Hey, everyone. Thanks for kind of hanging on here towards the end of the day. My name is Matthew DeYoe. I'm an Executive Vice President at Sigma Lithium, so Sigma, we currently produce lithium concentrate. We are, I think, the 10th largest lithium producer in the world. We have the 5th largest operating hard rock lithium site in the world, so as a look back, you know, two years ago, we've gone from project to production with our dense media separation industrial plant on the right. This is kind of an aerial view of the complex with the crushing system towards the top of the screen, our our separation Greent ech Plant, and then water recirculation and dry stacking facility. Where are we now as kind of a look back, right?
So scale, as I said, Sigma is the fifth largest, you know, industrial mineral complex for hard rock lithium and the 10th largest lithium producer in the world. We are the second lowest cost hard rock mine in the world for lithium. Pilbara in Australia and us, depending on the quarter, we go back and forth. But we have a cost structure that keeps us competitive in nearly every market. We sell a product quality of lithium that is pure and of a coarser grain, which delivers significant efficiencies to our customers, such that we think we have a quality lead on our peers. We have a project and a plan to grow with a phase II and a phase III and a phase IV over time. You start with phase two, with phase one having been operating.
The government of Brazil has stepped in with subsidized debt to fully finance our phase II build with 16-year paper at 2.5% interest. Phenomenal. We're fully funded for our growth. Longevity at two phases. We've got 25 years of current resource and mine life, so we have the ability to back it up, and one of the, what we consider to be one of the best operating teams on the market, 390 days in, no accidents, and what I'll show you is a production consistency and ramp that is pretty much unparalleled for the industry. This is just kind of a general framework of where we are, where we've been, where we're going from a resource base. As you see here, these are the largest operating lithium mines, hard rock lithium mines in the world. Grota do Cirilo, our operations currently in Brazil are 3.3 million tons of contained lithium.
We think we've got, you know, from a target perspective on nearly five million tons. So we have the resource and ground to to expand. What I think is noticeable or notable, at least from our perspective, is with all the billions invested in lithium in the last few years, we were the first to come to market with what we consider to be like the trinity: large scale, low cost, and traceability and sustainability. We've seen a significant number of projects come to the market, and oftentimes matching these three is difficult. And I think what, again, is notable is we sell what we brand as Quintuple Zero lithium, i.e., zero carbon. We deliver a zero carbon lithium concentrate to the market. We have zero tailings dams in our industrial process. We use no drinking water. There's zero toxic chemicals, and we don't use any coal power.
The entire grid in Brazil is effectively green. We have a five-year commitment from a hydro dam at $0.025 a kilowatt hour locked. So, from our perspective, being and operating at the forefront of sustainability is easy. And we can talk more about that to the extent that you'd like. But in general, Brazil, it's the perfect area for a hard rock mine. Vale has institutionalized mining in the country for the last decade plus. There are a number of deep water ports, roads, transmission, hydro. The entire infrastructure is there for us to operate. Importantly, mining law, mining regulation, very institutionalized over time. The other things that play in here, it's an emerging market. The average engineer or truck driver at Sigma is making $13,000 for the year, and that's a pretty good paid job in our district.
Compare that to somebody like Australia, where it's $130,000 a year. It delivers real, legitimate cost savings to the way that we do business. And that's starting to show up in our execution. Since ramping and really kind of hitting commercial cadence, we've been able to reduce our cost by about 20% across the board. As I said, we're about the second lowest cost mine in the world now from a hard rock lithium perspective. We are debottlenecking the plant, phase I, incrementally from here. So hopefully we can keep and should be able to keep prices and costs in in at this level. But $515 delivered to China compares to about $750 right now on a price basis.
So plenty of room between where the market is and where we are, which is rare, considering, I think, a good number of our peers are upside down at the moment. It gives us a lot of confidence that we can sustain. This is what I was talking about earlier with the consistency of shipments. This plant that we run basically commissioned and started in June, made a small shipment in July, and then by September we hit cadence. What is cadence? Cadence has been 22,000 tons every 35 days. We're trying to bring that down to every 31 days. But as as ramps go for mining, I think this is probably one of the best ones you'll ever see. 22,000 tons like a clock every month. That's the goal. We're working on getting there, but we're already pretty close.
