Q1 2024 Sigma Lithium Corp Earnings Call
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Unnamed Speaker: Hi, good morning.
Hi, good morning.
Hi, good morning.
Yeah.
Unnamed Speaker: We'll have Dennis is going to lead with some comments. Okay, thanks.
We will have Dennis is going to lead.
Okay.
Dennis: Good morning, everyone. My name is Dennis, and I will be your operator today. Welcome to the Sigma Lithium First Quarter 2024 EARNINGS Conference Call. Today's call is being recorded and is broadcast live on Sigma's website. On the call today are company CEO, Ana Cabral Gardner, and company executive vice president, Matthew DeYoe. We will now turn the call over to Matthew DeYoe.
Dennis: Good morning, everyone. My name is Dennis and I will be your operator today.
Speaker Change: Completely separate lithium at first quarter 2024 earnings conference call.
Speaker Change: Today's call is being recorded and broadcast live on the website on the call today is the company's CEO Anika ball Gardner and accompany the executive Vice President Matthew D. We will now turn the call over to Matthew D O.
Dennis: Thank you Dennis.
Matthew Porter DeYoe: Good morning, everyone. Thank you for joining us on our first quarter 2024 earnings conference call. On the call with me today is company CEO, Ana Cabral. This morning, before the market opened, we published our 1Q earnings release and posted our financial results, which would be available through CDER and SEC. Before we begin, I'd like to cover two items. First, during the presentation, you'll hear certain forward-looking statements concerning our plans and expectations. We note that actual events or results could differ materially from changes in market conditions in our operations.
Speaker Change: Morning, everyone. Thank you for joining us on our first quarter 'twenty 'twenty four earnings conference call on.
Speaker Change: On the call with me today is the company's CEO Anna Cabral.
Matthew Porter DeYoe: This morning before market open we published our <unk> earnings release, and posted our finance results, which would be available through SEDAR and actually shape before we begin I'd like to cover two items first during the presentation, you'll hear certain forward looking statements concerning.
Matthew Porter DeYoe: Additionally, earnings referenced in this presentation may exclude certain non-core and non-recurring items. Reconciliations to the most comparable IFRS financial measures and other associated disclosures, including descriptions of adjustments, can be found in the back of the release.
Speaker Change: Our plans and expectations, we note that actual events or results could differ materially from changes in market conditions and our operations.
Ana Cabral: Really earnings referenced in this presentation may exclude certain noncore and nonrecurring items reconciliations to the most comparable I F. R. S financial measures and other associated disclosures, including descriptions of adjustments can be found in the back of the release with that I'll pass it over to Anna Anna.
Matthew Porter DeYoe: With that, I'll pass it over to Ana. Ana? Hi, thank you.
Ana Cabral: Hi, thank you, Matt. Good morning, everyone.
Anna: Hi, Thank you, Matt and good morning, everyone.
Anna: We're delighted to present you with our first quarter 2024 result.
Ana Cabral: We're delighted to present you with our first quarter 2024 results. And without further ado, I encourage you to go to the following page. We are extremely enthusiastic about our prospects as we have been advancing towards key catalysts of our planned double production capacity by 2025. The four key deliveries of this quarter were first, the delivery of increased premium pricing where we achieved a fixed floating formula of 9% of the London Metals Exchange lithium equivalent, basically reaching a $1,290 price, that represents an 11% increase to the April 24th realize price, the numbers we released for the first quarter of 2024. So, that clearly shows that the pricing trend is upwards. An 11% increase from the previous month and an overall almost 30% increase from the average price of the previous quarter.
Anna: What sort of redo I encourage you to go to the following page.
Speaker Change: We are extremely.
Anna: Extremely enthusiastic about our prospects as we have been advancing towards key catalyst of our plan to double production capacity by.
Anna: By 2025.
Speaker Change: The four key deliveries of this quarter were first the delivery of an increased premium pricing, where we achieved a fixed floating formula of 9% of the London metals exchange lithium equivalent.
Speaker Change: Basically reaching eight $1290 pricing that represents an 11% increase to the April 24.
Speaker Change: Uh huh.
Speaker Change: Realized pricing.
The numbers, we released for the first quarter of 'twenty 'twenty four.
Speaker Change: So.
Speaker Change: That clearly demonstrate that the pricing trend is upwards and 11% increase from previous months and an overall almost 30% increase from the average pricing of the previous cohorts yet.
Ana Cabral: The second catalyst is that we have been reaching our marks on achieving a low cost of production. We became the world's second lowest cost lithium concentrate producer this quarter, reporting a cost of $397 per ton. So more importantly, we have also managed to increase the operating life of the company to 25 years. We increased mineral reserves by 40%, auditing 77 million tons of 43-101. We also made a final investment decision on a fully funded expansion to double production to 520,000 tons annually, equivalent to 70,000 tons of LCE.
Speaker Change: The second catalyst is that we have been reaching our marks on achieving a low cost of production. We became the worlds second lowest cost lithium concentrate producers this quarter reporting the.
Speaker Change: The cost of all three.
Speaker Change: $397 per ton.
Speaker Change: So more importantly, we have also managed to increase the operating life of the company to 25 years, we increased mineral reserves by 40% auditing 77 million tons 43, 101, we also made a final.
Speaker Change: Investment decision on a fully funded expansion to double production to 520000 tons annually equivalent to 70000 tons L E E.
Speaker Change: So on the next page, we demonstrate that we've been delivering on our vision to combine just large scale production with low cost.
Ana Cabral: So on the next page, we demonstrate that we've been delivering our vision to combine this large-scale production with low cost and higher standards of environmental and social sustainability in lithium. These three elements are rarely achieved together.
Speaker Change: And highest standards of environmental and social sustainability lithium. These three elements are rarely achieved together more often dennard scaling costs are achieved at the expense of traceability and environmental high standards alternatives.
Ana Cabral: More often than not, scale and cost are achieved at the expense of traceability and environmental high standards. Alternatively, scale and traceability, and environmental and social high standards are achieved at the expense of delivering a resilient business maintaining the lowest production costs. So here we are delivering on all three rather paradoxically strong. The next slide illustrates one of our key deliveries for the quarter, demonstrating how we became the fourth largest producing lithium industrial mineral complex globally. So Sigma is now the first non-Australian in the top five.
Speaker Change: Lee scale, and traceability, and environmental and social high standards are achieved at the expense of delivering reached a resilient business maintaining lowest production costs. So here, we are delivering on all the three rather paradoxically Bronx.
The next slide illustrates one of our key deliveries for the quarter.
Speaker Change: Trading how we became the fourth largest producing lithium industrial mineral complex globally. So Sigma now is Don the first non Australian and the top five were trailing behind green bushes, pilbara and watching them go out the door.
Ana Cabral: We're trailing behind Greenbushes, Pilbara, and Wadjina. Grota do Cirilo is now at 4.8 million tons of LCE equivalent, with a very high grade average at 1.4%. And that's the result of very well concatenated exploration, development, and feasibility deliveries achieved over the last 12 months. In this quarter, we delivered feasibility, and therefore we declared mineral reserves of 77 million tons, which were increased by 40%. It's a significant milestone. Why is that?
Speaker Change: <unk> is now at 4.8 million tons of LTE equivalent with a very high grade average at 1.4% and that's the result of a very well attaching needed exploration development and visibility of delivery.
Speaker Change: <unk> achieved over the last 12 months in this quarter, we delivered visibility and therefore, we declared mineral reserves of.
Speaker Change: 77 million tons, which were increased unfortunate the scent is a significant milestone Ah why is that because he lengthens the life of the project to 25 years and therefore as we expand to double capacity, we now have a operation that.
Ana Cabral: Because it lengthens the life of the project to 25 years. Therefore, as we expand to double capacity, we now have an operation that is sustainable for 25 years. That is a moving target.
Speaker Change: Is sustained for 25 years that is a moving target in other words as we move forward. We bought our expansion plans, we will continue to unlock and transform the mineral resources, we have into mineral reserves backing up a similar duration.
