Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURE™ and VPURE+™ products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Quarterly results reviewed. As indicated in an earlier report, first-quarter results were generally in line with expectations. Revenues ran a bit above expectations on favorable pricing, but costs were higher than expected as well.
Production and sales guidance reductions. Management reduced production and sales guidance by roughly 20% due to drilling delays caused by wet weather. Management explained that vanadium production requires blending, and we believe regular drilling is needed to identify blending supplies. Drilling has resumed, and management should have a better idea what production and sales could look like for the rest of 2024 soon.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated.
Q1 2023 and Other Highlights
Revenues of $57.4 million, a 35% increase over Q1 2022, mainly due to greater sales quantities at a higher revenue per lb sold1; Revenues per pound sold1 of $9.14, a 5% increase over Q1 2022
Operating costs of $45.9 million vs. $29.0 million in Q1 2022, and cash operating costs excluding royalties per pound1 of V2O5 equivalent sold of $5.15 vs. $3.97 in Q1 2022
Net loss of $1.2 million vs. a net loss of $2.0 million in Q1 2022
Cash provided before working capital items of $8.2 million, a 42% increase over Q1 2022
In January 2023, the Company secured two debt facilities: a two-year debt facility of $15.0 million, bearing interest at 6.85% per annum with payments due quarterly and principal repayments starting after a grace period of 180 days, and a three-year debt facility of $10.0 million, bearing interest at 8.36% per annum with an initial fee of 0.70% and payments due semi-annually with principal repayments starting after a grace period of 360 days
Cash balance of $61.6 million, debt of $65.0 million and a net working capital2 surplus of $119.3 million exiting Q1 2023
Total V2O5 equivalent sales of 2,849 tonnes (including 245 tonnes of purchased material), a 28% increase over Q1 2022; V2O5 production 2,111 tonnes (4.6 million lbs3) vs. 2,441 tonnes (4.4 million lbs3) in Q1 2022
The Company has adjusted its annual 2023 V2O5 equivalent production guidance to 9,000 – 11,000 tonnes from 11,000 – 12,000 tonnes, its annual 2023 V2O5 equivalent sales guidance to 8,700 – 10,700 tonnes from 10,300 – 11,300 tonnes and its cash operating cost excluding royalties per lb sold guidance to $4.85 – 5.65 from $4.85 – 5.25
Q1 2023 results conference call and webcast: Thursday, May 11th at 1:00 p.m. ET
Vanadium Market Update4
Spot demand remained strong in Q1 2023, primarily due to higher-than-expected demand from the aerospace sector with demand in the energy storage market anticipated to increase in future quarters largely due to anticipated Chinese vanadium redox flow battery (“VRFB”) deployments
The average benchmark price per pound of V2O5 in Europe was $10.39 in Q1 2023, a 3% decrease from the average of $10.72 seen in Q1 2022; The average benchmark price per kg of ferrovanadium (“FeV”) in Europe was $39.46 in Q1 2023, a 15% decrease from the average of $46.17 seen in Q1 2022, mainly due to lower spot demand from the steel sector in the quarter
TORONTO–(BUSINESS WIRE)– Largo Inc. (“Largo” or the “Company“) (TSX: LGO) (NASDAQ: LGO) today released financial and operating results for the three months ended March 31, 2023. The Company reported quarterly vanadium pentoxide (“V2O5”) equivalent sales of 2,849 tonnes at a cash operating cost excluding royalties per pound1 sold of $5.15.
Largo Reports First Quarter 2023 Financial Results and Provides Update to 2023 Operational and Sales Outlook (Photo: Business Wire)
Daniel Tellechea, Interim CEO and Director of Largo, stated: “While first quarter results were in line with our annual 2023 guidance, we have revised our 2023 production, sales and cost guidance due to heavy rain in December causing the Company to delay its infill drilling campaign for 2023, which is required for further refinement of the Company’s short-term mining model. Returning to normalized production levels remains the top priority for Largo as we work through this period of adjustment in our mining operations.”
He continued: “However, we should not overlook the upcoming catalysts for the Company in 2023. We continued to progress with the construction of our ilmenite concentration plant during the first quarter and expect to complete construction in Q2 2023, with commissioning and ramp up following shortly thereafter. In addition, installation of our 6.1 megawatt-hour vanadium battery in Spain continued during Q1 2023 with final provisional acceptance scheduled for Q3 2023.” He concluded: “As for the market, vanadium prices decreased approximately 6% in April 2023 as a result of lower short-term steel demand. Despite this, we believe vanadium’s long-term and medium-term fundamentals remain strong, with considerable demand growth expected in the future from battery applications.”
Q1 2023 Financial Highlights
During Q1 2023, the Company recognized revenues of $57.4 million from sales of 2,849 tonnes of V2O5 equivalent (Q1 2022 – 2,232 tonnes). This represents a 35% increase in revenues over Q1 2022 ($42.7 million) and is mainly due to greater sales quantities at a higher revenue per lb sold1.
Operating costs of $45.9 million in Q1 2023 (Q1 2022 – $29.0 million) include direct mine and production costs of $28.4 million (Q1 2022 – $17.6 million), conversion costs of $1.9 million (Q1 2022 – $1.8 million), product acquisition costs of $4.2 million (Q1 2022 – $1.6 million), royalties of $2.4 million (Q1 2022 – $2.0 million), distribution costs of $1.4 million (Q1 2022 – $1.4 million), depreciation and amortization of $7.3 million (Q1 2022 – $4.3 million) and iron ore costs of $0.3 million (Q1 2022 – $0.2 million). The increase in direct mine and production costs is attributable to low ore availability due in part to the heavy rains in December 2022, as well as a shutdown for the completion of the planned maintenance and refractory refurbishment in the kiln. Higher mining costs, the lack of production stability and the ramp up following the shutdown negatively impacted costs in Q1 2023. In addition, as compared with Q1 2022, the Company experienced cost increases in critical consumables, including sodium carbonate, as well as increased consumption of ammonium sulfate.
Cash operating costs excluding royalties per pound1 sold were $5.15 in Q1 2023, compared with $3.97 in Q1 2022. The increase seen in Q1 2023 compared with Q1 2022 is largely due to the reasons noted above for operating costs, with the previously noted plant shutdowns negatively impacting operational and financial performance for the quarter.
