Sigma Lithium posts record Q2 revenue but EPS misses as Minas Gerais dispute halts operations

Q2 production and revenue reach records

Sigma Lithium said it produced 35,400 tons of lithium oxide concentrate in the second quarter, a 52% sequential increase and 6% above its prior guidance, lifting quarterly revenue to a company record of about $55 million and first-half revenue to $97 million. Management said a redesigned mine pit expanded access to high-grade ore by 83%, supporting the company's plan to scale output to 330,000 tons annually using the existing plant and to reach roughly 830,000 tons of installed capacity by the end of 2028 through additional plants. Shares of Sigma traded up about 5.8% on the results day, reaching $11.99, against a 52-week range of $4.61 to $24.48.

Margins strengthen as cost guidance is reset lower

Sigma reported a 60% gross margin, a record 47% EBITDA margin, and a 32% operating margin for the quarter, with the company realizing a net price of $2,089 per ton for its SC5 lithium material. Plant-gate costs fell to $401 per ton, CIF costs to $452 per ton, and all-in sustaining cash costs to $668 per ton, allowing Sigma to lower its full-year 2026 all-in sustaining cash-cost guidance to that level, more than a 30% decline from prior plant-gate and CIF costs. Management said the cost structure left roughly $1,400 per ton of cash profit versus CIF Asia pricing after adjusting for grade.

EPS shortfall alongside cash generation

The company posted a quarterly loss of $0.02 per share, missing the $0.23 consensus estimate by $0.25, even as it generated $27 million in operating cash flow during the first half. Sigma said it had repaid 25% of total debt over the past year and 43% over the past two years, reducing total debt by roughly half during that period. The firm reported revenue of $54.70 million for the quarter against analyst expectations of $68.34 million, and recorded a negative return on equity of 57.50% with a negative net margin of 41.84%.

Operations suspended during Minas Gerais negotiations

During the earnings call, Chief Executive Officer Ana Cabral-Gardner said Sigma temporarily halted both mining and industrial operations after receiving notifications tied to negotiations over a TAC agreement with the state of Minas Gerais. She said the wording of the notifications made it difficult to determine precisely which operations were required to stop, prompting Sigma to initially suspend both areas. Management described discussions with the state as constructive and said a potential resolution could come within roughly one to two weeks, with industrial operations able to restart earlier to re-activate the reprocessing circuit. The company also said it could continue selling low-grade high-purity material, with about 300,000 tons of fines available and a $65-per-ton bid received, while it expected about CAD 60 million of cash inflows in the third quarter.

Offtake receipts and balance sheet position

Cabral-Gardner said Sigma had received $60 million to date under a $96 million offtake prepayment agreement covering 70,500 tons over one year, with additional payments expected during the third quarter. The company is negotiating an increase to a separate agreement involving 40,000 tons annually over three years, with proceeds earmarked for debt repayment or refinancing by the end of the third quarter. Sigma also said $27 million of sales had not converted to cash as of June 30, while its stock carried a market capitalization of $1.35 billion, a price-to-earnings ratio of -30.74 and a beta of 0.61.

Analyst ratings and next milestones

Coverage of the stock was mixed, with Weiss Ratings downgrading Sigma to a "sell (e+)" rating, Zacks Research moving to a "hold," and Wall Street Zen lowering its view to "hold," leaving a consensus "Hold" rating and an average price target of $18.50. The next verifiable milestones are the anticipated resolution of the Minas Gerais TAC negotiations within roughly one to two weeks, expected industrial and mining restarts, and additional cash receipts under the existing offtake prepayment agreement during the third quarter.