's been incredibly busy so here is the.
The view of it right. So this is the other aspect of O'brien's thinking Brian Talbot stay is looking into BD, how do we how do we think about elevation area. So that we can actually throw in two line trains and then a.
A third more once we once we build those two or.
Or build them to now and then a third immediately thereafter and again the demand for the product has proven to be.
Fully supportive of us putting in that throughput again triple zero Ultra high quality. The pairing of this should correct risk characteristics in the market is.
This unique we're the only ones that.
Basically so this is a visual.
And you can see here, where my Arrow is I'm not sure. If you can see that this is faster. So this is also what our environmental team loves to see in other words, we'll jump over this area here because he's got vegetation, we don't like to cut vegetation unless it's on the Pip, we typically don't do it so.
So we will go straight into what we call and trough the size vegetation area, where theres no trees to cut so pasture areas and we will build our three line trains there in a very bad you can see this was already a patio for truck maintenance for the mine. So it's actually an area that's already has industrial capabilities.
Our gas station they already had our industrial setup. There. So this is an area that's been considered for expansion so we'd probably do perpendicular.
And here is a bit more of that timetable. So I think what matters here is we're doing all these trade offs now right. So two lines three lines, how do we go about this construction.
We've been deploying cash we've been deploying.
Cost for just construction detailed engineering.
And others.
F E L III detailed engineering pool Blue that's costly.
So we're very very well.
We're able to cover that with our with a shareholder loan received and we're able to cover that with our own cash flow generation. So you know we're about to continue to generate a significant amount of cash going forward. So the plan here is to.
Expected here, we ordering long lead items in the fourth quarter once we get our arms around two plants to replace this is an eight month built so it's actually quite fast now that we're pretty done with all the infrastructure, including the substation. So it's going to be a different building phase one where we have to prepare the site and prepare everything so we're just literally going to be.
Boy three line train and that's the plan here.
Essentially.
We're expecting to initiate.
Production and delivery.
Expected to initiate the commissioning of this planting September off next year, and we expect to start receiving equipment at the beginning of the summer June July so, it's all sort of going according to plan.
There is further growth birder additional growth more and more and more as you can see just to recap we got nine former lithium minds. This is one of the richest lithium properties in the Zika chewing up valley to lithium valley in Brazil, We started with good also to see dealer, which names our studies.
Because it was where there were more form of buy and more large segment type formations. As you can see tusa, which is phase one is pit to the north at the bottom we have phase two it's all interconnected. So when you can see there's just there's a string of ore bodies embedding metallics.
They are not linked necessarily to each other but they are.
Joining or there they are a jason like they're just very close by to each other so here we have.
Page three start here, we have phase three and then we have <unk>.
They're all body between phase III and what we called Phase five which is called <unk> and then we have Lambda which is in our current.
Mineral resource is being drilled to the level of its potential now and then we have Moody's which is being drilled and so all of this a joining so we're basically planning to publish.
Two two to publicize that when we actually concrete finalized our thoughts around a four line trains. So this would be the and again the Fort line. Trey is irrespective of phase four it's very important to say that the Fort line train is how we are going to contribute to deliver.
<unk>.
The lithium.
That will actually support this very rapid pace of growth of electric vehicle demand in the western markets.
As a result of this incentive plans. So now in addition to China, which was the only market now.
Europe going full speed and then the U S. In March as the fastest growing EV market as a result of present violence Green Plaid. So now we have three markets to support as an industry and here's our contribution we're going to put a fort line train to actually deliver more material in the market and again, we'll see.
Later for us the lithium prices are secondary consideration to demand right.
In terms of making decisions around construction and throughput because we are the lowest cost producers. So we don't depend on prices to do anything here.
Lastly, I think I'll go in.
One of the key sources of Pride for this company.
In addition to the technical prowess of our incredible incredible technical change I mean, we are delivering on every front on every promise in terms of lifting this community with us. So we are enjoying shareholders all of us are enjoining enjoying the prosperity of the lithium.
But the communities are enjoying it.
So we are renovating the schools.
The cost per school, we did this as a test pilot school is $70000 per school, we're probably going to be doing 10 of those schools next year.
Got.
It's a whole new ballgame for that school this used to be a rural school with two classrooms, where children from three to scan cramp up into classrooms. It was a source of shame for all of US Brazilians to have next door schools like that where kids have.
They're learning capabilities significantly hindered by the facilities. So what are we doing is building down rubber facilities with libraries with classrooms with more classrooms.
We're putting a bridge to improve accessibility of the AR.