Professional, consulting and management fees were $5.5 million in Q1 2023, compared with $5.9 million in Q1 2022, representing a 6% decrease. The decrease is primarily due to lower costs incurred for Largo Physical Vanadium Corp. (“LPV”) in Q1 2023 than in the previous comparative quarter.
Other general and administrative expenses were $3.3 million in Q1 2023, compared with $1.7 million in Q1 2022. The increase is primarily attributable to increased depreciation in Q1 2023 from the Company’s software intangible asset, as well as increased IT related costs in support of the Company’s enterprise resource planning (“ERP”) software implementation. The Company also saw increased costs at LCE, which are primarily related to increased travel costs arising from its battery installation activities in Spain.
Share-based payments in Q1 2023 decreased from Q1 2022 by 266% to an expense recovery of $1.3 million. The decrease was attributable to the reversal of share-based payment expenditures on forfeited unvested stock options and restricted share units (“RSUs”) as well as a reduced number of stock options and RSUs granted in Q1 2023, as compared with Q1 2022.
Finance costs were $1.4 million in Q1 2023, compared with $0.2 million in Q1 2022. The increase is attributable to increased debt, as well as an initial financing fee on the Company’s new debt facilities.
Technology start-up costs were $2.8 million in Q1 2023, representing a 7% decrease over Q1 2022. These costs relate to activities at LCE focussed on the deployment of its initial VCHARGE VRFB system in Spain with the quarter seeing increased activity by the field service team and higher transportation and installation costs.
Cash provided by financing activities in Q1 2023 increased from cash provided by financing activities in Q1 2022 by $24.9 million. The movement is primarily due to the receipt of debt of $25.0 million.
Cash used in investing activities in Q1 2023 of $23.4 million is an increase from the $4.3 million seen in Q1 2022. This is primarily due to capital expenditures for the ilmenite project and purchases of vanadium assets by LPV of $8.6 million.
Additional Corporate Updates
Q1 2023 Production Overview: Production of 2,111 tonnes of V2O5 in Q1 2023 was 14% lower than the 2,442 tonnes of V2O5 produced in Q1 2022. In Q1 2023, the Company experienced reduced massive ore inventory arising from the heavy rainfall in December 2022. The planned kiln maintenance and refractory refurbishment initially scheduled for February was completed in January during the stoppage in operations. In Q1 2023, the transition in mining contractor was completed and 341,967 tonnes of ore were mined with an effective grade5 of 0.81% of V2O5. The ore mined in Q1 2023 was 13% higher than in Q1 2022. The Company produced 78,695 tonnes of concentrate with an effective grade5 of 2.99%. The global recovery6 achieved in Q1 2023 was 83.0%, an increase of 7.1% from the 77.5% achieved in Q1 2022 and 11.1% higher than the 74.7% achieved in Q4 2022. The global recovery6 in January was 83.1%, with 82.9% achieved in February and 82.7% achieved in March. Subsequent to Q1 2023, production in April 2023 was 676 tonnes of V2O5 equivalent.
Q1 2023 High Purity Production: In Q1 2023, the Company produced 1,041 V2O5 equivalent tonnes of high purity products, including 813 tonnes of high purity V2O5 and 228 tonnes of high purity vanadium trioxide (“V2O3”). This represented 49% of the total quarterly production.
Q1 2023 Sales Overview and Outlook: In Q1 2023, the Company sold 2,849 tonnes of V2O5 equivalent (Q1 2022 – 2,232 tonnes), including 245 tonnes of purchased products (Q1 2022 – 79 tonnes). Logistical challenges and transport costs have eased from their highs and the Company expects further improvements in the coming quarters and the Company continued to deliver on all its commercial commitments. The Company has also committed to the purchase of 60 tonnes per month of V2O5 from third parties for the remainder of the year. Subsequent to Q1 2023, sales in April 2023 were 1,101 tonnes of V2O5 equivalent, including 78 tonnes of purchased material.
Stack Manufacturing Facility Improvements at LCE: All building improvements at Largo Clean Energy’s (“LCE”) facility in Wilmington, Massachusetts were completed during Q1 2023. Stack manufacturing has moved into its final location and LCE will now begin the process of restarting and scaling up the capacity to 12.5 megawatts (“MW”) by the end of the year, with an ultimate capacity of 100 MW by the end of 2025. The sub-scale and chemistry teams have moved into their new lab, which, following an upgrade over the next two quarters, will increase the material and core technology testing capacity to support new vendors and performance improvements.
Promotion of Paul Vollant to Chief Commercial Officer: Effective May 9, 2023, Largo has promoted Paul Vollant to Chief Commercial Officer in order to oversee all sales and strategic business development efforts related to the commodity division of the Company. His promotion reflects an unwavering commitment and support of the Company’s sales efforts to date, including the establishment and oversight of Largo’s sales and trading department. Mr. Vollant is highly experienced in the sales and marketing of metals and minerals and has specialized in strategic metals, particularly vanadium and titanium. Mr. Vollant joined Largo in 2019 as Director of Sales and Trading and was subsequently promoted to Vice President of Commercial in 2021.
Update of 2023 Production and Sales Strategy Outlook
The Company is in the process of reviewing its short-term mine model to incorporate on-going infill drilling at the Campbell Pit. Based on results to date and expected future results, the Company has adjusted its annual 2023 production, sales and cash cost guidance.
Q1 2023 Webcast and Conference Call Information
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The information provided within this release should be read in conjunction with Largo’s unaudited condensed interim financial statements for the three months ended March 31, 2023 and 2022 and its management’s discussion and analysis for the three months ended March 31, 2023 which are available on our website at www.largoinc.com or on the Company’s respective profiles at www.sedar.com and www.sec.gov.
About Largo
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURETM and VPURE+TM products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing an ilmenite concentration plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information, please visit www.largoinc.com.
