The Conversation (0)
All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated.
Q1 2024 Highlights
Australian Vanadium Investor Kit
- Corporate info
- Insights
- Growth strategies
- Upcoming projects
GET YOUR FREE INVESTOR KIT
Australian Vanadium
Overview
Australian Vanadium Limited (ASX:AVL) is a Western Australia-based company focused on the Vanadium supply chain, from mining to batteries. The company has a “pit to battery” strategy, which involves processing the vanadium and creating vanadium electrolytes to manufacture vanadium flow batteries (VFB) and become a VFB supplier in Australia.
AVL will generate vanadium concentrate at the mine, which will be fed to the company’s processing plant to produce vanadium pentoxide, which will then be used as feedstock for its vanadium electrolyte manufacturing facility. AVL will leverage its wholly-owned subsidiary, VSUN Energy, to create safe and reliable renewable energy storage solutions using VFB.
Currently, around 85 percent of the vanadium is sourced from China, Russia and South Africa. Vanadium is classified as a critical mineral in several countries, including the US, EU and Japan, and with its geopolitically stable environment and mining-friendly policies, Australia makes for an attractive, secure supply source.
AVL boasts a world-class vanadium asset in a tier-1 mining jurisdiction. The company’s flagship Australian Vanadium project is one of the most advanced vanadium projects in the world. The asset comprises vanadium, titanium and magnetite ore body located on wholly-owned tenements, making it scalable. The project will consist of a simple open pit mine and a processing plant, which will be close to a major port bringing lower-cost energy, water and manpower.
AVL’s recent merger with Technology Metals Australia (TMT) has provided several key benefits, including the consolidation of each company’s tenements into one big project. The merger has created a 17 kilometre strike for the high-grade magnetite domain, allowing for efficient mine infrastructure. Moreover, the merger improves the project's economics through access to high-grade mineralization, which is now unconstrained.
A bankable feasibility study (BFS) prior to the merger had the following key parameters:
- Annual production of 11,200 t V2O5
- Mine life of 25 years
- Pre-production capex of $435 million
- Opex of $4.43/lb of V2O5
Following the merger, the company is preparing an optimized feasibility study (OFS) to improve the capex and opex and deliver better project economics. The next steps for the project include a combined mineral resource estimate, publishing the OFS report, certain approvals, offtake agreements, and financing.
The demand for vanadium is expected to increase significantly due to the growth of VFBs. However, the fundamental demand for vanadium remains strong across the end markets, including its application in steel production, aerospace and energy storage. In fact, a sharp rise in demand for energy storage applications will result in a supply deficit that will grow from 2024 onwards.
Vanadium flow batteries have two tanks filled with vanadium electrolyte fuel. First invented 40 years ago, VFBs have since been commercialized for large-scale applications. The technology offers compelling cost savings for applications with greater than four hours of storage.
The VFB technology has several technological and economic merits that are driving the scale of the projects. First, it is superior economically for long-duration storage applications. Second, it is non-flammable, making it very stable. Third, it provides 100 percent depth of discharge with multiple cycles. Fourth, it offers a life span of over 25 years. Fifth, it is easy to scale. It is well proven at MWh scale and is now moving towards GWh scale.
Given these techno-economic benefits, the VFB industry is experiencing unprecedented global growth, led by China. Currently, 208 VFBs are in operation, 51 are under construction, and 87 new projects have been announced. To give an idea of this rising demand, in 2025, China alone will consume 11 times AVL's annual production of 11,200 tons of V2O5.
The company has a well-crafted vertical integration strategy to participate across the vanadium supply chain. In addition to supplying vanadium, the company is present in the manufacturing of vanadium electrolyte and batteries.
AVL’s Vanadium Electrolyte Facility official opening by Australian Government minister for resources and Northern Australia Hon. Madeleine King MP alongside non-executive director Anna Sudlow, chair Cliff Lawrenson, CEO Graham Arvidson and non-executive director Miriam Stanborough.
AVL has completed the construction of a vanadium electrolyte manufacturing plant in Perth, Western Australia. The project has received funding from the Australian Government. The plant has a capacity of 33 MWh per annum of energy storage. The first production was completed in 2024, and VFB manufacturers will test samples. The electrolyte produced is further processed by AVL’s wholly-owned subsidiary, VSUN Energy, to create large scale energy storage solutions using VFBs.
Company Highlights
- Australian Vanadium Limited (AVL) is a Western Australia-based company focused on the entire vanadium supply chain, from mining to batteries. The company’s “pit to battery” strategy includes processing the vanadium to create vanadium electrolytes for vanadium flow batteries (VFB), as the company intends to become a VFB supplier in Australia.
- The Australian Vanadium project is the company’s flagship mining project and is one of the most advanced projects globally.
- The company recently completed its merger with Technology Metals Australia (TMT), which is likely to significantly boost the project's economics. The company is working on the project's optimized feasibility study (OFS) report.
- Given that only three countries (Russia, China and South Africa) contribute 85 percent of the global supply of vanadium, an Australian supply source makes the project attractive.
- The demand for vanadium is poised to grow across the end markets, including steel, aerospace and battery storage. Growing demand for VFBs has the potential to provide a sizable end-demand market for vanadium. Vanadium demand from batteries could reach 50 percent of the total demand by 2030, from the current share of just 7 percent.
- The company has a well-crafted vertical integration strategy. In addition to vanadium supply, it is also focusing on vanadium electrolyte manufacturing and the supply of VFBs to the Australian market.
- VSUN Energy, AVL’s subsidiary, creates safe and reliable renewable energy storage solutions using vanadium flow battery technology.
Key Operating Segments
Exploration
The segment comprises the Australian Vanadium project and other exploration projects.
Australian Vanadium Project
The Australian Vanadium project is the company’s flagship asset and one of the most advanced vanadium projects in the world. The Australian government recognized the project, which received federal major project status.
The project consists of high-grade V-Ti-Fe deposits located in Murchison Province, around 43 kilometres from the mining town of Meekatharra in Western Australia. It is around 740 kilometres from Perth, and a processing plant is located near the port city of Geraldton. The project comprises 15 tenements and spans an area of 200 square kilometres.