The rural communities.
Around it to get to the school to get to the actual so we're planning to make this the model for a pilot with not.
Not just the facility installation in the facility, but also a robust after school program because a lot of parents on that community, which is the committed if that's right up right.
Right in the middle of our areas.
Work at Sigma the women, who work at Sigma lots of women working at Sigma. So we're putting an after school program as well. So again, it's a pilot program from an academic standpoint is a pilot program from an installation standpoint in terms of doing fast building fast building cheap which is the same mindset. We have for everything we do so we're probably gonna be doing panels.
Which is again, a first in terms of speed and.
Hansen of the program right.
So financial numbers, where are we well, we're well on our way right. We're joining the ranks of the Super majors as you can see we.
We have the mineral resource and the ore bodies to support it now we can say we have an amazing sustainable plants to support it. We're the only company doing triple zero lithium zero carbon zero chemicals and zero daily. So we believe that now again, we have there.
Right circuits to grow which means we're going to grow without leaving a legacy of the environment and that's how the clients downstream automakers battery makers.
So that gave us this enormous competitive advantage as far as this material was concerned because of the sustainable way to grow and to cater to this industry, which is building the green car. So it's green lithium for green cars.
We're planning to put our two more aligned trains so we're getting to.
The full 37000 ton LTE annualized capacity, which is the 270000 ton of lithium concentrate and then we're going to get with two more lines trains to we expect to get to a 100000 tons of LTE, which is approximately 760000 tons.
Of concentrates.
And then we are tinkering with the idea of a fourth line again to be supported by our 53 million tons of reserve because of the current moment in time off the industry pay back for align train here is you know in months. So two months, two and a half months, depending on the price of the mature.
So very short very efficient so why not and then you can see also that theres a disconnect I mean, as we are able to establish the cadence we are hoping to be rewarded by all of you.
With that with the producer with a producer.
Mission given that we're just coming out of ramp up and we're gonna be start shipping this with a cadence and we're moving into the producer universe, where we are set to enjoy producer valuations right. Here is why prices matter very little for Sigma because we are one of them.
Lowest cost producers in the world and more importantly, as we sell our byproduct our cost becomes.
Now diving a.
The current portion of our cash cost is actually cover by the sale of byproduct I mean, we're achieving 350 to $400 a ton for this material and just as a refresh our cash cost is 290 as per feasibility.
And the all in sustaining cost was 530 expert visibility obviously the numbers.
The ramp up will be different will show that in next quarter, but essentially that is not the focus the focus is what happens to demand because we can deliver the low cost high quality people green lithium in any market in any point of the cycle and we have this built built in competitive advantage of.
Inability.
We're just putting scenarios with different prices, but you can throw in the prices. So we did per unit and we did.
<unk> using the three combined phases.
This is just an illustration to the chart on the right. The most important which shows in the red the forecast of prices and if you go all the way down even a $2000 a ton of material you'll see the difference between that and the cash flow. So we enjoying robust cash flows no matter what basically.
And that's the beauty of being the low cost producers.
Keeping the process in dense media separation was a key element to that our processing cost is our greatest competitive advantage mining costs are kind of similar but processing costs are the difference are processing costs are significantly lower than our peers just to illustrate.
Rates on electricity alone, we paid two cents of a dollar per kilowatt hour of green renewable.
Renewable power so that alone is a fraction of a.
Renewable power or any power dirty power clean power anywhere in the world.
And here is.
An important point I mean, there's a disconnect.
We are now Ernie credibility into building closing the gap towards closing the disconnect.
As you can see as we get to 270000 tonnes.
We are going to have reached the 37, which is the the colored yellow ball and we're moving steadily as rebuilding phases, two and three into the expansion and then perhaps they score we're going to hit 104.
1000 tonnes of LTE, which is again in line with our three peers. So.
It's pretty clear where we're going.
We get to our.
As we move through our construction, but what's most important here is that we have a very innovative circuit that we'd been calibrating adjusting perfecting E.
As far as the innovation, which is the dry stacking and even during the dense media separation process.
Our Chief operating officer has been Brian has been perfecting a number of aspects on their circuits. So now we have a tailor made sustainable circuit, that's just essentially.
No.
A replicable unit for our neurology again every mineralogy is different our mineralogy of course Crystal is X ray cause is the combination of the quality of the material. Although we have large crystal mineralization, which lends itself to this Dennis.
Meter separation process extremely well and the perfection of the circuit, which is dry stacking even ultra fine right.
