Sigma Lithium Corporation

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 is company CEO, Anna Cabral Gardner, and company executive vice president, Matthew Dio. We will now turn the call over to Matthew Dio. Thank you, Dennis.

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, Anna Cabral. This morning before market open, 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 and our operations. 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. With that, I'll pass it over to Ana. Ana?

Ana Martinez- Hi. Thank you, Matt. Good morning, everyone. 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 prospect as we have been advancing towards key catalysts of our plan to double production capacity by 2025. 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, basically reaching a $1,290 pricing. That represents an 11% increase to the April 24th realized pricing. The numbers we released for the first quarter of 2024. So that clearly demonstrates that the pricing trend is upwards. An 11% increase from previous month and an overall almost 30% increase from the average pricing of the previous quarter. 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 the cost of $397 per tonne. 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 investment decision on a fully funded expansion to double production to 520,000 tons annually, equivalent to 70,000 tons LCE. So on the next page, we demonstrate that we've been delivering our vision to combine this large scale production with low cost and highest standards of environmental and social sustainability in lithium. These three elements are rarely achieved together. 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 lowest production costs. So here we are delivering on all the three rather paradoxically fronts. The next slide illustrates one of our key deliveries for the quarter, demonstrating how we became the four largest producing lithium industrial mineral complex globally. So Sigma now is the first non-Australian in the top five. We are trailing behind Greenbushes, Pilbara and Wadena. Grota do Cirilo is now at 4.8 million tons of LCE equivalent with a very high grade average at 1.4 tons. And that's the result of a 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 in 14%. It's a significant milestone. Why is that? Because it lengthens the life of the project to 25 years. And therefore, as we expand to double capacity, we now have a operation that is sustained for 25 years. That is a moving target. 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 just are demonstrating the mineral resources in one of our four properties. With that, I move forward to the following page, to page seven, where we, again, deliver on the mathematics of our numbers. And we love mathematics because numbers don't really bring an opinion with them. 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 already reached 178,000 tons, which delights us all, given our pioneering dry stacking circuit of the dense media separation industrial plant, the GreenTac plant. 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 is, again, reaching our mark of capturing a 9% share of the value of the lithium hydroxide posted at the London Metals Exchange. which now is equivalent to $1,290 per ton. That number is a fixed floating formula, and you will be adjusted by that lithium metals exchange price one month after the delivery. We were able to achieve that and in parallel to deliver on our very low marks, on our very ambitious marks of a 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 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 at the second position, which makes us incredibly resilient to lithium cycles. So we're here to stay. In the meantime, we've also maintained our liquidity. So our cash position in March 31st at the end of the quarter was 108 million US dollars. So the 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, the teams. 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 of 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 and probable mineral reserve. 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 service. So on the next page, I'll initiate this section and then I'll hand over to my partner, Matthew Dejo. We wanna again, rate to rate how resilient and how reliable and how consistent our business has been since we made our first shipment. We have reached scale during 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 have been delivering these premium prices through auction slash price discovery conversations with our customers. 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 reached 20 to 30 percent over 2020. competing products in the marketplace. And that translates in commercial leverage. So mathematically, we demonstrate that with a 25% increase from the realized prices in the first quarter. This is not a valid menu option. So The page illustrates also in the two colors, in yellow color, what we believe to be the market benchmark, and in the blue color, what we believe to be our own pricing benchmark. So as you can see in the arrows, From the February, which is Lunar New Year, through office of the industry onward, we've been able to premiumize 25% our prices. From last month alone, we were able to achieve an 11% price increase. 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 the clients measurable chemical savings if compared to other available competing products in the marketplace. So by no means is it win-lose game. It's just the flourishing of commercial partnerships with our clients. 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, where we've gone from 8.75% of it to 9% of the index. 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 products. Typically, the average premiumization would be 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. So clearly a win-win relationship with our esteemed customers. On the next page, it's interesting when we place costs in perspective. We're demonstrating that Sigma is 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 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 And a 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 here in green, you can see Sigma as 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 on 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, you actually end up with just 900,000 tons of LCE equivalent production projector for 2025. If you add up everyone in the low cost traceability quartile all the way up to the midpoint of the cost curve, you end up with a million tons of LCE. Why am I making this point? If you please turn over to the next page, page 11, you can clearly see that the lithium demand being robust, 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. If you look at 24 this year, we're hinging on a fine balance. 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 simple. 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-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 covered or will be covered increasingly with high-cost product unless another sigma pops up. 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 EV growth in China alone, as you can see on the charts on the right, the world will need between 30% And 50 new segments that will have to pop up between now and 2030, which, again, demonstrates that on the low cost traceable and large scale, there's clearly a shortage of data. operational companies. So prices will eventually have to move to make feasible the high cost traceability challenge products on the right end of the cost curve that we saw on the previous page. And with that, I will move to the next section and I'll pass over to Matt Dale, my partner here, so that he can discuss some of our financial first quarter 24 earning highlights.