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All amounts expressed are in U.S. dollars, denominated by "$"
Largo Inc. (" Largo " or the " Company ") ( TSX: LGO ) ( NASDAQ: LGO ) today announces its third quarter 2023 financial results.
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Australian Vanadium
Overview
Vanadium doesn't get quite as much attention as other critical and battery metals, but it should.
Resistant to breakdown from both acid and salt, it adds considerable strength, heat resistance and toughness to steel when alloyed. Unsurprisingly, these characteristics have made vanadium a critical mineral for defence applications, particularly as vanadium need only be present in small amounts to impart its benefits. For the past twenty years, demand for the metal in the steel sector has steadily increased. With the recent push for clean energy and net-zero emissions, that demand is set to rise, not only from the steel market but from the battery market.
Australian Vanadium Limited (ASX:AVL, FRA:JT71, OTCQB:ATVVF), which holds one of the most advanced high-grade vanadium deposits in the world, has placed significant focus on developing its Australian Vanadium Project, a high-grade vanadium, titanium and iron resource situated roughly 43 kilometres south of the mining town of Meekatharra in Western Australia.
Vanadium's potential goes well beyond construction steel. The metal is also used extensively in multiple industries, including aerospace, defence and as a chemical catalyst. What's most notable, however, is vanadium's status as a battery metal, specifically one suited for long-term, large-scale energy storage.
The vanadium flow battery (VFB) was first invented in 1984 at the University of New South Wales in Australia. Early VFBs had to be the size of approximately one to two basketball courts to adequately perform, but the technology has been refined over the years since. Today’s VFBs are only a third of the size of their colossal predecessors, with a significantly higher energy capacity.
As businesses and governments seek battery storage for large-scale use cases, demand is expected to increase further, with the VFB market accounting for more than 10 percent of all vanadium production by the end of 2023. Demand for vanadium is expected to double by 2032, of which 90 percent will be driven by VFBs.
AVL is also working to cultivate Australia's burgeoning VFB market through its wholly owned subsidiary VSUN Energy. VSUN Energy's current projects include the installation of a VFB to power an industrial chlorinator, as a standalone power system for a mine process water pump at a major nickel project, and to power the systems at an orchard in Victoria. VSUN Energy is also consulting with several major mining clients.
The major component of a VFB is vanadium electrolyte. This solution of vanadium mixed with acid and water will be manufactured by AVL at a facility being constructed in the Perth region.
Both VSUN Energy and the electrolyte manufacturing facility are part of AVL's vertically integrated strategy, through which it intends to support every stage of VFB production. This will give it the ability to not only produce the world's highest-quality vanadium but also tailor that vanadium to its customers’ needs.
In 2023, AVL and Technology Metals Australia Limited (ASX:TMT) agreed to merge via a proposed scheme of arrangement under which AVL will acquire 100 percent of the TMT shares on issue. The consolidation of two adjoining projects provides a unique opportunity to achieve operational and corporate synergies by creating a single integrated project. The combined group will become the leading Australian vanadium developer with a world-class asset, located in a tier-1 mining jurisdiction.
Company Highlights
- Demand for VFBs is expected to fundamentally restructure the vanadium supply chain, with predicted demand ultimately outstripping global production.
- Australian Vanadium Limited (AVL) holds one of the world's most advanced, high-grade vanadium deposits in the world, situated in Western Australia.
- The company has had a strong technical team in place from the inception of its asset development strategy.
- The company employs an experienced leadership team with a proven technical and commercial track record in the vanadium sector, as well as project development and operations.
- AVL maintains strong relationships with Australian government agencies and has been awarded a $49-million grant from the Australian Government towards development of the Australian Vanadium Project.
- The status of the AVL project positions AVL with early mover advantage and supplier-of-choice status in the global battery market.
- AVL plans to incorporate green hydrogen into the natural gas supply for its processing plant to help reduce carbon emissions.
- The company maintains strong community relations, which include community sponsorship across Mullewa and Meekatharra.
- The strategic location of the company’s processing plant has the potential to provide a hub for processing vanadium concentrates from the region.
- AVL has announced a merger with Technology Metals Australia (ASX:TMT) to create a leading Australian-based vanadium developer of global significance. The combined entity will have a pro-forma market capitalisation of AU$217 million.
Key Project
The Australian Vanadium Project (AVL Project)
Located in Western Australia's Murchison Province, the Australian Vanadium Project will consist of an open cut mine, crushing, milling and beneficiation south of Meekatharra and a processing plant near the port city of Geraldton.
AVL has appointed engineering group Primero Group to construct its vanadium electrolyte manufacturing facility in Western Australia. The facility is designed to produce up to 33 MWh per year of vanadium flow battery high-purity electrolyte. The Australian Government’s grant of $3.69 million will co-fund the commercial vanadium electrolyte facility development.