This press release contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation. Forward‐looking information in this press release includes, but is not limited to, statements with respect to the timing and amount of estimated future production and sales; the future price of commodities; costs of future activities and operations, including, without limitation, the effect of inflation and exchange rates; the effect of unforeseen equipment maintenance or repairs on production; timing of ilmenite production; the ability to produce high purity V2O5 and V2O3 according to customer specifications; the extent of capital and operating expenditures; the ability of the Company to make improvements on its current short-term mine plan; the impact of global delays and related price increases on the Company’s global supply chain and future sales of vanadium products. Forward‐looking information in this press release also includes, but is not limited to, statements with respect to our ability to build, finance and successfully operate a VRFB business, the projected timing and cost of the completion of the EGPE project; our ability to protect and develop our technology, our ability to maintain our IP, the competitiveness of our product in an evolving market, our ability to market, sell and deliver our VCHARGE batteries on specification and at a competitive price, our ability to successfully deploy our VCHARGE batteries in foreign jurisdictions; our ability to negotiate and enter into a joint venture with Ansaldo Green Tech on terms satisfactory to the Company and the success of such joint venture; the receipt of necessary governmental permits and approvals on a timely basis, our ability to secure the required resources to build and deploy our VCHARGE batteries, and the adoption of VRFB technology generally in the market.
The following are some of the assumptions upon which forward-looking information is based: that general business and economic conditions will not change in a material adverse manner; demand for, and stable or improving price of V2O5 and other vanadium commodities; receipt of regulatory and governmental approvals, permits and renewals in a timely manner; that the Company will not experience any material accident, labour dispute or failure of plant or equipment or other material disruption in the Company’s operations at the Maracás Menchen Mine or relating to Largo Clean Energy, specially in respect of the installation and commissioning of the EGPE project; the availability of financing for operations and development; the availability of funding for future capital expenditures; the ability to replace current funding on terms satisfactory to the Company; the ability to mitigate the impact of heavy rainfall; the Company’s ability to procure equipment, services and operating supplies in sufficient quantities and on a timely basis; that the estimates of the resources and reserves at the Maracás Menchen Mine are within reasonable bounds of accuracy (including with respect to size, grade and recovery and the operational and price assumptions on which such estimates are based); the accuracy of the Company’s mine plan at the Maracás Menchen Mine, the competitiveness of the Company’s VRFB technology; the ability to obtain funding through government grants and awards for the Green Energy sector, the accuracy of cost estimates and assumptions on future variations of VCHARGE battery system design, that the Company’s current plans for ilmenite and VRFBs can be achieved; the Company’s “two-pillar” business strategy will be successful; the Company’s sales and trading arrangements will not be affected by the evolving sanctions against Russia; and the Company’s ability to attract and retain skilled personnel and directors; the ability of management to execute strategic goals.
Forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. All information contained in this news release, other than statements of current and historical fact, is forward looking information. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Largo or Largo Clean Energy to be materially different from those expressed or implied by such forward-looking statements, including but not limited to those risks described in the annual information form of Largo and in its public documents filed on www.sedar.com and available on www.sec.gov from time to time. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Although management of Largo has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Largo does not undertake to update any forward-looking statements, except in accordance with applicable securities laws. Readers should also review the risks and uncertainties sections of Largo’s annual and interim MD&As which also apply.
Trademarks are owned by Largo Inc.
Non-GAAP Measures
The Company uses certain non-GAAP measures in its press release, which are described in the following section. Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under IFRS, the Company’s GAAP, and might not be comparable to similar financial measures disclosed by other issuers. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Revenues Per Pound
The Company’s press release refers to revenues per pound sold, V2 O5 revenues per pound of V2 O5 sold and FeV revenues per kg of FeV sold, which are non-GAAP financial measures that are used to provide investors with information about a key measure used by management to monitor performance of the Company.
These measures, along with cash operating costs, are considered to be key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine and sales activities. These measures differ from measures determined in accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.
The following table provides a reconciliation of revenues per pound sold, V2O5 revenues per pound of V2O5 sold and FeV revenues per kg of FeV sold to revenues and the revenue information presented in note 18 as per the Q1 2023 unaudited condensed interim consolidated financial statements.
Cash Operating Costs and Cash Operating Costs Excluding Royalties
The Company’s press release refers to cash operating costs per pound and cash operating costs excluding royalties per pound, which are non-GAAP ratios based on cash operating costs and cash operating costs excluding royalties, which are non-GAAP financial measures, in order to provide investors with information about a key measure used by management to monitor performance. This information is used to assess how well the Maracás Menchen Mine is performing compared to plan and prior periods, and also to assess its overall effectiveness and efficiency.
Cash operating costs includes mine site operating costs such as mining costs, plant and maintenance costs, sustainability costs, mine and plant administration costs, royalties and sales, general and administrative costs (all for the Mine properties segment), but excludes depreciation and amortization, share-based payments, foreign exchange gains or losses, commissions, reclamation, capital expenditures and exploration and evaluation costs. Operating costs not attributable to the Mine properties segment are also excluded, including conversion costs, product acquisition costs, distribution costs and inventory write-downs.
Cash operating costs excluding royalties is calculated as cash operating costs less royalties.
Cash operating costs per pound and cash operating costs excluding royalties per pound are obtained by dividing cash operating costs and cash operating costs excluding royalties, respectively, by the pounds of vanadium equivalent sold that were produced by the Maracás Menchen Mine.
Cash operating costs, cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound, along with revenues, are considered to be key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine. These measures differ from measures determined in accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.
The following table provides a reconciliation of cash operating costs and cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound for the Maracás Menchen Mine to operating costs as per the Q1 2023 unaudited condensed interim consolidated financial statements.
For further information, please contact:
Investor Relations Alex Guthrie Senior Manager, External Relations +1.416.861.9778 aguthrie@largoinc.com
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURE™ and VPURE+™ products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Largo reported 2023-1Q results generally in line with our recently-revised estimates. Revenues were a few million higher than expected, but so were operating costs, leading to operating income near expectations. Income tax expenses of $1.8 million on $0.7 million of pretax income were unexpected causing a $1.2 million net loss ($0.02 p/s) versus our expectations for breakeven results. We will seek clarification on the 268% tax rate during the upcoming conference call (5/11 at 1:00 pm EST, 1-416-764-8650).
