Sigma Lithium(SGML) - 2025 Q2 - Quarterly Report

Management's Responsibility for Financial Reporting Management is responsible for preparing unaudited interim consolidated financial statements on a going concern basis, with the Board of Directors overseeing their review and approval - The unaudited condensed interim consolidated financial statements are prepared by management on a going concern basis in accordance with IAS 34[5] - The Board of Directors, through its Audit Committee, is responsible for overseeing and approving management's financial reporting responsibilities[6][7] Unaudited Condensed Interim Consolidated Statements of Financial Position This statement outlines the company's financial position as of June 30, 2025, showing a slight increase in total assets and a decrease in total shareholders' equity since December 31, 2024 | Metric | 6/30/2025 (US$k) | 12/31/2024 (US$k) | 1/1/2024 (US$k) | | :--------------------------------- | :-------- | :--------- | :-------- | | Total current assets | 69,750 | 92,771 | 107,631 | | Total non-current assets | 266,451 | 234,347 | 259,929 | | Total assets | 336,201 | 327,118 | 367,560 | | Total current liabilities | 115,339 | 108,771 | 92,316 | | Total non-current liabilities | 128,939 | 126,007 | 113,594 | | Total shareholders' equity | 91,923 | 92,340 | 161,650 | | Total liabilities and equity | 336,201 | 327,118 | 367,560 | - Cash and cash equivalents significantly decreased from $45,918k at December 31, 2024, to $15,113k at June 30, 2025[9] - Property, plant and equipment increased from $141,025k at December 31, 2024, to $161,617k at June 30, 2025[9] Unaudited Condensed Interim Consolidated Statements of Income (Loss) For the six months ended June 30, 2025, the company reported a net loss of $14,131k, an improvement from the prior year, driven by a positive shift in net financial income despite decreased net sales revenue | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | Change (YoY) | | :------------------------------------------------- | :-------- | :---------------------- | :----------- | | Net sales revenue | 64,560 | 83,122 | (22.33%) | | Cost of goods sold | (57,781) | (58,407) | (1.07%) | | Gross profit (loss) | 6,779 | 24,715 | (72.50%) | | Operating income (loss) before financial results | (13,368) | 5,277 | (353.10%) | | Financial income (expenses), net | 4,237 | (25,683) | 116.49% | | Loss before income tax and social contribution | (9,131) | (20,406) | 55.25% | | Net loss for the period | (14,131) | (17,757) | 20.42% | | Basic and diluted net loss per common share | (0.13) | (0.16) | 18.75% | - Net sales revenue decreased by 22.33% year-over-year for the six-month period ended June 30, 2025[10] - Financial income (expenses), net, improved substantially from a $25,683k loss in 2024 to a $4,237k gain in 2025[10] Unaudited Condensed Interim Consolidated Statements of Comprehensive Income (Loss) For the six months ended June 30, 2025, the company reported a net comprehensive loss of $2,055k, a significant improvement from the prior year, primarily due to a positive foreign currency translation adjustment | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | Change (YoY) | | :------------------------------------------ | :-------- | :---------------------- | :----------- | | Net loss for the period | (14,131) | (17,757) | 20.42% | | Foreign currency translation adjustment | 12,076 | (19,670) | 161.39% | | Net loss and comprehensive loss for the period | (2,055) | (37,427) | 94.51% | - Foreign currency translation adjustment of subsidiary shifted from a $19,670k loss in 2024 to a $12,076k gain in 2025[11] Unaudited Condensed Interim Consolidated Statements of Cash Flows For the six months ended June 30, 2025, the company reported a net cash outflow of $30,805k, a reversal from the prior year's inflow, driven by decreased financing activities and continued cash usage | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | Change (YoY) | | :------------------------------------------------- | :-------- | :---------------------- | :----------- | | Net cash used in operating activities | (8,205) | (42,710) | 80.79% | | Net cash used in investing activities | (8,066) | (13,895) | 41.95% | | Net cash provided by (used in) financing activities | (17,868) | 92,995 | (119.21%) | | Effect of exchange rate changes on cash | 3,334 | (9,644) | 134.57% | | Increase (decrease) in cash and cash equivalents | (30,805) | 26,746 | (215.29%) | | Cash and cash equivalents, end of period | 15,113 | 75,330 | (79.95%) | - Net cash used in operating activities significantly improved, decreasing from $42,710k in 2024 to $8,205k in 2025[13] - Net cash provided by financing activities turned into a net cash used, from $92,995k in 2024 to $(17,868)k in 2025[13] Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity Total shareholders' equity decreased from $92,340k at December 31, 2024, to $91,923k at June 30, 2025, primarily due to net loss, partially offset by other comprehensive income | Metric | Balance as of Jan 01, 2024 (US$k) | Balance at June 30, 2024 (US$k) | Balance at Dec 31, 2024 (US$k) | Balance at June 30, 2025 (US$k) | | :--------------------------------- | :----------------------- | :----------------------- | :---------------------- | :----------------------- | | Share capital | 291,215 | 314,169 | 326,832 | 327,006 | | Stock-based