Equipment for vanadium electrolyte production
Situated in Perth, the plant leverages proven technology sourced from US Vanadium LLC. Construction of the plant is underway and electrolyte will be available for battery supply in 2024.
As one of the world's most advanced in-development vanadium projects, the AVL Project has national strategic significance to Australia's critical mineral supply chains. The project has been recognised by both the Australian federal government and the Western Australian government, receiving multiple grants for a combined total of over $52.69 million.
The AVL deposit consists of a basal massive magnetite zone overlaid by five lower-grade mineralised magnetite-banded gabbro units, each of which is between 5 and 30 metres thick. Vanadium mineralisation can be found in both the massive magnetite horizon and the lower-grade gabbro horizons. The deposit is further divided into kilometre-scale blocks by a series of regional scale faults; the blocks show little sign of internal deformation and strong consistency in layering.
In late April 2023, AVL's processing plant site rezoning was approved by the city of Greater Geraldton, pushing plant one step closer to commencing construction. Once completed, the plant along with the mine will provide high-purity vanadium oxide and an iron-titanium co-product.
AVL could commence construction of its Australian Vanadium Project in 2024, targeting production by late 2025 or early 2026. Profiled on WA Investments, the project is seeking an investment value of more than $500 million to start building the project including an open-pit mine near Meekatharra and a processing plant near Geraldton.
Project Highlights:
- Government-recognised: In recognition of its national significance, the AVL Project was awarded Federal Major Project Status by the Australian government in September 2019. It was also awarded State Lead Agency Status by the Western Australian Government in April 2020.
- Promising Feasibility Study Results: According to a bankable feasibility study released on April 6, 2022, the project contains 239 million tons (Mt) at 0.73 percent vanadium pentoxide (V2O5) consisting of:
- measured mineral resource of 11.3 Mt at 1.14 percent V2O5
- indicated mineral resource of 82.4 Mt at 0.70 percent V2O5
- inferred mineral resource of 145.3 Mt at 0.71 percent V2O5
- High-grade Magnetite: Australian Vanadium's initial assessment of the project also indicates the presence of a distinct massive magnetite high-grade zone of 95.6 Mt at 1.07 percent V2O5.
- Other Minerals: In addition to vanadium, the AVL project also contains estimated cobalt, nickel and copper resources.
- Broad Focus: Rather than solely targeting the battery market, AVL intends to serve all sectors that require the critical metal. This includes the steel, titanium master-alloy, aerospace and specialty chemicals markets.
- Sustainable Production: AVL intends to operate its mine ethically and with a low-carbon footprint through the use of solar and wind generation and processing innovation designed to reduce carbon emissions..
- Longevity and Scalability: Once operational, the mine will have an estimated lifespan of more than 25 years, while the configuration of the processing facility will allow the company to quickly scale production as necessary.
Management Team
Cliff Lawrenson - Non-executive Chair
Cliff Lawrenson has more than 10 years of experience as a non-executive chair and non-executive director in both public and private companies. He is currently non-executive chair of Paladin Energy Ltd (ASX:PDN) and Caspin Resources (ASX:CPN) and non-executive chair of privately owned Pacific Energy Limited and Onsite Rental Group.
Lawrenson was managing director of Atlas Iron Ltd from 2017 and led the company to its acquisition by Hancock Prospecting Pty Ltd. Prior to Atlas Iron, Lawrenson served as managing director of a number of ASX-listed companies in the mining and mining services sectors. Lawrenson was also a senior executive of CMS Energy Corporation in the United States of America and Singapore, preceded by an investment banking career.
Daniel Harris - Technical Director
Daniel Harris is a vanadium industry veteran and has an understanding of the resource sector from both a technical and financial perspective. He is currently non-executive director of US Vanadium LLC, Queensland Energy & Minerals (ASX:QEM) and Flinders Mines (ASX:FMS). He is an advisory board member and vanadium consultant for Blackrock Metals.
Previous roles include interim CEO and managing director at Atlas Iron; chief executive & operating officer at Atlantic; vice-president and head of vanadium assets at Evraz Group; managing director at Vametco Alloys; general manager of vanadium operations at Strategic Minerals Corp and acting as an independent technical and executive consultant to GSA Environmental Limited in the United Kingdom.
Miriam Stanborough AM - Non-executive Director
Miriam Stanborough is a chemical engineer with over 20 years of experience in the mineral processing industry across a range of commodities. She has held senior roles at Monadelphous, Iluka Resources, Alcoa and WMC Resources. Her skill base spans innovation and technology, technical development, production management, project management, business improvement and people and culture.
Stanborough is currently a non-executive director of Pilbara Minerals Limited (ASX:PLS), BCI Minerals Limited (ASX:BCI), chair of the Minerals Research Institute of Western Australia (MRIWA), deputy chair of the Northern Agricultural Catchments Council (NACC), and a director of Scouts WA.