Production and sales numbers lowered for the rest of the year. Management lowered annual production guidance to 9,000-11,000 tonnes from 11,000-13,000 tonnes. It also lowered sales to 8,700-10,700 tonnes from 10,300-11,300 tonnes and raised the upper range of its operating costs per unit sold projections. The declines were split across the second, third, and fourth quarters implying that the heavy rainfall in December that affected inventory may continue longer than expected. We have adjusted the numbers in our models to reflect updated guidance.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURE™ and VPURE+™ products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Largo, Inc. will release 2023-1Q financial results on May 10th and hold a conference call to discuss results on May 11th. The company has previously (4/18/23) disclosed quarterly V2O5 production of 2,111 tonnes and sales of 2,849 tonnes. Sales were significantly above previous guidance of 2,300-2,500 tonnes. Consequently, we expect result to show improvement over the first quarter of last year when Largo sold 2,232 tonnes. We would note that 2023-1Q sales include 245 tonnes of purchased material, which we assume was done at a higher cost than produced V2O5.
Management’s guidance for the second quarter shows a build back of inventory. Management projects 2023-2Q production of 3,000-3,200 tonnes and sales of 2,300-2,500 tonnes. The reduction in sales and increase in production versus the first quarter could mean second quarter results will be below that reported in the first quarter. Importantly, some cost incurred during any quarter’s production may carry over into the next quarter when sales are completed. This will partially offset the impact of rising production and falling sales.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
TORONTO–(BUSINESS WIRE)– Largo Inc. (“Largo” or the “Company”) (TSX: LGO) (NASDAQ: LGO) announces today that Andrea Weinberg has been appointed as an independent director to the Company’s Board of Directors (“Board”).
Largo Announces the Appointment of Andrea Weinberg to its Board of Directors (Photo: Business Wire)
J. Alberto Arias, Chairman of Largo’s Board of Directors commented: “Andrea’s extensive knowledge of the metals sector, global financial markets, and specifically Brazil, her native country where she resides, makes her an excellent addition to our Board of Directors. With Andrea, the Board has gained an invaluable member who will assist the Company in enhancing value for Largo shareholders.” He continued: “In addition, Andrea most recently served on the board of Largo Physical Vanadium Corp. (“LPV”) during its founding, providing her with a thorough understanding of both the vanadium market fundamentals and the innovative business model we developed between Largo, Largo Clean Energy and LPV. It is our view that LPV has the potential to substantially improve the competitiveness of the vanadium flow battery industry in the future and the prospects of vanadium demand in general.”
Andrea Weinberg commented: “As the vanadium industry enters an exciting new phase of growth, largely driven by the world’s decarbonization needs and clean energy transition, it is my pleasure to join Largo’s Board of Directors and work closely with the management team and other Board members to execute on the Company’s two-pillar business strategy. Largo has developed a compelling business proposition to help advance a low-carbon future and I am excited to be a part of it going forward.”
Ms. Weinberg is a Director of Cosan, a Brazilian holding company of logistics, gas, fuels, lubricants and mining assets in Brazil. She has over 25 years of experience in the financial markets working at companies such as BTG Pactual, BlackRock for Latin American and Global Emerging Market funds, AllianceBernstein and Dynamo Administradora de Recursos covering commodities (metals & mining, pulp and paper and oil), amongst other things. Before joining the buyside industry, Ms. Weinberg worked as a sell side analyst at Merrill Lynch (2004-2007) and Goldman Sachs (1998-2004) covering the Metals & Mining sector. Ms. Weinberg holds a Bachelor of Science in Chemical Engineering from Universidade Federal do Rio de Janeiro and a Master’s Degree in Financial Engineering & Operations Research from Columbia University.
About Largo
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURETM and VPURE+TM products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing an ilmenite concentration plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information on the Company, please visit www.largoinc.com.
Investor Relations Alex Guthrie Senior Manager, External Relations +1.416.861.9778 aguthrie@largoinc.com
TORONTO–(BUSINESS WIRE)–Largo Inc. (“Largo” or the “Company”) (TSX: LGO) (NASDAQ: LGO) will release its first quarter 2023 financial results on Wednesday, May 10, 2023 after the close of market trading. Additionally, the Company will host a webcast and conference call to discuss its first quarter 2023 results and updates on Thursday, May 11 at 1:00 p.m. ET.
To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/40oF5sO to receive an instant automated call back.
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To view press releases or any additional financial information, please visit the Investor Resources section of the Company’s website at: www.largoinc.com/English/investor-resources
About Largo
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURETM and VPURE+TM products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing an ilmenite concentration plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information on the Company, please visit www.largoinc.com.
Contacts
Investor Relations Alex Guthrie Senior Manager, External Relations +1.416.861.9778 aguthrie@largoinc.com
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURE™ and VPURE+™ products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Michael Heim, Senior Vice President – Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Largo announced reduced production but increased sales. Largo announced 2023-1Q V2O5 production of 2,111 tonnes (23 tonnes/day) near the upper end of guidance, albeit slightly below that in used our models. The 14% decrease in production versus the same period last year come due to heavy rain in the early part of the quarter, planned maintenance, and the transition of a mining contractor. These factors were known and reflected in our estimates. Production levels also reflect a decline in effective grade to 0.81% from 1.27% as less vanadium was produced despite a 13% increase in mined ore.
Sales rose despite lower production as the company sold inventory and purchased material. V2O5 equivalent sales were 2,849 tonnes in the quarter, up 28% over last year sales of 2,232 tonnes and well above guidance of 2,300-2,500 tonnes and our projections that assumed sales near production levels. Sales include 245 tonnes of purchased material versus only 79 tonnes last year.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURE™ and VPURE+™ products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Sales and realized prices were down. Production volumes (preannounced) fell 31% q-t-q due to maintenance and rain. Realized vanadium prices fell 12% with Largo prices falling below benchmark prices due to a drop in ferrovanadium prices and timing factors associated with contract deliveries.
Costs were up. Operating costs continued to rise in the fourth quarter. The change in cost per unit produced was especially noteworthy as production levels dropped. Management has put a priority on controlling operating costs and expects costs in future quarters to decline. Non-operating cost remain high, although they have eased since the third quarter.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated.