Here is more numbers the busy page, but I just want to leave you with the main message, which is the face for fourth line trained which was initially planned to the back we're now probably putting it at the front because it is at the front of the life of the project, where we have the biggest pressure from our clients on the mountain we're living through food.
Ramp up of EV demand by consumers.
And not.
Not all of the projects that were promised has to come on stream have come on stream. So the producers in that Sigma included the producers are doing everything they can to basically cater to this industry given that.
The the commissioning and the ramping up of the new projects, it's slowly slower than everyone thinks is delayed so we're basically trying to fill that gap with as much material as it can possibly can sustainable material add that and as you can see.
Using the price assumptions that we had in the study originally which we will adjust the payback was one month.
So I mean really right. So now what we're basically going to do we are going to just the prices, but what you will do well at bratsk cutting half. So we're talking $2000 payback will be like two months. So it is a discussion that the irrespective of pricing. That's what we're trying to show you here is the low cost producer.
Taylor a byproduct.
I mean for us putting more mature in the market. It's just a matter of is there a demand out there for this material and the answer is a resounding yes right.
And so here is the clothing I mean, we delivered on every every front. There's a degree of consistency here and focus that that's really unmatched I mean, we run this business like a technology company. It's very it's very taxing on all of US executives I mean, we feel the pressure we feel the daily pressure, but it's just a.
System delivery of milestone I mean, this being an industrial operation you can only imagine how taxing it is on people. So that's why we're constantly building up our human capital raise we're constantly building our our team we're bringing in more and more incredible people like the two gentlemen that just.
Now, leading together financial officer, how filing Kyle Hi Fi, Okay from a long integer.
Tradition of companies operating in Brazil, lifting in the United States.
Including <unk>, which is a known steelmaker here has been listed in the U S. For almost 25 years, then Rafael comes from Cargill, Who's going to lead the controls area fish Chief control Officer, leading Sox implementation improving internal controls. So cargo was a north American company TUSK.
<unk> co.
Commodities businesses, so again top team and again, we delivered on everything from lastly, you know first shipment zero carbon dry stacking zero dailies got rid of the tailing selling byproducts I mean, the law right. So what's next well up complete ramping up this plant so when we get to a nameplate.
Today, we will be hitting.
Now we're going on to 10 days of that but we're going to probably hit that in the third quarter consistently and then steadily up and second shipment third shipment for shipment and then we've done and then it's on two phases, two and phases Street, though here is Q&A, so I'll stop Sherry.
And we go straight to Q&A.
So another.
Another question.
So can we talk about the decision to use our trucks.
Trucks versus a heavier mining equipment for pit work in Holly or should we assume higher maintenance downtime from OPEC.
Is it worth it she specifications if you don't get compensated for that with a product priced well look.
The cost of mining here is negligible compared to the overall cost I mean, if you could keep $2 a ton to mind is and you saw the slides. So it's an important point here, we're talking about negligible cost elements negligible $2 a ton the product is three.
<unk> $3500 a ton final even with the bear market projections 2000 dollar a ton product. So it's important to understand that mining is a feedstock to the industrial operation and where do we really manage for in the industrial operation.
Processing costs are the key by choosing dense media separation, we put ourselves way out there are way ahead in terms of advancing.
In terms of advancing just keeping those costs low because this meter separation is a relatively simple simpler processes and flotation and therefore inherently intrinsically he has lower cost.
As a result, when you compare mining with plant I mean, the decision to add trucks with a social decision and you can see how bad the social license of the industry in Brazil is and how much resistance, even stigma encountered the perfect company environmentally and socially as it initiated op.
<unk> what was the resistance.
We never had the benefit of the doubt. It's here. It is in Brazil, you started mining operation you presumed guilty and we proved everyone wrong within two months of operation, but you know it was tough going so what will win what we had going for us.
Significant number of members of the community that were employed by the company also well fewer trucks more people and easier to redeploy.
Are the drivers that were driving trucks another applications towards driving off bit trucks. This is key to understanding our unique incredible social license with this community with the Lincoln Valley region with the country with federal with stake I mean, we'd become an engine.
Awesome.
Positive change as a force for good and that is connected to this decision. So.
Answering your questions. It is well worth it is well worth it and I'm just talking about the social now I'm going to get to the environmental Biofuels. The smaller trucks are made for Biofuels. So we are 15% we could easily get to 50 with.
With zero carbon anyway, now so that this is done but.
The main consideration here was social because instead of using 100 ton trucks, we're using 40 ton trucks, we employ more.