Ana Cabral: In other words, as we move forward with our expansion plans, we will continue to unlock and transform the mineral resources we have into mineral reserves, backing up a similar duration in operational life. Therefore, with this mineral resource work executed, we demonstrate that Sigma Lithium is not at all constrained by the scale, the sheer scale, of the mineral resources available on its properties. And here we are demonstrating the mineral resources in one of our four properties. With that, I move forward to the following page, to page 7, where we, again, deliver on the mathematics of our numbers. And we love mathematics because numbers don't really bring an opinion with them.
Speaker Change: Operational wise, therefore with this oh.
Speaker Change: Our mineral resource work executed we demonstrate that Sigma lithium is not at all constrained by just scale. The sheer scale of the mineral resources available on these properties and here. We just are demonstrating the mineral resources in one of our four property.
Speaker Change: Geez.
Speaker Change: With that I move forward.
Speaker Change: The following page to page seven where we again deliver on the mathematics, all our numbers.
Speaker Change: We love mathematics, because numbers don't really bring an opinion with them.
Speaker Change: In joints don't you for as we discussed we are delivering on every operational targets, we set out for ourselves some of those were quite ambitious and and again the numbers demonstrate the resilience and the longevity of our project essentially combining.
Ana Cabral: In 2024, as we discussed, we are delivering on every operational target we set out for ourselves, some of those were quite ambitious. And again, the numbers demonstrate the resilience and the longevity of our project, essentially combining scale, costs, and the highest global standards of environmental and social sustainability. We are sustaining nameplate capacity; we have been sustaining nameplate capacity since December 2023. In the first 10 months of production, we have already reached 178,000 tons, which delights us all, given our pioneering dry-stacking circuit of the Dense Media Separation Industrial Plant, the Green Tact Plant.
Speaker Change: Scale cost and the highest global standards of environmental and social sustainability.
Speaker Change: We are sustaining nameplate capacity. So we have been sustaining nameplate capacity since December 'twenty two 'twenty three.
Speaker Change: In the first 10 months of production, we already reached 178000 tons, which the light does all given our pirate nearing.
Speaker Change: Dry stacking circuit of the dense media separation industrial plant the green Dot plant.
Ana Cabral: In parallel, the highest premium and the highest quality that our product exhibits is translated into premium pricing, and we have been able to do that consistently. The economics for our ninth shipment are again reaching our mark of capturing a nine percent share of the value of the lithium hydroxide posted at the London Metals Exchange, which is now equivalent to $1,290 per ton. That number is a fixed floating formula, and it will be adjusted by that Lithium Metals Exchange price one month after delivery. We were able to achieve that and, in parallel, to deliver on our very low marks on our very ambitious targets of a low cash cost at the plant.
Speaker Change: In parallel the.
Speaker Change: Highest premium and the highest quality that our product exhibit is translated into premium pricing and we have been able to do that consistently are the economics for our nine shipment is again, reaching a mark of capturing a 9% share of the.
Speaker Change: Value of the lithium hydroxide posted at the London metals exchange.
Speaker Change: Which now equivalent is equivalent to $1290 per ton are that number is a fixed floating formula and it will be adjusted by that lithium metals exchange price one month after the delivery.
Speaker Change: We were able to achieve that in parallel to deliver on a very low marks on our very ambitious March of our low cash cost at the plant. So we got to $397 per ton at industrial plant gate, which basically places as the lowest cost producer.
Ana Cabral: So we got to $397 per ton at the industrial plant gate, which basically places us as the lowest cost producer amongst all lithium concentrate hard rock producers, all of our peers in Australia. So we're demonstrating that despite not yet getting to that scale, we have the cost discipline to be in second place, which makes us incredibly resilient to the lithium cycle. So we're here to stay.
All lithium concentrate hard rock producers all of our peers in Australia. So we demonstrating that despite not yet getting to that scale. We have the cost discipline to be at the second position, which makes us incredibly resilient too.
Let him cycle.
Speaker Change: Jim cycles. So we're here to stay in me and in the meantime, we've also maintained our liquidity so our cash position at March 31st at the end of the quarter was 108 million U S dollars. So the phase two the second green plant.
Ana Cabral: In the meantime, we've also maintained our liquidity. So, our cash position on March 31 at the end of the quarter was $108 million US. So phase two, the second green plant construction that will deliver double capabilities, is fully funded with cash at hand in the balance sheet. And we will continue to work on improving the capital structure to fund that construction. But regardless, the funding is in the bank as we speak, so we'll keep going with the construction project to meet our delivery timetables of around this time next year. We've been initiating the construction with Earthworks Engineering, Design, and the teams.
Speaker Change: Construction that will deliver double capabilities is fully funded with cash at hand in the balance sheet and we will continue to work on improving the capital structure to fund that construction, but regardless the Sunday isn't a bank as we speak so we will keep going.
Speaker Change: With the construction projects to meet our delivery time tables, all around this time next year.
Speaker Change: We've been initiating the construction with Earth works engineering design. The teams we have our second construction team in place we bifurcated our teams so that we ensure reliable timely and on budget delivery of the second Green Dot plant and again you will need.
Ana Cabral: We have our second construction team in place, so we bifurcated our teams so that we ensure reliable, timely, and on-budget delivery of the second green tech plant. And again, you will lead us to double capacity to approximately 70,000 tons of LCE equivalent or 520,000 tons of lithium concentrate. And lastly, we already talked about this; we delivered the longevity that will back up the operational life for 25 years with a 77 million ton proven improbable mineral reserve.
Speaker Change: It is shoe double capacity to approximately.
Speaker Change: Approximately 70000 tons of ELC equivalent or 520000 tons of lithium concentrate.
Speaker Change: Lastly, we already talked about this we delivered the longevity that will backup the operational life for 25 years with 70 77 million ton of proven and probable mineral reserves.
Ana Cabral: And again, it's always very, it makes us very proud to remind everyone that we're the only global producer that has achieved the zero carbon, very sought-after objective so that we're delivering lithium products aligned with the ethos of the electric car industry that we serve. So on the next page, I'll initiate this section, and then I'll hand over to my partner, Matthew DeYoe.
Speaker Change: And again, it's always a very it makes us very proud to remind everyone that we're the only global producer that has achieved the zero carbon a very sought after objective so that we delivering lithium products aligned would you at those or do you like.
Speaker Change: With car industry dealt with others.
Speaker Change: So on the next page all initiate the section and then I'll hand over to my partner Matthew Deyoe.
Ana Cabral: We want to, again, reiterate how resilient and how reliable and how consistent our business has been since we made our first shipment. We have reached scale in 2023, and we have been shipping, like clockwork, 22,000 tons, approximately, of lithium concentrate materials every 35 days. More importantly, at the top of the market, we actually initiated a premiumization drive that has been delivering these premium prices through auction slash price discovery conversations with our customers.
Speaker Change: We wanted we want again, Rachael ray, how resilient and how reliable and how consistent.
Matthew Porter DeYoe: Our business has been since we made our first shipment we have reached scale during 2023, and we have been shipping like Clockwork 22000 tons approximately of lithium concentrate materials every 35 days more importantly.
Speaker Change: At the trough of the market, we actually initiated a premium amortization drive they have been delivering these premium prices to auction slashed price discovery conversations with our customers that demonstrate that we'd been increasingly gaining commercial leverage as our COO.
Ana Cabral: That demonstrates that we've been increasingly gaining commercial leverage as our clients try and experience the savings they can achieve with our product, which reach 20 to 30% over competing products in the marketplace, and that translates into commercial leverage. So, mathematically, we demonstrate that with a 25% increase from the realized prices in the first quarter.
Clients try and experience the savings they can achieve.
Speaker Change: Without product, which reached twentyish to 20% to 30% over.
Speaker Change: A competing product in the marketplace and that translates in commercial leverage so mathematically we demonstrate that with a 22, 5% increase from the realized prices in the first quarter, India is not a valid menu option.
Ana Cabral: So. The page also illustrates in two colors, in yellow what we believe to be the market benchmark and in blue what we believe to be our own pricing benchmark. So as you can see in the arrows, from February, which is the Lunar New Year, at drops of the industry onward, we've been able to premiumize 25% of our prices. From last month alone, we were able to achieve an 11% price increase.
