SGML Stock Is Diving Today – Why Has Blue Orca Capital Taken A Short Position Against Co?

The short seller alleged the company is facing undisclosed regulatory actions, creditor lawsuits and safety concerns at its Brazilian mine.

• Blue Orca stated that Sigma cannot afford any mistakes, pointing to its most recent earnings report, which showed minimal cash reserves, a large and increasing payables balance, and significant upcoming debt maturities.
• Short Seller said that according to undisclosed Brazilian legal filings and news articles, Sigma’s former mining contractor filed a sealed lawsuit against Sigma in São Paulo, and Sigma reportedly owes it $22 million. 
• The company suspended mining operations in October 2025, and had said that it was transitioning to a new mining contractor.

Sigma Lithium Resources shares fell 11% on Thursday after short seller Blue Orca Capital disclosed a short position against the company. 

The short seller alleged the company is facing undisclosed regulatory actions, creditor lawsuits and safety concerns at its Brazilian mine. 

More From Blue Orca Report

Blue Orca said in its report that Brazilian court records reveal a technical report prepared by a mining engineering firm in 2025 that alleges Sigma deviated from its approved mine plan and built pit walls so dangerously steep that it created a “high potential for loss of human life,” threatening the safety of workers and the economic viability of the mine." 

The short seller said that satellite imagery, reviewed by independent mining experts it has retained to corroborate the technical report, found the analysis and allegations credible.

Blue Orca stated that Sigma cannot afford any mistakes, pointing to its most recent earnings report, which showed minimal cash reserves, a large and increasing payables balance, and significant upcoming debt maturities.

“Yet undisclosed lawsuits and creditor judgments suggest that Sigma’s liquidity crisis is far worse than investors are led to believe. According to undisclosed Brazilian legal filings and news articles, Sigma’s former mining contractor filed a sealed lawsuit against Sigma in São Paulo, and Sigma reportedly owes it R$115 million ($22 million),” the report said. 

Sigma Struggles

Sigma in its third quarter results reported $6.1 million in cash and $54.8 million in supplier payables at the end of the quarter. The company has a $100 million loan due in late 2026.

The company suspended mining operations in October 2025, and had said that it was transitioning to a new mining contractor. Blue Orca in its report suggested Sigma's departure may have been related to unpaid amounts rather than a strategic upgrade.

How Did Stocktwits Users React?

Retail sentiment around SGML trended in ‘extremely bullish’ territory amid ‘extremely high’ message volume. 

Shares in the company have risen 32% over the past year. 

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