More people number one and that means the members of the community around us are employed there.
The mine is the largest employer.
95% of the person now into my if from the past born and bred race from there 95. These are astounding numbers. How did we do this we brought these people back we brought the community back we train them, we were able to quickly read.
Employ their skill set towards driving.
Trucks on picks.
Basically.
Somebody wants to see the head grade concentrate grade mining cost progression slides again will put us on the puts us on this on the on the on the on the website. So essentially what we've done as you can see.
Let me just go back to this if I can do that.
If I can keep on sharing this.
Okay here, we go just to the question.
So just to see the consistency right here it is.
You too.
Okay concentrates and had great. So you can see us concentrate I mean, basically we need to we struggled to bring it down to two five and a half said, though it is sort of this plant is left to its own devices will be doing six 4% material, though now so we basically have two tone it down in terms of just the sort of adjusted down.
255%, because obviously the spec be five 5% a pricing formula contracts being set five 5%, we want to deliver market spec peers, delivering below so where delivery market spec, but if we lap the plant on the east you'll be doing 63646 point plus material.
So again this is obviously a function of the quality of what we got in the quality of the process. So it's the combination the process preserves the integrity of the of the particle size. So the product becomes the.
The product becomes.
Are more valuable because it's large particle six and a half millimetres and therefore and therefore it is it is it is more efficient it's about 30% more efficient downstream than our competitors because peer.
<unk> and particle size, especially the first phase of chemical refining so the other mining.
Otherwise you would like to see us mining cost progression you can clearly see here Oh here. It is here's the consistent theme it kind of goes back to answering the previous question I mean, it's counterintuitive and I completely understand your question. It is counterintuitive, but remember.
This is kind of what my job here is to show how counterintuitive. This is mining isn't the focus the focus is the plant right and there's been incredible consistency on a.
Achieving the the visibility level.
Our mining costs right, so and so that's kind of what gave us the latitude to think well you know we really we really have room to maneuver here, we can do differently right on environmental sustainability more biofuels and old people, we can employ more people by decreasing the number of trucks and absorb all that labor.
That's all those all those individuals' all the members of the community.
God, we're driving trucks elsewhere in other applications that can be it can be redeployed here.
<unk>.
The fright cost you're trying to well we're not paying for fright. This is F. O b prices. So we are publishing F O b prices right. So I would say today, the bright costa sitting between 65 and $75 a ton.
They've gone down quite a lot, but we don't pay for that the customers send the ship and we actually are weak we actually cash the LC upon loading the ships at the port in Victoria in Brazil.
Our published prices all of them are F O B, Brazil prices.
So more color on sales and marketing operation would what would be some date of monthly sales volume going forward and how's the demand side within the spot market at the moment I mean, let.
Let me be very clear, even though we sell spot we're not hostages to the spot.
Our protagonist fear I mean, we're selling spot into very well known downstream supply chain. So the spot aspect of it is basically the pricing and the sale mechanism in other words.
We are selling into very very well now.
And users and the end users are starting to pop up as clients of our clients. So we announced the name of our clients and their clients. The automakers that are their clients appeared because ultimately there's green lithium triple zero green lithium coming into that fly. So it's actually a source of pride for us to see.
Our clients clients are.
Theory, we're now looking into doing three months contract. So again the mindset here is to preserve the unit to give us flexibility strategic downstream planning to build a well called the basic chemistry potential.
Technical grade carbonate audit himself and so as we look into all of these things and we want to keep our units very close to us because they have massive strategic value. So the concept of sport is essentially how we transact it.
We got clients here that would.
Three months four months option out of the year. So we have that faith of demand.
To rely upon again this product sells itself essentially right.
Another question is in terms of market, you mentioned huge demand versus carrying capacity in near or midterm, how about other technologies sodium based batteries for the future attract your lithium based acknowledges well I've seen in China C. A T L sodium cars a.
A feat of engineering, but remember they were developed when the prices were underway to hit the $100000 per ton of lithium hydroxide, which was unsustainable for the growth of the industry and that's been one of the Sigma has been one of the few companies before two years now has been saying exactly that this industry needs to have.
<unk> to deliver a low cost volumes, so that we don't hinder ourselves obsolete right and we have no qualms and saying that so it's the technology client that's at the very end if lithium industry loses discipline on.
Delivery supply pricing, you know, making fair pricing for everyone in the supply chain and so on and so forth will render ourselves obsolete and for sure our app and user will innovate somehow the history of this industry I've been here like for 10 years right.
Seen a lot of these battery materials literally rendering obsolete for lack of sustainability.