As I was saying, we have a very pure lithium product. Low iron content, low mica. The crystal purity creates a process and an engineering beneficiation that's increasingly, or I should say, incredibly simple. We don't run a flotation plant, just dense media separation. That means we don't have to pay for a tailings dam. We don't have to pay for the flotation. We don't have to commission that. That means we can set up a mine in a processing plant in a year, and we can do it very efficiently. It also means we deliver significant savings to our competitors by driving a pure product into their refining network. This all kind of supports the demand profile of the company, even in a market like lithium that's at trough. From this perspective, we're spearheading ESG. The company was founded by our CEO. She owns 45% of the company.
She started as an impact investor, but we do it through Brazil, and we do it in a way that's capital and cost efficient. It's all free to the investors and to the customers, but it's about bringing the ethos in line with the electric vehicle market. You know, ESG is maybe not as popular of a word in the U.S. as it used to be, but from our framework, it's where the industry is going, and I think it's been a an additional kind of demand driver for our for our lithium, which has been helpful. From a market update perspective, headlines for electric vehicles aren't great in the U.S. or Europe, but we're still growing 23% year over year, and that's China and and battery storage. Batteries and EVs are up 21% year over year through July. Energy storage is up 50% year over year.
Energy storage is only about 10% in demand, but it's growing 50% a year. So despite all of the kind of downtrodden news that you hear about that, the growth engine of this market is still very real. 2.8 million for 2030 is kind of the bear case you see. And if we're, you know, Sigma is a 270,000 ton mine at 1 million tons of of demand and 20% growth, you kind of, and that's on a, well, this is a chemical basis, not equivalent, but you basically need five or six Sigmas every year, even in this bearish scenario, to keep up with demand. And I think, look, the industry had a hell of a party in 2021 and 2022, and we're pretty hungover from that.
And there's a little bit more supply that's coming to market, but the fundamental demand trends, particularly from a China urbanization, from a decarbonization perspective, are still there. You still need that product. As we said, we've got the cost down, and we've got the operational cadence down. From our decision our prospect, it's about growing now. We can dilute our non-operating costs further by being larger. Given, as I said, our plant is quite simple, the operational and the CapEx intensity is among the lowest costs in the world. We have the lowest, or I should say the most capital efficient supply addition in the market globally. It's a function, again, of the simplicity of the emerging market economy. And what's great now is the Development Bank of Brazil is financing it for us. They've committed to 16-year paper at 2.5%.
They will cover 99% of the budgeted CapEx. And what's great is operating with the Brazilian National Development Bank is a signal of a partnership. They will work with us on our phase III if we need. They will work with us on debottlenecking if they need. They will be there to provide us capital should we need to tap as we grow. If you look at the largest Brazilian companies, they've all grown on the back of the National Development Bank: Embraer, Klabin, Suzano, JBS, the ethanol industry. It doesn't work just like China, but from some perspective, Brazil sets an industrial policy, and if you align with where they're going, they will be there to support you. Plus, there's the implicit backing of the government behind the NGOs kind of lay off. But it doesn't, it shouldn't be surprising that BYD got $100 million. VW got $100 million.
We're getting $100 million. The Brazilian government is behind this, which is great, particularly in emerging markets where people often kind of get nervous about that. There is a clear support amongst the government for investment. What you're looking at as our current operations, this is $135 million. The green and other site infrastructure costs us $35 million. We can leverage that across three plants. The yellow is our current Green tech line. That's our current processing line. And the red is the plant that we just cleared for expansion. Now that we've got the Brazilian National Development Bank on our side, we're going to move forward because we have the financing. The $100 million that cost us in the yellow, we're rebuilding. Same exact flow sheet, same geology, same team, more of the same. At this point, repetition is, or I should say the heavy lifting has been done.