Q4 & Full Year 2022 Highlights
Revenues of $47.5 million in Q4 2022, 6% below Q4 2021; Revenues per pound sold1 of $7.77 in Q4 2022, largely in line with $7.88 recognized in Q4 2021
Operating costs of $44.5 million in Q4 2022 vs. $37.7 million in Q4 2021, and cash operating costs excluding royalties per pound1 of V2O5 equivalent sold of $5.15 in Q4 2022 vs. $3.68 in Q4 2021
Net loss of $15.6 million in Q4 2022 vs. net income of $1.0 million in Q4 2021; Basic loss per share of $0.24 in Q4 2022 vs. basic earnings per share of $0.01 in Q4 2021
In Q4 2022, the Company’s net loss included approximately $6.3 million of non-recurring expenditures
Revenues of $229.3 million in 2022, a 16% increase over 2021; Revenues per pound sold1 of $9.38 in 2022, a 19% increase over 2021
Operating costs of $169.7 million in 2022 vs. $133.0 million in 2021, and cash operating costs excluding royalties per pound1 of V2O5 equivalent sold of $4.57 in 2022 vs. $3.37 in 2021; 2% above upper range of revised 2022 guidance for cash operating costs excluding royalties per pound1
Net loss of $2.2 million in 2022 vs. net income of $22.6 million in 2021; Basic loss per share of $0.03 in 2022 vs. basic earnings per share of $0.35 in 2021
In 2022, the Company’s net loss included approximately $15.0 million of non-recurring expenditures
V2O5 production of 2,004 tonnes in Q4 2022 vs. 2,003 tonnes in Q4 2021; Annual V2O5 production of 10,436 tonnes in 2022 vs. 10,319 tonnes in 2021 and 6% below lower range of revised production guidance
Quarterly sales of 2,772 tonnes of V2O5 equivalent (inclusive of 118 tonnes of purchased material) in Q4 2022 vs. 2,899 tonnes in Q4 2021; Annual V2O5 equivalent sales of 11,091 (inclusive of 1,057 tonnes of purchased material) tonnes in 2022 vs. 11,393 tonnes in 2021 and within revised sales guidance of 11,000 – 12,000 tonnes
Vanadium Price Update2
The average benchmark price per pound of V2O5 in Europe was $8.25 in Q4 2022, being largely in line with the average of $8.23 seen in Q3 2022 and $8.30 in Q4 2021; The average benchmark price as of March 3, 2023 was $10.78, a 44% increase from the lows of 2022
The average benchmark price per kg of ferrovanadium (“FeV”) in Europe was $33.35 in Q4 2022, a 3% decrease from the average of $32.29 seen in Q4 2021; The average FeV benchmark price as of March 3, 2023 was $40.88, a 30% increase from the lows of 2022
TORONTO–(BUSINESS WIRE)– Largo Inc. (“Largo” or the “Company“) (TSX: LGO) (NASDAQ: LGO) today released financial and operating results for the three and twelve months ended December 31, 2022. The Company reported annual vanadium pentoxide (“V2O5”) equivalent sales of 11,091 tonnes at a cash operating cost excluding royalties per pound1 sold of $4.58. Revenues in 2022 increased 16% over 2021 to $229.3 million mainly due to a strengthening of vanadium prices in the year.
Daniel Tellechea, Interim CEO and Director of Largo, stated: “For Largo, 2022 was a challenging year, which led to an underperformance on both production and cost metrics, particularly in Q4 2023 with the mining disruption caused by record rainfall at our mine, cost inflation of key raw materials and sizeable non-recurring expenditures. Although we continue to navigate an inflationary environment, we anticipate delivering and capitalizing on a 10% increase in production for 2023 over 2022, particularly with the recent strengthening of vanadium prices.” He continued: “This recent increase is due in part to increased demand from the energy storage sector, especially in China, where new vanadium redox flow battery (“VRFB”) deployments totaling around 2 GWh or approximately 10% of global vanadium output are planned for the next 12-24 months.Importantly, the VRFB sector accounted for the second largest source of vanadium demand outside of the steel sector in Q3 2022, according to Vanitec, a global vanadium organization. Other key markets including steel, aerospace, and chemical have also shown considerable demand growth in recent months.”
He continued: “As for growth plans this year, Largo’s ilmenite project remains on track and is expected to generate a new source of revenue for the Company. We anticipate providing guidance on ilmenite production for 2023 once commissioning of the plant has been completed. We continue to make progress on the installation of our first VRFB in Spain and our negotiations toward the formation of a joint venture with Ansaldo Green Tech (“Ansaldo”) for the deployment of VRFBs in the Europe, Middle East and Africa power generation markets. Lastly, safety and sustainability remain key priorities for Largo and we are pleased to be recently ranked in the top quartile of our peer group as measured by certain ESG rating agencies for 2022.”
Q4 & Full Year 2022 Financial Results Overview
During 2022, the Company recognized revenues of $229.3 million from sales of 11,091 tonnes of V2O5 equivalent (2021 – 11,393 tonnes). This represents a 16% increase in revenues over 2021 ($198.3 million) mainly due to higher vanadium prices in the year, particularly with revenues recognized in Q2 2022. During Q4 2022, the Company recognized revenues of $47.5 million (Q4 2021 – $50.3 million) from sales of 2,772 tonnes of V2O5 equivalent (Q4 2021 – 2,899 tonnes).
Operating costs of $169.7 million in 2022 (2021 – $133.0 million) include direct mine and production costs of $94.5 million (2021 – $75.1 million), conversion costs of $8.1 million (2021 – $9.3 million), product acquisition costs of $24.4 million (2021 –$9.7 million), royalties of $10.4 million (2021 – $8.9 million), distribution costs of $9.2 million (2021 – $5.3 million), inventory write-down of $2.3 million (2021 – $3.2 million), depreciation and amortization of $20.9 million (2021 – $21.5 million) and iron ore costs of $1.0 million (2021 – $0.05 million), partially offset by insurance proceeds of $1.0 million (2021 – $nil).
Operating costs of $44.5 million in Q4 2022 (Q4 2021 – $37.7) include direct mine and production costs of $28.4 million (Q4 2021 – $21.4 million), conversion costs of $2.2 million (Q4 2021 – $2.6 million), product acquisition costs of $3.8 million (Q4 2021 – $1.0 million), royalties of $2.1 million (Q4 2021 – $2.3 million), distribution costs of $2.3 million (Q4 2021 – $1.5 million), inventory write-down of $0.4 million (Q4 2021 – $3.2 million), depreciation and amortization of $6.0 million (Q4 2021 – $5.8 million) and iron ore costs of $0.02 million (Q4 2021 – $nil), partially offset by insurance proceeds of $1.0 million (Q4 2021 – $nil).