Before its merger with TMT, the company released a bankable feasibility study in 2022, showing a total mineral resource estimated at 239 million tons (Mt) at 0.73 percent of V2O5. The project IRR stands between 16.1 percent and 26.9 percent based on various price assumptions.
Following the merger with TMT, the company anticipates better project economics, given that it will now have easy access to the ore body's high-grade areas, which was previously constrained. Prior to the merger, TMT tenements at the northern end of the ore body and a small block at the southern end were surrounded by AVL’s tenements, which constrained the development. The merger has created 17 kilometres of strike for the high-grade magnetite domain and allows for efficient mine infrastructure.
Coates Project – Vanadium, PGE, Nickel and Copper
The Coates project is a non-core project for the company. The project is 60 kilometres east of Perth in the Shire of Wundowie. A significant discovery of Ni-Cu-PGE by Chalice Gold Mines is just 20 kilometres from the company’s tenement, which covers an area of 111.6 square kilometres, with new applications adding 52.6 square kilometres to the area. Historic exploration of the project focused on iron-titanium-vanadium. The focus was the recovery of vanadium-titano-magnetite concentrate for use in the historical Wundowie smelter.
Nowthanna Hill – Uranium and Vanadium
Nowthanna Hill is a non-core project for the company located 50 kilometres south of Meekatharra in Western Australia, where vanadium and uranium are co-mineralized. The project resource estimate was completed in 2019. Based on 250 parts per million (ppm) V2O5 cut-off, the inferred mineral resource stands at 3.2 Mt at 334 ppm V2O5. Based on 200 ppm U3O8 cut-off, the inferred mineral resource stands at 4.22 Mt at 409 ppm U3O8.
Energy storage
This segment comprises AVL’s wholly-owned subsidiary, VSUN Energy, which develops safe and reliable renewable energy storage solutions using VFB technology. VSUN Energy is focused on developing the Australian market for VFB, and utilizes VFB technology from various global OEMs, including Invinity Energy Systems, CellCube, Sumitomo and VFlow Tech.
The company is working on several projects for VFBs in Australia, including:
- Horizon Power - 78 kW/220 kWh pilot project in Kununurra, WA
- IGO - supply and installation of an 80 kW/300 kWh VFB at Nova Nickel Operation
- Victoria – supply and installation of a 20 kW/80 kWh VFB
- Manufacture of a prototype residential 5 kW/15 kWh VFB
- Water Corporation – successful completion of trial of a 5 kW/30 kWh VFB
Electrolyte Plant
This segment comprises AVL’s vanadium electrolyte manufacturing facility in Western Australia. The facility was successfully and safely completed in December 2023. It was made possible with support from the federal government, which awarded AVL a $3.69 million Australian Government Modern Manufacturing Translation grant in 2021 under the National Manufacturing Priority Roadmap.
The facility can support 33 MWh of VFB energy storage per year, and AVL has the capability to expand conveniently. By sourcing electrolyte locally, AVL aims to establish itself as a reliable provider of vanadium electrolyte for battery projects not only in Australia but also across the broader region.
Management Team
Cliff Lawrenson – Non-executive Chairman
Cliff Lawrenson has a decade of experience as a chairman and director of both private and public companies. Currently, he serves as chairman of Paladin Energy, Caspin Resources and Pacific Energy. Previously, he held senior leadership roles at various companies in the mining and mining services sectors.
Daniel Harris – Non-executive Director
Daniel Harris has a B.Sc. degree and has rich experience in the vanadium industry in the technical and financial domains. He is currently a director Queensland Energy & Minerals, and Flinders Mines. Previously, he held senior leadership roles at U.S Vanadium, Atlas Iron, Atlantic, Evraz Group, Vametco Alloys and Strategic Minerals.
Miriam Stanborough – Non-executive Director
Miriam Stanborough has a degree in chemical engineering and has over two decades of experience in the mineral processing industry. She has held senior leadership roles at Alcoa, Monadelphous, Iluka Resources and WMC Resources. She currently serves on the boards of Pilbara Minerals and BCI Minerals, and is a chair of the Minerals Research Institute of Western Australia.
Peter Watson – Non-executive Director
Peter Watson has a degree in chemical engineering and has over four decades of rich experience in various domains at several ASX-listed companies. He is a director of Paladin Energy, New Century Resources and Strandline Resources.
Anna Sudlow - Non-executive Director
Anna Sudlow has a B. Com degree, a CPA designation, and an MBA. She is a senior finance executive with rich experience in the mining and resources sector. She is currently CFO at Paladin Energy.
Jo Gaines - Non-executive Director
Jo Gaines has a BA degree from the University of Western Australia, a diploma in Occupational Health and Safety from Curtin University, and is also a graduate of the Australian Institute of Company Directors. She has previously served as deputy chief of staff for the Premier of Western Australia. She currently serves as a chair of the Government Employees Superannuation Board and is also associated with Chalice Mining, CinefestOZ and Gaines Advisory.
Graham Arvidson – Chief Executive Officer
Graham Arvidson has over 18 years of experience in the minerals sector, working with commodities such as vanadium, nickel, lithium and others. He also has rich project development experience, covering various areas such as managing contracts, tendering, negotiations, O&M and project delivery.
Todd Richardson – Chief Operating Officer
Todd Richardson has a B.Sc. degree and an MBA. He has over two decades of experience in the vanadium industry across various domains such as design, commissioning and operations. He has rich experience in operations management and technical services in the US and Australia.
Louis Mostert – Chief Legal and Commercial Officer
Louis Mostert has a bachelor’s degree in engineering and law from the University of Western Australia, and a diploma from the Governance Institute of Australia. He has over two decades of rich experience across various functions such as project finance, M&A, corporate advisory, insurance, work health and safety, governance, and compliance.
Tom Plant – Chief Financial Officer
Tom Plant is a qualified chartered accountant with an MBA from INSEAD, an M.Sc. degree from Curtin University, and a B.Com. degree from the University of Western Australia. He is a seasoned finance professional with over thirty years of experience in corporate and commercial roles.