Peter Watson - Non-executive Director
Peter Watson is a chemical engineer with 40 years of experience in senior technical, project and management roles in addition to corporate experience running ASX-listed companies. He has significant board-level experience, particularly regarding safety, governance, financial reporting, risk management and strategy.
Watson is currently a non-executive director of Paladin Energy Ltd (ASX:PDN), New Century Resources (ASX:NCZ) and Strandline Resources Limited (ASX:STA).
Anna Sudlow - Non-executive Director
Anna Sudlow is a corporate finance executive with experience in the mining and resources sectors across a range of commodities and jurisdictions. She holds a Bachelor of Commerce, is a certified practising accountant (CPA) and holds a Master of Business Administration (MBA). Sudlow has held senior roles at Woodside Energy and Paladin Energy and has experience in strategy, capital management and funding, commercial analysis, business development, risk and financial reporting and governance. Sudlow is currently the CFO of Paladin Energy, (ASX:PDN), an Australian-listed uranium company on the S&P/ASX 200 Index.
Graham Arvidson - Chief Executive Officer
Graham Arvidson has 18 years of experience in the minerals sector spanning feasibility, evaluation, successful development and operation of mineral assets globally and across a broad range of commodities including deep experience in vanadium, lithium, nickel and other future-focused battery metals.
Arvidson has proven project development expertise, a deep Western Australian project development network specific to mining, commercial acumen borne of managing contracts from both the client and contractor side and extensive project management experience in tendering, negotiation, conforming and managing O&M, EPC, EPCM, EPC-O and BOO forms of project delivery.
Todd Richardson - Chief Operating Officer
Todd Richardson BSc ChE MBA is an expert in vanadium process design, commissioning and operations with over 20 years’ experience in vanadium. He has an extensive background in operations management and technical services both in the USA and Australia in all phases of plant operation – process design through commissioning, ramp up and operation. Richardson leads the development of AVL’s world-class vanadium project.
Tom Plant - Chief Financial Officer
Tom Plant is a seasoned chartered accountant and finance executive with almost 30 years of experience in various corporate and commercial roles. He has a strong background in debt and equity funding solutions, investment evaluation and corporate transactions. Plant recently served as interim CFO at Leo Lithium, which developed the Goulamina Lithium Project in Mali. Prior to that, he was the CFO at Firefinch and spent 10 years at global mineral sands and rare earths producer Iluka Resources. He held various positions in investment banking and professional services with Macquarie Group, Dresdner Kleinwort Wasserstein and Arthur Andersen.
Neville Bassett - Company Secretary
Neville Bassett is a chartered accountant operating his own corporate consulting business, specializing in the area of corporate, financial and management advisory services. Bassett has been involved with numerous public company listings and capital raisings.
His involvement in the corporate arena has also taken in mergers and acquisitions and includes significant knowledge and exposure to the Australian financial markets.
Bassett has a wealth of experience in matters pertaining to the Corporations Act, ASX listing requirements, corporate taxation and finance. He is a director or company secretary of a number of public and private companies.
Louis Mostert - Chief Legal and Compliance Officer, Joint Company Secretary
Louis Mostert has over 20 years of experience in project contracting and finance, corporate advisory, mergers and acquisitions, insurance management, dispute resolution, work health and safety, employment and industrial relations, intellectual property, corporate governance and compliance.
Mostert graduated from the University of Western Australia with a Bachelor of Engineering (Hons) and a Bachelor of Laws (Hons) and has a Diploma of Applied Corporate Governance from the Governance Institute of Australia. He is admitted as a barrister and solicitor of the Supreme Court of Western Australia, a fellow of the Chartered Institute of Secretaries, a fellow of the Governance Institute of Australia and a member of the Institute of Company Directors.
Outstanding Pre-Feasibility Study for Victory Bore Vanadium Project
- The Victory Bore Pre-Feasibility Study (PFS) has been completed on time, and on-budget by METS Engineers, Snowden-Optiro and other key specialists. A summary of the financial results are shown in the body of this announcement.
- An updated Mineral Resource of 465 Mt @ 0.30% V2O5, 5.1% TiO2 and 17.7% Fe (Measured, Indicated and Inferred Resources) was reported in accordance with the JORC Code (2012).
- A maiden probable Ore Reserve of 93 Mt @ 0.35% V2O5, 5.2% TiO2 and 19.8% Fe was reported in accordance with the JORC Code (2012).
- The operation will involve an optimal mining rate of 4 Mt/a of ore to produce approximately 1.25 Mt/a of high-grade magnetite concentrate to be processed into six end products.
- Mining and magnetite concentration to occur at Victory Bore in Western Australia. Magnetite concentrates to be bulk shipped to the Kingdom of Saudi Arabia (KSA) for downstream processing into final high value end products.
