Sigma Lithium Corporation

good morning everyone my name is regina and i will be your operator today welcome to the sigma lithium second 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 and company executive vice president matthew dio we will now turn the call over to matthew dio thank you regina and good morning everyone

Thank you for joining us for our second quarter 2024 earnings conference call. As Regina noted, on the call with me today is company CEO and co-chairperson Anna Cabral. After the market closed yesterday, we published our 2Q financials, which are available both through SEC and CEDAR. Before we begin, I'd like to cover two items. First, during the presentation, you will hear certain forward-looking statements concerning our plans and expectations. We note that actual events or results could differ materially from the changes in market conditions in our operations. And 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 the descriptions of adjustments, can be found in the back of the press releases. With that, I will pass it over to Ana.

Hi, good morning, everyone. I am very, very pleased to present to you with our second quarter of 2024 quarterly results. We are actually delighted that we have managed to achieve all around operational excellence, thriving in our financial results despite what it is a lithium price environment that we just do not control so what we're going to show in these results is that we have what we control all of our operational elements fully managed and actually demonstrating our operational excellence so Starting with the volumes, we further increase the cadence of volume sold to 22,000 tons of material shipped every 30 to 35 days. So that means we have achieved what we call reliability as a producer, which is linked to our ability to receive favorable rates and favorable terms in export-linked credit, meaning credit lines linked to our ability to continue to maintain this export track record. Another very important point in delivering our strategy was the ability to continue to increase the sales price premium relative to our competitors. That's a key element of our strategy, and it's a result of increased commercial assertiveness. So as we deliver cadence of volumes, And as we are rewarded by the banking system with more favorable credit linked to the export financing, we are able to continue to push, continue to exercise commercial assertiveness and therefore achieve a sales price premium. So these elements are all interlinked. Performance, favorable credit lines, and then price premiums. premium performance. On the cost front, on the operational front, we are just delighted to have been able to print one of the highest cash margins in the sector, especially when this happened against the quarterly where the backdrop of top line resulting from lithium prices wasn't, again, something we controlled, but wasn't as favorable. So it means that by posting this cash margins, we do have our cost structure well under control. And at that, I mean, again, we're very proud of having reached our cost targets for 2024 ahead of schedule, meaning we're now, we continue to be amongst the lowest in the sector and we managed to print every cost target that we indicated to investors early in the year for the year 2022. And we're just in the second quarter, which just shows the direction of this trajectory. We do believe that this is the result of a bottom-up, top-down culture. So it would be impossible to achieve all these metrics if we hadn't implemented what we call a culture of excellence and high standards amongst our employees. And that starts with a clean metric that's highly beneficial to them, which is safety. Again, we're very proud of having completed the full year with no fatalities, zero fatalities and zero accidents without loss of work, which means we send our people back to their families safe. And we've been doing that for an entire year, which is an incredible achievement for a young operation. That has catapulted us to the very top of the metals and mining industry rankings as measured by ICMM, the International Council of Metals and Minings Companies. There's just one company that ranks above us on these combined ratings. If you could please turn to the next page. So I think the summary of where we are is, again, we were able to combine three attributes that are quite unique and not easily combinable in our industry. We initiated our shipments last year in operating in large scale. We have been maintaining low production costs consistently, and we have been delivering the most sustainable lithium in the world. Our lithium became a brand for all attributes related to sustainability and traceability. Not one company in our space has been able to deliver what we call the trinity of metal producers since 2018 when our dear Bilbao initiated their operations. So six years have passed. Billions of dollars have been invested in the lithium industry, quite a lot of hype, a massive cycle, but not one company has been able to deliver the trinity that we actually have delivered, which demonstrates how rare an achievement this is. On the next page, then, I will encourage you to look at our operational highlights. And again, I'm going to start with the slide where we implemented this culture of excellence and high standards, which drive our entire performance and has been driving our entire performance throughout 2024. We're very, very proud to present this slide because the numeric quantification of our ability to operate our Graca do Cirilo industrial mining facilities adhering to the highest operational standards. We were able to surpass in the ICMM rankings, dozens of much larger and much more mature metals and mining company producers, just demonstrating that we had to quickly rise to the occasion during our first year, meaning we didn't have a break and no slack was cut for us. Essentially, we had to straight out of the gate, behave like a seasoned producer, commission like a seasoned producer, and ramp up like a seasoned producer. There are several operational milestones that we will be showing here today, which are actually rarely achieved by a company that's just one year old. And the rankings you see here are just one of these. The next page, talks about our cadence of volume shift, which, again, we were able to establish that reliable cadence of product sales, which are hallmark of the operational maturity of a seasoned producer. We have sold 52,500 tons of our quintuple zero green lithium concentrate, both in the first and the second quarter, which means we were able to manage the cadence and reliability of our shipments. That was possible because of our enhanced creditworthiness at the end of the first quarter. So we were able to conduct what we call FOB sales at warehouse, which again are a hallmark of trustworthiness and reliability between Sigma and its clients. when we transfer ownership of material at port to its final client before it boards the ship, which again