Couple of availability Ocean trade it out.
Concentrated production locations and all the classic mistakes the energy transition is not going to happen.
To deliver a disdain situation, we had before with fossil fuels. So the purpose of this is actually to have it wisely abundant low cost and sustainable and this is kind of why we do believe we are a force for good we enable that.
Low cost abundant sustainable, we're putting Brazil another geography.
So here's another competitive advantage when it comes to our clients is another country new place.
Geographic diversification.
With that so it's it's it's kind of logic for our clients to purchase this material from us. So I do not see sodium sulfate as attract I see it as a message the message downstream sent the industry to be disciplined to be sustainable to behave.
And the message I think was taken by most of the industry. So we see the producers doing just that.
And he was a good message for the new companies to kind of become producers with their mindset right.
The sodium sulfur cars are very very low.
Tanami and.
And again I see them, having been developed for a purpose right to basically show the lithium industry that we are not mighty and alone. We have you know innovation right at our doorstep also even though lithium is critical it is fantastic is the third lightest matawan periodic table technologies technology.
And you know we have incredible clients and they can do incredible thing right.
So can you. Please comment on recent price Vergilian won't give your materials spaces as a sign of demand weakness.
Or Chinese destocking too well.
We need to look at supply very clinically to understand what's going on there.
The very high end of supply is the unknown element called Lepidolite, which is horrible from a sustainability standpoint, I mean talk about pre stripping for every ton of lithium is 35 to 40 tons of waste in the region, where it rains a law so that waste goes one place in one place only two.
The river so that is a temporary remedy until there are players at the middle of the supply cost can actually deliver more material, which is starting to happen, but we see the price receding now its around 35, 30 35 to 30 torch gravitating to.
Our middle to high it's not on the ultra high to make anything feasible, but it's getting to a place where it allows for the middle cost producers to be very profitable, but also eliminates the ultra high cost unsustainable player so well be watching in the industry now that movement.
Back to normality, we're up.
The mid cost producers the newer companies, everyone is kind of coming to the table with more material and you have the very high end of the cost curve being first out because theyre going to be priced out of this but to be Frank at 35000 done quite a lot of you know environmentally.
Environmentally unsustainable lithium is still feasible, which is a sign of demand robustness on its own I mean, lithium now is priced to perfection to make pretty much most operations out there profitable.
Not with the kinds of profits, we enjoy sitting at the low end of the cost curve, but profitable to the point of let's deliver it is.
As time goes on and more and more of the middle to low end of the cost curve companies like six Sigma sitting right at the low end of the clock or continuing to deliver we're going to see the prices slowly pulling it back and that's we think is our mission to deliver this low cost sustainable lithium which gives resilience to the industry from.
To the previous question.
Rendering itself obsolete right. So he has to beat their pricing he has to be a level where.
There's there are margins across the board and that's also a message for downstream I mean in the previous cycle, we saw downstream capturing all the value and that wasn't in a very sustainable for the industry for large companies.
Upstream went bankrupt in 2019 2020, so what we're seeing now is kind of this new cycle coming off cycle, we think in a more responsible way and in a hopefully lessons learned way right.
So I don't I don't see demand weakness at all quite the contrary I mean I see actually.
Critical materials being a hindrance being sort of the bottleneck for demand completely on leasing as far as the vs goes in government incentives goes.
How about new mining frontiers.
Well I can't speak of new mining Frontiers, I I, just can't speak about the lithium valeant what I see here in Brazil was just phenomenal they are three.
Three listed companies are already perspective materials here so.
Theres, an enormous level of excitement with the region again, there's very cheap and abundant.
Renewable green bars, two cents per kilowatt hour. So the focus of the company should be on your scope, one and there are different companies doing different things, but so for investors. The region is fantastic is mining friendly. It's there the region is mining friendly which is what matters right the country's learning to be mining.
But the region is and that's a big thing because you basically delivering to a region that embraces it is there chance to come out of <unk>.
Korbel levels of poverty is the trust in our lifetime and they're fully embraced it. They welcome everyone. Their company from Australia, Canada, the United States lots of foreign as everyone's a foreign basically and they still incredibly welcomed community embraces them. It's amazing it's just amazing what's happening there and all of these to come visit it.
<unk>, So I think Brazil is the mining frontier.
At the moment.
Uh huh.
So next question.