- Mining will be by standard open cut methods: low strip ratio, drill and blast, load and haul.
- Downstream processing will use traditional methods with modern applications and state of the art flow processing.
- Processing in KSA has significant advantages with lower Operating and Capital Costs and close proximity to markets. The KSA Government has proposed downstream processing to be located in one of the industrial hubs specifically designated for Ferro-Alloy processing.
The Company has commenced discussions with interested Saudi companies as partners in the KSA processing operation, and is arranging meetings at the forthcoming Future Minerals Forum (FMF) being held January 2024 in Riyahd, KSA.
The PFS was completed to an accuracy of +/- 25% to 35%, on time, and on-budget and undertaken by METS Engineers, Snowden Optiro, together with other specialist groups providing reliable cost estimates, and using conservative commodity pricing.
Table 1 Summary of project economics estimate. All values are approximate rounded to nearest significant digit.
The Company’s approach to this maiden and landmark study of the Victory Bore Project is to use industry standard processing for a range of products to maximise the value, allowing for a reliable and demonstrable low-risk business concept. These outstanding financial results demonstrate that offshore processing is the correct approach in a global economic backdrop of rising capital and operating costs (Figure 1).
The Company has a non-binding Memorandum of Understanding (MoU) in place with the Ministry of Investment Saudi Arabia (MISA) for vanadium and critical mineral processing in the Kingdom of Saudi Arabia (see ASX announcement 16 August 2023).
The Company’s engagement with the Kingdom of Saudi Arabia (KSA) as a low power and fuel cost jurisdiction, allows the project significant advantages of reduced operating costs, and producing final products for nearby markets. The KSA has a significant steel sector with demand for vanadium products, including ferrovanadium and vanadium electrolyte for Vanadium Redox Batteries.
Management Comment: Mr Paul Burton, Surefire Resources Managing Director said “This is an outstanding result for our world class critical minerals project and shows that in the current economic environment, offshore processing is the right approach to getting this project into development and production. We look forward to taking this project forward, completing the next significant milestones and engaging with KSA companies interested in being part of our project and development”.
Figure 1 Development proposal for the Victory Bore Vanadium Project: mining and concentrate production in Australia, final product production in the low cost jurisdiction of the KSA.
SUMMARY OF KEY PFS RESULTS
Surefire has based the PFS on producing approximately 1.25 million tonnes per year (Mt/a) of high quality vanadium- titanium magnetite concentrate at the Victory Bore mine site in Western Australia, and to produce up to six products from that concentrate in KSA:
- 2,580 t/a High purity vanadium
- 5,760 t/a of Ferrovanadium
- 192,880 t/a of Titanium slag
- 364,480 t/a of Pig iron
- 245,480 t/a of High purity iron oxide pigment
- 245,480 t/a of High grade iron ore
Note: The final product mix may differ in a future Feasibility Study as processes may be optimised further to maximise recoveries and revenues.
Click here for the full ASX Release
This article includes content from SUREFIRE RESOURCES NL, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Largo Reports Third Quarter 2023 Financial Results; Announces First Commercial Shipment of Ilmenite as By-Product of its Vanadium Operations in Brazil and Validation of its 6 MWh Vanadium Redox Flow Battery to Operate on Test Conditions in Spain
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20231108025853/en/
Largo Reports Third Quarter 2023 Financial Results; Announces First Commercial Shipment of Ilmenite as By-Product of its Vanadium Operations in Brazil (Photo: Business Wire)
Q3 2023 and Other Highlights
- Revenues of $44.0 million vs. revenues of $54.3 million in Q3 2022; Decline driven by lower vanadium prices and lower vanadium sales volumes; Revenues per lb sold 3 of V 2 O 5 equivalent of $8.34 vs. $8.80 in Q3 2022
- Operating costs of $42.5 million vs. $45.6 million in Q3 2022; Cash operating costs excluding royalties 1 per pound sold of $5.44 vs. 4.86 per lb sold in Q3 2022
- Net loss of $11.9 million vs. net loss of $2.6 million in Q3 2022; Basic loss per share of $0.19 vs. basic loss per share of $0.04 in Q3 2022
- Cash used before working capital items of $4.4 million vs. cash provided before working capital items of $4.3 million in Q3 2022
- Cash balance of $39.5 million, net working capital surplus of $91.0 million and debt of $65.0 million exiting Q3 2023
- V 2 O 5 equivalent sales of 2,385 tonnes (inclusive of 256 tonnes of purchased material) vs. 2,796 tonnes (inclusive of 351 tonnes of purchased material) sold in Q3 2022
- Production of 2,163 tonnes (4.8 million lbs 1 ) of V 2 O 5 vs. 2.906 tonnes in Q3 2022
- Largo Clean Energy's ("LCE") 6 megawatt-hour ("MWh") vanadium redox flow battery ("VRFB") deployment for Enel Green Power España ("EGPE") was validated to operate on test conditions according to EGPE specifications and LCE test procedures in October