Ross Jennings – Chief Safety and People Officer
Ross Jennings has formal qualifications in health & safety, environmental management and HR. He has over 18 years of experience in the mining industry, holding leadership roles across various functions such as operations, health, safety and emergency response.
Flormirza Cabalteja - Executive General Manager: Project Delivery – Downstream
Flormirza Cabalteja has a degree in chemical engineering with 17 years of rich experience in the downstream refinery industry of vanadium, cobalt, nickel and ammonium phosphate-based fertilizers. She has extensive experience in both technical management and operational aspects.
Ian Prentice – Executive Integration
Ian Prentice has a B.Sc. degree in geology from the University of Western Australia and has over three decades of experience in the global mining industry.
This profile was written in collaboration with Couloir Capital.
Largo Announces Cost Reduction and Productivity Improvements at its Maracás Menchen Mine; Reports Q1 2024 Production and Sales Results
- V 2 O 5 production of 1,729 tonnes (3.8 million lbs 1 ) in Q1 2024 vs. 2,111 tonnes produced in Q1 2023; Within the lower range of Company's quarterly production guidance of 1,700-2,200 tonnes for Q1 2024
- Lower Q1 2024 production was expected and is largely attributable to the completion of the Company's planned kiln refractory replacement; Annual maintenance actions were performed concurrently in the crushing, milling, ilmenite, leaching and chemical sections of the plant; The Company maintains its annual production guidance for 2024
- V 2 O 5 equivalent sales of 2,765 tonnes (inclusive of 156 tonnes of purchased material) in Q1 2024 vs. 2,849 equivalent tonnes sold (inclusive of 245 tonnes of purchased material) in Q1 2023; Within the upper range of the Company's quarterly guidance of 2,300-2,800 tonnes
- The Company produced 9,563 tonnes and sold 513 tonnes of ilmenite concentrate in Q1 2024, respectively; Ilmenite sales were below Q1 2024 guidance due to operational and administrative delays; The Company expects sales to increase in the coming months and maintains its production and sales guidance for 2024
- The Company maintains its annual cost guidance for 2024; As a result of new cost reduction and productivity measures, the Company has lowered its cost guidance for H2 2024, however, it is expected that these cost savings will be offset by higher costs in H1 2024 as a result of the extended kiln maintenance period in Q1 2024
- Negotiations regarding the Company's previously announced signing of a non-binding letter of intent by Largo Clean Energy Corp. with Stryten Energy LLC to establish a 50:50 joint venture in the United States are ongoing
Largo Inc. (" Largo " or the " Company ") ( TSX: LGO ) ( NASDAQ: LGO ) today announces the implementation of extensive changes to reduce production costs and improve productivity at its Maracás Menchen Mine through several initiatives, including the reduction of haulage distances, costs of inputs as well as comprehensive review of all contracts. The Company will reduce the number of contractors by 20% in Q2 2024 and prioritize its capital expenditures for low-cost, high-return projects in order to optimize the use of cash. The Company also announces quarterly production of 1,729 tonnes of vanadium pentoxide (" V 2 O 5 ") equivalent and sales of 2,765 tonnes V 2 O 5 equivalent in Q1 2024.
As part of the plan to increase productivity, the Company plans to increase its annual crushing capacity by approximately 220,000 tonnes or 22% by the end of Q2 2024 following the installation of a mobile crusher, dry magnetic and wet magnetic separator from inventory, which is expected to compensate for lower grades and higher silica levels resulting from increased processing of disseminated vanadium ore. These actions are expected to maintain the Company's production capacity by providing the required throughput and grades needed to achieve its set production targets in accordance with its 2024 mining plan.
Also, starting in Q2 2024, the Company plans to feed its ilmenite plant with ilmenite feedstock from its non-magnetic ponds from ores processed in prior years. This action is expected to increase ilmenite production in 2024 as well as improve titanium dioxide (" TiO 2 ") grades as non-magnetic material stored in the Company's ponds contain higher TiO 2 grades than feedstock from current mine operations.
For the remainder of 2024, the Company expects a reduction of approximately BRL$48 million in operating expenditures and approximately BRL$12 million in ilmenite capital expenditures.
Celio Pereira, COO of Largo, Brazil, stated: "Maximizing operational output and reducing costs remain top priorities at Largo. We have identified several avenues for cost reduction at the Maracás Menchen Mine and we expect to realize the benefits of these initiatives in the second half of the year. When combined with our productivity improvement initiatives this year, these measures are expected to assist the Company in achieving its revised 2024 cost guidance and offset some of the impact of lower vanadium prices." He continued: "In Q1 2024, the operations team conducted the planned annual maintenance at the mine, which included the replacement of the kiln refractory as well annual maintenance actions performed in the crushing, milling, ilmenite, leaching and chemical sections of the plant. Following this maintenance, we also expect to remain within our annual production guidance of 9,000 to 11,000 tonnes of V 2 O 5 for 2024."
Maracás Menchen Mine Operational and Sales Results
Q1 2024 | Q1 2023 | |
Total Mined – Dry Basis (tonnes) | 3,243,492 | 3,523,656 |
Total Ore Mined (tonnes) | 604,231 | 341,967 |
Ore Grade Mined - Effective Grade (%) 2 | 0.53 | 0.81 |
Concentrate Produced (tonnes) | 74,986 | 78,695 |
Grade of Concentrate (%) | 2.90 | 2.99 |
Global Recovery (%) 3 | 70.5 | 83.0 |
V 2 O 5 produced (Flake + Powder) (tonnes) | 1,729 | 2,111 |
V 2 O 5 produced (equivalent pounds) 2 | 3,811,788 | 4,653,953 |
Total V 2 O 5 equivalent sold (tonnes) | 2,765 | 2,849 |
Produced V 2 O 5 equivalent sold (tonnes) | 2,609 | 2,604 |
Purchased V 2 O 5 equivalent sold (tonnes) | 156 | 245 |
Ilmenite concentrate produced (tonnes) | 9,563 | Nil |
Ilmenite concentrate sold (tonnes) | 513 | Nil |
Q1 2024 Production and Sales Overview
- Lower Expected Production in Q1 2024 Due to Kiln Refractory Maintenance: V 2 O 5 production in January was 582 tonnes, with 276 tonnes produced in February and 871 tonnes produced in March, for a total of 1,729 tonnes produced in Q1 2024. Production in Q1 2024 was largely impacted by the replacement of the kiln refractory and associated restart of operations following the performed maintenance during the quarter. During this shutdown, the Company completed its yearly maintenance activities in the crushing, milling, ilmenite, leaching and chemical sections of the plant. In Q1 2024, global recoveries 3 averaged 70.5%, being 15% lower than the 83.0% averaged in Q1 2023 and 11% lower than the 79.4% achieved in Q4 2023. Lower global recoveries 3 achieved during Q1 2024 is largely attributable to the kiln refractory maintenance performed during the quarter. As part of its ongoing efforts to offset lower grades of ore mined in Q1 2024, the Company continued to increase mining throughput during the quarter to 604,231 tonnes with an effective V 2 O 5 grade 2 of 0.53%, compared to 341,967 tonnes with an effective V 2 O 5 grade 2 of 0.81% in Q1 2023. Total crushed ore also increased by 50% over Q1 2023 (344,265 tonnes) to 516,547 tonnes in Q1 2024 and 11% over the 465,619 tonnes crushed in Q4 2023.