Speaker Change: Yeah.
Speaker Change: So.
Speaker Change: The page illustrates also in the two colors in yellow color, what we believe to be the market benchmark in the blue color, what we believe to be our own pricing benchmark. So as you can see in the arrows from the fabry, which as lunar new year throw offs of the industry one word.
Speaker Change: We've been able to premium and is 25% our prices from last month alone we were able to watch it.
Speaker Change: We were able to achieve an 11% price increase so that's again, a mathematical numeric demonstration of increased commercial leverage.
Ana Cabral: So that's, again, a mathematical numeric demonstration of increased commercial leverage. And it results in a partnership, in a win-win partnership with our clients, given that our product does bring them measurable chemical savings compared to other available competing products in the marketplace. So by no means is it a win-lose game; it's just the flourishing of commercial partnerships with our clients. And on this chart, we also illustrate the translation of our prices into value capture of the lithium hydroxide as priced on the London Metals Exchange, where we've gone from 8.75 percent of it to 9 percent of the index.
Speaker Change: And it results in a partnership and a win win partnership with our clients given that I brought it does bring the clients are.
Speaker Change: Measurable chemical savings Ah if compared to other available competing products in the marketplace. So by no means is it.
Speaker Change: Win lose gain is just the the flourishing off commercial partnerships with our clients.
Speaker Change: And at the chart. We also illustrate the translation of our prices into value capture of the lithium hydroxide as priced in the London metals exchange well, we've gone from $8 75 per cent of it shoot 9% of the index show an increase.
Ana Cabral: So an increased value capture over the lithium hydroxide chemical. And again, in a mathematical demonstration of this partnership with clients that win as they acquire our product. Typically, the average premiumization we've achieved hovers around 10% over the similar competing products, which again, given that we bring 20 to 30% of cost savings to our clients, it clearly demonstrates that the clients are still achieving a 20 to 10% savings.
Speaker Change: <unk> value capture over the lithium hydroxide chemical and again in a mathematical demonstration of this.
Speaker Change: Our partnership with clients that win as they acquire our products.
Speaker Change: Typically the average bring United nation would be and achieve hoover's around 10% over the similar competing products, which again given that were bring 20% to 30% of cost savings to our clients. It clearly demonstrates that the clients are still achieving a 22.
Speaker Change: 10% savings so clearly a win win relationship with our steam customers.
Ana Cabral: So, clearly, a win-win relationship with our esteemed customers. On the next page, it's interesting when we place cost in perspective. We're demonstrating that Sigma is one of the lowest cost producers in the world. We have clearly secured our position in the global supply chain.
Speaker Change: On the next page.
Speaker Change: Interesting when we placed costing perspective, we're demonstrating the Sigma is it's one of the lowest cost producers in the world. We clearly secured our position in the global supply chain, we have a low cost and traceable sustainable product and and and more interesting and more interestingly.
Ana Cabral: We have a low cost and traceable, sustainable product. And, more interestingly, we show that this market hinges on a, let's say, fine balance, given that the trinity we discussed earlier is not always easily achieved by lithium producers. In other words, to combine low cost, sustainability, and scale is actually the only thing that's rare in the lithium industry. In other words, exceptional execution.
Speaker Change: We show that this market hindrance hinges on a let's say fine balance given that the Trinity. We discussed earlier is not always easily achieved.
Speaker Change: By lithium producers in other words to combine low cost sustainability and our scale is actually the only thing that's rare in the lithium industry in other words exceptional execution. So that's what we've been able to deliver and hearing green.
Ana Cabral: So that's what we've been able to deliver. And here, in green, you can see Sigma as the, you know, the second lowest cost producer. This is actually a benchmark minerals standard cost curve, and we're also highlighting, in brown, the producers that sit in the traceability zone of producing countries. So when you add up those players, this is a hard rock cost curve with the other brine source material from the traceability zone.
Speaker Change: <unk> you can see Sigma as this you know the second lowest cost producer. This is actually a benchmark minerals a standard cost curve and we're also highlighting in our brown the producers that sit on the traceability zone are producing countries. So when you add.
Speaker Change: Those players. This is a this is a hard rock cost curve with the other brine source material from the traceability zone, you actually end up we just 900000 tons of L. C equivalent.
Ana Cabral: You actually end up with just 900,000 tons of LCE equivalent projected for 2025. If you add up everyone in the low cost traceability quartile, all the way up to the mid point of the cost curve, you end up with a million tons of LCE. Why am I making this point?
Speaker Change: Projected for 2025, if you add up everyone in the low cost traceability up a quartile or all the way up to the mid point of the cost curve you end up with a million tons of LC why am I, making this point if you. Please turn it over to the next page page 11, you can clearly.
Ana Cabral: If you please turn over to page 11, you can clearly see that lithium demand is robust and the supply of medium to low cost sources being what it was on the previous page. And again, that's a benchmark minerals cost curve. If you look at 24 this year, we're hinging on a fine balance. If I mean, these are demand estimates again from benchmark minerals. And when you look at 25, unless something miraculous happens, we're going to be reaching a slight tension point. What does that mean? It means something very similar and simple.
Speaker Change: See that diligence demands the robot and the supply of medium to low cost sources being what it is in the previous page and again, that's a benchmark minerals cost curve.
Speaker Change: If you look at 24 this year, where he needs me on a fine balance if the diesel demand estimates again from benchmark minerals and when you look at 25.
Speaker Change: Unless something miraculous happens, we're gonna be reaching up a slight tension point, what does that mean you need it means something very similar simple prices will have to move again upwards.
Ana Cabral: Prices will have to move again upwards, inching towards the higher production cost zone so that it brings forth the product from the higher cost producers to meet the supply and demand equilibrium. So the numbers on this page have to be observed in tandem with the numbers on a previous page so that when we look at the gap, we can mathematically see why the gap has been covered or will be covered increasingly with high-cost products unless another stigma pops up.
Speaker Change: Inching towards the higher up production cost zone, so that he brings forth.
Speaker Change: The product from the higher cost producers to meet the supply demand equilibrium. So the numbers on this page have to be observed in tandem with the numbers on the previous page. So that when we look at the gap, we can mathematically see why the gap has been cut.
Speaker Change: Well, we'll be covered increasingly with high cost product unless another sigma pops up and all that up it's important to note that if the 2030 projections, our 'twenty 'twenty seven projections.
Ana Cabral: And on that, it's important to note that if the 2030 projections or 2027 projections are correct, and we do believe they are based on sheer growth in China alone, as you can see on the charts on the right, the world will need between 30 and 50 new firms that will have to pop up between now and 2030, which, again, demonstrates that, at low cost and on a large scale, there's clearly a shortage of operational companies So prices will eventually have to move to make the high cost traceability challenge of products on the right end of the cost curve that we saw on the previous page feasible. And with that, I will move to the next section, and I'll pass over to Matt DeYoe, my partner here, so that he can discuss some of our financial first quarter 24 earnings highlights. Thank you, Ana.
Our Oh, correct and we do believe they are based on sheer easy them easy growth in in China alone as you can see on the charts on the right. There, we'll do we'll need between touchy and 15 new Sigma.
Speaker Change: That will have two pop up between now and two extra chachi, which again demonstrates that on the low cost traceable and large scale, there's clearly a shortage of Ah Ah Ah Ah Ah operational all companies so.
Speaker Change: Prices will eventually have to move to make feasible the high cost Oh traceability challenge our product on right out of the cost curve that we saw on the previous page.
Speaker Change: And with that I will move to the next section and I'll pass over to Matt Deyoe. My partner here. So that he can discuss some of our financial first quarter 'twenty four earning highlights.
Matthew Porter DeYoe: In the first quarter, the company sold 52,857 tons of lithium concentrate, which consisted of two full shipments and a partial sale of warehouse inventory to Glencore towards the end of the quarter. Production totaled just over 54,000 tons. Reported revenue for the quarter totaled $37.2 million, which included a $12 million impact from provisional adjustments associated with prior shipments, particularly our November shipment. This reduction, or this is a reduction, versus the $30 million we experienced in 2014. The company assesses revenue for business conducted during the first quarter at $49 million.
