Shares tumble after short seller report
Sigma Lithium Resources Corp (NASDAQ:SGML) saw its stock fall 13% on Thursday after short seller Blue Orca Capital revealed a short position and published allegations concerning the miner's operations and finances in Brazil. The report asserts a combination of safety-related engineering concerns, creditor litigation, and regulatory actions that were not publicly disclosed by the company.
Alleged engineering and safety issues
Blue Orca cited Brazilian court records and a 2025 technical report prepared by a mining engineering firm that, according to the short seller, contends Sigma deviated from its approved mine plan. The report is said to allege that Sigma constructed pit walls at angles the engineering firm described as creating a "high potential for loss of human life." Blue Orca also said it retained independent mining experts to analyze satellite imagery, and that those experts found the engineering allegations credible.
Claims of undisclosed creditor suits and judgments
In addition to the safety-related claims, the short seller's report alleges the company is subject to a series of creditor and supplier suits that were not disclosed. Blue Orca referenced Brazilian media reporting that a former mining contractor has filed a lawsuit asserting Sigma owes about $22 million. The short seller also reported it discovered a $2 million judgment against Sigma and identified more than a dozen additional creditor lawsuits or debt collection protests in public records.
Regulatory actions cited
Blue Orca further alleged that state prosecutors in Minas Gerais filed a previously undisclosed lawsuit in December 2025 seeking to freeze roughly $9 million of Sigma's bank accounts, citing concerns about the company's financial condition. The report also claimed that Brazilian federal prosecutors issued formal demand letters in September 2025 recommending that mining and environmental agencies undertake reviews and consider suspending or annulling Sigma's mining authorization.
Company financial position and upcoming debt
Sigma's published financial snapshot for the third quarter of fiscal 2025 shows $6.1 million in cash and $54.8 million in supplier payables. Separately, the company has a $100 million loan maturing in late 2026. Those figures are cited in the short seller report as context for the alleged creditor actions and regulatory pressures.
Operational disruption and contractor change
The company suspended mining operations in October 2025, stating it was transitioning to a new mining contractor. Blue Orca suggested that the contractor's exit may have been linked to unpaid amounts rather than being purely a strategic upgrade, though the short seller framed this as a hypothesis based on the alleged creditor disputes.
What is confirmed and what is alleged
The claims in Blue Orca's report are presented as allegations based on court records, a technical report, media accounts and the short seller's review of satellite imagery and public filings. The company's reported cash, supplier payables and loan maturity dates are cited figures, and the operational suspension in October 2025 is a reported company action. The report links these items to argue there are unreported legal, regulatory and safety issues, which coincided with the 13% share-price decline following the report's release.
Note: This article reports the contents of the short seller's public allegations and the company's reported financial figures as presented in public filings and media accounts referenced by the short seller. The article does not introduce additional facts beyond those claims and reported numbers.