- Sales Results in Q1 2024 In Line with Quarterly Guidance – Steel Sector Demand Remains Soft: V 2 O 5 equivalent sales of 2,765 tonnes (inclusive of 156 tonnes of purchased material) was within the upper end of the Company's quarterly guidance range for Q1 2024 but represented a 3% decrease over the 2,849 tonnes sold in Q1 2023. Spot demand remained soft in Q1 2024, primarily due to ongoing adverse conditions in the Chinese and European steel sectors. The average benchmark price per pound of V 2 O 5 in Europe was $6.44 in Q1 2024, a 38% decrease from the average of $10.39 seen in Q1 2023. The average benchmark price per kg of ferrovanadium in Europe was $27.96 in Q1 2024, a 30% decrease from the average of $39.46 seen in Q1 2023.
Revised 2024 Cash Operating Costs Excluding Royalties 1
Cash operating costs excluding royalties ($ / lb V 2 O 5 sold) i | Previous Q2 | Previous Q3 | Previous Q4 | Unchanged 2024 | ||||
Low | High | Low | High | Low | High | Low 4.50 | High 5.50 | |
4.15 | 5.15 | 4.75 | 5.75 | 4.75 | 5.75 | |||
Revised Q2 | Revised Q3 | Revised Q4 | ||||||
Low | High | Low | High | Low | High | |||
4.50 | 5.50 | 4.50 | 5.50 | 4.50 | 5.50 | |||
Ilmenite Concentrate Plant Capital Expenditures | Previous 2024 | Revised 2024 | ||||||
$3.2 – 3.8 million | $1.0 – 2.0 million | |||||||
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 .
Cautionary Statement Regarding Forward-looking Information:
This press release contains "forward-looking information" and "forward-looking statements" (collectively, "forward looking statements") within the meaning of applicable Canadian and United States securities legislation. Forward‐looking statements in this press release include, but are not limited to: the achievement of operational stability; Largo's ability to improve cash flow in the future; implemented cost reduction measures; expected sales; diversifying the Company's product offering; optimizing operations, continued advancements at the Maracás Menchen Mine; the conclusion of the installation of Largo's battery project; and future commitments to purchase V 2 O 5 .
The following are some of the assumptions upon which forward-looking statements are 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 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 LCE; 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 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 LCE 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.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 most recent annual and interim MD&A, which also apply. Largo's most recent annual and interim MD&A are available on Largo's SEDAR+ profile at www.sedarplus.com .
Trademarks are owned by Largo Inc.
1 Conversion of tonnes to pounds, 1 tonne = 2,204.62 pounds or lbs.
2 Effective grade represents the percentage of magnetic material mined multiplied by the percentage of V2O5 in the magnetic concentrate.
3 Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching recovery and chemical plant recovery.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240430525815/en/
For further information:
Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778
aguthrie@largoinc.com
News Provided by Business Wire via QuoteMedia
Achievement of Ultra-High Purity 99.9% Vanadium Product
KEY POINTS
- Pilot testwork achieves greater than 99.9% purity vanadium pentoxide from Australian Vanadium Project ore.
- Ultra-high purity flowsheet provides a scalable ‘bolt-on’ option to produce ultra-high purity vanadium oxides which demand a premium price.
Ultra-high purity vanadium pentoxide is critical in applications where even the smallest impurities can significantly affect performance, such as the chemical industry and specialty alloys for the aerospace industry, including defence. These growing market segments demand higher purity levels. AVL has identified the importance of satisfying this expanding market, in addition to other steel and battery markets which can use the Company’s standard 99.5% purity level.1
CEO, Graham Arvidson, comments, “AVL’s ability to produce 99.9% ultra-high purity vanadium pentoxide, in addition to our 99.5% standard high purity vanadium pentoxide, allows us to further strengthen our competitive advantage in specialised markets in which premium products attract a higher value.
“Our distinct advantage as a business continues to be our outstanding technical and economic vanadium processing acumen and I commend the team for the work undertaken to create and substantiate a new pathway for additional value creation. Our conviction remains that vanadium producers who can achieve the highest quality vanadium oxides will stand above the rest and command the greatest and most enduring returns. In addition to our proposed world-class vanadium project, our lowest quartile unit cost competitiveness strategy and our focus on product quality will provide further long-term competitive advantages to the Company and superior investor return.
“We have been pleased to work with the team at ANSTO and for the support that the Australian Government has provided us in achieving this milestone. Adding value to vanadium through downstream processing in Australia aligns with the Federal Government’s Critical Minerals Strategy 2023-2030 and helps to keep the value of Australia’s minerals in the country as we transition to a net zero future.”