Matthew Porter DeYoe: Thank you Ana so in the first company in the first quarter. The company sold 52857 tons of lithium concentrate.
Matthew Porter DeYoe: Which composed of two full shipments and a partial sale of warehouse inventory to glencore towards the end of the quarter.
Matthew Porter DeYoe: Duction totaled just over 54000 tons reported revenue on the quarter totaled $37 2 million, which included a $12 million impact from provisional adjustments associated with prior shipments, particularly our our November shipments.
Speaker Change: This reduction or this is a reduction versus the $30 million we experienced in <unk>.
Speaker Change: Company assesses revenue for business conducted during the first quarter at $49 million and against our volumes that would imply a realized price for business again conducted in the first quarter of $930 a ton.
Matthew Porter DeYoe: And against our volumes, that would imply a realized price for business, again, conducted in the first quarter of $930 a ton, operating cash costs per ton at plant gate of $462 a ton, down about 16% sequentially and delivers a 50% FOB margin against that $930 per ton price. The reported adjusted EBITDA of $6 million drives a margin of nearly 16%. So again, we assess EBITDA for business conducted in one category, and that's excluding the provisional implications at about $17 million, which reflects an EBITDA margin closer to 35%.
Speaker Change: Operating cash cost per ton at plant gate of $462, a ton down about 16% sequentially and delivers a 50% F O b margin against that $930 per ton price.
Speaker Change: Reported adjusted EBITDA of 6 million drives a margin of nearly 16%. So again, we assess EBITDA for business conducted in <unk> and that's excluding the provisional implications and about $17 million, which reflects an EBITDA margin closer to 35%.
Matthew Porter DeYoe: Importantly, as we want to note, as prices rallied during the first quarter, the implications of these provisional adjustments subsided, and given our fixed shipment in April and the material correction we've seen in market prices, these adjustments should be immaterial going forward. Now, I want to move, I guess, to our cost bridge. We believe our guided targets are very much in reach.
Speaker Change: Importantly, as we want to note as prices rallied during the first quarter the implications of these provisional adjustments subsided.
Speaker Change: Given our fixed shipment in April and a material correction, we've seen in market prices. These adjustments should be immaterial going forward.
Speaker Change: When a move I guess two are cost bridge.
Speaker Change: We believe our guided targets are very much in reach and importantly, as well as we're moving past much of the noise associated with commissioning activity, it's really helping us deliver a much cleaner quarter and a coach cleaner look into the company's advantage cost structure.
Matthew Porter DeYoe: Importantly, as we're moving past much of the noise associated with commissioning activity, it's really helping us deliver a much cleaner quarter and a much cleaner look into the company's advantage cost structure. Cash cost per ton, as Ana had mentioned earlier, was $397 for the first quarter, which drives an FOB cost at Vitoria of $462. The difference here to COGS represents only royalties, non-cash DNA, and a small stocking effect associated with production of concentrate in 1Q that will sell in the second quarter. As we said though, guidance is clearly within reach.
Speaker Change: Cash cost per ton as Anil had mentioned earlier was $397 for the first quarter, which drives an F O b.
Vittorio: As Vittorio of $462.
Speaker Change: And you'll hear to Cogs represents only royalties noncash DNA in a small stocking effect associated with production of concentrate and want you that we'll sell in the second quarter.
Vittorio: As we said the guidance is clearly within reach recall from our earlier conversations the company expects to have $370 a ton plant gate 400, and 20-F O B Victoria during the second quarter for the three Q <unk>.
Matthew Porter DeYoe: Recall from our earlier conversations, the company expects to hit $370 a ton plant gate and 420 FOB Vithoria during the second quarter of the 3Q. Absolute dollar costs are already there. As you can see, the main hindrance to achieving these numbers in one quarter is production.
Speaker Change: Absolute dollar costs are already there as you can see the main hindrance for achieving these numbers in <unk> was production, there's a normalization for cost base for for Q production would leave plant gate cost of $359 in the first quarter.
Matthew Porter DeYoe: As a normalization for cost base for four Q production, we leave plant gate costs at $359 in the first. Production improved through the course of the first quarter, leaving us confident again that we can hit these targets, which would put us comfortably, although we already are, at the second lowest cost hard rock project in the world, at least that we know of. Next, I'll move to our cash balance. As Ana mentioned, we ended 1Q at $108 million, which primarily reflects the cash gained from trade finance and trade facilities, partially offset by an annual interest payment and a modest build in working capital. Operations proved to be neutral to our earnings formula as revenues were offset by a partial adjustment in operating costs.
Speaker Change: Production improve through the course of the first quarter, leaving us confident again that we can hit these targets, which would put us comfortably. Although we already are at the second lowest cost hard rock project in the world at least that we know.
Speaker Change: Next I'll move to our cash balance.
Speaker Change: So as I had mentioned we ended once you had $108 million, which primarily reflects the cash gains from trade finance trade facilities, partially offset by an annual interest payment and a modest build in working capital.
Speaker Change: Operations proved to be neutral to our earnings Formula as revenues were offset by a partial adjustment in operating costs going forward as we had mentioned as prices improve we should move past provisional headwinds, we should begin to accrue substantial amounts of free cash.
Matthew Porter DeYoe: Going forward, as we mentioned, as prices improve, we should move past provisional headwinds, and we should begin to accrue substantial amounts of free cash. The next slide points to what we believe to be the cash flow potential on a recurring basis. The column at current price, or $11.60, reflects broadly the current market, while the cost to our targets, though, is stated above within REIT. This isn't explicit cash flow guidance for this year, as the numbers just portray at capacity and don't reflect, perhaps, the realities of 1Q, but it gives a good idea of the potential of the company on a go-forward basis, and as you can see, we're comfortably above So with that, I'll pass it back.
Speaker Change: Yeah.
Speaker Change: The next slide points to what we believe to be the cash flow potential on a recurring basis.
Speaker Change: The model or the column at current price of $11 60 reflects broadly the current market, while the cost of our targets, though as stated above within reach.
Speaker Change: This isn't an explicit cash flow guidance for this year is the numbers just portray of capacity and don't reflect perhaps the reality is once you, but it gives a good idea of the potential of the company on a go forward basis and as you can see we're comfortably above the $100 million required to fund our expansions.
Speaker Change: So with that I'll pass it back on.
Speaker Change: So.
Ana Cabral: Going straight to the point Matt left off of doubling production capacity. Again, we show the drone aerial picture of the simplicity of that project, and you can clearly see in the back the expansion area highlighted in red where we already have the truck maintenance patio installed. It's an area without vegetation.
Speaker Change: Going to straight to the point, where Matt left off of doubling production capacity.
Again, we show the drone aerial picture of the simplicity of that project and you can clearly see in the back the expansion area highlighted in Red where we already have the trunk that truck maintenance patio installed it's an area, we'd all vegetation, it's pretty it's.
Ana Cabral: It's basically the form of pasture areas, so very straightforward, perpendicular to the elevation of the terrain, perfect for the installation of an ROM pad that will feed a second green tag production plant. That second line train will be equivalent to the one highlighted in yellow, and it will be sustained by the existing infrastructure in green, which also could sustain a third green tag line expansion, which we do plan to execute the moment we commission the second green tag plant. The infrastructure, which costs almost $40, $45 million, is no longer necessary because it sustains two additional green tech plant expansions.
Speaker Change: It's it's basically form of pasture areas, so very straightforward perpendicular to the elevation of the terrain perfect for the installation of our <unk> pad that will feed our second green tax production plant.
Speaker Change: That second line train will be equivalent to the one outlook are highlighted in yellow.
Speaker Change: And it will be sustained by the existing infrastructure and green, which also could sustain a third green Tech line expansion, which we do plan to execute the moment, We commission the second Greenlaw Greentech plant so.
Speaker Change: Infrastructure.