- The Company successfully commissioned and is in the process of ramping up production of its new ilmenite concentrate plant with initial production of 350 tonnes in August and 700 tonnes in September; The first commercial shipment of ilmenite is in progress and should contribute to the Company's revenues in Q4 2023 as a by-product of its vanadium operations
- Q3 2023 results conference call: Thursday, November 9th at 1:00 p.m. ET
Vanadium Market Update 2
- The average benchmark price per lb of V 2 O 5 in Europe was $8.03, a 2.5% decrease from the average of $8.23 seen in Q3 2022
- Vanadium spot demand was soft in Q3 2023, primarily due to adverse conditions in the Chinese and European steel industries. However, strong demand growth from the aerospace and energy storage sectors continued
Daniel Tellechea, Director and Interim CEO of Largo commented: "Q3 2023 was a challenging quarter for Largo, primarily due to the tragic accident that occurred at the Company's chemical plant in July as well as technical delays in commissioning our new crushing plant. The accident at the chemical plant resulted in a capacity bottleneck in the evaporator section of the plant, which resulted in lower overall production rates of vanadium in July and August. In early September, our operating team recommissioned the evaporator circuit, which is now operating at its original capacity. A delay in ramp up of the new magnetic separation crushing plant also temporarily impacted vanadium production in Q3 2023. The new crushing plant was designed to offset the impact of lower mined vanadium grades, as per the Company's mine plan. The operating team is in the process of resolving these issues, and we are pleased to report that the crushing plant exceeded 1,000 tonnes of contained V 2 O 5 in October, despite additional crushing plant improvements scheduled to be implemented in November and December."
He continued: "It is our priority to continue to optimize our operations, reduce costs, and achieve production and sales targets safely. In light of this, we maintain our guidance for 2023. Additionally, further measures are being implemented to improve the organization's performance, including optimizing operational efficiencies through the implementation of the new crushing system, concentrating on increasing production of high purity vanadium, restructuring equipment maintenance processes to further reduce costs, and ramping up ilmenite production starting in the fourth quarter of 2023 to diversify revenues. We are beginning to see a notable reduction in key consumable costs, such as sodium carbonate, as well as ongoing overhead cost reductions through a reduction of the number of contractors at the mine through efficiency improvement programs and further reductions in the headcount at LCE. The Company considers these ongoing initiatives to be a vitally important measures to counter the current decrease in vanadium prices."
He concluded: "During this past year, we have also made several significant investments that are necessary for the sustainability of our operations in a lower vanadium price environment. Among these investments are an increased waste rock pre-stripping and aggressive infill drilling program to optimize production in the years to come. Our team has successfully built and commissioned an ilmenite plant to diversify future revenues as a by-product of the vanadium mine, built a new magnetic separation crushing plant for the purpose of mining lower-grade material without reducing production levels, and delivered the Company's first vanadium battery to EGPE, our European energy storage customer. A substantial investment has been made in LCE, which is not yet generating significant revenues, but continues to consume cash. With our current strategic review process in place, Largo expects to optimize the value proposition of LCE and participate in one of the most significant macrotrends, the clean energy transition with vanadium as a critical material. With these investments, we believe that Largo is on the path to a brighter future."
Financial and Operating Results – Highlights
(thousands of U.S. dollars, except as otherwise stated) | Three months ended | Nine months ended | ||
Sept. 30, 2023 | Sept. 30, 2022 | Sept. 30, 2023 | Sept. 30, 2022 | |
Revenues | 43,983 | 54,258 | 154,514 | 181,750 |
Operating costs | (42,580) | (45,602) | (131,540) | (125,264) |
Net income (loss) | (11,884) | (2,601) | (19,057) | 13,410 |
Basic earnings (loss) per share | (0.19) | (0.04) | (0.30) | 0.21 |
Cash (used) provided before working capital items | (4,360) | 4,328 | 7,631 | 35,479 |
Cash operating costs excl. royalties 3 ($/lb) | 5.44 | 4.86 | 5.25 | 4.37 |
Cash | 39,572 | 62,713 | 39,572 | 62,713 |
Debt | 65,000 | 15,000 | 65,000 | 15,000 |
Total mined – dry basis (tonnes) | 6,406,626 | 4,178,185 | 11,373,683 | 7,780,061 |
Total ore mined (tonnes) | 447,165 | 351,450 | 1,279,024 | 1,033,375 |
Effective grade 4 of ore milled (%) | 0.94 | 1.28 | 1.04 | 1.32 |
V 2 O 5 equivalent produced (tonnes) | 2,163 | 2,906 | 6,913 | 8,432 |
Q3 2023 Notes
- The decrease in operating costs in Q3 2023 is largely attributable to lower overall sales in the period, which includes a reduction in the sale of purchased products and lower royalties due to lower sales.