The work undertaken to achieve ultra-high purity vanadium pentoxide was partly funded through a $3.69 million Australian Government Modern Manufacturing Initiative Translation grant under the National Manufacturing Priority Roadmap.2
AVL worked in conjunction with Australia's Nuclear Science and Technology Organisation (ANSTO) in Sydney to develop a feasible processing route. The pilot for producing ultra-high purity vanadium pentoxide is the culmination of two years of work, exploring the most economic method for producing this product. The pilot was designed and operated to simulate processing of a stream diverted from the leach circuit developed in the AVL Bankable Feasibility Study (BFS) flowsheet.3 This concept allows for easy integration of an ultra-high purity process, in addition to the Company’s high purity process, that can be scaled to match ultra-high purity demand.
Figure 1 - AVL's Metallurgist Greg O'Connor alongside staff from ANSTO at the pilot facility
The feed for the pilot was generated during AVL’s pilot beneficiation,4 pyrometallurgy5 and hydrometallurgy6 programs, conducted as a part of the BFS work undertaken in 2021. The feed materials for this sequence of pilot programs comprised two composites of drill core, designed to be indicative of the average first five years of production and life of mine production.7
Click here for the full ASX Release
This article includes content from Australian Vanadium, 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 Fourth Quarter and Full Year 2023 Financial Results; Continued Focus on Operational Improvements and Cost Reduction to Offset Depressed Vanadium Prices
All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated.
Q4, Full Year 2023 and Other Highlights
- Revenues of $44.2 million in Q4 2023, 7% below Q4 2022; Revenues per pound sold 1 of $7.69 in Q4 2023 vs. $7.77 in Q4 2022
- Operating costs of $43.2 million in Q4 2023 vs. $44.5 million in Q4 2022; Cash operating costs excluding royalties per pound 1 V 2 O 5 equivalent sold of $5.44 in Q4 2023 vs. $5.15 in Q4 2022
- Net loss of $13.3 million in Q4 2023, which included $6.6 million in non-recurring items vs. net loss of $15.6 million in Q4 2022, which included $6.3 million in non-recurring items; Basic loss per share of $0.21 in Q4 2023 vs. basic loss per share of $0.24 in Q4 2022
- Adjusted EBITDA 2 of $1.4 million in Q4 2023 increased by 138% from that seen in Q4 2022
- Revenues of $198.7 million in 2023, 13% below 2022; Revenues per pound sold 1 of $8.66 in 2023 vs. $9.38 in 2022
- Operating costs of $174.8 million in 2023 vs. $169.7 million in 2022, and cash operating costs excluding royalties per pound 1 V 2 O 5 equivalent sold of $5.30 in 2023 vs. $4.57 in 2022; Within revised annual cash operating costs excluding royalties 1 per pound guidance for 2023
- Net loss of $32.4 million in 2023, which included $10.3 million in non-recurring items vs. net loss of $2.2 million in 2022, which included $13.8 million in non-recurring items; Basic loss per share of $0.51 in 2023 vs. basic loss per share of $0.03 in 2022
- Adjusted EBITDA 2 of $12.1 million in 2023 vs. $41.6 million in 2022
- Cash balance of $42.7 million, net working capital 3 surplus of $94.7 million and debt of $75.0 million exiting 2023
- V 2 O 5 production of 2,768 tonnes in Q4 2023, a 38% increase over the 2,004 tonnes produced in Q4 2022; Annual V 2 O 5 production of 9,681 tonnes in 2023 vs. 10,436 tonnes in 2022 and within the Company's revised 2023 production guidance range of 9,000 – 11,000 tonnes
- Quarterly sales of 2,605 tonnes of V 2 O 5 equivalent (inclusive of 139 tonnes of purchased material) in Q4 2023 vs. 2,774 tonnes in Q4 2022; Annual V 2 O 5 equivalent sales of 10,396 (inclusive of 929 tonnes of purchased material) tonnes in 2023 vs. 11,091 tonnes in 2022 and within the Company's revised 2023 sales guidance of 8,700 – 10,700 tonnes
- In Q4 2023, Largo Clean Energy's ("LCE") 6 megawatt-hour vanadium flow battery deployment for Enel Green Power España ("EGPE") was validated to operate on test conditions according to EGPE specifications and LCE test procedures
- On March 18, 2024, the Company announced the signing of a non-binding letter of intent with Stryten Energy LLC ("Stryten") to establish a 50:50 joint venture that would combine the Company's wholly owned subsidiary, LCE with Stryten's vanadium redox flow battery ("VRFB") business
- The Company produced 8,970 tonnes of ilmenite concentrate in Q4 2023; In January and February 2024, the Company produced 5,100 tonnes and 2,000 tonnes of ilmenite concentrate, respectively
- Q4 and FY 2023 results conference call: Friday, March 22 at 1:00 p.m. ET
Vanadium Market Update 4
- The average benchmark price per pound of V 2 O 5 in Europe was $6.46 in Q4 2023, a 22% decrease from the average of $8.25 seen in Q4 2022; The average benchmark price per pound of V 2 O 5 in Europe was $6.53 as at December 31, 2023, a 31% decrease from the average of $9.44 seen as at December 31, 2022
- Vanadium spot demand was soft in Q4 2023, primarily due to adverse conditions in the Chinese and European steel industries, however, strong demand from the aerospace sector continued
- The average benchmark price per pound of V 2 O 5 in Europe as of March 15, 2024 was $6.05
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, 2023. The Company reported annual vanadium pentoxide (" V 2 O 5 ") equivalent sales of 10,396 tonnes at a cash operating cost excluding royalties per pound 1 sold of $5.30.
Daniel Tellechea, Interim CEO and Director of Largo, stated: "The Company's financial results continued to be adversely affected by lower vanadium prices as highlighted by a sharp decline in the European V 2 O 5 price of 22% in Q4 2023 compared to Q4 2022. We remain committed to achieving greater levels of operational efficiency at the Maracás Menchen Mine in order to meet production and sales targets improve cash flow going forward."
He continued: "A number of notable achievements were made by the Company during 2023, including the successful construction and commissioning of a new ilmenite concentration plant. We continue with the ramp-up of production at this facility, further diversifying our revenue stream from our existing vanadium operations. Largo's exploration efforts surrounding the Maracás Menchen Mine have become an increasingly important part of our story over the last few quarters, and we continue to advance our efforts in this area. Following our recent announcement on our review and evaluation of strategic alternatives to unlock and fully maximize the value of LCE, we look forward to continuing discussions with Stryten over the coming weeks."
