The Grotta do Cirillo is said to be among the largest and highest hard rock lithium deposits in the world. Credit: Sigma Lithium
Sigma Lithium (NASDAQ, TSXV: SGML) shares rose as much as 40% on Monday as the company explained in its latest quarterly earnings a sharp rise in operating margins and forecast an increase in cash flow from new sales agreements.
For the fourth quarter of 2025, the lithium producer said it generated an operating cash margin of 47%. This generated cash of $31 million, most of which was used to pay down debt. By the end of the year, its total debt had fallen by 35%, Sigma said in its earnings report on Monday.
In 2026, the company expects to generate stronger cash after signing two agreements to purchase high-grade lithium oxide concentrate produced at its Brazilian operations. The first deal covers shipments of 70,500 tons this year with a total value of $96 million, and the other covers 40,000 tons annually for three years with a total value of $50 million.
These deals are expected to generate $35 million in cash flow, mostly from the sale of high-purity lithium oxide fines, for the first quarter, then nearly triple to $96 million in the second quarter when concentrate sales begin, Sigma said.
Improved results and cash outlook lifted Sigma’s share price on Monday, with the stock rising to a one-month high of C$20.31 in Toronto. By midday, it had pared about half of the gains, trading at about C$17 a share with a market value of C$1.84 billion (US$1.32 billion).
Monetary concerns eased
Ahead of earnings, Sigma’s ability to generate cash caused concern among investors after production halted at its Grota do Cirilo operations in Brazil last October. However, Monday’s results helped ease those concerns, as the company revealed that its cash position nearly doubled from $6.2 million at the end of the year to $12 million as of March 30.
“Cash flows have been delivered and debt has been paid,” Sigma CEO Ana Cabral said on the earnings call. “These are numbers that are worth a thousand words and have no opinion. Numbers are numbers.”
Total debt at the end of 2025 was $141 million, including a $100 million loan that Sigma expects to repay in 2026 using proceeds from acquisition agreements and projected cash flows.
During the fourth and first quarters combined, the Company generated net sales revenue of approximately $67 million from the sale of approximately 650,000 tons of high-purity lithium pellets and approximately 5,000 tons of high-grade lithium oxide concentrate. The latter marks the resumption of sales of Sigma’s flagship product since the remobilization of its mine operations.
After restarting in JanuarySigma said it expects to continue its expansion plans at Grotta do Cirillo, including building a second plant to increase annual production capacity to 520,000 tons of lithium oxide concentrate by 2027.
