Sigma Lithium Corporation (NASDAQ: SGML), a key player in the global lithium sector, plunged sharply on Thursday after the short-selling firm Blue Orca Capital published a report claiming the Brazilian miner is facing undisclosed safety issues, regulatory challenges and creditor disputes — spurring fresh market volatility around the company’s operations and outlook. (Investing.com)
Short Seller Report Sparks Sell-Off
On Feb. 26, Sigma Lithium’s stock tumbled about 13 % in afternoon trading after Blue Orca Capital disclosed a short position and released a detailed report alleging that the company’s Grota do Cirilo mine in Brazil deviated from its approved mine plan, creating dangerous pit wall configurations that could pose a “high potential for loss of human life.” The firm also claimed independent mining experts found those safety allegations credible based on satellite imagery reviews.
In addition to safety concerns, the report asserted that Sigma Lithium is contending with multiple undisclosed lawsuits and creditor claims — including an estimated $22 million lawsuit from a former mining contractor, a $2 million judgment, and more than a dozen debt collection protests — which the short seller says have not been fully disclosed to investors.
Blue Orca further alleged that state prosecutors in the Brazilian state of Minas Gerais filed a previously unreported lawsuit late last year seeking to freeze roughly $9 million in company bank accounts over financial concerns, and that federal prosecutors had issued demand letters recommending that mining and environmental authorities review and possibly suspend Sigma’s mining authorization.
Financial and Operational Stress Points Highlighted
According to regulatory filings, Sigma reported having $6.1 million in cash compared with $54.8 million in supplier payables at the end of the third quarter of fiscal 2025, and faces a $100 million loan repayment due late in 2026. The company’s largest Brazilian lithium mine has been suspended since last October as it transitions between mining contractors, a move Blue Orca suggested may be tied to unpaid bills rather than a strategic upgrade.
Context of Ongoing Safety Controversies
The short seller’s allegations arrive amid an extended period of scrutiny over Sigma’s operations. Earlier this year, Brazilian authorities ordered the closure of several waste piles at the Grota do Cirilo site, citing safety risks that triggered broad sell-offs and bearish analyst commentary.
In response to various negative reports and regulatory reactions over recent months, Sigma Lithium has publicly denied safety hazards, labeling speculative media coverage as “fake news” and highlighting actions like the sale of high-purity lithium fines and ongoing mine remobilization as evidence of normal operations.
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