compensation reserve | 44,488 | 27,181 | 18,485 | 19,762 | | Tax incentive reserve | - | - | 2,500 | 2,687 | | Accumulated other comprehensive income (loss) | 1,533 | (18,137) | (28,495) | (16,419) | | Accumulated losses | (175,586) | (193,343) | (226,982) | (241,113) | | Total shareholders' equity | 161,650 | 129,870 | 92,340 | 91,923 | - Net loss for the six months ended June 30, 2025, was $(14,131)k[14] - Other comprehensive income for the period was $12,076k, partially offsetting the net loss[14] Notes to the Unaudited Condensed Interim Consolidated Financial Statements 1. Corporate Information Sigma Lithium Corporation is a commercial producer of lithium oxide concentrate with operating assets in Brazil, and its shares trade on TSXV, Nasdaq, and B3 - Sigma Lithium Corporation is a commercial producer of lithium oxide concentrate[15] - The company's operating assets are located in the Jequitinhonha Valley, Minas Gerais, Brazil, held by its indirect wholly-owned Brazilian subsidiaries[16][17] - Sigma Lithium's common shares trade on the TSX Venture Exchange (TSXV), Nasdaq Capital Market (Nasdaq), and its unsponsored Brazilian Depositary Receipts (BDRs) trade on B3[18] 2. Basis of Preparation The financial statements are prepared under IAS 34 and the historical cost method, with a retrospective change in presentation currency to US Dollars from January 1, 2025, and are presented on a going concern basis - The unaudited condensed interim consolidated financial statements are prepared in accordance with IFRS Accounting Standards applicable to interim financial statements (IAS 34)[19] - The statements are prepared under the historical cost method, with certain financial instruments measured at fair value[20] 2.1. Transactions Eliminated on Consolidation Intra-group balances, transactions, and unrealized income/expenses are eliminated on consolidation - Intra-group balances, transactions, and unrealized income/expenses from intra-group transactions are eliminated on consolidation[23] 2.2. Functional Currency The company's functional currency is the Brazilian Real, as its operations are primarily held by the Brazilian subsidiary - The Company's functional currency is the Brazilian Real (R$), as its operations are primarily held by the Brazilian subsidiary[24] 2.3. Presentation Currency of the Financial Statements The presentation currency was retrospectively changed from Canadian Dollars to United States Dollars on January 1, 2025, for better comparability - On January 1, 2025, the Company retrospectively changed its presentation currency from Canadian Dollars (CAD) to United States Dollars (US$) for better comparability[25] - Comparative financial information has been restated as though US$ had always been the Company's presentation currency, in accordance with IAS 21 and IAS 8[25] - As of June 30, 2025, the main exchange rate for conversion was US$1.00 equivalent to R$5.4571 (R$6.1923 on December 31, 2024)[28] 2.4. Going Concern The interim financial statements are prepared on a going concern basis, as management believes the company has adequate resources - The unaudited condensed interim financial statements for the six-month periods ended June 30, 2025, are prepared on a going concern basis, as management believes it has adequate resources to continue operations[29] 3. Cash and Cash Equivalents Cash and cash equivalents significantly decreased from $45,918k at December 31, 2024, to $15,113k at June 30, 2025, primarily due to the termination of short-term investments | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :-------------------- | :-------- | :----------------------- | | Cash | 15,113 | 24,860 | | Short-term investments | - | 21,058 | | Total | 15,113 | 45,918 | - The Company terminated its short-term financial investment positions as of June 30, 2025, in line with evolving liquidity and strategic priorities[31] 4. Trade Accounts Receivable Trade accounts receivable increased from $11,584k at December 31, 2024, to $16,765k at June 30, 2025, largely due to a positive provisional price adjustment | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :-------------------------- | :-------- | :----------------------- | | Accounts receivable from customers | 12,756 | 18,013 | | Provisional price adjustment | 4,009 | (6,429) | | Total | 16,765 | 11,584 | - The provisional price adjustment shifted from a negative $6,429k at December 31, 2024, to a positive $4,009k at June 30, 2025[32] - Trade accounts receivable are subject to significant market price fluctuations until final settlement, with adjustments based on forward market prices[33] 5. Inventories Total inventories increased from $16,140k at December 31, 2024, to $24,566k at June 30, 2025, including a $7,989k provision for expected losses on green by-products | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :-------------------------------- | :-------- | :----------------------- | | Lithium oxide concentrate | 14,412 | 2,653 | | Green By-Products | 7,989 | 6,499 | | Provision for expected inventory losses | (7,989) | - | | Total finished goods | 14,412 | 9,152 | | Consumable | 556 | 391 | | Spare parts | 9,598 | 6,597 | | Total | 24,566 | 16,140 | - A provision for expected inventory losses on green by-products, totaling $7,989k, was recognized and recorded under other operating expenses for the period ended