He concluded: "While vanadium appears to have very promising long-term fundamentals, the Company remains solely focused on reducing costs and meeting its production and sales targets to withstand the current period of low vanadium prices."
Financial and Operating Results – Highlights
(thousands of U.S. dollars, except as otherwise stated) | Three months ended | Year ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues | 44,170 | 47,501 | 198,684 | 229,251 |
Operating costs | (43,218) | (44,455) | (174,758) | (169,719) |
Net income (loss) | (13,301) | (15,636) | (32,358) | (2,226) |
Basic earnings (loss) per share | (0.21) | (0.24) | (0.51) | (0.03) |
Adjusted EBITDA 2 | 1,385 | (3,680) | 12,127 | 41,583 |
Cash (used) provided before working capital items | (2,364) | (14,055) | 5,267 | 21,424 |
Cash operating costs excl. royalties 5 ($/lb) | 5.44 | 5.15 | 5.30 | 4.57 |
Cash | 42,714 | 54,471 | 42,714 | 54,471 |
Debt | 75,000 | 40,000 | 75,000 | 40,000 |
Total mined – dry basis (tonnes) | 3,490,711 | 2,737,149 | 14,864,394 | 10,517,210 |
Total ore mined (tonnes) | 473,958 | 326,552 | 1,752,982 | 1,359,927 |
Effective grade 6 of ore milled (%) | 1.03 | 1.06 | 1.04 | 1.26 |
V 2 O 5 equivalent produced (tonnes) | 2,768 | 2,004 | 9,681 | 10,436 |
Q4 & Full Year 2023 Notes and Other Highlights
- The Company recorded a net loss of $32.4 million in 2023 compared with a net loss of $2.2 million in 2022, largely driven by a 13% decrease in revenues and an increase in certain expenses, most notably a 3% increase in operating costs, a 506% increase in finance costs, a 195% increase in exploration and evaluation costs and a write down of vanadium assets of $4.9 million.
- In 2023, the Company saw increased direct mine and production costs, primarily due to an increase in total ore mined in 2023, the cost impacts of low ore availability experienced earlier in the year and plant shutdowns for corrective maintenance during 2023. The Company's direct mine and production costs decreased in Q4 2023 as compared with Q4 2022, reflecting the impact of the cost saving and operational improvement initiatives implemented at the mine, as well as the softening of prices for critical consumables.
- The Company continues to actively work towards achieve higher levels of operational efficiency to better manage its costs as it navigates lower grades of ore mined as compared with prior years. In Q4 2023, V 2 O 5 equivalent production was 28% higher than the 2,163 tonnes produced in Q3 2023 and 38% higher than the 2,004 tonnes produced in Q4 2022. The global recovery 7 achieved in Q4 2023 was 79.4%, an increase of 6.3% from the 74.7% achieved in Q4 2022 and 3.3% higher than the 76.9% achieved in Q3 2023. The total ore mined in Q4 2023 was 473,958 tonnes, an increase of 45% in comparison with Q4 2022. 1,752,982 tonnes of ore were mined in 2023, an increase of 29% as compared with 2022. Actions were taken to increase crushing availability and normal production levels were recovered in Q4 2023. Total ore crushed in Q4 2023 was 8% higher than in Q3 2023 and 35% higher than in Q4 2022. For 2023, total ore crushed was 9% higher than in 2022.
- For 2023, total professional, consulting and management fees decreased by 9% from 2022 and other general and administrative expenses decreased by 18% from 2022, both as a result of reduced activity and headcount at LCE as a result of the initiation of the strategic review. Additionally, technology start-up costs decreased by 52% in 2023 compared with 2022 primarily due to a write down of battery components inventory in Q4 2022 of $6.4 million and a decrease in activities at LCE in Q4 2023 as the installation of its battery project nears conclusion.
- In 2021, the Company signed a 10-year exclusive off-take agreement with Gladieux Metals Recycling (" GMR ") for the purchase of all standard and high purity grade vanadium products GMR produces. The Company is committed to the purchase of a minimum of 360 tonnes of V 2 O 5 in 2024 and its onward distribution to customers.
- Subsequent to Q4 2023, production in January 2024 was 582 tonnes of V 2 O 5 equivalent with 276 tonnes of V 2 O 5 equivalent produced in February 2024. Lower production achieve in the first two months of Q1 2024 is attributable to the Company's previously announced kiln refractory maintenance. Subsequent to Q4 2023, sales in January 2024 were 1,072 tonnes of V 2 O 5 equivalent, with 1,065 sold in February 2024.
The information provided within this release should be read in conjunction with Largo's annual consolidated financial statements for the years ended December 31, 2023 and 2022 and its management's discussion and analysis for the year ended December 31, 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 the ramp-up its 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" (collectively, "forward looking statements") within the meaning of applicable Canadian and United States securities legislation. Forward‐looking statements in this press release include, but are not limited to: the achievement of operational stability; Largo's ability to improve cash flow in the future; expected sales; diversifying the Company's product offering; optimizing operations, continued advancements at the Maracás Menchen Mine; the conclusion of the installation of Largo's battery project; and future commitments to purchase V 2 O 5 ..
The following are some of the assumptions upon which forward-looking statements are 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 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 LCE; 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 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 LCE 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.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 most recent annual and interim MD&A, which also apply. Largo's most recent annual and interim MD&A are available on Largo's SEDAR+ profile at www.sedarplus.com .
Trademarks are owned by Largo Inc.
Non-GAAP 8 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. Management believes that non-GAAP financial measures, when supplementing measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company.
Revenues Per Pound Sold
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 the 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 sold 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 Q4 2023 and annual unaudited condensed interim consolidated financial statements.
