CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain information and statements in this MD&A may constitute “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of U.S. securities legislation (collectively, “Forward-Looking Information”), which involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such Forward-Looking Information. All statements, other than statements of historical fact, may be Forward-Looking Information, including, but not limited to, mineral resource or mineral reserve estimates (which reflect a prediction of the mineralization that would be realized by development). When used in this MD&A, such statements generally use words such as “may”, “would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate” and other similar terminology. These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this MD&A. Forward-Looking Information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and does not necessarily provide accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the Forward-Looking Information, which is based upon what management believes are reasonable assumptions, and there can be no assurance that actual results will be consistent with the Forward-Looking Information.
In particular (but without limitation), this MD&A contains Forward Looking Information with respect to the following matters: statements regarding anticipated decision making with respect to the Company; capital expenditure programs; estimates of mineral resources and mineral reserves; development of mineral resources and mineral reserves; government regulation of mining operations and treatment under governmental and taxation regimes; the future price of commodities, including lithium; the realization of mineral resource and mineral reserve estimates, including whether mineral resources will ever be developed into mineral reserves; the timing and amount of future production; currency exchange and interest rates; expected outcome and timing of environmental surveys and permit applications and other environmental matters; potential positive or negative implications of change in government; the Company’s ability to raise capital and obtain project financing; expected expenditures to be made by the Company on its properties; successful operations and the timing, cost, quantity, capacity and quality of production; capital costs, operating costs and sustaining capital requirements, including the cost of construction of the processing plant; and competitive conditions and the ongoing uncertainties and effects in respect of the military and global conflicts.
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SIGMA LITHIUM CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSISFOR THE THREE AND TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2025(Expressed in thousands of United States dollars, except per share amounts or unless stated otherwise)
Forward-Looking Information does not take into account the effect of transactions or other items announced or occurring after the statements are made. Forward-Looking Information is based upon a number of expectations and assumptions and is subject to several risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those disclosed in or implied by such Forward-Looking Information. With respect to the Forward-Looking Information, the Company has made assumptions regarding, among other things:
| § | General economic and political conditions (including but not limited to the impact of the continuance or escalation of the military conflict between Russia and Ukraine, the military conflict in Middle East, and other military and global conflicts, and the multinational economic sanctions in relation to such conflicts); |
| § | Stable and supportive legislative, regulatory and community environment in the jurisdictions where the Company operates; |
| § | Stability and inflation of the Brazilian Real, including any foreign exchange or capital controls which may be enacted in respect thereof, and the effect of current or any additional regulations on the Company’s operations; |
| § | Demand for lithium, including that such demand is supported by growth in the EV market; |
| § | Estimates of, and changes to, the market prices for lithium; |
| § | The impact of increasing competition in the lithium business and the Company’s competitive position in the industry; |
| § | The Company’s market position and financial and operating performance; |
| § | The Company’s estimates of mineral resources and mineral reserves, including whether mineral resources will ever be developed into mineral reserves; |
| § | Anticipated timing and results of exploration, development and construction activities; |
| § | Reliability of technical data; |
| § | The Company’s ability to maintain full capacity commercial production, including that the Company will not experience any materials or equipment shortages, any labor or service provider outages or delays or any technical issues; |
| § | The Company’s ability to obtain financing on satisfactory terms to develop its projects, if required; |
| § | The Company’s ability to obtain and maintain mining, exploration, environmental and other permits, authorizations and approvals; |
| § | The timing and outcome of regulatory and permitting matters; |
| § | The exploration, development, construction and operational costs; |
| § | The accuracy of budget, construction and operations estimates for the Company; |
| § | Successful negotiation of definitive commercial agreements; and |
| § | The Company’s ability to operate in a safe and effective manner. |
Although management believes that the assumptions and expectations reflected in such Forward-Looking Information are reasonable, there can be no assurance that these assumptions and expectations will prove to be correct. Since Forward-Looking Information inherently involves risks and uncertainties, undue reliance should not be placed on such information.
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SIGMA LITHIUM CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSISFOR THE THREE AND TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2025(Expressed in thousands of United States dollars, except per share amounts or unless stated otherwise)
In addition, Forward Looking Information with respect to the potential outlook and future financial results contained in this MD&A is based on assumptions noted above and about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information available as at the date of such information. Readers are cautioned that any such information should not be used for purposes other than for which it is disclosed.
