Sigma Lithium (SGML) faces increased uncertainty around production and liquidity following its decision to switch mining contractors and ongoing delays in securing new financing, BofA Securities said in a note Friday.

Financing delays persist as Sigma's $300 million in prepayment deals remain unsigned and a $100 million loan from Brazil's BNDES remains incomplete, the analysts said.

While Sigma Lithium's long-term project fundamentals remain strong, production risk and liquidity risk have increased, the analysts said.

BofA cut its rating on the stock to neutral from buy and trimmed its price target to $7 from $10.

Shares of Sigma Lithium were 3.4% higher in recent trading.

Price: 6.37, Change: +0.26, Percent Change: +4.24