is another operational milestone rarely achieved by a company that's just one year old. The next page has a color coding because it just highlights two different moments in our one year history. Again, we are now a seasoned producer. We demonstrate shipment by shipment on this page that we have this cadence and reliability of consistently shipping 22,000 tons every 30 to 35 days, which drive our export credit lines increasingly more favorable terms and rates. And again, it underpins our commercial independence and commercial assertiveness. The color coding demonstrates this evolution of our commercial strategy. In other words, we've gone from the first six months where we had a counterparty trader that was the principal, moved into where we are today, where there are various forms of exercising assertiveness, selling to end users, selling to counterparty traders, uh, trading agencies, but trading companies as agents, uh, and, uh, again, this last shipment, this, this was capped. This one year was capped by sending the last shipment to Mitsubishi, which is a very large, uh, industrial KDAD. So in Japan, they just associated itself with two other automakers for, uh, EV strategy and EV development. So we hit the stride. And again, we want to also leave you here, um, with the certainty that we're going to further enhance this cadence, meaning we're targeting 60,000 tons of sales for the upcoming third quarter, closing on September 30th, which is basically just 45 days away. This track record that we established allows us to basically tap into these leading global supply chains for lithium. Again, going direct to, you know, downstream members of these supply chains, because this is the result of this commercial flexibility. One of the other points that we want to make, I mean, we are pretty agnostic as far as our client base, but typically given that Asia concentrates the supply chain manufacturing today, we've been equally distributing our shipments into Japanese, South Korea, and Chinese clients. which is a reflection of the industry. The next page, again, is a derivative of the previous page. As you can tell, on the left chart, you have basically the quantification of these two different moments of commercial strategy. First, we had the first six months, and then on this page, we demonstrate where we are today, where we continue to premiumize, we continue to increase sales price premium relative to peer lithium producers. We've been maintaining an average of 10% price premiumization today, which again, are a result of this cadence, reliability as a seasoned producer. And then more importantly, the financial flexibility of our own credit and customer financing lines, because that allows us to navigate what we call mini cycles in a cycle, meaning the purchase cycles of the spring and fall that take place in this industry, which allow us to sell into the purchase cycle and therefore achieve the price premiumization. So we are now able to starting to monetize gradually what turns out to be a chemically superior quality of our quintuple zero lithium concentrate. And at that, we turn to the next page, where we basically numerically demonstrate that this high quality is what drives premium pricing. But more importantly, it's a win-win situation for our customers because our customers save significantly if they acquire our product, even at a premium price versus the product of our competitors. In other words, our high quality is chemically measured. And it translates into this cost savings for our customers and their supply chains. So buying a ton of product from Sigma means that the client saves approximately 20% to 30% in raw materials when refining lithium hydroxide chemicals. Everything else staying the same. So it's a gradual process for us to simply grab that, to simply understand monetize a portion of that, leaving another portion for the customer in a full win-win relationship. The next page talks a bit about the operational improvements that we have been able to affect in our green-black plant over the last year. I mean, we're very proud of this because we keep on perfecting this plant in a continuous effort. And as you recall, it started with the dry stacking. So a year ago, we were barely finishing commissioning the dry stacking, which has been a centerpiece of our overall purpose as a company, to deliver the most sustainable lithium materials in the world, which meant for us not to produce a tailings dam, which means we dry stack our fines and our ultra-fines produced by the green tech plant. That means we're also able to maintain minimum levels of water usage because we reuse all that water, which in our case comes from sewage. Now, those operational improvements translate into decreasing the shipment intervals between each boat. So the target is to get to 30 to 35 days driving maximum efficiency of the plant and reducing the shipment intervals. And this is kind of how we are going to get to our annual guidance. Now, within the Green Tech DMS, we again have been affecting further adjustments and further perfecting this plan. Essentially, we have been able to reprocess the fines that were generated in the early commissioning period which have higher grades. They have lithium oxide grades of about 1.5%. So that means we are benefiting from a double whammy here, where the improvements in the circuit increase daily productivity. So we have higher recoveries and higher daily production, but we also utilize that circuit to concentrate material that if we didn't dry stack, would be otherwise left inside the tailings dam. So by recycling material that has zero cost, because it was just essentially tailings, but we had dry stacked it, we are able to gradually increase our throughput of high purity, quintuple zero lithium concentrate. So some of these results of this continual improvement has already been reflected In our third quarter performance, hence the robust guidance of 60,000 tons of lithium materials to be shipped in the third quarter that we plan to hit, just resulting from the work we've already done. And I think lastly, regarding the crusher, we keep on playing around with new flow sheets for the crusher, which again, help us increase the efficiency. So the latest a change in flow sheet is that we're going to create a new setup, which is in line with basically the best crush designs in the world that separate screens from the motor. Again, improving crusher efficiency and benefiting from the customized crusher we created at the plant, which has 1,200 milliliters of job crusher opening, which means less fines, which means higher yield, which means higher productivity. So that's what it all means. Decreased cadence is a result not of one great change, but of a myriad of improvements on this plant that actually lead to our higher confidence that we'll be hitting 60,000 tons of lithium concentrate sales in the third quarter. So with that, I'll hand over to my partner, Matt Dejo, to go over our financial highlights.