From here, it's just more of the same. What's nice is the cash dependency, or I should say the cash flow of the business, the cash model of the business. Prices are a little bit lower than this $900 now, but this is pretty bearish from a cycle perspective. We're just looking at $900 and $1,250. Price for lithium last year was $3,500. But I think the important thing to note is the cash accretion as you double. The model can go from $43 million of free cash to $113 million of free cash at $900, which is pretty low. A good portion of our industry is still upside down at that point. What you notice is at $113 million, we become basically a deleveragable entity within a year, or we can grow at our own clip. So what's nice is the two phases creates a self-fulfilling enterprise.
Granted, as I said, the National Development Bank will be there with us anyway, but the cash flow potential increases. At $1,250, which we're calling a mid-cycle, at two phases, it's $280 million of free cash on 110 million shares and an $11 stock. We think the opportunity is is pretty pretty robust. This is generally where we're going. And as I said, it's a one-year build and commission cycle. As we continue to grow, self-fulfilling becomes easier. And so we have the potential to be over 100,000 tons LCE, lithium carbonate and lithium chemical equivalent, by this 2026-27 timeframe. I think from our perspective, look, the the opportunity is there for us at doing more of the same. I think valuation continues to be one of our personal bugaboos as a management company.
And and look, I don't want to harp and say our stock's cheap because everybody says their stock's cheap, but when you look at it versus our peers from a production and market cap perspective, there's a clear asymmetry that we're working on closing. Things like National Development Bank have been very helpful. There's more to come, and we think execution and and working our way into growth, all de risks that. And this is just kind of, you know, our ability to knock off our our goals as we move through. So phase two commissioning is obviously the big next one for us, but that's pretty much it. It it shouldn't be hard. We just take big rocks and make little rocks from them and sell them to the market, but we do it really cost efficiently, and the demand for that rock is growing about 20%.
So cycle tailwinds are all kind of aligning, which is good. But I'll leave it there.
I will jump on the cost efficiency. Sure. So you have a low cost of production, and the question would be, how come and is there a risk of a cost increase? And yeah, we can start there. How can you be a low cost user?
So geography comes into it. The emerging market economics of Brazil, right? I said cheap power, you know, five-year $0.02 a kilowatt hour for power. Some of our peers in Australia run their plants off diesel generators.
Okay.
So that's one. Two, labor. As I said, it's costing us about $13,000 a ton to employ some of our, you know, the primary workforce. It's 10x that in other developed market geographies. The geology that we have, we have a very pure product, i.e., there weren't a lot of impurities. Iron and mica I had brought up. What's nice is that allows us to just use dense media separation. It's basically a centrifuge. We adapted it from the diamond mining industry where large crystals basically get freed from host rock through centrifugation because lithium is so light, floats out.
Okay.
A number of our peers use this in Australia, but they they will co-utilize DMS with flotation. And look, if we used flotation, we would get more recoveries, but given our economics, DMS is good enough, but that's helpful because it keeps our plant capital light, keeps our plant maintenance light, operational light. There's not many things in the plant. There's not many things that go wrong. It's not high tech, which is great because if something breaks, it's readily off the shelf available to fix. I think what was unique about what we did was we took a risk on dense media separation as the only form of beneficiation in a time when nobody was doing that. And you see more projects stepping into that timeframe because time to market's faster, initial capital investment's faster, and that's really attractive in an industry where cycle times have have been faster than you probably want them to be.
Thankyou. Given given the, well, not given the fact, but I come with a statement. So pricing here of of lithium in a way should be more or less the same, I'll take it. So yet you're delivering cost savings to the clients in in what way? Because you are purer or?
Yeah, so in some respects, we think of what we have as a product as like if copper and iron ore had a baby. We have a granular product that's very pure, but lithium is a really immature market. And the front end of any converter or chemical plant is a big oven. It's a big rotating calcine. And low impurities, basically what that means is you don't have to distribute as much heat into that calcine to get the chemical reaction you want. If you have more iron, that iron melts, creates problems. If you have more mica, that detracts from the burn rate. So by having low impurities, we have a cleaner burn. By having a granular product that actually moves through the calcine efficiently versus a tacky powder, which disperses and creates difficulty. So these types of operational efficiencies are driven to our customer.