The increases in direct mine and production costs are attributable to a decrease in the global recovery5, cost increases in critical consumables, including heavy fuel oil (“HFO”) and ammonium sulfate, as well as increased consumption of these critical consumables and sodium carbonate. Costs were further impacted by the Company’s mining contractor transition in Q3 2022 and corrective maintenance in the plant throughout the year. Higher costs of production in the current and previous periods in the year related to shutdowns caused by abnormally high rainfall during Q4 2022, while corrective maintenance continued to impact operating costs as a result of the time between production and sales.
Cash operating costs excluding royalties per pound1 of V2O5 equivalent soldwere $4.57 in 2022, compared with $3.37 in 2021. Cash operating costs excluding royalties per pound1 sold were $5.15 in Q4 2022, compared with $3.68 in Q4 2021. The increase seen in Q4 2022 and 2022 compared with Q4 2021 and 2021 is largely due to the impacts noted previously, in addition to produced V2O5 equivalent sold having decreased in 2022 as compared with 2021, with 10,034 tonnes sold versus 10,864 tonnes.
Professional, consulting and management fees were $25.3 million in 2022, compared with $17.9 million in 2021. Professional, consulting and management fees were $5.7 million in Q4 2022, compared with $5.6 million in Q4 2021. For 2022, the increase is primarily attributable to costs incurred earlier in the year in connection with LCE, which was not fully operational earlier in 2021 and transaction and listing related costs incurred by Largo Physical Vanadium Corp. (“LPV”) in connection with the completion of its qualifying transaction.
Other general and administrative expenses were $14.3 million in 2022, compared with $6.4 million in 2021. Other general and administrative expenses were $3.5 million in Q4 2022, compared with $2.3 million in Q4 2021. For 2022, the increase is primarily due to an increase in provisions as well as costs incurred in Q4 2022 in connection with LPV, and in Largo Clean Energy Corp. (“LCE”) which has scaled up activities throughout 2022. The increase in provisions relates to a supply agreement for the Maracás Menchen Mine which was filed with Brazilian courts in October 2014. The ruling requires the Company to pay amounts due, plus interest and legal fees.
Technology start-up costs were $12.7 million in 2022 (2021 – $3.8 million) and $8.2 million in Q4 2022 (Q4 2021 – 3.1 million). This includes a full write-down of battery components inventory at LCE of $6.4 million (Q4 2022 and 2022) (Q4 2021 and 2021 – $nil) to their expected net realizable value. Technology start-up costs relate to LCE’s activities related to ramping up its operations for the deployment of the VCHARGE VRFB system and the titanium project in Brazil.
Finance costs in Q4 2022 increased from Q4 2021 by 118% (or $0.4 million), which is attributable to increased debt, as well as the initial financing fees on the Company’s new debt facilities.
For 2022, cash provided by financing activities increased from cash used in financing activities in 2021 by $33.3 million. The movement is primarily attributable to the receipt of debt of $55.0 million and cash received from the sale of non-controlling interest of $7.3 million (2021 – $nil), partially offset by the repayment of debt of $30.0 million (2021 – $24.8 million) and share repurchases of $6.0 million. Cash provided by financing activities in Q4 2022 increased from cash used in financing activities in Q4 2021 by $24.1 million. This movement was primarily due to the receipt of new debt of $40.0 million, partially offset by a repayment of debt of $15.0 million.
Cash used in investing activities in Q4 2022 of $26.8 million is an increase of $19.8 million from the $7.0 million seen in Q4 2021. This movement was primarily driven by the purchase of vanadium assets and continued work on the ilmenite project. For 2022, the increase from 2021 was $32.7 million. Expenditures in 2022 primarily relate to the ilmenite project, mining equipment, costs relating to a software implementation and cash outflows for purchased product vanadium assets.
Additional Company Updates
Q4 and Full Year 2022 Operational Results: Production of 2,004 tonnes of V2O5 in Q4 2022 was in line with the 2,003 tonnes of V2O5 produced in Q4 2021, primarily due to reduced massive ore inventory arising from the transition in mining contractors in Q3 2022 and due to unusually heavy rainfall in December 2022. In Q4 2022, the Company produced 839 V2O5 equivalent tonnes of high purity products, including 650 tonnes of high purity V2O5 and 189 tonnes of high purity vanadium trioxide (“V2O3”). This represented 42% of the total quarterly production. In 2022, the Company produced 1,801 V2O5 equivalent tonnes of high purity products, including 1,368 tonnes of high purity V2O5 and 433 tonnes of high purity V2O3. In Q4 2022, 326,552 tonnes of ore were mined with an effective grade4 of 0.96% of V2O5. The ore mined in Q4 2022 was 18% higher than in Q4 2021. The Company produced 90,797 tonnes of concentrate with an effective grade4 of 2.94%. The global recovery5 achieved in Q4 2022 was 74.7%, a decrease of 1.7% from the 76.0% achieved in Q4 2021 and 7.4% lower than the 80.7% achieved in Q3 2022. The global recovery5 in October 2022 was 75.0%, with 67.8% achieved in November 2022 and 80.8% achieved in December 2022.
Continued Focus on ESG in 2022: The Company continued to improve its overall Environmental, Social and Governance (“ESG”) performance and public disclosures in 2022. This is reflected in additional improved ratings and scores, most notably its S&P Global Corporate Sustainability Assessment (“CSA”) rating having improved approximately 38%, placing the Company in the top quartile of its mining peer group for 2022. This improvement was largely driven by updates to Largo’s governance of ESG, including new policies, ESG oversight at the Board level and climate-related disclosures, as well as improved responses related to the Company’s on-going environmental compliance in Brazil. The Company expects to issue its 2022 sustainability report in late Q2 2023.
Largo Clean Energy Recent Developments: During Q4 2022, LCE continued to make significant progress on the delivery of the Enel Green Power España (“EGPE”) contract, which remains a priority focus. Substantially all the hardware is either in transit to or is in Spain awaiting installation. The Company shipped the remaining six of 12 electrolyte storage containers in early 2023 and the Field Service team has been on site in Q1 2023 and work is ongoing to install and interconnect the AC and DC power systems. Provisional acceptance, which requires the completion of as-build drawings, manuals, final punch-list items, and operational testing by EGPE, is expected to be completed by the end of May 2023. Additionally, LCE and Ansaldo continue to focus on the formation of a joint venture for the manufacturing and commercial deployment of VRFBs in the European, African and Middle East power generation markets. The Company’s previously announced memorandum of understanding (“MOU”) has been extended to March 31, 2023, to allow for the negotiation and entering into a joint venture and other ancillary agreements. Ansaldo and LCE continue to develop a business path for the joint venture to service the European markets with Long Duration Energy Storage (“LDES”).