June 30, 2025[34] 6. Advance to Suppliers Advances to suppliers decreased from $9,727k at December 31, 2024, to $5,864k at June 30, 2025, for operating consumables - Outstanding balances for advances with domestic and foreign suppliers decreased to $5,864k as of June 30, 2025, from $9,727k on December 31, 2024[36] 7. Recoverable VAT and Other Taxes Total recoverable VAT and other taxes increased from $7,680k at December 31, 2024, to $8,427k at June 30, 2025, with federal tax credits expected within 24 months | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :-------------------------- | :-------- | :----------------------- | | ICMS (State VAT) | 2,412 | 1,312 | | Federal tax credits (PIS / COFINS) | 4,562 | 5,224 | | Other recoverable taxes | 1,453 | 1,144 | | Total | 8,427 | 7,680 | | Current | 6,015 | 6,368 | | Non-Current | 2,412 | 1,312 | - The Company expects to recover outstanding federal taxes within the next 24 months and recoverable ICMS (state VAT) in about two years[37] 8. Cash Held as Collateral The company held $12,686k as collateral at June 30, 2025, unchanged from December 31, 2024, related to interest obligations on export prepayment contract loans - The Company had $12,686k advanced as collateral related to the obligation to pay interest on export prepayment contract loans for industrial plant development as of June 30, 2025, and December 31, 2024[38] 9. Property, Plant and Equipment The net book value of property, plant and equipment increased from $141,025k at December 31, 2024, to $161,617k at June 30, 2025, driven by additions and foreign currency translation adjustments | Metric | Balance as of Jan 1, 2024 (US$k) | Balance as of Dec 31, 2024 (US$k) | Balance as of June 30, 2025 (US$k) | | :--------------------------------- | :------------------------ | :------------------------- | :-------------------------- | | Total | 180,857 | 141,025 | 161,617 | | Additions | 14,754 | 8,512 | | | Depreciation and depletion | (13,407) | (7,023) | | | Foreign currency translation adjustment | (39,894) | 19,119 | | - Additions to property, plant and equipment for the six months ended June 30, 2025, totaled $8,512k[39] - Depreciation and depletion for the six months ended June 30, 2025, amounted to $7,023k[39] a) Average Estimated Useful Lives This section details the average estimated useful lives in years for various asset categories | Description | 6/30/2025 (Years) | 12/31/2024 (As restated) (Years) | | :-------------------- | :-------- | :----------------------- | | Buildings | 26 | 26 | | Machinery and equipment | 19 | 20 | | Right of use assets | 3 | 3 | | Mining rights | 8 | 8 | | Other assets | 6 | 5 | b) Assets Under Construction The company continued investments in Phase 2 capacity expansion and Phase 1 operational infrastructure, classified as construction in progress - The Company continued investments related to Phase 2 capacity expansion and Phase 1 operational infrastructure, with expenditures initially classified as construction in progress[41] c) Right-of-Use Assets Right-of-use assets include land, machinery, and equipment provided exclusively for the company's use on-site under long-term contracts - Right-of-use assets include land, machinery, and equipment provided exclusively for the Company's use on-site, for contracts longer than 12 months with individual amounts greater than $5k[42] d) Depreciation and Depletion This section reconciles depreciation and depletion for the period, including amounts recognized in operating expenses and deferred exploration | Reconciliation of depreciation and depletion for the period | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :-------------------------------------------------------- | :-------- | :----------------------- | | Operating expenses | 6,910 | 13,367 | | Deferred exploration and evaluation expenditure | 113 | 40 | | Depreciation accumulated for the period | 7,023 | 13,407 | 10. Deferred Exploration and Evaluation Expenditure Deferred exploration and evaluation expenditure increased from $47,141k at December 31, 2024, to $54,498k at June 30, 2025, mainly due to foreign currency translation adjustment and additions | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :---------------------------------------- | :-------- | :----------------------- | | Opening balance | 47,141 | 56,016 | | Exploration and feasibility investments | 658 | 3,186 | | Share based compensation | 296 | 1,267 | | Additions | 954 | 4,453 | | Foreign currency translation adjustment | 6,403 | (12,886) | | Closing balance | 54,498 | 47,141 | 11. Related Parties' Transactions The company engages in various transactions with related parties, including cost sharing, leasing, royalties, and a significant loan facility to Tatooine for property acquisitions a) Transactions with Related Parties This section details various transactions with related parties, including receivables, debts, expenses, and income | Description | 6/30/2025 (Receivable / Debt) (US$k) | 6/30/2025 (Expenses) (US$k) | 6/30/2024 (Receivable / Debt) (US$k) | 6/30/2024 (Expenses) (US$k) | | :-------------------- | :---------------------------- | :------------------- | :---------------------------- | :------------------- | | A10 Advisory (CSA) | 16 (payable) | (158) | - | (129) | | Miazga (Lease) | 570 (payable) | (104) | 5 (payable) | (2) | | Miazga (Royalties) | 