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    SGML
    Earnings call· Jun 2026(Q2 FY26)

    Sigma Lithium Q2 FY26 earnings call SGML

    Aug 14, 2026 Source

    Executive summary

    Sigma Lithium Q2 FY26 — Record Production, Margins, and Lowered Cost Guidance

    Sigma Lithium delivered a strong second quarter, marked by record production volumes and industry-leading margins, driven by operational efficiencies and cost control. The company is advancing its growth strategy to significantly expand capacity by 2028, capitalizing on robust lithium market demand. While facing a temporary operational suspension, management is confident in its financial position and ability to resolve the situation.

    Highlights

    5

    • Achieved record production of 35,400 tonnes of lithium oxide concentrate in Q2 FY26, a 52% increase over Q1.

    • Delivered a record 47% EBITDA margin and maintained a high 60% gross margin due to disciplined cost control.

    • Generated $27 million in cash from operations during the first half of the year.

    • Lowered FY26 all-in sustaining cash cost guidance to $668 per tonne, reinforcing cost leadership.

    • Repaid 25% of total debt in the last year, deleveraging the balance sheet by 43% over the last two years.

    Concerns

    2

    • Experienced a temporary suspension of mining and processing operations due to TAC negotiations, with an uncertain restart timeline (best case next week, worst case 2 weeks).

    • Analyst noted $13 million cash flow in Q2, which management clarified was 'more' but with $27 million sold not yet converted to cash.

    Guidance & targets

    10
    CategoryTargetConfidence
    All-in sustaining cash costs
    $668 per tonne
    high materiality
    High
    Total cash cost
    $620 per ton
    medium materiality
    High
    Production forecast (Plant 1)
    240,000 tonnes of high-grade lithium concentrate per year
    high materiality
    High
    Production forecast (Plant 1, all circuits)
    330,000 tonnes per year
    high materiality
    High
    Installed capacity (with Plant 2)
    580,000 tonnes of high-grade lithium concentrate per year
    high materiality
    High
    Installed capacity (with 3 plants)
    830,000 tons of installed capacity for production
    high materiality
    High
    Cash flow forecast (Plant 1, 12 months forward, $1,500/ton)
    $166 million
    medium materiality
    Medium
    Cash flow forecast (Plant 1, 2027 production, $1,500/ton)
    $360 million
    medium materiality
    Medium
    Cash flow forecast (Plant 1, 12 months forward, $2,500/ton)
    $235 million
    medium materiality
    Medium
    Cash flow forecast (Plant 1, 2027 production, $2,500/ton)
    $0.5 billion
    medium materiality
    Medium

    Operational metrics

    30
    Gross margin
    60%Maintained
    Q2 FY26

    Maintained high gross margin.

    EBITDA margin
    47%
    Q2 FY26

    Record high EBITDA margin.

    Operating margin
    32%
    Q2 FY26

    Operating margins remained positive.

    Net margin
    Positive
    Q2 FY26

    Maintained profitability with a positive net margin.

    Production volume
    35,40052% increase over Q1
    Q2 FY26

    Lithium oxide concentrate production.

    Net revenues
    $55 million
    Q2 FY26

    Highest net revenues in company history.

    Plant gate cost
    $401Decreased over 30%
    Q2 FY26

    Cost per ton block gate.

    CIF cost
    $452Decreased over 30%
    Q2 FY26

    Cost per ton CIF.

    All-in cash costs
    $668
    Q2 FY26

    Tremendous resilience and competitive advantage.

    Net lithium price (SC5)
    $2,089
    Q2 FY26

    Realized for SC5 product.

    Revenues
    $97 million
    H1 FY26

    Total revenues for the first half of the year.

    Debt repaid
    25%
    Last year

    Repaid 25% of total debt over the last year.

    Debt repaid
    43%
    Last 2 years

    Deleveraged the balance sheet by 43% over the last 2 years.

    Mining ramp-up
    35,0006% over guidance
    Q2 FY26

    High-grade lithium oxide production.

    Haulage capacity increase
    40%
    H1 FY26

    Achieved during the first half targets through fleet upgrade.

    New pit shell size increase
    83%
    Current

    Larger than the block accessible with the old design.

    Fresh ore block size
    1.1 million
    Current

    Large amount of high-grade spodumene ore accessible from new pit shell.

    Fresh ore grade
    1.4%
    Current

    Grade of fresh rock from the new pit shell.

    Lithium oxide concentrate from new pit shell
    200,000
    Current

    Production potential from the 1.1 million tonnes of fresh ore.

    Plant 1 recovery (main circuit)
    70%
    Current

    Recovery rate in the main circuit of Plant 1.

    Reprocessing circuit recovery
    60%
    Current

    Recovery rate for reprocessing into 4.7% material by clients.

    Concentrate grade (reprocessed)
    5.1%, 5.2%
    Current

    High-grade concentrate produced after reprocessing.

    Fresh ore feed for full capacity
    160,000
    Current

    Required fresh ore feed to achieve Plant 1's full capacity of 330,000 tonnes/year.

    Cash profit vs CIF Asia
    $1,400
    Current

    Cash profit per ton, adjusted to 5% grade, compared to CIF Asia prices.

    Cash to receive
    $60 million
    Q3 FY26

    Expected cash flow from Q2 sales that did not convert to cash, plus other material.