Speaker Change: Cost is almost a 40 $45 million is no longer necessary because it sustains two additional green dot plant expansions so with that.
Speaker Change: Again, we'd like to reiterate that the cash to build it is at hand are.
Ana Cabral: So with that, we again would like to reiterate that the cash to build it is at hand. We've been able to secure robust and resilient trade lines as a result of our consistent, resilient performance in production, shipping, delivery, and customer acceptance of our product throughout the first 10 months of operation. So that reliability gives us access to trade line mandatory funding. It's called ACEs in Brazil, Advancements on Export Contracts, which are the main source of funding for this construction at the moment. It's cash sitting in our treasury right now.
Speaker Change: We've been able to.
Speaker Change: Secured a robust and resilient trade lines as a result of our consistent resilient performance of production shipping delivery and customer acceptance of our products throughout the first 10 months of operation. So that reliability gives us Act.
Speaker Change: As to trade line mandatory funding, it's called AC East in Brazil advancement on export contract.
Speaker Change: Which are the main source of funding for this construction at the moment, it's cash sitting in our treasury.
Speaker Change: Right now.
We will continue to work to improve the capital structure for the construction of the project and Ah we have up there.
Ana Cabral: We will continue to work to improve the capital structure for the construction of the project, and we have very interesting plans to tap debt capital markets and debt loan markets throughout the course of the next few months. But without it, or irrespectively of it, or irrespectively of any additional source of financing, we are confident that we can carry on and execute our doubling of production capacity plans. And again, the commercial uptake is there. We could be selling far more boats if we had the material to deliver them.
Speaker Change: Interesting plans to tap.
Speaker Change: That capital markets debt loan markets throughout the course of the next few months, but without it or irrespectively of it or irrespectively of any additional source of financing. We are confident that we can carry on and execute our doubling of production capacity plan and again the commercial uptake is there we could be.
Speaker Change: Far more boats, if we had the material to deliver so ultimately we're sitting in a very comfortable position in the industry. Now. So our objective is to continue to bank on the you know the comfort of our business position in the global lithium industry at the moment. So here the following.
Ana Cabral: So ultimately, we're sitting in a very comfortable position in the industry now. So our objective is to continue to bank on the comfort of our business position in the global lithium industry at the moment. So this page just shows, again, the only thing that's rare in the lithium industry, which is exceptional execution.
Speaker Change: Just shows again, the only thing that's rare in the lithium industry, which is exceptional execution. So we're going to do it again.
Ana Cabral: So we're gonna do it again. We've already done the licensing for the industrial plant. We've achieved the initial financing through the securing of the trade lines. We completed the engineering FPL-3 CAPEX quoting throughout the course of the last year, essentially. We've been working on this for actually more than 12 months now. We are actually comfortable with the capital structure we have. We're going to work to improve it and finance it.
Speaker Change: We've already done the licensee of industrial plant we've achieved the.
Speaker Change: The initial financing through securing of the trade lines, we completed engineering.
Speaker Change: F E L. Three capex quoting us throughout the course of the last year essentially we'd be working at this for actually more than 12 months as of now we we actually are comfortable with the capital structure. We have we're going to work to improve it and finance it but again it averaged nine 3% up a cost.
Ana Cabral: But again, at an average 9.3% cost for trade lines, that's a pretty reasonable cost considering the returns we will achieve out of volumes and production on a cash generation basis. And so with that confidence and with the confidence in the execution ability and execution prowess of our team, the board of directors cleared and gave us the final approval and final investment decision for the construction of phase two in the quarter. With that, I go on to the next page. So Matt, I'm passing this on to Matt.
Speaker Change: For trade lines, that's a pretty reasonable cost considering the returns we will achieve our volumes and production on a cash generation basis, and so with that confidence and with the confidence in execution ability and execution prowess of our team our board of directors cleared and gave US a final.
Speaker Change: Ruble and final investment decision for the construction of phase two in the quarter.
Speaker Change: With that I go on to the next stage, so Matt I'm passing on to Matt.
Matthew Porter DeYoe: Yeah, I mean, again, from the perspective of the company, right, we have a unique track record of being able to build on time and on budget, and we're going to do that again. So, as Ana mentioned, April 1st, Sigma's Board of Directors issued the Phase 2 FID. As we said, the CapEx budget is only about $100 million to add 250,000 metric tons, which is enough lithium equivalent for about 850,000 EVs.
Matthew Porter DeYoe: Yes, I mean again from the perspective of the company right. We have a unique track record of being able to build on time and on budget and we're going to do that again, so as Andrew had mentioned April 1st SYGMA as board of directors. This should the phase two F E. As we said the Capex budget is only about $100 million to add 250.
Speaker Change: <unk> metric tons, which is enough lithium equivalent for about 850000 Evs.
Matthew Porter DeYoe: EPCM teams are finishing earthworks engineering, and mobilization is ongoing. And the phase two flow sheet importantly follows phase one. The goal is to reduce risks as much as possible as we go through this process. The local EPCM team is the same. The parts design team is the same. We're going through Phase 2 with the knowledge and experience gained through Phase 1, which should mean a faster ramp and a faster path to free cash flow as we move forward. This is just a, you know, higher level path to where we're going. And as Ana mentioned, there's a third phase coming on the back end, which is already supported through the infrastructure.
Speaker Change #100: E. P. C. M teams are finishing earthworks engineering and mobilization is ongoing.
Andrew: As to flow sheet importantly follows phase one the goal is to reduce risks as much as possible as we go through this process. The local E. P. C. M team is the same the parts design team is the same but we're going through phase two with the knowledge and experiences gained through phase, one which should mean a faster ramp in it.
Speaker Change #102: Faster path to free cash flow as we move forward.
Speaker Change #103: This is just in a higher level past to where we're going and as I had mentioned theres a third phase coming on the backend which is already supported through the infrastructure. Yeah. So here is kind of the whole picture right. This is the industrial plan, we submitted to our development bank into our investors earlier.
Matthew Porter DeYoe: Yeah, so this is kind of the whole picture, right? This is the industrial plan we submitted to our development bank and to our investors earlier in the year. And that kind of shows graphically where we are and where we're headed and how disciplined we have been in adding production capacity based essentially on the one element in short supply, our ability to execute on time and on budget and comfortably because we're maintaining our operations at the highest standards of performance we set out for ourselves. So we got here in 23 months what we delivered over the last 12 months. So 23 today actually is 175,000 tons produced. So that goes over to now.
Speaker Change #104: The year and that kind of shows graphically, where we are and where we have it and how disciplined we have been in adding production capacity based essentially on the one element in short supply our ability to execute on time and on budget and comfortably up because we're maintaining.
Speaker Change #105: Operations at the highest standards of performance, we set out for ourselves. So we got here in 23, what we've delivered over the last 12 months. So 23 today actually its 175000 tons produced so that goes over to now then we have that cash flow should propel us.
Matthew Porter DeYoe: Then we have that cash flow to propel us and to give us a base. That's our safety net. Let's put it that way.
Speaker Change #106: And to give us a base that's our safety net let's put it that way and then Oh, if you annualize 'twenty four from now we would have 270000 tons of production.
Matthew Porter DeYoe: And then, if you annualize 24 from now, we would have 270,000 tons of production. And again, furthering that safety net of cash generation. So we're building double capacity, approximately double capacity, another green tech line at 250,000 tons. So we're in construction of what equates to 35,000 tons of LCE. And then again, we're gonna do the third line, as I showed you earlier with the drone pictures that are supported by the existing infrastructure that will get us to another 250,000 tons.
Speaker Change #107: And again further in that safety net of cash generation. So we're building up double capacity.
Speaker Change #107: Ultimately double capacity.
Speaker Change #107: The Green tax law line at 250000 tonnes.
Speaker Change #108: So we're in construction of.
Speaker Change #108: You know what equates to 35000 tonnes LC and then again, we're going to do the third line as I showed you earlier with a drone pictures that supported by the existing infrastructure that will get us to another.
Speaker Change #109: Another 250000 tonnes, so you'll get us to 770000 tons of annual capacity so approximately a week.