The Company’s actual results could differ materially from those anticipated in any Forward-Looking Information as a result of various known and unknown risk factors, including (but not limited to) the risk factors referred to under the heading “Financial Risk Factors” in this MD&A. Such risks relate to, but are not limited to, the following:
| § | There can be no assurance that market prices for lithium will remain at current levels or that such prices will improve; |
| § | The market for EVs and other large format batteries remains an emerging technology in several markets. No assurances can be given for the rate at which this market will develop, if at all, which could affect the success of the Company and its ability to expand lithium operations; |
| § | Changes in technology or other developments could result in preferences for substitute products; |
| § | The imbalance in the lithium market due to an excess of supply from new or existing competitors could adversely affect prices; |
| § | The Company’s financial condition, operations and results of operations are subject to political, economic, social, regulatory and geographic risks of doing business in Brazil; |
| § | Inflation in Brazil, along with Brazilian governmental measures to combat inflation, may have a significant negative effect on the Brazilian economy and, as a result, on the Company’s financial condition and results of operations; |
| § | Violations of anti-corruption, anti-bribery, anti-money laundering and economic sanctions laws and regulations could materially adversely affect the Company’s business, reputation, results of operations and financial condition; |
| § | Corruption and fraud in Brazil relating to ownership of real estate could materially adversely affect the Company’s business, reputation, results of operations and financial condition; |
| § | The Company is subject to regulatory frameworks applicable to the Brazilian mining industry which could be subject to further change, as well as government approval and permitting requirements, which may result in limitations on the Company’s business and activities; |
| § | The Company’s operations are subject to numerous environmental laws and regulations and expose the Company to environmental compliance risks, which may result in significant costs and have the potential to reduce the profitability of operations; |
| § | Physical climate change events and the trend toward more stringent regulations aimed at reducing the effects of climate change could have an adverse effect on the Company’s business and operations; |
| § | The Company’s future production estimates are based on existing mine plans and other assumptions which change from time to time. No assurance can be given that such estimates will be achieved; |
| § | The Company’s capital and operating cost estimates may vary from actual costs and revenues for reasons outside of the Company’s control; |
| § | Insurance may not be available to insure against all such risks, or the costs of such insurance may be uneconomic. Losses from uninsured and underinsured losses have the potential to materially affect the Company’s financial position and prospects; |
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SIGMA LITHIUM CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSISFOR THE THREE AND TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2025(Expressed in thousands of United States dollars, except per share amounts or unless stated otherwise)
| § | The Company is subject to risks associated with securing title, property interests and exploration and exploitation rights; |
| § | The Company is subject to strong competition in Brazil and in the global mining industry; |
| § | The Company may become subject to government orders, investigations, inquiries or other proceedings (including civil claims) relating to securities, labor, environmental and health and safety matters, which could result in consequences material to its business and operations; |
| § | The Company’s mineral resource and mineral reserve estimates are estimates only and no assurance can be given that any particular level of recovery of minerals will in fact be realized or that identified mineral resources, or mineral reserves will ever qualify as a commercially mineable (or viable) deposit; |
| § | The Company’s operations and the development of its projects may be adversely affected if it is unable to maintain positive community relations; |
| § | The Company is exposed to risks associated with doing business with counterparties, which may impact the Company’s operations and financial condition; |
| § | The Company may not be able to secure the supply of key raw material; |
| § | The Company may not be able to meet the quality requirements of its customers; |
| § | Any limitation on the transfer of cash or other assets between the Company and the Company’s subsidiaries, or among such entities, could restrict the Company’s ability to fund its operations efficiently or the ability of its subsidiaries to distribute cash otherwise available for distributions; |
| § | The Company is subject to risks associated with its reliance on consultants and others for mineral exploration and exploitation expertise; |
| § | The Company's operations are subject to the high degree of risk normally incidental to the exploration for, and the development and operation of, mineral properties; |
| § | From time to time, the Company may become involved in litigation, which may have a material adverse effect on its business, financial condition and prospects; |
| § | The current military conflict in Ukraine and the Middle East and the economic or other sanctions imposed in response to such military conflicts and other global conflicts may impact global markets in such a manner as to have a material adverse effect on the Company’s business, operations, financial condition and stock price; |
| § | Operating cash flow may be insufficient for future needs; |
