July 28 (Reuters) – Sigma Lithium (SGML.V) is working with Bank of America (BAC.N) to coordinate talks with parties interested in acquiring it, the chief executive of the miner, which produces the metal used to make electric vehicle batteries, told Reuters on Friday.
The deal discussions come amid a supply crunch for lithium. Sigma earlier this year started production at the Grota do Cirilo hard rock lithium project in Brazil to supply roughly a fourth of its output to LG Energy Solution (373220.KS) with the rest slated for sale on the spot market.
Bank of America has been Sigma’s bank on retainer for some time and has been holding meetings for at least four months with parties that approach with interest in acquiring the lithium miner, Sigma CEO Ana Cabral-Gardner said in an interview. She added that the company “is focused on alternatives that embrace the importance of our shareholders’ values of social sustainability.”
Bank of America declined to comment.
Bloomberg News reported in February, citing sources, that automaker Tesla Inc (TSLA.O) was considering a bid for Vancouver-based Sigma, which is listed on Nasdaq and has a market value of $4.2 billion.
“What I can confirm is that since the rumors started in February, the management continues to work to understand strategic alternatives to strengthen Sigma’s and Brazil’s unique environmentally competitive position on the midstream of the global supply chain,” said Cabral-Gardner. She is also managing partner of A10 Investimentos, which owns 44% of Sigma’s shares.
Cabral-Gardner said that while Bank of America is coordinating meetings with parties that approach Sigma, Sigma has not yet picked a bank to advise on any potential transaction.
“Maybe I’m not selling. Maybe I’m partnering with someone. I don’t know what I’m doing yet,” Cabral-Gardner said in the interview.
“We need to find someone to marry, and when we find someone to marry, then we choose a priest,” Cabral-Gardner said, making an analogy between an M&A banker and a priest. “The priest is going to depend on who we’re going to marry.”
Cabral-Gardner added that Sigma does not plan to sell the Brazilian mine separately from the company itself.
“The company is the asset,” she said.
Because lithium demand is low in biofuel-focused Brazil, the country exports nearly all of it.
Sigma has projected the mine will reach annual free cash flow of $455 million for its first phase of production. Eight analysts recommend buying Sigma’s stock and believe it should be trading 28% higher than current levels, according to Refinitiv Eikon data.
Reporting by Ernest Scheyder; Editing by Cynthia Osterman
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