Sigma Lithium Corporation (NASDAQ: SGML) has begun negotiating a settlement agreement with the Minas Gerais state government in Brazil following environmental fines issued by a regional regulatory body.

The Vale do Jequitinhonha branch of SUPRAM, the Minas Gerais environmental state body based in Diamantina, issued fines totaling approximately $540,000. Several of the fines relate to environmental issues from 2013 to 2022.

Sigma Lithium said it denies any wrongdoing and has filed factual and quantitative environmental evidence with FEAM, the state's environmental regulator, in support of its defense. The company specifically denied misrepresenting information filed with environmental authorities since 2018, denied commercially selling lithium materials before May 2023, and denied that two houses located outside its licensed area were negatively impacted by its operations.

The company confirmed it has agreed to a settlement to be established through a TAC Agreement — a standardized regulatory settlement instrument used in Brazil — in addition to paying up to $540,000 in fines. The fines are not due for at least 120 days.

Sigma Lithium estimates that implementing the environmental procedure adjustments required under the TAC Agreement will require capital expenditure of approximately $1,000,000 to enable the resumption of activities that have been partially and temporarily suspended by SUPRAM auditors.

The company said it is also in contact with securities regulators, including FINRA, regarding what it described as a negative online media campaign that it claims coincided with its announcement of a second-quarter production target beat and board re-election results at its Annual General Meeting.