Any ideas, how we're going to be funding phase four expansion offtake equity debt financing the lot well look I mean, we produced quite a lot of cash flow right. So it's essentially more of the same and if you look at the levels of cash flow. We produce let me put a slide back here for everybody kind of gets refreshed on cash generation I mean, I get questions like what are you going to do so much cats essentially.
Seriously right.
So after tax earnings margin, 75%, that's a lot of cash flow a lot of castle.
These like train tier these dense media separation line trains.
The initial feasibility study indicated that it could cost around $80 million.
$80 million each so.
It's just math right. It's it's.
Internal cash generation and who can leverage we can leverage anytime it's interesting because we've got quite a lot of financial institutions that want to lend to us.
Because you know obviously, we're generating quite a lot of cash that we are very robust credit.
So there's no shortage of lenders.
We feel very comfortable very very comfortable cash generation position essentially.
So basically here.
Could you please provide an update on sickness.
Just give him a strategic and well look where we are a financial sponsor led business. So this is something that can be forgotten on the other hand, we understand the value of this company and I think there's a question here about unlocking shareholder value unlocking shareholder value just happens by one means and one means only.
Well, we've been doing since day one.
You know defy defy expectations and delivery delivering delivering consistently we have never missed the milestone.
So that's it right in our industry, there's a graveyard accompanies the milestones I missed everything over promised and under delivered with tend to under promise.
We tend to under promise and Thats, sometimes a thin, but we like under promise and over deliver so we never missed their milestone.
And we've been consistently doing it but not just on one front, we do that in all from an environmental sustainability on social sustainability I mean, the company has been.
Overly scrutinized and here we are delivering on every front. So it's essentially it's essentially.
We see strategic value and in strategy right. So.
It's a company that's owned by a financial sponsor, but the main focus here is to create value and the only sustainable source of value is just people people like were feeling the ranks of incredible people, which drive execution because as I said, it's very taxing on people to execute.
Consistently at the speed of what we do so these are the building blocks of value and everything else happens as a derivative of it as the ability that we have to continuously deliver continuously deliver on our promises right. So this is my answer for strategic.
And then someone talked about M&A interest well look we're the most talked about company in this industry, but I would say because we don't promote because we deliver I think because he had been delivery I mean look I've Bureau, cobham lithium zero carbon lithium.
It's in every Powerpoint I've seen where the ones doing it that's it is zero I.
Think about the strategic value of that four four for this industry right. So we've talked about because we deliver and what are we going to do we're going to continue to deliver and in our view that makes us more and more and more valuable on a fundamental basis. Because this is a solid business.
And generating cash solid business, that's going to take us where our willingness to deliver takes us right.
So.
Trucking trucking cost per up for mine support is $40.
So that's our cost so very good question. It's a very important point, we're not shipping so with trucking. So every truck is $40 a ton and so that goes towards when we talk about the the tailings right. So when you think about the net net on a daily it sits between $310 a ton and $350 a ton depending on the.
A contract because theres that $40 of cost you weight more heavily on the tailings then on the concentrate because the concentrate sells for $3500 right, but that's the only transport costs, we have clients sand the ships right, which shows how valuable this is.
They come to pick it up essentially.
So.
So I. So the question is why do you believe market continues not to value the company properly well I agree with you.
Think part of it is we'd be inward focused.
Focusing on delivering so now we got this you know plants shipshape delivering dry stacking delivering on every front, we're going to go out and.
Communicate that more often more frequently it's August in the northern hemisphere, everybody is on vacation, but September comes we're just going to go off and about communicating this left and right. We are preparing a number of important things one of those was to list in the Brazilian stock exchange in.
In this country, we are darling of the industry will become the new paradigm. So we were able to unite federal and state governments, because we renewed.
The social license of the.
The entire sector to entire sectors. So we do believe the pension funds the largest juices in Brazil that were not eligible to purchase Sigma will be a very interesting source of demand the same way our neighbors in Chile enjoyed that that kind of baseline investor August is not summer here. So we're plenty.
You know quite a number of investor relations initiatives to kind of go out and communicate that because we were inward focused delivering delivering delivery as we go out. It's just wow right. We did it we did it because that would be no point for US no point for us to adjust the plant and.
Putting a tailing spawn somewhere that is not the reason why we made this investment that's not the reason why we're here so for us delivering has to be a holistic delivery on every front social environmental and technical. This is why we made this investment. This is why we withstood the full cycle.
So, but I do agree with your question completely right.
We don't think the company is valued properly now impacting the future decisions of the ACA, while people can do math I think.
As I said the greatest value of this company is its resilience, where very large we havent been incredible product and we're going to continue to deliver it. So this is the value the intrinsic value when people can do that.
