Sigma Lithium (NASDAQ:SGML) has temporarily suspended all mining and industrial activities at its Grota do Cirilo lithium operation in Brazil as it awaits a ruling from a federal appeals court.
The suspension follows an order from Brazil’s national mining agency (ANM) to halt mining activities at the operation.
According to a document seen by Reuters, regulators at ANM cited an “imminent risk” at Grota do Cirilo and ordered immediate corrective work on the eastern slope of the mine’s north pit.
ANM described the affected area as a “ruptured section” and said it must remain closed until the corrective work is completed, Reuters reports.
Court ruling pending
Sigma claims it suspended operations while awaiting a federal appeals court review of an emergency motion challenging a preliminary injunction related to its environmental licences.
“The suspension is a result of an atypical 15-day delay by the Federal Court of Appeals in reviewing the company’s legal defense,” Sigma says in its statement.
Reuters previously reported that a Brazilian judge had ordered the suspension of environmental licences and mining activities at Grota do Cirilo.
The injunction stems from a civil lawsuit brought by the Federation of Quilombola Communities of Minas Gerais, which argues that Sigma’s project falls within the area of influence of the Bau Quilombola community.
Quilombolas are traditional communities of African descent whose territories are protected under Brazilian law.
Sigma disputes the claims, saying its operations do not adversely affect nearby Quilombola communities and that the project sits outside the relevant impact zone.
Production guidance delayed
Grota do Cirilo is Sigma’s sole producing asset and is located in Brazil’s Lithium Valley in Minas Gerais. The operation hosts a large hard-rock lithium deposit alongside a processing plant.
Despite the suspension, Sigma says it remains focused on its expansion plans and expects to deliver 330,000 tonnes of lithium oxide concentrate in fiscal 2027.
However, the company has pushed back its 12-month production guidance of 240,000 tonnes by three months because of the suspension.
Sigma says commercial and recycling activities will continue during the shutdown, including sales of lithium fines, allowing the company to generate cash flow while mining and industrial operations remain suspended.
Shares of Sigma plunged on the news, extending their year-to-date decline to more than 40% as uncertainty continues to weigh on the company’s Brazilian operation.
Write to Jackson Chen at Mining.com.au
Main Image: Sigma Lithium