1,090 (payable) | (575) | 671 (payable) | - | | Arqueana (Lease) | 1,436 (payable) | (121) | 123 (payable) | (9) | | Tatooine (Loan) | 17,376 (receivable) | 1,449 (income) | 12,953 (receivable) | 585 (income) | | Instituto Lítio Verde | 1,053 (payable) | (518) | 563 (payable) | (495) | - A loan granted by Sigma Brazil to Tatooine for property acquisitions totaled $17,373k as of June 30, 2025, an increase from $12,952k at December 31, 2024[49] - Royalties payable to Miazga increased to $1.5 million as of June 30, 2025, with $0.54 million settled in the first half of 2025[48] b) Key Management Personnel This section details compensation for key management personnel, including stock-based compensation, salaries, benefits, and director's fees | Metric | Three months ended, 6/30/2025 (US$k) | Three months ended, 6/30/2024 (As restated) (US$k) | | :-------------------------------------------------------- | :---------------------------- | :------------------------------------------ | | Stock-based compensation, included in operating expenses | 844 | 913 | | Salaries, benefits and director's fees, included in general and administrative expenses | 422 | 423 | | Total | 1,266 | 1,336 | 12. Suppliers Total suppliers increased from $32,627k at December 31, 2024, to $44,325k at June 30, 2025, with $7,997k related to an ongoing arbitration | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :-------------------------- | :-------- | :----------------------- | | Brazilian-based suppliers | 39,932 | 26,190 | | Non-Brazilian-based suppliers | 4,393 | 6,437 | | Total suppliers | 44,325 | 32,627 | - Out of the total suppliers amount, $7,997k as of June 30, 2025, is related to an ongoing arbitration to which Sigma Brazil is a party[53] 13. Loans and Export Prepayment Total loans and export prepayments decreased slightly from $173,599k at December 31, 2024, to $166,955k at June 30, 2025, with new agreements totaling $39,015k and repayments of $55,657k | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :------------------------------------------------ | :-------- | :----------------------- | | Total loans and export prepayment (current) | 53,655 | 61,596 | | Total loans and export prepayment (non-current) | 113,300 | 112,003 | | Total (including transaction costs) | 166,955 | 173,599 | - The Brazilian real appreciated by 11.9% against the U.S. dollar in the first half of 2025, primarily affecting provisions and not significantly impacting cash flow[58] Export Prepayment Trade Finance The company entered into new export prepayment agreements totaling $39,015k and repaid $55,657k during the six-month period ended June 30, 2025 - For the six months ended June 30, 2025, the Company entered into export prepayment agreements totaling $39,015k with maturities from 30 to 180 days and interest rates between 9.0% p.a. and 10.7% p.a.[61] - The Company repaid $55,657k related to export prepayment agreements that matured during the six-month period ended June 30, 2025[61] Export Prepayment Agreement – Synergy The $100 million export prepayment agreement with Synergy transitioned its benchmark interest rate from BSBY to SOFR + 6.95% p.a. after BSBY's discontinuation - The $100 million export prepayment agreement with Synergy, maturing December 13, 2026, transitioned its benchmark interest rate from BSBY to 12-month SOFR + 6.95% per annum after BSBY's discontinuation[62][66] - In the six-month period ended June 30, 2025, the Company recognized interest expense on this contract in the amount of $5,551k[66] a) Banco de Desenvolvimento de Minas Gerais - BDMG The company has multiple financing agreements with BDMG, with varying interest rates and principal repayment schedules, and recognized $1,247k in interest expense - The Company has multiple financing agreements with BDMG, with interest rates ranging from SELIC+3.75% to SELIC+3.93% per annum, and grace periods for principal amortization[67][68][70] - Principal repayment schedules vary, with installments due in December 2024, December 2025, and May 2026[67][68][70] - Interest expense on BDMG contracts for the six-month period ended June 30, 2025, was $1,247k[71] b) Banco Nacional de Desenvolvimento Econômico e Social - BNDES Sigma Lithium signed a R$486.8 million development loan agreement with BNDES in October 2024 for a second industrial plant, with no drawdowns yet - Sigma Lithium signed a final agreement for a R$486.8 million development loan from BNDES in October 2024 to fund a second Greentech industrial plant[72] - As of June 30, 2025, no drawdowns have been recorded from BNDES, pending a required letter of credit[72] - The Company is in compliance with all debt covenants as of June 30, 2025[73] 14. Lease Liability Lease liabilities, primarily for land leases with related parties, totaled $4,742k at June 30, 2025, an increase from $3,188k at December 31, 2024, with a weighted average discount rate of 9.69% | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :-------------------------- | :-------- | :----------------------- | | Opening balances | 3,188 | 4,321 | | Remeasurement | 2,094 | 2,232 | | Interest expense | 207 | 369 | | Payments | (1,226) | (2,392) | | Lease Liability total | 4,742 | 3,188 | | Current | 2,327 | 1,753 | | Non-Current | 2,415 | 1,435 | - The weighted average discount rate used for lease liabilities is 9.69%, determined as the Company's