- V 2 O 5 equivalent production of 2,163 tonnes in Q3 2023 decreased from 2,639 tonnes produced in Q2 2023. Production in July 2023 was 644 tonnes, with 775 tonnes produced in August and 744 tonnes produced in September, for a total of 2,163 tonnes of V 2 O 5 equivalent produced. July and August production were negatively impacted as a result of the chemical plant operating at limited capacity due to the accident in the evaporation section of the plant in July 2023. In addition, September production was negatively impacted by low availability of the crushing circuit, combined with the planned lower vanadium grade of ore mined. V 2 O 5 production in October continued to improve with 866 tonnes produced.
- The Company is actively working to achieve higher levels of operational stability to better manage its costs which have increased due in part to lower grades of ore mined as compared with prior quarters. The lower grade of ore mined in Q3 2023 was according to plan, representing a 27% decrease year-over-year. The Company is actively working towards increasing the availability of its new crushing system to offset lowers grades of ore mined and reach production of 1,000 tonnes of V 2 O 5 per month in future months.
- Total mined (dry basis) of 6.4 million tonnes increased by 53% and total ore mined of 447,165 tonnes was 27% higher than Q3 2022, respectively. Increased mining rates and higher mining costs impacted the Company's financial performance in Q3 2023.
- As part of its ongoing mitigation efforts, the Company is focused on reducing its fixed cost structure through contract renegotiations and an optimization of key operational areas, including mining, maintenance, equipment rental and consumables.
- The commissioning and ramp up of the ilmenite plant commenced in Q3 2023 with production of 350 tonnes in August and 700 tonnes in September. The Company expects the ramp up to conclude in Q2 2024 with revenue expectations in Q4 2023.
- Exploration and evaluation costs of $2.3 million increased by $1.8 million from Q3 2022. This was driven by infill drilling and geological model work at the Maracás Menchen Mine and diamond drilling at Campo Alegre de Lourdes to support the maintenance of the Company's mineral rights. During Q3 2023, the Company completed approximately 9,100 metres of diamond drilling in the near mine deep drilling and exploration program. In the nine months ended September 30, 2023, approximately 19,100 metres of diamond drillholes have been completed in Campo Alegre de Lourdes and Maracas targets. A re-assay program began in Q2 2023 to perform chemical analysis on previously interpreted results. The focus of this program is to increase measured and indicated resources. Approximately 5,000 samples were prepared and sent to the external laboratory for analysis in Q3 2023.
The information provided within this release should be read in conjunction with Largo's unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 and its management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2023 which are available on our website at www.largoinc.com or on the Company's respective profiles at www.sedarplus.com and www.sec.gov .
About Largo
Largo is a globally recognized vanadium company known for its high-quality VPURE™ and VPURE+™ products, sourced from its Maracás Menchen Mine in Brazil. The Company is currently focused on implementing an ilmenite concentrate plant and is undertaking a strategic evaluation of its U.S.-based clean energy business, including its advanced VCHARGE vanadium battery technology to maximize the value of the organization. Largo's strategic business plan centers on maintaining its position as a leading vanadium supplier with a growth strategy to 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 .
Cautionary Statement Regarding Forward-looking Information:
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, achieving operational stability and managing unit costs; and the expected completion of the ilmenite plan ramp up in Q4 2023.
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 V 2 O 5 , other vanadium products, ilmenite and titanium dioxide pigment; 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; 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 reliability of production, including, without limitation, access to massive ore, 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 vanadium redox flow battery (" 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 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.sedarplus.ca 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&A which also apply.
Trademarks are owned by Largo Inc.
Non-GAAP 5 Measures
The Company uses certain non-GAAP measures in this 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
This press release refers to revenues per pound sold, a non-GAAP performance measure that is used to provide investors with information about a key measure used by management to monitor performance of the Company.
This measure, along with cash operating costs and total cash costs, is considered to be one of the key indicators of the Company's ability to generate operating earnings and cash flow from its Maracás Menchen Mine and sales activities. This revenues per pound measure does not have any standardized meaning prescribed by IFRS and differs from measures determined in accordance with IFRS. This measure is 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. This measure is not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.
The following table provides a reconciliation of this measure per pound sold to revenues as per the Q3 2022 unaudited condensed interim consolidated financial statements.