Ilmenite Concentration Plant Progress: The Company progressed with the construction of its ilmenite concentration plant at its Maracás Menchen Mine in Q4 2022. The Company received all required flotation structures and is finalizing the building of its desliming, flotation, filtration, warehouse and pipe rack structures ands expects commissioning of the plant to be completed in Q2 2023.
January and February 2023 Production and Sales: Subsequent to Q4 2022, the Company produced 354 tonnes of V2O5 in January and 843 tonnes in February. The Company also sold 1,080 tonnes of V2O5 equivalent (including 68 tonnes of purchased material) in January 2023 and 750 tonnes (including 11 tonnes of purchased material) in February. Production in January and February was largely impacted by low ore availability in due to the heavy rains at the mine site and planned maintenance of the kiln for its refractory refurbishment, with sales in February being impacted by a delay in sales recognition. The Company expects to remain within its quarterly production and sales guidance for Q1 2023.
Largo Physical Vanadium Update: LPV’s net assets are now over 90% held in physical vanadium products and near-term delivery commitments (approximately 2.9 million lbs of V2O5 equivalent). The launch of LPV in September 2022 coincided with lower vanadium prices, which allowed LPV to purchase vanadium units at favorable market prices. LPV’s net asset value (“NAV”) is now C$2.56 per share or 28% above the closing share price of C$2.00 per share on March 8, 2023. LPV believes its NAV to share price discount offers current and new LPV investors an attractive investment case and closing this disconnect is now LPV’s key focus. LPV management are working on a broad marketing and communication campaign to raise awareness of its investment proposal.
Director Resignation: Following the Company’s previously announced leadership change on February 16, 2023, Mr. Paulo Misk has resigned from his position as a Director of the Company effective March 7, 2023.
Annual 2022 Webcast and Conference Call Information
The Company will host a webcast and conference call on Friday, March 10, 2023, at 1:00 p.m. ET, to discuss its fourth quarter and annual 2022 results and progress.
Details of the webcast and conference call are listed below:
To join the conference call without operator assistance, you may register and enter your phone number at https://bit.ly/3Yho3fJ to receive an instant automated call back.
You can also dial direct to be entered to the call by an Operator via dial-in details below.
A playback recording will be available on the Company’s website for a period of 60-days following the conference call.
The information provided within this release should be read in conjunction with Largo’s annual consolidated financial statements for the years ended December 31, 2022 and 2021 and its management’s discussion and analysis for the year ended December 31, 2022 which are available on our website at www.largoinc.com or on the Company’s respective profiles at www.sedar.com and www.sec.gov.
About Largo
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURETM and VPURE+TM products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company will be implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information, please visit www.largoinc.com.
This press release contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation. Forward‐looking information in this press release includes, but is not limited to, statements with respect to the timing and amount of estimated future production and sales; the future price of commodities; costs of future activities and operations, including, without limitation, the effect of inflation and exchange rates; the effect of unforeseen equipment maintenance or repairs on production; timing and cost related to the build-out of the ilmenite plant; the ability to produce vanadium trioxide according to customer specifications; the extent of capital and operating expenditures; the impact of global delays and related price increases on the Company’s global supply chain and future sales of vanadium products. Forward‐looking information in this press release also includes, but is not limited to, statements with respect to our ability to build, finance and successfully operate a VRFB business, the projected timing and cost of the completion of the EGPE project; our ability to protect and develop our technology, our ability to maintain our IP, the competitiveness of our product in an evolving market, our ability to market, sell and deliver our VCHARGE batteries on specification and at a competitive price, our ability to successfully deploy our VCHARGE batteries in foreign jurisdictions; our ability to negotiate and enter into a joint venture with Ansaldo Green Tech on terms satisfactory to the Company and the success of such joint venture; the receipt of necessary governmental permits and approvals on a timely basis, our ability to secure the required resources to build and deploy our VCHARGE batteries, and the adoption of VRFB technology generally in the market.
The following are some of the assumptions upon which forward-looking information is based: that general business and economic conditions will not change in a material adverse manner; demand for, and stable or improving price of V2O5 and other vanadium commodities; receipt of regulatory and governmental approvals, permits and renewals in a timely manner; that the Company will not experience any material accident, labour dispute or failure of plant or equipment or other material disruption in the Company’s operations at the Maracás Menchen Mine or relating to Largo Clean Energy, specially in respect of the installation and commissioning of the EGPE project; the availability of financing for operations and development; the ability to mitigate the impact of continuing heavy rainfall; the Company’s ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; that the estimates of the resources and reserves at the Maracás Menchen Mine are within reasonable bounds of accuracy (including with respect to size, grade and recovery and the operational and price assumptions on which such estimates are based); the competitiveness of the Company’s VRFB technology; the ability to obtain funding through government grants and awards for the Green Energy sector, the accuracy of cost estimates and assumptions on future variations of VCHARGE battery system design, that the Company’s current plans for ilmenite and VRFBs can be achieved; the Company’s “two-pillar” business strategy will be successful; the Company’s sales and trading arrangements will not be affected by the evolving sanctions against Russia; and the Company’s ability to attract and retain skilled personnel and directors; the ability of management to execute strategic goals.
Forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. All information contained in this news release, other than statements of current and historical fact, is forward looking information. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Largo or Largo Clean Energy to be materially different from those expressed or implied by such forward-looking statements, including but not limited to those risks described in the annual information form of Largo and in its public documents filed on www.sedar.com and available on www.sec.gov from time to time. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Although management of Largo has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Largo does not undertake to update any forward-looking statements, except in accordance with applicable securities laws. Readers should also review the risks and uncertainties sections of Largo’s annual and interim MD&As which also apply.
Trademarks are owned by Largo Inc.