incremental borrowing rate[75] 15. Prepayment from Customer Prepayment from customers decreased significantly from $1,514k at December 31, 2024, to $225k at June 30, 2025, representing payments made in excess due to provisional pricing - The outstanding balance of prepayment from customer was $225k as of June 30, 2025, down from $1,514k at December 31, 2024[77] - Prepayments refer to payments made in excess due to provisional pricing, with the final amount subject to adjustments based on sales contract terms[77] 16. Taxes Payable Total taxes payable increased from $7,097k at December 31, 2024, to $8,064k at June 30, 2025, benefiting from a 75% income tax reduction approved by SUDENE | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :---------------- | :-------- | :----------------------- | | Municipal taxes | 842 | 422 | | State taxes | 248 | 297 | | Federal taxes | 6,974 | 6,378 | | Total | 8,064 | 7,097 | | Current | 5,428 | 3,923 | | Non-Current | 2,636 | 3,174 | - The Northeast Development Authority (SUDENE) approved Sigma Brazil for a 75% reduction in income tax (Profit from Exploration), effective from 2024 for ten years[78] - For the six months ended June 30, 2025, the Company recognized a reserve for tax incentives in the amount of $187k[78] 17. Income Tax and Social Contributions For the six months ended June 30, 2025, the company recognized a total income tax and social contribution expense of $5,000k, a shift from a $2,649k income in the same period of 2024, with an effective tax rate of (54.7%) a) Current Income Tax and Social Contribution Recognized in Profit or Loss This section details the current and deferred income tax and social contribution recognized in profit or loss, along with the effective tax rate | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | | :------------------------------------------------ | :-------- | :----------------------- | | Current | (353) | (5,042) | | Deferred | (4,647) | 7,691 | | Total | (5,000) | 2,649 | | Effective tax rate | (54.7%) | 13.0% | - The Company operates in Brazil (corporate tax rate 34%) and Canada (federal corporate tax rate 15% plus provincial rates, totaling 27%)[79] - A tax loss carryforward of $14,710k generated in Canada has not been recognized due to no expected taxable income to offset it[80] b) Deferred Income Tax and Social Contribution This section details the components of deferred tax assets, including pre-operational expenses, tax loss carryforward, and provisions | Metric | 12/31/2024 (As restated) (US$k) | 6/30/2025 (US$k) | | :-------------------------------- | :----------------------- | :-------- | | Pre-operational expenses | 2,490 | 2,136 | | Tax loss carry forward | 8,165 | 8,008 | | Unrealized foreign currency fluctuation | 8,364 | 1,818 | | Provision for expected inventory losses | - | 2,619 | | Total deferred tax assets | 19,230 | 17,003 | - A new provision for expected inventory losses contributed $2,619k to deferred tax assets as of June 30, 2025[82] - The Company expects to realize the deferred tax assets within two years[82] 18. Asset Retirement Obligations ("ARO") Total asset retirement obligations increased from $2,903k at December 31, 2024, to $3,416k at June 30, 2025, mainly due to accretion and foreign currency translation adjustment | Metric | 6/30/2025 (US$k) | 12/31/2024 (As restated) (US$k) | | :-------------------------------- | :-------- | :----------------------- | | Xuxa Mine | 2,552 | 2,169 | | Barreiro Mine | 864 | 734 | | Total | 3,416 | 2,903 | - The increase in ARO is attributed to accretion of asset retirement obligation ($116k) and foreign currency translation adjustment of subsidiary ($397k) for the six months ended June 30, 2025[84] 19. Financial Instruments The company's financial instruments include cash, receivables, payables, and loans, with most approximating fair value, and it manages various financial risks including exchange rates, interest rates, market price, credit, and liquidity a) Identification and Measurement of Financial Instruments This section identifies and measures financial instruments, categorizing them by amortized cost or fair value through profit or loss | Description | 6/30/2025 (Amortized Cost) (US$k) | 6/30/2025 (Fair Value through P&L) (US$k) | 12/31/2024 (Amortized Cost) (US$k) | 12/31/2024 (Fair Value through P&L) (US$k) | | :--------------------------------------- | :------------------------- | :--------------------------------- | :------------------------- | :--------------------------------- | | Cash and cash equivalents | 15,113 | - | 45,918 | - | | Trade accounts receivable | - | 16,765 | - | 11,584 | | Loan and accounts receivable from related parties | 17,376 | - | 12,953 | - | | Cash held as collateral | 12,686 | - | 12,686 | - | | Suppliers | 44,325 | - | 32,627 | - | | Loans and export prepayment (current) | 53,655 | - | 61,596 | - | | Prepayment from customer | - | 225 | - | 2,154 | | Loans and export prepayment (non-current) | 113,300 | - | 112,003 | - | - The Company measures certain financial assets and liabilities using Level 2 inputs, which are observable but not quoted in active markets[87] b) Financial Risk Management The company employs risk management strategies to regularly monitor and manage financial risks, including exchange rates, interest rates, market price, credit, and liquidity - The Company uses risk