Matthew Porter DeYoe: So you get us to 770,000 tons of annual capacity, so approximately what we call the magic number of 100,000 tons of LCE a year. Gentlemen and ladies, there are very few companies that can actually deliver and operate at these levels, and they're called the super majors.
Speaker Change #110: What we call the magic number of 100000 tons of L E a year.
Speaker Change #111: Gentlemen, and ladies they're very few companies that can actually deliver and operate at these levels and their coldest supermajors and with our careful.
Ana Cabral: And with our careful, conservative, and disciplined execution, we plan to get there most likely at the beginning of 2026 with three green tag production lines. And we are already on the way with the ongoing earthworks construction for the second one. One point that's important, if warranted, and again it will be a function of the pre-immunization, we do have plans to potentially build an integrated intermediate chemicals line connected to the third line. And again, that is already in the works.
Speaker Change #112: So that if and disciplined execution, we plan to get there most likely at the beginning of 2026 week three green tags production lines and we are already on the way with the ongoing artworks construction for the second one.
Speaker Change #113: One point that's important.
Speaker Change #114: If warranted and again it'll be a function of the premium amortization, we do have plans to in 2026 potentially building Unintegrated intermediate chemicals line connected to the third line and again that is already in the works would be scouting locations for Oh.
Ana Cabral: We've been scouting locations for a potential setting for this industrial plant. Given that, as we like to say in our industry, 2026 is literally around the corner in the metals industrial industry time, 18 months away.
Speaker Change #115: Potential upsetting of this industrial plant given that as we like to say in our industry to enter 26 is literally around the corner in the metals industrial industry time.
Ana Cabral: So with that, I go on to the closing remarks. I mean, essentially, the future has arrived. Sigma is the sixth largest producer globally, and we are on the way to becoming the fourth as soon as we conclude the construction of the second green tech plant. We have the same team, the same execution, the same engineers, even the same suppliers. That's how conservative we have been.
Speaker Change #116: 18 months away so with that I go onto the closing remarks, I mean, essentially the future has arrived I mean Sigma is the sixth largest producer globally.
Speaker Change #117: We are on the way to become the fourth.
Speaker Change #118: As soon as we conclude the construction of the second Greentech plant. We have the same team the same execution. The same engineers, even the same suppliers. That's how conservative we have been so the one unfortunate thing that hasn't happened is that we have not repriced from developer producer, but we believe.
Ana Cabral: So the one unfortunate thing that hasn't happened is that we have not reprised from developer to producer, but we believe that with our resilience and with the cadence and the continued successful execution, that will happen in due course. So, and clearly, you can see on this slide an illustration of the disconnect between Sigma and its peer, peer producers. The following page illustrates that further using fractions, which is a very clear way of prorating valuation to production. So if we were to do that exercise comparing to an America's player or an Australian player, we would end up with similar disconnect asymmetrical results.
Speaker Change #119: With our resilience and with the cadence and the continued successful execution that should all happen in due course, so and clearly you can see on this slide an illustration of the disconnect.
Speaker Change #120: Between Sigma and East fear fear producers.
Speaker Change #121: The following page illustrates that birder, using fractions, which is a very clear way of pro rating valuation to production. So we we want to do that exercise comparing to.
Speaker Change #122: And America's player or an Australian player we would end up at similar disconnect AC magical results. So.
Ana Cabral: So this is an exercise that just shows why we are so steady, steady fast on delivering a cadence execution, consistent execution throughout the year because we do plan to close that gap with mathematical deliveries. And again, it's just a fraction of the market cap of our current market cap with the market cap of players in the Americas or players in Australia vis-a-vis the production they actually deliver currently today. Our production, for instance, compared to a player in the Americas, is essentially a fifth.
Speaker Change #123: This is an exercise that just shows why are we so steady steady fast on delivering a cadence execution consistent execution throughout the year, because we do plan to close that gap with mathematical deliveries and again, it's just a fractional pro rate.
Speaker Change #124: <unk> of our current market cap with the market cap of our players in the Americas or players in Australia. These avi the production they actually deliver currently today our.
Speaker Change #125: And for instance, if compared to a player in the Americas is essentially a fifth however, our market cap is in a fifth of theirs. If you are over to the west to the east to Australia. Our production is half of a very large player.
Ana Cabral: However, our market cap isn't a fifth of theirs. If you were over to the West, to the East, to Australia, our production is half that of a very large player in Australia, but our market cap is a lot less than half. It's almost a fourth of their market cap, which again demonstrates such a disconnect.
Speaker Change #126: And in Australia, but our market cap is a lot less than half its almost a force of their market cap, which again demonstrates such disconnect and with that I'll close.
Ana Cabral: And with that, I'll close. And again, with the key valuation benchmarks that we have already delivered, again outlining the targets that we set out for ourselves, which are actually quite ambitious. I mean, first, we are planning to achieve the cost guidance we set out for ourselves. We are already the industry's second-lowest cost player, and we do plan to stay that way. However, we have a few more dollars of costs to shave from our C1 plant cash costs, and we're planning to march towards that further cost savings as we reach an operational cadence, reaching a year of operations. I mean, again, it's actually important to remind everyone that this is still our first year.
Speaker Change #127: And again with the key valuation we did keep valuation benchmarks that we have already delivered and.
Again outlining the targets that we set out for ourselves, which are actually quite ambitious.
Speaker Change #128: First we are planning to Ah Ah Ah.
Speaker Change #129: Achieved the cost guidance, we set out for ourselves we are already the industry second lowest cost player and we do plan to stay that way. However, we have a few more dollars of costs to shave from our C. One plant our plant cash costs.
Speaker Change #130: And we're planning to March towards that further cost savings as we reach and operational us operational cadence are reaching a year of operations I mean again, it's actually important to remind everyone that this is to our first year. So technically we would shut it should've given ourselves.
Ana Cabral: So, technically, we should have given ourselves some margin for commissioning, but we didn't because the lithium pricing environment didn't allow us to have any margin of error. So, we set out to meet the ambitious low-cost targets almost out of the gate, and here we are. The next milestone will be to commission the second green tech production line, and we're already up with earthworks construction engineering underway. So, we do believe that we're going to meet the same exact construction milestones as last time. We have the same team, similar leadership, engineers the same, everyone's basically the same. As I said earlier, not even suppliers we're risking to change. That's how conservative we are.
Speaker Change #131: So margin for commissioning, but we haven't because the lithium pricing environment did not allow us to have any margin of errors. So we set out to meet the ambitious low cost targets almost out of the gate and here. We are the next milestone will be to commission the second Green tax production line.
Speaker Change #132: And we already up with earthworks construction engineering underway. So we do believe that we're going to meet the same exact construction milestones as last time, we have the same chi.
Speaker Change #133: Similar leadership engineers, the same everyone's basically the same as I said earlier, not even suppliers, who are risking to change that's how conservative we all so it's basically a repeat of what will be done before one line at a time. So this is on the left how much we've delivered and you can see for yours.
Ana Cabral: So it's basically a repeat of what we've done before, one line at a time. So this is on the left how much we deliver. And you can see for yourselves, I mean, we deliver zero carbon, we expanded the resource to an estimated resource of 150 million tons, and we're drawing from that resource into proven improbable 2P reserves, which we just increased on feasibility to 77 million tons, expanded by 40%. We've been delivering consistent monthly shipments of around 22,000 tons every 35 days. We mobilized phase two, delivered the final investment decision on phase two, and began construction.
Speaker Change #134: Salves I mean, we deliver zero carbon we expanded the resource to estimated resource to 150 million tons and withdrawing from their resource into proven and probable two P reserves, which we just increased visibility up to 77 million tons expanded and 40%.
Speaker Change #135: And we've been delivering consistent monthly shipments of around 22000 tons every 35 days.
Speaker Change #136: We mobilized stage to deliver the final investment decision on phase two began construction. So again, we set up a target we focus execution and we deliver which as I.
