Under a binding heads of agreement Mitsui will pre-pay Sigma US$30 million for battery-grade lithium concentrate supply of up to 55,000 tonnes per year over six years, extendable for five years. Mitsui will also have the right to buy a supplementary amount of 25,000tpy of products at prevailing market prices over six years, extendable for five years. An initial tranche of $3 million has been received by Sigma.

"The pre-payment provides Sigma with significant flexibility to fund the remaining portion of its capex with debt instruments. Sigma's ability to secure a pre-payment of this magnitude for its future production demonstrates the confidence that Mitsui, one of the largest trading companies in the world, has in Sigma's ability to timely produce and deliver high-quality lithium products," said chief strategy officer Ana Cabral.

Mitsui will support Sigma's construction timetable by negotiating the terms of a disbursement of up to $7 million that will be used for the deposits required to purchase long lead items for the construction of the commercial production plant. Mitsui will also provide support from its global logistics and battery materials marketing expertise.

Sigma is working on a feasibility study for Grota do Cirilo that envisions building a lithium concentration plant with an initial processing capacity of 1.5 million tonnes per year of spodumene ore to produce 220,000tpy of battery-grade spodumene concentrate from the first quarter of 2020, which may be expandable to 440,000tpy.

"Both of our companies share the same vision regarding the growth in the battery metals value chain as well as commitment to supply the world with clean energy," said chairman and CEO Calvyn Gardner in a statement.

Sigma started to produce battery-grade lithium concentrate on a pilot scale in 2018 at a 12,000tpy plant that produces a battery-grade lithium spodumene concentrate above 6% Li2O.

Grota do Cirilo has a January 2019 measured and indicated mineral resource of 45.7Mt grading 1.38% Li2O

Shares in the company (TSXV:SGMA) opened 3% higher at C$1.65 valuing the company at $107 million. Its share price has fallen 16% so far this year.