Non-GAAP Measures
The financial statements and related notes of Largo have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. This press release contains non-GAAP financial measures and non-GAAP ratios, which are not standardized financial measures under IFRS, and might not be comparable to similar financial measures disclosed by other issuers. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Revenues Per Pound
The Company’s press release refers to revenues per pound sold, V2 O5 revenues per pound of V2 O5 sold, V2 O3 revenues per pound of V2 O3 sold and FeV revenues per kg of FeV sold, which are non-GAAP financial measures that are used to provide investors with information about a key measure used by management to monitor performance of the Company.
These measures, along with cash operating costs, are considered to be key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine and sales activities. These measures differ from measures determined in accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.
The following table provides a reconciliation of revenues per pound sold, V2 O5 revenues per pound of V2 O5 sold, V2 O3 revenues per pound of V2 O3 sold and FeV revenues per kg of FeV sold to revenues and the revenue information presented in note 18 as per the 2022 annual consolidated financial statements.
Cash Operating Costs and Cash Operating Costs Excluding Royalties
The Company’s press release refers to cash operating costs per pound and cash operating costs excluding royalties per pound, which are non-GAAP ratios based on cash operating costs and cash operating costs excluding royalties, which are non-GAAP financial measures, in order to provide investors with information about a key measure used by management to monitor performance. This information is used to assess how well the Maracás Menchen Mine is performing compared to plan and prior periods, and also to assess its overall effectiveness and efficiency.
Cash operating costs includes mine site operating costs such as mining costs, plant and maintenance costs, sustainability costs, mine and plant administration costs, royalties and sales, general and administrative costs (all for the Mine properties segment), but excludes depreciation and amortization, share-based payments, foreign exchange gains or losses, commissions, reclamation, capital expenditures and exploration and evaluation costs. Operating costs not attributable to the Mine properties segment are also excluded, including conversion costs, product acquisition costs, distribution costs and inventory write-downs.
Cash operating costs excluding royalties is calculated as cash operating costs less royalties.
Cash operating costs per pound and cash operating costs excluding royalties per pound are obtained by dividing cash operating costs and cash operating costs excluding royalties, respectively, by the pounds of vanadium equivalent sold that were produced by the Maracás Menchen Mine.
Cash operating costs, cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound, along with revenues, are considered to be key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine. These measures differ from measures determined in accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.
The following table provides a reconciliation of cash operating costs and cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound for the Maracás Menchen Mine to operating costs as per the 2022 annual consolidated financial statements.
Investor Relations Alex Guthrie Senior Manager, External Relations +1.416.861.9778 aguthrie@largoinc.com
TORONTO–(BUSINESS WIRE)– Largo Inc. (“Largo” or the “Company”) (TSX: LGO) (NASDAQ: LGO) will release its fourth quarter and annual 2022 financial results on Thursday, March 9, 2023 after the close of market trading. Additionally, the Company will host a webcast and conference call to discuss its fourth quarter and annual 2022 results and updates on Friday, March 10 at 1:00 p.m. ET.
To join the conference call without operator assistance, you may register and enter your phone number at https://bit.ly/3Yho3fJ to receive an instant automated call back.
You can also dial direct to be entered to the call by an Operator via dial-in details below.
To view press releases or any additional financial information, please visit the Investor Resources section of the Company’s website at: www.largoinc.com/English/investor-resources
About Largo
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURETM and VPURE+TM products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information on the Company, please visit www.largoinc.com.
Investor Relations Alex Guthrie Senior Manager, External Relations +1.416.861.9778 aguthrie@largoinc.com
TORONTO–(BUSINESS WIRE)– Largo Inc. (“Largo” or the “Company”) (TSX: LGO) (NASDAQ: LGO) announces a change in leadership in which Paulo Misk, President and Chief Executive Officer has left the organization with immediate effect.
The Company’s Board of Directors (“the Board”) has appointed Mr. Daniel Tellechea as interim Chief Executive Officer to assist the Company through this period of transition. Mr. Tellechea has served on the Company’s Board of Directors since 2015 and currently serves as the Chair of the Company’s Operations Committee.
A search for a permanent Chief Executive Officer has begun and the Company has not amended its goals or objectives planned for the ensuing year, including its previously announced 2023 guidance.
J. Alberto Arias Chairman of the Board of Directors stated, “Daniel has extensive experience in the metals and mining sector with some of the most successful metal companies in the Americas. His skill set will be invaluable during this period of management transition and his priority will be on the efficiency of the Company’s vanadium operations in Brazil. The Company continues with its goal of adding shareholder value through its two-pillar strategy as a tier one vanadium supplier with an emerging U.S.-based energy storage business with manufacturing facilities in Massachusetts.”
Mr. Tellechea has extensive experience in international mining, most recently serving as President & CEO of Sierra Metals, Inc. from 2007 to 2014, a Toronto based mining company listed on both the Toronto Stock Exchange with assets in Mexico and Peru. Prior to Sierra Metals, Mr. Tellechea was President and CEO of Asarco LLC from 2003 to 2005, and also served as the Managing Director of Finance and Administration for Asarco’s parent, Grupo Mexico from 1994 to 2003. Mr. Tellechea also served as Asarco’s Chief Financial Officer and Vice President of Finance for Southern Copper Corporation, which was majority owned by Grupo Mexico. Mr. Tellechea earned a Bachelor of Science in Accounting and a Master’s Degree in Business Administration from Tecnologico de Monterrey.
About Largo
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURE™ and VPURE+™ products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future.
Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information on the Company, please visit www.largoinc.com.
Investor Relations Alex Guthrie Senior Manager, External Relations +1.416.861.9778 aguthrie@largoinc.com
Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Largo is a play on growing vanadium demand. We believe Largo, Inc. offers investors an attractive way to play an expected growth in the demand for vanadium due to its use in large-scale energy storage. Largo is the largest producer of vanadium outside of China and Russia. The high vanadium concentration of is Maracas Menchen Mine in Brazil makes Largo one of the lowest-cost producers of vanadium in the world.
Largo is involved with vanadium batteries. In addition to mining vanadium, Largo has formed a division to manufacture and install Vanadium Redox Flow Batteries (VRFB). VRFBs have key advantages over other battery types in terms of scalability, cost, and safety making them ideal for grid operations. VRFB can store energy for months and have operating duration periods of 6-10 hours. Vanadium used in VRFBs has little degradation and can be recovered and reused upon recycling.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