Three months ended | Nine months ended | |||||||||||
September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||
Revenues - V 2 O 5 produced 1 | $ | 25,268 | $ | 30,831 | $ | 90,352 | $ | 98,621 | ||||
V 2 O 5 sold - produced (000s lb) | 3,017 | 3,745 | 9,898 | 10,824 | ||||||||
V 2 O 5 revenues per pound of V 2 O 5 sold - produced ($/lb) | $ | 8.38 | $ | 8.23 | $ | 9.13 | $ | 9.11 | ||||
Revenues - V 2 O 5 purchased 1 | $ | 2,066 | $ | 1,655 | $ | 7,531 | $ | 3,184 | ||||
V 2 O 5 sold - purchased (000s lb) | 309 | 207 | 1,014 | 339 | ||||||||
V 2 O 5 revenues per pound of V 2 O 5 sold - purchased ($/lb) | $ | 6.69 | $ | 8.00 | $ | 7,43 | $ | 9.39 | ||||
Revenues - V 2 O 5 1 | $ | 27,334 | $ | 32,486 | $ | 97,883 | $ | 101,805 | ||||
V 2 O 5 sold (000s lb) | 3,326 | 3,952 | 10,912 | 11,163 | ||||||||
V 2 O 5 revenues per pound of V 2 O 5 sold ($/lb) | $ | 8.22 | $ | 8.22 | $ | 8.97 | $ | 9.12 | ||||
Revenues - V 2 O 3 produced 1 | $ | 3,734 | $ | 3,798 | $ | 7,575 | $ | 3,798 | ||||
V 2 O 3 sold - produced (000s lb) | 308 | 308 | 619 | 308 | ||||||||
V 2 O 3 revenues per pound of V 2 O 3 sold - produced ($/lb) | $ | 12.12 | $ | 12.33 | $ | 12.24 | $ | 12.33 | ||||
Revenues - V 2 O 3 purchased 1 | $ | — | $ | 482 | $ | 1,155 | $ | 482 | ||||
V 2 O 3 sold - purchased (000s lb) | — | 43 | 88 | 43 | ||||||||
V 2 O 3 revenues per pound of V 2 O 3 sold - purchased ($/lb) | $ | — | $ | 11.21 | $ | 13.13 | $ | 11.21 | ||||
Revenues - V 2 O 3 1 | $ | 3,734 | $ | 4,280 | $ | 8,730 | $ | 4,280 | ||||
V 2 O 3 sold (000s lb) | 308 | 350 | 707 | 350 | ||||||||
V 2 O 3 revenues per pound of V 2 O 3 sold ($/lb) | $ | 12.12 | $ | 12.23 | $ | 12.35 | $ | 12.23 | ||||
Revenues - FeV produced 1 | $ | 11,750 | $ | 12,756 | $ | 46,408 | $ | 54,667 | ||||
FeV sold - produced (000s kg) | 444 | 394 | 1,591 | 1,576 | ||||||||
FeV revenues per kg of FeV sold - produced ($/kg) | $ | 26.46 | $ | 32.38 | $ | 29.17 | $ | 34.69 | ||||
Revenues - FeV purchased 1 | $ | 1,058 | $ | 4,736 | $ | 1,386 | $ | 20,998 | ||||
FeV sold - purchased (000s kg) | 39 | 159 | 50 | 516 | ||||||||
FeV revenues per kg of FeV sold - purchased ($/kg) | $ | 27.13 | $ | 29.79 | $ | 27.72 | $ | 40.69 | ||||
Revenues - FeV 1 | $ | 12,808 | $ | 17,492 | $ | 47,794 | $ | 75,665 | ||||
FeV sold (000s kg) | 483 | 553 | 1,641 | 2,092 | ||||||||
FeV revenues per kg of FeV sold ($/kg) | $ | 26.52 | $ | 31.63 | $ | 29,12 | $ | 36.17 | ||||
Revenues 1 | $ | 43,876 | $ | 54,258 | $ | 154,407 | $ | 181,750 | ||||
V 2 O 5 equivalent sold (000s lb) | 5,259 | 6,164 | 17,177 | 18,340 | ||||||||
Revenues per pound sold ($/lb) | $ | 8.34 | $ | 8.80 | $ | 8.99 | $ | 9.91 | ||||
| 1. As per note 18 of the Company's Q3 2023 unaudited condensed interim consolidated financial statements. | ||||||||||||
Cash Operating Costs Per Pound
The Company's MD&A 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 Q3 2023 unaudited condensed interim consolidated financial statements.