management strategies to regularly monitor and manage financial risks, including exchange rates, interest rates, market price, credit risk, and liquidity risks[88] Foreign Exchange Rate Risk The company's exposure to foreign exchange rate risk arises from assets and liabilities denominated in U.S. dollars, given its Brazilian Real functional currency - The Company's exposure to foreign exchange rate risk arises from assets and liabilities denominated in U.S. dollars, given that its functional currency is the Brazilian Real[89] | Description | 6/30/2025 (US$k) | | :-------------------- | :-------- | | Canadian dollars | (4,395) | | United States dollar | (108,954) | Sensitivity Analysis (Foreign Exchange) This section presents a sensitivity analysis of foreign exchange rate variations on the company's financial position | Currency | Notional (US$k) | Probable scenario (US$k) | Scenario 1 (+/-10%) (US$k) | Scenario 2 (+/-20%) (US$k) | | :-------------------------- | :------- | :---------------- | :------------------ | :------------------ | | Canadian dollar-denominated (+) | (4,395) | 89 | (319) | (658) | | Canadian dollar-denominated (-) | (4,395) | 89 | 587 | 1,210 | | U.S dollar-denominated (+) | (108,954) | 1,046 | (8,954) | (17,287) | | U.S dollar-denominated (-) | (108,954) | 1,046 | 13,268 | 28,546 | Interest Rate Risk The company is exposed to interest rate risk from financial investments, financing, and export prepayments linked to CDI, SELIC, and SOFR rates - The Company is exposed to interest rate risk from financial investments, financing, and export prepayments linked to fixed and floating interest rates of CDI, SELIC, and SOFR[92] Sensitivity Analysis of Interest Rate Variations This section provides a sensitivity analysis of interest rate variations on the company's liabilities, including BDMG loans and export prepayments | Liabilities | Rate (Probable) | Rate (Scenario 1) | Rate (Scenario 2) | Probable scenario (US$k) | Scenario 1 (US$k) | Scenario 2 (US$k) | | :------------------------ | :-------------- | :---------------- | :---------------- | :---------------- | :--------- | :--------- | | BDMG (SELIC +10%/+20%) | 15.00% | 16.50% | 18.00% | (1,194) | (1,313) | (1,433) | | Export prepayment (SOFR +2.5%/+5.0%) | 4.12% | 4.22% | 4.33% | (2,040) | (2,091) | (2,195) | - During 2024, the Company entered into a swap operation to exchange the interest exposure of an advance on foreign exchange contract calculated in US$ to DI plus an interest rate calculated on the notional amount in R$[95] Market Price Risk The company's products are provisionally priced at revenue recognition, exposing it to market price risk until final selling prices are settled - The Company's products may be provisionally priced at revenue recognition, with final selling prices based on forward market prices, exposing it to market price risk[97] | Scenario | Volume (kt) | Shipment average price | Variation | Effect on Sales Revenue (US$k) | | :-------------------------------- | :---------- | :--------------------- | :-------- | :---------------------- | | Lithium oxide concentrate (Probable) | 113,570 | 846 | 11 | 1,234 | | Lithium oxide concentrate (+20%) | 113,570 | 924 | 54 | 6,136 | | Lithium oxide concentrate (-20%) | 113,570 | 616 | (54) | (6,136) | Credit Risk The company manages credit risk by requiring substantial advance payments or guarantees via letters of credit for its sales - The Company manages credit risk by receiving substantial advance payments or guarantees via letters of credit for its sales[101] Liquidity Risk The company manages liquidity to ensure sufficient cash for financial obligations, operations, growth, and corporate expenditures, considering additional funding if needed - The Company's liquidity management focuses on ensuring sufficient cash to meet financial obligations, fund operations, growth opportunities (Phase 2), and general corporate expenditures[103][104] - Management intends to use cash generated by operating activities but will consider securing additional equity or debt funding if necessary[104] | Contractual obligations | Up to 1 year (US$k) | 1-3 years (US$k) | 4-5 years (US$k) | More than 5 years (US$k) | Total (US$k) | | :------------------------ | :----------- | :-------- | :-------- | :---------------- | :---- | | Suppliers | 44,325 | - | - | - | 44,325 | | Loans and export prepayment | 53,652 | 106,686 | 6,266 | 1,564 | 168,168 | | Lease liabilities | 2,327 | 1,245 | 641 | 529 | 4,742 | a) Capital Management The company's capital management aims to safeguard its going concern ability, fund operations and development, with equity issuances as the primary source - The Company's capital management objective is to safeguard its ability to continue as a going concern, continue operations, and meet strategic objectives, including mineral project development[108] - The primary source of capital is derived from equity issuances, and the Company has no externally imposed capital requirements[108] - As of June 30, 2025, capital consisted of equity attributable to common shareholders of $91,923k, compared to $92,340k as of December 31, 2024[108] b) Fair Values of Assets and Liabilities Financial assets and liabilities at fair value through profit or loss are recognized in current and non-current accounts, with carrying amounts substantially similar to fair values - Financial assets and liabilities at fair value through profit or loss are recognized in current and non-current assets and liabilities, with gains and losses recognized as financial income or costs[109] - The carrying amounts of most financial instruments are substantially similar to their fair values, particularly for long-term assets and liabilities with floating interest rates (SOFR and SELIC)[110] 20. Share Capital As of June 30, 2025, the company had 111,281,979 common shares outstanding, with A10 Investimentos Ltda. holding 42.85% of voting capital, and share capital increased due to RSU exercises a) Ownership Structure This section details the company's ownership structure, including major shareholders and their respective percentages of voting capital | Shareholder | Number of Common Shares | % of Voting Capital | | :-------------------------------- | :---------------------- | :------------------ | | A10 Investimentos Ltda. | 47,686,968 | 42.85% | | Fitpart Fund Administration Services Limited | 8,238,230 | 7.40% | | Appian Way Asset Management LP | 4,963,006 | 4.46% | | Others | 50,393,775 | 45.29% | | Total | 111,281,979 | 100.00% | b) Authorized Share Capital The authorized share capital consists of an unlimited number of fully paid common shares with no par value - The authorized share capital consists of an unlimited number of common shares with no par value, all fully paid[112] c) Common Shares Issued This section details the common shares issued by the company for the period ended June 30, 2025, including shares from RSU exercises | Metric | Number of common shares | Amount (US$) | | :-------------------------------- | :---------------------- | :--------- | | Balance, January 1, 2025 | 111,267,279 | 326,832 | | Exercise of RSUs | 14,700 | 174 | | Balance, June 30, 2025 | 111,281,979 | 327,006 | d) Reserve for Tax Incentives For the six-month period ended June 30, 2025, the company recognized a $187k reserve for tax incentives from a 75% income tax reduction approved by SUDENE - For the six-month period ended June 30, 2025, the Company recognized a reserve for tax incentives in the amount of $187k, stemming from a 75% income tax reduction approved by SUDENE[114] - This tax benefit, applicable for ten years starting in 2024, allows the Company to reduce its current income tax payment, but the saved amount cannot be distributed to shareholders[114] 21. Loss Per Share The basic and diluted net loss per common share for the six months ended June 30, 2025, was $(0.13), an improvement from $(0.16) in the same period of 2024, despite a net loss of $14,131k | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | | :------------------------------------------------ | :-------- | :----------------------- | | Net loss for the period | (14,131) | (17,757) | | Weighted average number of common shares | 111,275,927 | 110,568,147 | | Basic and diluted net loss per common shares | (0.13) | (0.16) | 22. Net Sales Revenue Net sales revenue for the six months ended June 30, 2025, decreased to $64,560k from $83,122k in the same period of 2024, including a negative provisional price adjustment of $6,874k | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | | :-------------------------------- | :-------- | :----------------------- | | Gross sales revenue – lithium concentrate | 68,803 | 96,488 | | Provisional price adjustment | (6,874) | (15,665) | | Shipping services | 2,631 | 2,299 | | Total net sales revenue | 64,560 | 83,122 | - Shipment contracts are subject to adjustments based on lithium oxide concentrate market prices and grade confirmation, with provisional pricing adjustments recognized as revenue[117] 23. Costs and Expenses by Nature Total costs and expenses by nature for the six months ended June 30, 2025, were $(57,781)k, a slight decrease from $(58,407)k in the same period of 2024, detailing cost of goods sold and general and administrative expenses a) Cost of Goods Sold This section details the components of cost of goods sold, including mining services, blasting, salaries, freight, and depreciation | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | | :-------------------------------- | :-------- | :----------------------- | | Mining service providers | (9,377) | (16,021) | | Blasting and fuels | (9,725) | (8,115) | | Salaries and benefits | (6,024) | (5,826) | | Freight Maritime | (5,875) | (2,365) | | Depreciation | (4,252) | (3,898) | | Mobile Crushing | (2,959) | - | | Royalties | (2,207) | (2,437) | | Total | (57,781) | (58,407) | - Mobile Crushing costs of $(2,959)k were a non-recurring expense in H1 2025, aimed at maintaining production during primary crusher maintenance[118] - Starting in 2025, stock-based compensation for certain operational personnel is directly allocated to operating costs[121] b) General and Administrative Expenses This section details general and administrative expenses, including legal, salaries, insurance, travel, and public company costs | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | | :-------------------------------- | :-------- | :----------------------- | | Legal | (2,366) | (1,273) | | Salaries and benefits (Staff) | (2,186) | (1,960) | | Insurance (D&O) | (1,043) | (1,173) | | Travel | (791) | (978) | | Public company costs | (283) | (855) | | Total | (9,095) | (8,966) | 24. Other Operating Expenses Other operating