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Sigma’s $45 million project finance beneficial for lithium industry – report

Finished product with 6% Min. Li2O from the Grota do Cirilo project. (Image courtesy of Sigma Lithium Resources).

Market research firm Roskill has published an analysis where it reports that Sigma Lithium Resources’ (TSX-V: SGMA) $45 million finance by Societe Generale for its Grota do Cirilo project in Brazil sent a positive message about the state of the lithium industry.

The announcement was made in late June and it marked a second green funding success in as many weeks for the lithium sector, following on from Livent’s $225 million green debt facility. 

“With an interest rate of US LIBOR plus 5%, dropping to LIBOR plus 4.5% after completion of the project, this deal highlights the relatively low-cost access to capital lithium producers can gain, even in a tough market, by leveraging the green credentials of their product (which can be used in the production of rechargeable batteries),” the report reads.

“In the case of Sigma, these green credentials have been bolstered by its access to hydro-power (reducing its scope 2 GHG emissions) and its wider Environmental, Social, and Governance (ESG) focused development of the project, which has helped it meet the EPs.”

Sigma Lithium’s $45-million project finance beneficial for the lithium industry - Roskill
Pilot plant at the Grota do Cirilo project. (Image courtesy of Sigma Lithium Resources).

According to Roskill, Sigma’s financing package includes environmental and social covenants following the Equator Principles, which are a set of voluntary guidelines adopted by private financial institutions to ensure that large-scale development or construction projects appropriately consider the associated potential impacts on the natural environment and any affected communities. 

The package will be supplemented by a production prepayment facility signed with Mitsui & Co in April 2019 and an approximate $10-million equity contribution, which is required to satisfy the funding package.

Located in Minas Gerais, Brazil, the Grota do Cirilo project is initially expected to produce 220ktpy of 6% Li2O spodumene concentrate from the Xuxa deposit. The construction capital cost for the project is currently estimated at $82 million.