Ana Cabral: So again, we set up a target, we focus on execution, and we deliver, which, as I'll reiterate again to close, is the one thing that scars in this industry, superb execution, superb resilience, as it has been demonstrated by our team, which faced market headwinds in our first year of operations and came out the industry's second lowest cost producer and second lowest cost, sixth largest producer. And thank you for everything. Thank you, everyone, for your trust. Thank you, everyone, for your confidence in us. And with that, I close our first quarter 24 earnings presentation, and we'll take questions. Yes. Thank you, Dennis.
Bud Brazilians: Well raise their rates again to close is the one thing that's cars in this industry superb execution. So bud Brazilians as it has been demonstrated by our team which faced market headwinds in our first year of operations and came out the industry second lowest cost producer.
Bud Brazilians: And six largest second lowest cost six largest producer and thank you for thank you everyone for your trust. Thank you everyone for your confidence in us and what we that I close our first quarter 'twenty four earnings presentation, and we will take questions. Yes. Thank you Dennis.
Matthew Porter DeYoe: Yes, thank you, Dennis. If you can move now to Q&A, that would be great. If you would like to ask a question, simply press star.
Speaker Change #138: If you can move now to Q&A that would be great.
Speaker Change #138: Yeah.
Dennis: If you would like to ask a question, simply press star, then the number 1 on your telephone keypad. Once again, to ask a question, please press star 1 on your telephone keypad. Your first question is from the line of Brock Hoffman with Bank of America. Please go ahead. Paul, I was just wondering, can you provide the latest regarding the strategic review?
Speaker Change #139: If you would like to ask a question simply press Star then the number one on your telephone keypad. Once again to ask a question. Please press star one on your telephone keypad.
Speaker Change #139: Your first question is from the line of Rock Hoffman with Bank of America. Please go ahead.
Rock Hoffman: Oh, just so I'm wondering can you provide the latest regarding the strategic review and is currently on pause.
Ana Cabral: Yes, it is. We've been publicly reiterating that phone pause, and again, the reasons are quite clear. I mean, there's a symmetrical disconnect between what we believe our fair value should be.
Speaker Change #141: Yes. It is we've been a publicly reiterating that phone pause and again the reasons are quite clear I mean, there is not symmetrical disconnect between what we believe are fair value should be.
Ana Cabral: And we decided, given the strength and resilience of our operation, that we would just continue to deliver. We have a fantastic business, and there's absolutely no pressure to conduct any review from our end. So we will deliver on the targets we set out for ourselves and probably emerge two years from now and decide what we are going to do for the next phase of growth.
Speaker Change #142: And we decided to given the strength and resilience of operation that will just continue to deliver it we have a fantastic business and Theres absolutely no pressure to conduct any review from our and so we will deliver on the targets, we set out for ourselves and probably you merge two years from now and decide well we were going to do.
Speaker Change #143: <unk> for the next phase of growth.
Ana Cabral: And just to follow up on the LG press release regarding arbitration, just wondering what the timeline is on that and any updates in that process. Well, we have a very friendly relationship with the LG Group and with South Korea, and there's going to be more positive news on that end that we're going to publicize in due course. But what I can say as of now is that the commercial relationship actually couldn't be better with the LG Group as a whole, and that includes their trading arms, which were actually visiting our plant facilities at the time.
Speaker Change #143: Understood.
Speaker Change #143: Just a follow up.
Speaker Change #144: In regards to the Oh Gee press release regarding our arbitration just wondering what the timeline is on that and any updates in that process.
Speaker Change #145: Well, we have a very friendly relationship with the LG group and with South Korea.
Speaker Change #146: And they're gonna be more positive news on that and that we're gonna publicized in due course, but what I can say as of now is that the commercial relationship actually couldn't be better with the LG group as a whole and that includes their trading arms with which was actually visiting our up plants facilities at the time another subsidy.
Ana Cabral: Another subsidiary of the group initiated arbitration and kind of made everyone rather dumbfounded. But again, that's been amended, and we just want to reiterate how we have a fantastic relationship with both the government of South Korea and with LG Group as a whole. And we don't see any reason to worry about it. Thank you.
Speaker Change #147: The area of the group initiated arbitration and kind of made everyone, rather dumbfounding, but again, that's demanded and we just want to reiterate how we have a fantastic relationship with both the government of South Korea, and with LG group as a whole.
Speaker Change #148: And we don't see any reason to worry about it.
Ana Cabral: There you go. Thanks.
Speaker Change #149: Okay. Thanks.
Speaker Change #149: Yeah.
Speaker Change #149: Yeah.
Speaker Change #149: Yeah.
Dennis: Dennis, if you want to move on to the next question,
Speaker Change #149: Dennis if you want to move onto the next question.
Dennis: Of course, your next question from the line is from Mack Will with Cormark Securities. Please go ahead.
Mac Whale: Of course your next question from live of Mac whale with <unk> Securities. Please go ahead.
Matthew Porter DeYoe: Hi, good morning guys. Congratulations on bringing the cost down quite handily. I was wondering, can you speak a little bit about the two big items in there versus Q4 in mining services and consumables. Why such a big decrease in those two items, in particular?
Mac Whale: Hi.
Speaker Change #151: Good morning, guys say, congratulations on bringing the cost down quite candidly I was wondering can you speak a little bit too I saw two big items in their Q4 and mining services and consumables.
Speaker Change #152: Why such a big decrease in those two items in particular.
Matthew Porter DeYoe: So, hey Mac, on the consumable side... We got pretty effective at using our ferrosilicon and recycling that through the process. If you recall, we installed the magnetic separator in November, and part of that was on the tailing side of the equation and being able to improve our recyclability of ferrosilicon through our process.
Speaker Change #153: So hey, Mac on the consumable side.
Mac Whale: We got pretty effective in using our ferrous silicon and recycling that through the process, if you'd recall as well we installed the magnetic separator in in November and part of that was on the tailing side of the equation and being able to improve our recyclability of ferrous silicon through our process.
Matthew Porter DeYoe: Also, some of these purchases may be a little bit lumpy, but we are getting better at optimizing and running the plant. So that's going to explain a good portion of the consumable side, as well as decrease in the shared services. I'll have to double-check, but look, as part of what we've said, we're removing a lot of on-site contractors and replacing them with domestic and local labor. So as the roll-off happens, you're going to see perhaps an overall reduction in costs, but also a little bit of left overs, right overs as some of that stuff gets allocated and reallocated through our cost lines, if that makes any sense
Speaker Change #154: So some of these purchases, maybe a little bit lumpy, but we are getting better at optimizing and running the plant. So.
Speaker Change #154: That's going to explain a good portion of the consumable side.
Speaker Change #155: The decrease in the shared services.
Speaker Change #155: I'll have to double check, but look at it as part of what we said we'll.
Speaker Change #156: We're removing a lot of onsite contractors and replacing them with domestic and local a local labor.
Speaker Change #157: So as the roll off happens you're going to see perhaps an overall reduction in cost, but also a little bit of left pocket right pocket is some of that stuff gets allocated and reallocated through our cost lines if that makes any sense.
Matthew Porter DeYoe: Yeah, that's helpful. And then on the G&A, your various sort of under the operations line on some of your costs for G&A, in particular, were lower. Is that a good run rate now, and we should look at those line items going forward?
Speaker Change #158: Yeah. That's helpful and then on the G&A you various sort of under underneath the operations line.
Speaker Change #158: Some of your costs for G&A in particular was lower.
Speaker Change #158: Good run rate now and if you look at those line items going forward.
Matthew Porter DeYoe: Yeah, look, GNA is, obviously, as we've tried to portray on our 4Q call, right? There's a ton of noise and clutter in the annual SG&A number. We had a lot of confidence that it would come down.
Speaker Change #159: Yeah look G&A is obviously as we've we try to.
Speaker Change #160: Portray on our <unk> call right. There is a ton of noise and clutter and in the annual SG&A number and we had a lot of confidence that would come down.
Matthew Porter DeYoe: To the extent that the strategic review is paused, obviously, some more costs will come out of the business, but it's at a pretty good level, considerably lower than where we were. And again, some of these productivity initiatives that we've been taking take a little bit of time to move through the system. You know, you can't shut off all costs at the end of the year; some of that stuff bleeds. But, you know, the goal is to keep a very draconian approach to all costs.