So if I every one.
Carmakers talk about vertical Ization do you see the supply chain short and no I don't but I think we see.
Well, let me, yes, I do and I don't let me put it that way.
Do you see is a greater level of integration and it's happening you see Gee am taking stakes of companies in North America Carmakers, taking stakes of company upstream, it's fantastic for the industry, especially projects that rely on that credibility to raise further capital to deliver so we do believe in that we do believe that there's a level of integration.
That's going to be unique to lithium.
Of a whole number of factors that all of you know so we see downstream very interested in upstream and that's not just refining it's is the entire chain wide and that goes back to the demand question will we know about the months a day.
It just makes us worried zero about it I mean governments have.
Significant firepower to deploy towards inventing EV demand why is the quick path to meet carbon targets. There is agreement carbon targets for northern Hemisphere Nations, It's a lot slower to upgrade.
Our coal fossil fuels base.
Chris witty transmission grid electricity generation grid. It takes a lot longer it's a lot quicker to turn the car capex and hit targets on mobility, given them mobility diesel powered in the northern hemisphere.
It's quite obvious where the sustainability where D. The climate action dollars of these green plains are going it's just to try to catch the low hanging fruits of transforming mobility into low carbon green cards.
Zero emission mobility, because those are the easy targets, so that way that companies can show progress towards contributing to climate action. So demand isn't the issue. The issue is is the industry ready to bear the demand and without these $100000 ton crazy.
The price spikes in lithium so this industry was not ready that's why we had the price spikes. So what we're seeing now is the level of resilience built on upstream built on on midstream that actually prepares itself for what's coming this decade, I mean, you see the intake the kind of uptake on <unk>.
The demand I mean, when we talk to our clients in China, They talk about 50%.
Uptake for new car sales by 2025 26. These are very high numbers. These are like Mindboggling numbers strike and if one market. We got two more market golly, so decent levels of demand that in 2018 and the depth of the bear market. When we were here.
Working on this project doing visibility and a lot were unthinkable unthinkable if someone had told anyone in the industry <unk> that we would have 50% uptake in new E vs. Four new car sales in China by 'twenty five 'twenty six you would have been no way you Crazy that's what we've seen today that's what the.
Clients tell us will look like it will look like in China. So.
Europe's coming.
Very rapidly along you see.
One in every four cars now in Europe .
There are very strict government targets hitting 2025 by 2030, a lot of them a number of nations in Europe have a very strict common bands.
And carbon emission levels. So the only way for this to happen through demand. So it's it's there we see the supply chain say nosh sorted, but integrated with cross participations with.
The lot right and and and and that's what we're seeing is already happening let them right.
A little bit of life as we work as a marginal producer producer at this moment do you believe is that the more constructive scenario, where alpha industry doesn't need to secure material anymore. I mean, no not at all not at all not at all it's a survival industry 40 out of the industry and this is a very important point that client buying that green coffee.
Does the one I know that you know every ton of the lithium generates 35 tons of waste, which are permanently destroyed land ecosystems and rivers and causing.
Horrific environmental damage that these things are equal.
In coherent with the industry. The lipid alike is that temporary gap in let's just be very clear on that at least as far as western market goes.
It's not sustainable for the western markets EV adoption to reach the 50% levels that we're seeing China. It flip into like is the answer it won't happen because the environmental groups aren't going to let that happen right and cobalt is a witness to it we all watched what happened to cobalt so.
It's not about the product only it's about delivering the product with the same at those of the car.
So and this is key and the industries all geared up that way now which is fantastic right. So you see a level of concern around sustainability today that six years ago, a perhaps wasn't as heightened as today because it's the very existence. The very competitiveness of this car that's at stake when we.
Go to climate Congresses around the world some of the first slide the Apis.
Opposite.
Opposition to beans, or people, who don't think he's he's so you'd be even here. So are how many years. These cars need to drive to clean up the carb on the extra probably and the battery because they make it look like the only difference between I C cars and EV cars are the 40% of the car in a battery which is.
It's not really but this is a slide they show, but there's clearly a battery here and not a battery there and the carbon in that batteries being scrutinized by the very people that do not want to become 100% of the fleet.
So it's on us to make sure that we break the resistance to Evs and show that he visa sustainable across the board across the board on us the industry. The critical materials industry all of us nickel manganese cobalt copper lithium the lot right.
And this is the important thing so lepidolite, it's just not the answer if the industries rely on a bit of light to deliver if you will vendor itself obsolete essentially right.
