Sigma Lithium buys time with US$100m bond as operations restart

Convertible bond pushes Sigma’s main debt risk into 2029 and 2031

Sigma Lithium Corporation (ASX:SAU) is attempting to trade near-term financing pressure for a longer runway, announcing a US$100 million five-year senior unsecured convertible bond. Net proceeds are intended to repay its senior secured debt with Synergy Capital, moving the bond’s final maturity to approximately November 2031 and reducing the company’s short-term debt by about 80% on a pro forma basis.

The refinancing would also replace Synergy’s floating rate of SOFR plus 6.95% with a fixed 7.00% coupon. That is a lower stated cash rate, while the switch from secured to unsecured borrowing would release the security attached to the existing facility. Bondholders would have an investor put at the end of year three, around November 2029, so the liability is deferred rather than eliminated.

Operations recover after Brazilian licence dispute

The funding announcement comes alongside a preliminary, unaudited preview of a difficult third quarter. Sigma produced 7,293 tonnes of lithium oxide concentrate after local authorities suspended operations during the quarter, while gross revenue fell 23% year on year to US$23 million. Yet the company maintained a 32% gross margin and reported a CIF China cash cost of US$518 per tonne, 5% below the comparable quarter despite the lower production base.

“Sigma Lithium – Production Volumes by Quarter.”

Operations restarted early in the fourth quarter after State and Federal Court protection for the company’s operating and mining licences. That restart followed the court-backed licence restoration, which earlier enabled mining and processing to resume. Sigma says it has produced 9,000 tonnes of high-grade concentrate since restarting to October 30, with another 21,000 tonnes of third-quarter inventory available for sale, including 15,000 tonnes of low-grade material and 6,000 tonnes of intermediate products.

Lower cost guidance meets a thin cash position

Sigma cut FY26 all-in sustaining cost guidance by 6% to US$668 per tonne, while retaining its FY27 guidance of US$620 per tonne and production target of 330,000 tonnes from Plant 1. The company expects 240,000 tonnes over the next 12 months, although those figures remain dependent on the operating restart continuing as planned and are forward-looking estimates rather than achieved production.

“Sigma Lithium – Cash Flow Bridge 3Q 26 (US$ millions).”

The balance sheet remains the less comfortable part of the picture. Cash and equivalents stood at US$10 million at September 30, while Sigma identified up to US$62 million of potential short-term liquidity from receivables, unsold low-grade inventory and remaining offtake instalments. The timing and value of those inflows depend on sales and lithium prices. The bond offering is also not yet the same as cash in the bank: it remains subject to pricing, closing and required approvals.

Conversion terms leave a future dilution question

The bonds are convertible into CHESS Depositary Interests at a 25% premium to the reference share price, with conversion unavailable during the first 12 months except in limited circumstances. That gives Sigma a route to reduce debt later, but conversion would increase the number of shares on issue. The remaining proceeds after repaying Synergy are earmarked for growth capital expenditure and general corporate purposes, including the company’s planned expansion ambitions.