Three months ended | Nine months ended | |||||||||||||||
September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
Operating costs i | $ | 42,580 | $ | 45,602 | $ | 131,540 | $ | 125,264 | ||||||||
Professional, consulting and management fees ii | 747 | 1,181 | 2,215 | 3,784 | ||||||||||||
Other general and administrative expenses iii | 408 | 383 | 1,032 | 859 | ||||||||||||
Less: iron ore costs i | (145 | ) | (200 | ) | (638 | ) | (637 | ) | ||||||||
Less: conversion costs i | (1,413 | ) | (1,655 | ) | (5,551 | ) | (5,839 | ) | ||||||||
Less: product acquisition costs i | (5,449 | ) | (7,248 | ) | (13,380 | ) | (20,651 | ) | ||||||||
Less: distribution costs i | (2,202 | ) | (2,581 | ) | (6,174 | ) | (6,887 | ) | ||||||||
Less: inventory write-down iv | (978 | ) | (1,655 | ) | (1,661 | ) | (1,655 | ) | ||||||||
Less: depreciation and amortization expense i | (6,003 | ) | (5,111 | ) | (19,456 | ) | (14,923 | ) | ||||||||
Cash operating costs | 27,545 | 28,716 | 87,927 | 79,315 | ||||||||||||
Less: royalties 1 | (2,024 | ) | (2,497 | ) | (6,919 | ) | (8,264 | ) | ||||||||
Cash operating costs excluding royalties | 25,521 | 26,219 | 81,008 | 71,050 | ||||||||||||
Produced V 2 O 5 sold (000s lb) | 4,693 | 5,390 | 15,434 | 16,272 | ||||||||||||
Cash operating costs per pound ($/lb) | $ | 5.87 | $ | 5.33 | $ | 5.70 | $ | 4.87 | ||||||||
Cash operating costs excluding royalties per pound ($/lb) | $ | 5.44 | $ | 4.86 | $ | 5.25 | $ | 4.37 | ||||||||
i. As per note 19 of the Company's Q3 2023 unaudited condensed interim consolidated financial statements. | ||||||||||||||||
ii. As per the Mine properties segment in note 15 of the Company's Q3 2023 unaudited condensed interim consolidated financial statements. | ||||||||||||||||
iii. As per the Mine properties segment in note 15 of the Company's Q3 2023 unaudited condensed interim consolidated financial statements less the increase in legal provisions of $0.4 million (Q3 2023) and $0.8 million (nine months ended September 30, 2023) as noted in the "other general and administrative expenses" section on page 6 of the Company's Q3 2023 management discussion and analysis. | ||||||||||||||||
iv. As per notes 5 and 19 of the Company's Q3 2023 unaudited condensed interim consolidated financial statements for purchased finished products. | ||||||||||||||||
____________________________
1 Conversion of tonnes to pounds, 1 tonne = 2,204.62 pounds or lbs.
2 Fastmarkets Metal Bulletin.
3 The cash operating costs excluding royalties and revenues per pound per pound sold are reported on a non-GAAP basis. Refer to the "Non-GAAP Measures" section of this press release. Revenues per pound sold are calculated based on the quantity of V2O5 sold during the stated period.
4 Effective grade represents the percentage of magnetic material mined multiplied by the percentage of V2O5 in the magnetic concentrate
5 GAAP – Generally Accepted Accounting Principles
View source version on businesswire.com: https://www.businesswire.com/news/home/20231108025853/en/
Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778
aguthrie@largoinc.com
News Provided by Business Wire via QuoteMedia
Largo to Release Third Quarter 2023 Financial Results on November 8, 2023
Largo Inc. ("Largo" or the "Company") (TSX: LGO) (NASDAQ: LGO) will release its third quarter 2023 financial results on Wednesday, November 8, 2023 after the close of market trading. Additionally, the Company will host a conference call to discuss its third quarter 2023 results and other updates on Thursday, November 9 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/3RXJdiN to receive an instant automated call back.
You may also dial direct to be entered to the call by an operator using the dial-in details provided below.
Conference Call Details | |
Date: | Thursday, November 9, 2023 |
Time: | 1:00 p.m. ET |
Dial-in Number: | Local: +1 (416) 764-8650 |
North American Toll Free: +1 (888) 664-6383 | |
Conference ID: | 19034623 |
RapidConnect Link: | |
Replay Number: | Local / International: + 1 (416) 764-8677 |
North American Toll Free: +1 (888) 390-0541 | |
Replay Passcode: 034623# | |
Website: | To view press releases or any additional financial information, please visit the Investor Resources section of the Company's website at: https://www.largoinc.com/investors/Overview |
About Largo
Largo is a globally recognized vanadium company known for its high-quality VPURE TM and VPURE+ TM products, sourced from its Maracás Menchen Mine in Brazil. The Company is currently focused on implementing an ilmenite concentrate plant and is undertaking a strategic evaluation of its U.S.-based clean energy business, including its advanced VCHARGE vanadium battery technology to maximize the value of the organization. Largo's strategic business plan centers on maintaining its position as a leading vanadium supplier with a growth strategy to 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 .
View source version on businesswire.com: https://www.businesswire.com/news/home/20231031200048/en/
For further information, please contact:
Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778
aguthrie@largoinc.com
News Provided by Business Wire via QuoteMedia
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