Sigma Lithium wins appeal in Brazil, removing $10M legal order

Sigma Lithium (NASDAQ, TSXV: SGML) says it has won an appeal in Brazil overturning a lower-court decision tied to the environmental impacts of the company’s mining operations.

A Minas Gerais state court has reversed an earlier decision by a local judge in Aracuai related to allegations of irresponsible waste disposal at the Grota do Cirilo lithium operations, Sigma said Tuesday in a statement.

The May 17 ruling by a judge in Aracuai included a potential $10 million (C$13.9 million) legal collateral that would only have become payable if the company lost following appeals through Brazil’s state and federal courts.

The Aracuai court previously required Sigma to comply with certain precautionary measures sought by state prosecutors over alleged environmental impacts of its mine operations on nearby communities.

After reviewing 12 months worth of environmental data on dust, noise and vibration, which Sigma said were independently collected and verified by external experts, the Minas Gerais court ruled in favour of the company.

It also asked Sigma to hire an independent technical advisory firm to monitor environmental impacts on communities. The requirement of an impact assessment study is “an excellent opportunity to establish the facts of the matter through an independent evaluation,” Sigma said Tuesday.

‘Baseless claims’

Sigma shares jumped 4.6% to C$19.44 Tuesday afternoon in Toronto. The company has a market capitalization of about C$2.2 billion ($1.6 billion).

The allegations against Sigma came after reports last month that Brazilian labour inspectors fined the company for depositing waste on a pile that authorities had previously shut down over what they described as grave and imminent risks to workers and nearby residents.

The data-based defence presented by the company debunked the baseless claims made by local prosecution and was accepted by the state court judge, Sigma said in its statement on Tuesday.

The court win removes a potential obstacle to the company’s expansion plans at one of the largest hard-rock lithium projects in the Americas. Located in a region dubbed as Brazil’s lithium valley, the Grota do Cirilo operation has the capacity to produce 270,000 tonnes of lithium oxide concentrates annually. A Phase 2 expansion is being contemplated to nearly double the output to 520,000 tonnes.

Sigma has long advertised its lithium products as a “low-impact” source of the battery mineral. According to the company website, its Greentech plant, which has been in operation since 2023, combines the reuse of 100% of water, zero use of toxic chemicals, zero tailings and the use of 100% renewable electricity.