Key Highlights

  • Shares are trading down 26.57% at $5.14, near the 52-week low of $4.62.
  • The $100 million convertible carries a fixed 7.0% coupon and a 25% conversion premium.
  • Third-quarter Revenue fell 23% to $23 million on 7,293 tonnes of output.

Sigma Lithium (NASDAQ:SGML) shares are trading down 26.57% at $5.14 after the company announced a $100 million, five-year Convertible Bond offering alongside a preview of third-quarter results. The stock sits close to its 52-week low of $4.62, against a 52-week high of $24.48, on Volume well above average.

Sigma Lithium is a Canadian-incorporated lithium producer whose Grota do Cirilo operation in Minas Gerais, Brazil, produces lithium oxide concentrate. The site has a nameplate capacity of 330,000 tonnes a year, and the company plans to resume its Phase 2 expansion in 2027.

Convertible Terms Replace Floating-Rate Secured Debt

The senior unsecured bonds mature in 2031 and carry a fixed 7.0% coupon, replacing a floating rate that the company put at 11.45% on its Synergy Capital secured debt. Bonds convert into CHESS Depositary Interests at a 25% premium to a reference price, with no conversion allowed during the first 12 months, and holders can require Redemption at the end of year three.

Net proceeds will repay the Synergy Capital debt, which was due in June 2027, with the balance going to growth capital spending and general corporate purposes. The company said the repayment cuts short-term Debt by roughly 80% from $125 million. The conversion feature, which could add shares after the first year, is drawing attention.

Third-Quarter Preview Shows Output Hit by a Local Suspension

Preliminary third-quarter production came in at 7,293 tonnes after local authorities suspended operations during the quarter, and gross revenue fell 23% from a year earlier to $23 million. Gross Margin held at 32% and the CIF China cash cost was $518 per tonne, 5% lower than a year earlier. Cash stood at $10 million against total debt of $125 million at quarter-end.

Operations restarted early in the fourth quarter after state and federal courts protected the company's operating and Mining licenses, and 9,000 tonnes of high-grade concentrate have been produced through October 30. The company also lowered its fiscal 2026 All-In Sustaining Cost guidance by 6% to $668 per tonne. Downgrades from BMO and JPMorgan in October had already left analyst sentiment cautious.

Bond Pricing and November 11 Results Are the Next Checkpoints

The offering is expected to close on or about November 16, and full third-quarter results are scheduled for November 11. Investors will also track whether the 21,000 tonnes of unprocessed inventory available for sale converts into fourth-quarter revenue.