Three months ended | Year ended | |||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||
Revenues - V 2 O 5 produced 1 | $ | 25,182 | $ | 24,908 | $ | 115,534 | $ | 123,529 | ||||
V 2 O 5 sold - produced (000s lb) | 3,215 | 3,483 | 13,113 | 14,307 | ||||||||
V 2 O 5 revenues per pound of V 2 O 5 sold - produced ($/lb) | $ | 7.83 | $ | 7.15 | $ | 8.81 | $ | 8.63 | ||||
Revenues - V 2 O 5 purchased 1 | $ | 1,497 | $ | — | $ | 9,028 | $ | 3,184 | ||||
V 2 O 5 sold - purchased (000s lb) | 265 | — | 1,279 | 265 | ||||||||
V 2 O 5 revenues per pound of V 2 O 5 sold - purchased ($/lb) | $ | 5.65 | $ | — | $ | 7.06 | $ | 12.02 | ||||
Revenues - V 2 O 5 1 | $ | 26,679 | $ | 24,908 | $ | 124,562 | $ | 126,713 | ||||
V 2 O 5 sold (000s lb) | 3,480 | 3,483 | 14,392 | 14,571 | ||||||||
V 2 O 5 revenues per pound of V 2 O 5 sold ($/lb) | $ | 7.67 | $ | 7.15 | $ | 8.65 | $ | 8.70 | ||||
Revenues - V 2 O 3 produced 1 | $ | 6,213 | $ | 4,736 | $ | 13,788 | $ | 8,534 | ||||
V 2 O 3 sold - produced (000s lb) | 596 | 426 | 1,215 | 734 | ||||||||
V 2 O 3 revenues per pound of V 2 O 3 sold - produced ($/lb) | $ | 10.42 | $ | 11.12 | $ | 11.35 | $ | 11.63 | ||||
Revenues - V 2 O 3 purchased 1 | $ | — | $ | 480 | $ | 1,155 | $ | 962 | ||||
V 2 O 3 sold - purchased (000s lb) | — | 42 | 88 | 85 | ||||||||
V 2 O 3 revenues per pound of V 2 O 3 sold - purchased ($/lb) | $ | — | $ | 11.43 | $ | 13.13 | $ | 11.32 | ||||
Revenues - V 2 O 3 1 | $ | 6,213 | $ | 5,216 | $ | 14,943 | $ | 9,496 | ||||
V 2 O 3 sold (000s lb) | 596 | 468 | 1,303 | 819 | ||||||||
V 2 O 3 revenues per pound of V 2 O 3 sold ($/lb) | $ | 10.42 | $ | 11.15 | $ | 11.47 | $ | 11.59 | ||||
Revenues - FeV produced 1 | $ | 11,278 | $ | 15,664 | $ | 57,686 | $ | 71,025 | ||||
FeV sold - produced (000s kg) | 479 | 559 | 2,070 | 2,135 | ||||||||
FeV revenues per kg of FeV sold - produced ($/kg) | $ | 23.54 | $ | 28.02 | $ | 27.87 | $ | 33.27 | ||||
Revenues - FeV purchased 1 | $ | — | $ | 1,713 | $ | 1,386 | $ | 22,017 | ||||
FeV sold - purchased (000s kg) | — | 64 | 50 | 603 | ||||||||
FeV revenues per kg of FeV sold - purchased ($/kg) | $ | — | $ | 26.77 | $ | 27.72 | $ | 36.51 | ||||
Revenues - FeV 1 | $ | 11,278 | $ | 17,377 | $ | 59,072 | $ | 93,042 | ||||
FeV sold (000s kg) | 479 | 623 | 2,120 | 2,738 | ||||||||
FeV revenues per kg of FeV sold ($/kg) | $ | 23.54 | $ | 27.89 | $ | 27.86 | $ | 33.98 | ||||
Revenues 1 | $ | 44,170 | $ | 47,501 | $ | 198,577 | $ | 229,251 | ||||
V 2 O 5 equivalent sold (000s lb) | 5,743 | 6,116 | 22,920 | 24,451 | ||||||||
Revenues per pound sold ($/lb) | $ | 7.69 | $ | 7.77 | $ | 8.66 | $ | 9.38 | ||||
| ||||||||||||
Cash Operating Costs Excluding Royalties Per Pound
The Company's press release refers to 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 2023 annual consolidated financial statements.
Three months ended | Year ended | |||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||
Operating costs i | $ | 43,218 | $ | 44,455 | $ | 174,758 | $ | 169,719 | ||||
Professional, consulting and management fees ii | 887 | 1,185 | 3,102 | 4,969 | ||||||||
Other general and administrative expenses iii | 718 | 530 | 1,750 | 1,390 | ||||||||
Add: insurance proceeds i | — | 683 | — | 683 | ||||||||
Less: iron ore costs i | (84 | ) | (22 | ) | (722 | ) | (659 | ) | ||||
Less: conversion costs i | (1,768 | ) | (2,231 | ) | (7,319 | ) | (8,070 | ) | ||||
Less: product acquisition costs i | (1,974 | ) | (3,775 | ) | (15,354 | ) | (24,426 | ) | ||||
Less: distribution costs i | (2,366 | ) | (2,282 | ) | (8,540 | ) | (9,169 | ) | ||||
Less: inventory write-down iv | (192 | ) | (332 | ) | (1,853 | ) | (1,987 | ) | ||||
Less: depreciation and amortization expense i | (6,592 | ) | (5,959 | ) | (26,048 | ) | (20,882 | ) | ||||
Cash operating costs | 31,847 | 32,252 | 119,774 | 111,568 | ||||||||
Less: royalties 1 | (2,243 | ) | (2,106 | ) | (9,162 | ) | (10,371 | ) | ||||
Cash operating costs excluding royalties | 29,604 | 30,146 | 110,612 | 101,197 | ||||||||
Produced V 2 O 5 sold (000s lb) | 5,437 | 5,855 | 20,871 | 22,121 | ||||||||
Cash operating costs per pound ($/lb) | $ | 5.86 | $ | 5.51 | $ | 5.74 | $ | 5.04 | ||||
Cash operating costs excluding royalties per pound ($/lb) | $ | 5.44 | $ | 5.15 | $ | 5.30 | $ | 4.57 | ||||
| ||||||||||||
EBITDA and Adjusted EBITDA
The Company's press release refers to earnings before interest, tax, depreciation and amortization, or "EBITDA", and adjusted EBITDA, which are non-GAAP financial measures, in order to provide investors with information about key measures used by management to monitor performance. EBITDA is used as an indicator of the Company's ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures.