| § | The Company may not be able to obtain sufficient financing in the future on acceptable terms, which could have a material adverse effect on the Company’s business, results of operations and financial condition. In order to obtain additional financing, the Company may conduct additional (and possibly dilutive) equity offerings or debt issuances in the future; |
| § | Actions taken by foreign governments regarding critical minerals may affect the Company’s business; |
| § | The Company’s operations may be adversely affected if its licenses and permits are challenged, revoked, amended, not issued or not renewed; |
| § | The Company may be subject to sudden tax changes, which can have a material adverse effect on profitability; |
| § | The Company may be unable to achieve cash flow from operating activities sufficient to permit it to pay the principal, premium, if any, and interest on the Company’s indebtedness, or maintain its debt covenants; |
| § | The Company has not declared or paid dividends in the past and may not declare or pay dividends in the future; |
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SIGMA LITHIUM CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSISFOR THE THREE AND TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2025(Expressed in thousands of United States dollars, except per share amounts or unless stated otherwise)
| § | The Company has increased costs as a result of being a public company both in Canada listed on the TSXV and in the United States listed on the Nasdaq, and its management is required to devote further substantial time to United States public company compliance efforts; |
| § | If the Company does not implement and maintain adequate and appropriate internal controls over financial reporting as outlined in accordance with NI 52-109 or the Rules and Regulations of the SEC. Accordingly, inappropriately designed or ineffective controls could result in inaccurate financial reporting; |
| § | As a foreign private issuer, the Company is subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to its shareholders; |
| § | Failure to retain key officers, consultants and employees or to attract and retain additional key individuals with necessary skills could have a materially adverse impact upon the Company’s success; |
| § | The Company’s business depends on strong labor and employment relations; |
| § | The Company is subject to currency fluctuation risks; |
| § | The Company is subject to interest rates fluctuation; |
| § | The Company may face challenges in accessing global capital markets; |
| § | Failure in the infrastructure that the Company relies upon could have an adverse effect on its operations; |
| § | Certain directors and officers of the Company are, or may become, associated with other natural resource companies which may give rise to conflicts of interest; |
| § | The market price for the Company’s shares may be volatile and subject to wide fluctuations in response to numerous factors beyond its control, and the Company may be subject to securities litigation as a result; |
| § | If securities analysts, industry analysts or activist short sellers publish research or other reports about the Company’s business, prospects or value, which questions or downgrades the value of the Company, the price of the Common Shares could decline; |
| § | The Company will have broad discretion over the use of the net proceeds from offerings of its securities; |
| § | There is no guarantee that the Common Shares will earn any positive return in the short term or long term; |
| § | The Company has a major shareholder which owns 42.77% of the outstanding Common Shares and, as such, for as long as such shareholder directly or indirectly maintains a significant interest in the Company, it may be in a position to affect the Company’s governance, operations and the market price of the Common Shares; |
| § | As the Company is a Canadian corporation but many of its directors and officers are not citizens or residents of Canada or the U.S., it may be difficult or impossible for an investor to enforce judgements against the Company and its directors and officers outside of Canada and the U.S. which may have been obtained in Canadian or U.S. courts or initiate court action outside Canada or the U.S. against the Company and its directors and officers in respect of an alleged breach of securities laws or otherwise. Similarly, it may be difficult for U.S. shareholders to effect service on the Company to realize on judgements obtained in the United States; |
| § | The Company is governed by the Ontario Business Corporations Act and by the securities laws of the province of Ontario, which in some cases have a different effect on shareholders than U.S. corporate laws and U.S. securities laws; |
| § | The Company is subject to risks associated with its information technology systems and cyber-security; and |
| § | The Company may be a Passive Foreign Investment Company, which may result in adverse U.S. federal income tax consequences for U.S. holders of Common Shares. |
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SIGMA LITHIUM CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSISFOR THE THREE AND TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2025(Expressed in thousands of United States dollars, except per share amounts or unless stated otherwise)
Readers are cautioned that the foregoing lists of assumptions and risks are not exhaustive. The Forward-Looking Information contained in this MD&A is expressly qualified by these cautionary statements. All Forward-Looking Information in this MD&A speaks as of the date of this MD&A. The Company does not undertake any obligation to update or revise any Forward-Looking Information, whether as a result of new information, future events, or otherwise, except as required by applicable securities law. Additional information about these assumptions, risks, and uncertainties is contained in the Company’s filings with securities regulators, including this MD&A and the Annual Information Form, which are available on SEDAR+ atwww.sedarplus.ca.
