The Globe and Mail reports in its Friday, Oct. 2, edition that BMO Nesbitt Burns analyst Joel Jackson, citing legal, safety and environmental concerns at Sigman Lithium's wholly owned Grota do Cirilo operation in Brazil, downgraded his recommendation to "market perform" from "outperform." The Globe's David Leeder writes that Mr. Jackson continues to target the shares at $10 (U.S.). On Thursday, Brazil's mining regulator ANM ordered Sigma Lithium to halt part of its mining activities due to an "imminent risk."
The agency ordered immediate repairs on the eastern slope of the mine's north pit due to a "ruptured section" and demanded risk mitigation measures, warning of consequences for non-compliance.
Mr. Jackson says in a note: "We move to the sidelines pending greater clarity on a number of legal, safety, and environmental challenges facing the company. While we recognize the political backdrop in Brazil remains complex, the timing of a return to normalized operations remains uncertain. We also expect SG&A expenses to increase meaningfully as Sigma addresses and contests these issues.
Combined with a more challenging lithium market backdrop in recent weeks, we believe a more cautious stance is warranted."
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