Speaker Change #161: To the extent the strategic review has paused, obviously, some more costs will come out of the business, but is that a pretty good level.
Speaker Change #162: Considerably lower than where we were and again some of these productivity initiatives that we've been taking take a little bit of time to move through the system you can't shut off our cost at the end of the year some of that stuff leads but you know.
Speaker Change #163: The goal is to keep a very draconian approach on all costs.
Matthew Porter DeYoe: If you've talked to me recently, what I say is that I really love $1,200 a ton spodumene because, you know, we can generate cash, and we can grow in this market, but it also keeps everybody honest on cost. So you should expect the same level of, I can use the word draconian, but you know intensive cost control internally at Sigma to continue to deliver on these numbers as best we can.
Speaker Change #164: If you talk to me recently, when I say that I really I really loved $200 a ton spodumene, because we can generate cash and we can grow in this market, but it also keeps everybody honest on costs.
Speaker Change #165: So you should expect the same level of.
Sigma: You can use were draconian, but you know intensive cost control internally at Sigma to continue to deliver on these on these numbers to the best we can.
Matthew Porter DeYoe: And do you think this is the environment for pricing improving? Are we going to see how these provisional pricing situations change as we move through the year?
Speaker Change #167: And do you think this is the third.
Speaker Change #168: Environment for pricing improves or are we going to.
Speaker Change #168: C.
Speaker Change #169: Like how will these provisional pricing.
Speaker Change #170: Situations change as we move through the year.
Ana Cabral: I'll take that. Hey, Matt. It's Ana.
Speaker Change #170: I'll take that Hey, Matt.
Speaker Change #170: On.
Ana Cabral: Provisional pricing is, we believe, a commercial element of the past. And in our case, it doesn't really connect as much with the market environment, but it's 100% connected to us, basically, from the beginning in the marketplace. A lot of our clients' experience of our product had been with what we call bulk samples, 100 ton, 200 ton samples, but this last 12 months was the first time they actually got to try full tonnages.
Speaker Change #171: The provisional pricing is we believe a a commercial element of the past and in our case it doesn't really connect with as much with the market environment, but it is 100% connected to us basically beginning in the marketplace.
A lot of what our clients are experienced our products had been to what we call bulk sample was 100 times when a ton samples, but in this last 12 months was the first time, they actually got to try full tonnages and as he happened.
Ana Cabral: And as it happened, the clients experienced the 20 to 30% cost savings that our product brought to them by themselves. So they actually measured the cost savings in their own refineries. So that actually moved our commercial conversations to a completely different level. Because, as we like to say, lithium prices globally are still in their infancy. It is as if copper concentrate and iron ore got married, and lithium prices for concentrate would borrow from each. Like you would borrow purity from copper concentrate, and you would borrow lump size from iron ore. But we weren't seeing any of that in our high purity, coarse, lumpy product.
Speaker Change #172: Declines experienced a 20% to 30% cost savings are that our product brought to them by themselves. So they actually are measured in their own refineries the cost savings so that actually moved our commercial conversation so completely different level because as.
Speaker Change #173: We like to say.
Speaker Change #174: Prices globally are still in its infancy. It is as if copper concentrates and iron ore got married and lithium prices for content trade would borrow for me like you would borrow parity from copper concentrate and you would borrow lump size from iron ore and we don't see we werent seeing any of it.
Speaker Change #175: In our high purity course lumpy product. So we believe that as the client experience the product and software themselves. The cost savings we brought to their refineries they would be more amenable to a non provisional and final price conversations and we demonstrated that firstly the fixed pricing.
Ana Cabral: So we believe that as clients experience the product and see for themselves the cost savings we bring to their refineries, they will be more amenable to non-provisional and final price negotiations. And we demonstrated that first with a fixed price that we delivered last month. It was fixed and final, just like the great players in the industry, like ALB and others.
Speaker Change #176: That we deliver last month it was fixed and final just like the great players in the industry like Albion and in others and then we now this month, we moved to what we call. The best place the Holy Grail of pricing, which is a fixed like fixed floating formula where we work if our client that's why we say it's a partnership we're not fixing it.
Ana Cabral: And then we now, this month, we moved to what we call the best place, the holy grail of pricing, which is the fixed floating formula, where we work with our clients. That's why we say it's a partnership. We're not fixing at their expense. We're floating to their quote, which is the hydroxide LME.
Speaker Change #177: Their expense with floating to their quote which is hydroxide alami, but were fixing our value capture to their quote so we're being friendly with the industry because it floats with them. So we're not squeezing anyone's margins, but we're capturing what we believe to be our premium amortization in those prices and that's how we would like to stay throughout the.
Ana Cabral: But we're fixing our value capture to their quote. So we're being friendly with the industry because it floats with them. So we're not squeezing anyone's margins. But we're capturing what we believe to be our premiumization at those prices. And that's how we would like to stay throughout.
Speaker Change #177: Yep.
Matthew Porter DeYoe: I'd say, Mac, I think the last thing, right? We did, April was locked in at a firm price. May, we have the firm 9% lock. But on the floating, look, we're fairly confident we're towards the bottom end of the cycle here on price.
Speaker Change #177: I'd say Mark I think the last thing right. It's a little switch right. We did April was locked in firm price may we have the firm 9% locked but on the floating look we're fairly confident we're towards the bottom end of the cycle here on price.
Matthew Porter DeYoe: So we want to retain some of the optionality of that as the cycle improves over time. And so locking the commitment on the 9%, but keeping some optionality on the cycle. We're a low-cost producer, and you're investing in a lithium company. We want to give everybody, and everybody should have the economics on the upside. So that's all.
Speaker Change #178: We want to retain some of the optionality of that as the cycle improves over time.
Speaker Change #179: Locking the commitment on the 9%, but keeping some optionality on the cycle and that's you know.
Speaker Change #180: We're a low cost producer and you're investing in a lithium company. We wanted to give everybody and everybody should have the economics on the upside. So that's what exactly we can this is this is essentially the core building the customer partnership, which again you look at the copper concentrate industry. The iron ore industry. That's how this industry has evolved into the premium pricing and so we believe in partnership.
Ana Cabral: Exactly. We can. This is essentially the core building of the customer partnership, which, again, you look at the copper concentrate industry, the iron ore industry. That's how these industries evolved into premium pricing. And so we believe in the partnership of our customers. And it's exactly what we're doing. Thank you. Yeah, Dennis, if you want to prompt, but otherwise, we can close down.
Speaker Change #180: With our customers and this is exactly what we're doing.
Speaker Change #180: Thank you yeah, Dennis if you want to reprice, but otherwise we cannot close down.
Dennis: Once again, if you would like to ask a question, simply press star 1 on your telephone keypad. And at this time, you may continue with your closing remarks.
Speaker Change #181: Once again, if you would like to ask a question simply press star one on your telephone keypad.
Speaker Change #182: And at this time you May you may continue with closing remarks.
Matthew Porter DeYoe: So I'll just leave it there. Thank you everyone for joining our call. We look forward to updating you as shipments and the company progresses through our 2Q build, and we'll look forward to re-engaging on 2Q earnings.
Speaker Change #183: So I'll just leave it there. Thank you everyone for joining our call.
Speaker Change #184: We look forward to updating you as our shipments and the company progress is through our <unk> Bill and we'll look forward to re engaging our onto Q earnings. So enjoy the rest of your day. Thank you. Thank you. Thank you everyone.
Matthew Porter DeYoe: So enjoy the rest of your day. Thank you. Thank you. Thank you, everyone.
Matthew Porter DeYoe: Thank you. Thank you, everyone.
Matthew Porter DeYoe: and the company progresses through our 2Q bill, and we'll look forward to re-engaging on 2Q earnings. So, enjoy the rest of your day. Thank you.
Speaker Change #184: And as the company progresses through our <unk> Bill and we'll look forward to re engaging on to Q earnings. So enjoy the rest of your day. Thank you.