expenses for the six months ended June 30, 2025, significantly increased to $(9,387)k from $(5,026)k in the same period of 2024, primarily due to a $7,859k provision for expected inventory losses | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | | :-------------------------------- | :-------- | :----------------------- | | Provision for expected inventory losses | (7,859) | - | | Environmental and social expenses | (1,211) | (1,568) | | Accrual for contingencies | (86) | (1,910) | | Taxes and fees | - | (984) | | Total | (9,387) | (5,026) | - A $7,859k provision for expected inventory losses was recognized in H1 2025 due to current market conditions and updated estimates of future selling prices[123] 25. Financial Expenses Financial expenses for the six months ended June 30, 2025, resulted in a net income of $4,237k, a significant improvement from a net expense of $(25,683)k in 2024, largely driven by a positive foreign exchange variation | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | | :-------------------------------- | :-------- | :----------------------- | | Financial income | 1,610 | 2,949 | | Interest accrued on loans and export prepayment | (9,858) | (9,956) | | Foreign exchange on tax/fees | (1,720) | (538) | | Foreign exchange variation on net assets | 14,881 | (17,506) | | Total | 4,237 | (25,683) | - Foreign exchange variation on net assets shifted from a $(17,506)k loss in H1 2024 to a $14,881k gain in H1 2025[124] - The Brazilian real appreciated by 11.9% against the US$ in the six-month period ended June 30, 2025, primarily affecting non-cash provisions and accruals[125] 26. Stock-Based Compensation Total stock-based compensation expense for the six months ended June 30, 2025, was $1,277k, a decrease from $4,209k in 2024, accounted for as a non-cash item in the income statement and shareholder's equity a) Restricted Share Units (RSU) As of June 30, 2025, 183,277 RSUs remained outstanding, with 2,868,040 equity units available for new grants under the Equity Incentive Plan | Metric | Balance, January 1, 2024 | Balance, December 31, 2024 | Balance, June 30, 2025 | | :---------------- | :----------------------- | :------------------------- | :--------------------- | | Balance | 1,363,660 | 383,852 | 183,277 | | Exercised | (1,207,808) | (14,700) | | | Forfeited | (207,000) | (185,875) | | | Granted | 435,000 | - | | - As of June 30, 2025, 183,277 RSUs remained outstanding, with 2,868,040 equity units available for new grants under the Equity Incentive Plan[128][131] b) Stock Options All 100,000 stock options granted on April 12, 2022, expired on April 25, 2025, without being exercised - All 100,000 stock options granted on April 12, 2022, expired on April 25, 2025, without being exercised, and are no longer outstanding[136] c) Measurement of Stock-Based Compensation Stock-based compensation is a non-cash item accounted for in the income statement and as a provision in shareholder's equity, transferred to share capital upon RSU vesting - Stock-based compensation is a non-cash item, accounted for in the Income Statement and as a provision in shareholder's equity[138] - Upon vesting of RSUs, the provision is transferred to the Company's share capital[138] | Metric | 6/30/2025 (US$k) | 6/30/2024 (As restated) (US$k) | | :-------------------------------- | :-------- | :----------------------- | | Stock-based compensation expense | 1,277 | 4,209 | | Cost of goods sold (adjustments) | (61) | - | | Property, plant and equipment | (61) | 407 | | Deferred exploration and evaluation expenditure | 296 | 857 | | Total | 1,451 | 5,647 | 27. Legal Claim Contingency The company has probable legal losses totaling $2,046k and possible losses totaling $8,397k, including a significant civil claim and an arbitration by LG-ES which the company believes is without merit | Nature | Current (US$k) | Non-current (US$k) | Probable loss, net (US$k) | | :----- | :------ | :---------- | :----------------- | | Civil | 534 | 1,840 | 432 | | Labor | - | 1,614 | 1,614 | | Total | 534 | 3,454 | 2,046 | - As of June 30, 2025, the Company holds judicial deposits of $859k to guarantee certain civil lawsuits[140] | Nature | Contingency Possible loss, net (US$k) | (-) Suppliers (US$k) | Possible loss, net (US$k) | | :----- | :----------------------------- | :------------ | :----------------- | | Civil | 15,470 | -7,997 | 7,473 | | Regulatory | 149 | - | 149 | | Labor | 775 | - | 775 | | Total | 16,394 | -7,997 | 8,397 | - LG Energy Solution, Ltd. initiated arbitration alleging breach of offtake arrangements, which the Company believes are without merit[143] 28. Additional Information on the Cash Flow Statement Non-cash effects on the cash flow statement for the six months ended June 30, 2025, included $2,094k in additions to property, plant, and equipment in exchange for leases | Metric | 6/30/2025 (US$k) | | :------------------------------------------ | :-------- | | Addition to property, plant, and equipment in exchange for: | | | Lease | 2,094 | | Suppliers | - | | Non-cash effects | 2,094 | 29. Subsequent Events In July 2025, the company entered into a new export prepayment trade finance agreement with a financial institution for $5.0 million - In July 2025, the Company entered into an export prepayment trade finance agreement with a financial institution for a total amount of $5.0 million[146]