And so alive Oh do you plan on paying dividends during vessel. There you go that's the cash question I get that too.
No not yet we got a lot to do we got a lot of growth to do so we do not plan to pay dividends until we have full visibility of strategically where we go away, especially when it comes to what we call basic chemistry downstream, we do not and have not ever said, we were going to build a specialty chemicals downstream.
Even at the time this entire industry was just ferreting that away we they're very good people doing this who are better at this than anyone there years decades of experience what we can do and we're going to we're looking into very actively very attentively is first basic blocks chemistry, which is calcination.
Litigation.
And that makes sense environmentally we.
Probably we'll do zero comp.
Basic blocks chemicals, because calcination can be done in natural gas.
Empowered by all of it can be powered by clean energy the waste I mean, there's a ton of.
Every ton of specialty chemicals generates 12 tons of waste every ton of basic chemistry chemicals generates 12 tons of waste toxic waste, we have a plan for the waste. These byproducts go to the cleaning products industry to the cement construction binding industry, both of which are very big and very vibrant in Brazil.
We will do it zero waste, we would do it probably zero. So we can do better. So we would only enter a business where we can compete to be the best in the world to beat the incumbent on sustainability and this is something we seriously consider on basic chemistry, but never not on specialty chemicals, but that all cost money.
So this is the long answer to your dividend question I mean, there's there's quite a lot that we had seen appear.
And therefore, we until we have full clarity on what the picture looks like with all the line change with face for with perhaps basic chemistry Ah, We don't plan to pay dividend, so dividends will be something for 2026, maybe.
Maybe 'twenty five 'twenty six between sprint six for sure right.
Do you proceed from here shortly and just this is absolutely is it a next year issue next decade, how the industry will deal with Chinese dominance installed well look.
We think there's industry everywhere I mean, China is a huge market they need to supply themselves. So that's a big thing there too so let's not forget the EV market.
Was first and foremost China right everyone else came later now everyone else are huge.
Huge too. So you have this giant western European market and the giant North American market, which is just starting North America is going to blow us away. So the question is how do we get there sustainably because there are different concerns from the customers in these markets and that goes back to my point about lipitor likes just not be answered.
Just forget it right so.
So that is the biggest challenge in this industry today, how do we do more more and more of it more of lithium sustainable low carbon zero zero carbon.
No tailings I mean, all of these variables matter for these two giant market very large I mean, western Europe and in the U S.
So and that goes across the supply chain in other words, its supply chain has to adjust and that means refining.
What we're finding will look like I don't know I don't know, but what do I know, we're going to do our part here at Sigma our plan is to eventually deliver the zero zero carbon basic chemicals building block to.
Refining elsewhere to perhaps get zero carbon too and so that together with the other critical materials, we can get to the zero carbon battery because that's the Holy Grail of this industry to deliver a battery that's zero carbon because that goes into the zero carbon emissions cost. So then mobility is.
Is reality right electric mobility, a holistic reality, so we're getting there.
We're doing our part.
And in it.
And I can't answer your question because I don't have the answer but I tell you the answers.
We're doing what we can here to go as far as we can prudently and responsibly in a in a manner that builds an intrinsic competitive advantage because that's what we got in any price environment, where low cost product is.
Technically better it's sustainably unique theres nothing like this in the market. So that's a competitive advantage, meaning we branded it cannot be on sustainability reality zero zero zero. These are numbers.
Pages on our book right.
So we're very excited about the future here essentially did.
Did I answer everything well look gentlemen, I think I answered all of your questions.
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Uh huh.
Theyre also tricky questions around strategic movements in strategic initiatives and I thought what I can say I mean.
And what I always say I can show what it can control.
We are a company led by a financial sponsor what people, what others do or what.
What all these you know interested parties to go to press to talk about being interest to do I don't control I don't sit in their boardrooms I sit on this board room.
And my role here and the technical change, Brian a guy who have filed our amazing team.
Our job here is to deliver and continue to deliver in that way, we build value that we control. These fundamentals solid value in the company like no other cause we building a product that.
Quantifiably doesn't have a competitor essentially which is a huge source of pride for all of us because it took us six years of incredible hard work. So I wanted to thank you for your patience I want to thank you for listening.
I want to thank you for being here until the end and Ah. Please send your questions, Jamie Our Chief Development Officer in Canada.
We are open to having conference calls should meeting you went to one.
We're now going to go outward focus and talk about all these amazing things our team did a and as a team is a team effort at every one of US here has a a key piece of contribution to two to build this company.