    Low-grade high purity material available
    300,000
    Current

    Inventory of low-grade high purity material (fines) available for sale.

    Bid for low-grade high purity material
    $65
    Current

    Current bid price for the available low-grade high purity material.

    LCE demand growth
    900,000
    2025-2026

    Expected growth in lithium carbonate equivalent (LCE) demand from 2025 year-end to 2026 expected.

    LCE demand forecast
    5 million
    2035

    Global demand expected by 2035.

    Sigma's share of 2035 LCE demand
    2%
    2035

    Expected share of global demand at 800,000 tons/year production by 2028.

    Industry KPIs

    5
    MetricValueDetails
    Safety0TRIFR
    Unit cash cost$668USD/ton
    All in sustaining cost$668USD/ton
    Ore grade recovery drilling by deposit1.4%%
    Production sales volume by metal and by mine35,400tonnes

    Deals & partnerships

    2
    Undisclosed1-year agreement for 70,500 tons of lithium concentrate$96 million1 year

    Offtake prepayment agreement.

    Undisclosed3-year agreement for 40,000 tons per year of lithium concentrate, currently being increased$50 million3 years

    Offtake prepayment agreement. The amount of this offtake is being increased due to exceptional ramp-up.

    Risks & headwinds

    2
    Temporary suspension of mining and processing operationsCurrent

    Operations suspended

    Mitigation: Negotiating with state of Minas Gerais for full clearance of alleged false accusations; aiming for restart within 1-2 weeks.

    Allegations by local inspectorsCurrent

    Mostly false acquisitions executed by local inspectors

    Mitigation: Negotiating strict terms for agreement to be cleared of any wrongdoing, not just a settlement.

    What to watch in Q3 FY26

    5

    Mine Operations Restart

    Next quarter
    CurrentTemporarily suspended
    TargetFull mining and industrial operations resumed

    Why it matters

    Essential for production volumes and revenue generation, directly impacting financial performance.

    Best case will be to restart next week. Worst case restart, I think it would take about 2 weeks.

    Q&A highlights

    3

    What was the exact production of normal and lower-grade concentrate in Q2? What is the expected cash flow/burn if the mine does not restart for the rest of Q3? What are the best and worst-case scenarios for mine restart and ramp-up time?

    Q2 production was entirely high-grade material, with lower-grade material produced but not sold, to be sold in Q3. Approximately $60 million in cash from Q2 sales is expected to be received in Q3. The best-case scenario for mine restart is next week, and the worst case is two weeks, with negotiations focused on full clearance of alleged false accusations.

    “Best case will be to restart next week. Worst case restart, I think it would take about 2 weeks.”

    asked by Joel Jackson · answered by Ana Cabral Gardner

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Excellence and Cost Control

    Sigma Lithium achieved record operational metrics in Q2 FY26, including 35,400 tonnes of lithium oxide concentrate production, a 52% increase over Q1. This was supported by disciplined cost control, resulting in a record 47% EBITDA margin and maintaining a 60% gross margin. The company's all-in cash costs were $668 per tonne, positioning it as a low-cost leader with significant resilience and competitive advantage.

    02

    Mine Primarization and Fleet Upgrade

    The company successfully primarized its mining operations, deploying larger equipment like 75-ton trucks and 98-ton excavators to increase haulage capacity by 40%. A new pit shell design unlocked an 83% larger block of high-grade spodumene ore, totaling 1.1 million tonnes at 1.4% grade. This enables the industrial plant to operate at full capacity, utilizing both its main and reprocessing circuits to produce 200,000 tons of lithium oxide concentrate from this block.

    03

    Production Capacity Expansion Plans

    Sigma Lithium plans significant capacity expansion, targeting 330,000 tonnes per year from Plant 1 by the end of 2027, utilizing all circuits including the recirculation circuit. With the construction of Plant 2, installed capacity is expected to reach 580,000 tonnes per year by the end of 2027. The company projects 830,000 tonnes per year of installed capacity with Plant 3 by the end of 2028, with flexibility to greenlight Plant 2 and potentially Plant 3 simultaneously.

    04

    Financial Discipline and Debt Reduction

    The company generated $27 million in cash from operations in H1 FY26 and has significantly deleveraged its balance sheet, repaying 25% of its total debt in the last year and 43% over the last two years. This strong financial position, combined with robust cash generation, supports future growth initiatives and provides resilience across lithium market cycles without the need for additional capital.

    05

    Market Outlook and Strategic Positioning

    Management highlighted a robust lithium market driven by increasing demand from battery storage for AI data centers and energy security. Global LCE demand is projected to grow by 900,000 tons from 2025 to 2026 and reach 5 million tonnes by 2035. Sigma Lithium, with its low-cost position and planned capacity expansion to 830,000 tons per year by 2028, expects to supply approximately 2% of this demand, positioning itself for a significant market re-rating.

    06

    Temporary Operational Suspension and Resolution

    The company experienced a temporary suspension of mining and processing operations related to TAC negotiations. Management stated that disclosure was immediate and that they are negotiating from a position of strength, aiming for a full clearance of alleged false accusations by local inspectors. While mining is suspended, the company continues to process and ship existing inventory of 'low-grade high purity' material, demonstrating operational resilience.

    AI-generated summary of the company’s earnings call. Not investment advice.