We're not getting paid for that. But what's helpful is we know even in a bear market like we have now, we are getting three to four calls for every ship that we make. So we have a position where we're still basically creating bid asks for our boats. That also lends us a lot of confidence that, yeah, we can ship two boats into this market, no problem. ESG, that's free right now. The quality and premium, we're working on getting and institutionalizing the price premium versus our peers, but for now, we don't recover enough of it. So right now, these are just free attributes that kind of come with our product.
But basically, you you have a better product.
We think so.
One can argue at least. And then you have a lower cost base.
Yes.
And you're you're operating in a country which is fairly stable. You you mentioned that the the government was very positive, but this Brazil is a federation in a way. So do you negotiate with the with the state as it were or the federal government?
It just depends on it just depends on what you need. We work we operate in Minas Gerais, which literally translates to general mining. It's a heavily conservative pro-mining district as where Vale was founded. That's about as supportive of a background as we can get. And then you have Lula on the federal side, which is about as left-leaning progressive as you can get. It doesn't mean that everybody in Brazil supports us, but it means we have a wide set of support behind it, which I think is helpful. And look, the region that we operate is the poorest in Brazil, but the GDP there is growing 20% now. So it's not even popular domestically to be anti-mining.
It's it's we're starting to show the country that we can do it. And again, because it's clean, because it's green, there's no tailings dams, which have been the real ugly mark for Brazilian mining, it's it's easier to rally behind.
And what would you like us to to look for for the like next six months?
Well, I mean, look, we we the national development financing is super helpful. I think from here, again, it's more of the same, blocking and tackling. There's not going to be a lot of headlines from Sigma over the next 12 months because we're going to be building. And hopefully, we ship every month. But you know if we' re to come and we come next year, we'll be commissioning our phase two and on path to double. And look, I can't tell you where the lithium market's going to be. I'm optimistic we bottomed because every executive is optimistic we bottomed.
But because of our cost profile, because of the CapEx efficiency, because now of cheap debt and the operational kind of know-how, it it shouldn't be a big lift to get to where we need to be. And if the cycle recovers in 2025 or 2026, we'll be twice as large by the time that happens. And I think that's the key is investing through the cycle when others aren't because that's how you accrete value and you're in a position to generate that cash versus trying to turn your CapEx back up when the cycle's good because you'll always be behind the ball. The one conversation or question you get in general is about the safety of lithium-ion batteries, right?
I live in New York and you talk to people in the U.S. and in New York, it's it's bikes and e-bikes and those will catch fire and then all of a sudden you lose an apartment block, right? The the supply chain needs maturity and it needs specifications and it needs a little bit more oversight. And look, in some respects, you know a bike messenger trying to fix his e-bike in his apartment at night and it catches fire. Like this is these are things that probably get more press than they are real risks, but it gets to a point of, I think, education around use and around the platform. But from an actual like efficiency, from a decarbonization perspective, it's where it needs to be. I think battery technology in vehicles has improved. We've gotten better at thermal runaway.
So I don't know that these are as big of a risk or hopefully we can mature our way out of that. The pager thing, look, I don't even know if those were lithium-ion batteries in the pagers. But that's kind of a very specific instance, but it does talk to a little bit to what you hear in social circles at times is like, "Hey, are those safe?" I think they are. And I think the other side is, look, look, everybody, you know, if you've got a cell phone, your cell phone battery stinks over time. And so you get people like, "I don't want to buy a car because I got to charge it more and more as it goes." Look, Apple is a profitable enterprise. This is planned expiry. They put crappy lithium in the phone to die on purpose.
You got to buy a new phone. A car shouldn't do that. A well-executed battery will not end that way. But you know UI is not always the same and the people have premonitions and that's just kind of what it is. But it's just part of the maturation and adoption cycle.
Excellent. So we thank you for that with an applause.