Adjusted EBITDA removes the effect of inventory write-downs, impairment charges (including write-downs of vanadium assets), insurance proceeds received, movements in legal provisions, non-recurring employee settlements and other expense adjustments that are considered to be non-recurring for the Company. The Company believes that by excluding these amounts, which are not indicative of the performance of the core business and do not necessarily reflect the underlying operating results for the periods presented, it will assist analysts, investors and other stakeholders of the Company in better understanding the Company's ability to generate liquidity from its core business activities.
EBITDA and adjusted EBITDA are intended to provide additional information to analysts, investors and other stakeholders of the Company and do not have any standardized definition under IFRS. These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures exclude the impact of depreciation, costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore are not necessarily indicative of operating profit or cash flow from operating activities as determined under IFRS. Other companies may calculate EBITDA and adjusted EBITDA differently.
The following table provides a reconciliation of EBITDA and adjusted EBITDA to net income (loss) as per the 2023 annual consolidated financial statements.
Three months ended | Year ended | |||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||
Net loss | $ | (13,301 | ) | $ | (15,636 | ) | $ | (32,358 | ) | $ | (2,226 | ) |
Finance costs | 4,096 | 801 | 9,630 | 1,588 | ||||||||
Interest income | (280 | ) | (311 | ) | (2,018 | ) | (1,109 | ) | ||||
Income tax expense | 40 | (1,336 | ) | 88 | 7,688 | |||||||
Deferred income tax recovery | (3,119 | ) | (252 | ) | (2,786 | ) | (1,423 | ) | ||||
Depreciation i | 7,393 | 6,725 | 29,250 | 23,278 | ||||||||
EBITDA | $ | (5,171 | ) | $ | (10,009 | ) | $ | 1,806 | $ | 27,796 | ||
Inventory write-down ii | 2,407 | 6,797 | 4,068 | 8,739 | ||||||||
Write-down of vanadium assets | 3,535 | — | 4,862 | — | ||||||||
Insurance proceeds iii | — | (683 | ) | — | (683 | ) | ||||||
Movement in legal provisions iii | (85 | ) | 215 | 692 | 5,107 | |||||||
Employee settlements iii | 699 | — | 699 | 624 | ||||||||
Adjusted EBITDA | $ | 1,385 | $ | (3,680 | ) | $ | 12,127 | $ | 41,583 | |||
| ||||||||||||
______________________________________________
1 Revenues per pound sold and cash operating costs are non-GAAP financial measures, and cash operating costs per pound and cash operating costs excluding royalties per pound are non-GAAP ratios with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-GAAP Measures" section of this press release.
2 Adjusted EBITDA is a non-GAAP financial measure with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-GAAP Measures" section of this press release.
3 Defined as current assets less current liabilities per the consolidated statements of financial position.
4 Fastmarkets MetalBulletin
5 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.
6 Effective grade represents the percentage of magnetic material mined multiplied by the percentage of V2O5 in the magnetic concentrate
7 Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching recovery and chemical plant recovery.
8 GAAP – Generally Accepted Accounting Principles
Appendix:
Consolidated Statements of Financial Position
Expressed in thousands / 000's of U.S. dollars
As at | |||||||
December 31, 2023 | December 31, 2022 | ||||||
Assets | |||||||
Cash | $ | 42,714 | $ | 54,471 | |||
Restricted cash | 712 | 470 | |||||
Amounts receivable | 25,598 | 20,975 | |||||
Inventory | 61,565 | 64,221 | |||||
Prepaid expenses | 6,534 | 14,007 | |||||
Total Current Assets | 137,123 | 154,144 | |||||
Other intangible assets | 6,153 | 7,263 | |||||
Mine properties, plant and equipment | 212,176 | 175,237 | |||||
Vanadium assets | 18,674 | 14,510 | |||||
Deferred income tax asset | 7,495 | 4,596 | |||||
Total Non-current Assets | 244,498 | 201,606 | |||||
Total Assets | $ | 381,621 | $ | 355,750 | |||
Liabilities | |||||||
Current portion of lease liability | $ | 600 | $ | 581 | |||
Accounts payable and accrued liabilities | 31,439 | 26,634 | |||||
Deferred revenue | 3,553 | 1,698 | |||||
Debt | — | 4,000 | |||||
Current portion of provisions | 6,863 | 6,060 | |||||
Total Current Liabilities | 42,455 | 38,973 | |||||
Lease liability | 925 | 1,473 | |||||
Non-current accounts payable and accrued liabilities | 724 | 326 | |||||
Long term debt | 75,000 | 36,000 | |||||
Provisions | 6,718 | 4,424 | |||||
Total Non-current Liabilities | 83,367 | 42,223 | |||||
Total Liabilities | 125,822 | 81,196 | |||||
Equity | |||||||
Issued capital | 412,295 | 411,646 | |||||
Equity reserves | 12,200 | 14,138 | |||||
Accumulated other comprehensive loss | (98,200 | ) | (112,165 | ) | |||
Deficit | (77,643 | ) | (48,227 | ) | |||
Equity attributable to owners of the Company | 248,652 | 265,392 | |||||
Non-controlling Interest | 7,147 | 9,162 | |||||
Total Equity | 255,799 | 274,554 | |||||
Total Liabilities and Equity | $ | 381,621 | $ | 355,750 | |||
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Expressed in thousands / 000's of U.S. dollars and shares (except per share information)
Years ended December 31, | |||||||
2023 | 2022 | ||||||
Revenues | $ | 198,684 | $ | 229,251 | |||
Expenses | |||||||
Operating costs | (174,758 | ) | (169,719 | ) | |||
Professional, consulting and management fees | (23,068 | ) | (25,277 | ) | |||
Foreign exchange (loss) gain | (183 | ) | 1,584 | ||||
Other general and administrative expenses | (11,792 | ) | (14,319 | ) | |||
Share-based payments | 362 | (2,372 | ) | ||||
Finance costs | (9,630 | ) | (1,588 | ) | |||
Interest income | 2,018 | 1,109 | |||||
Technology start-up costs | (6,122 | ) | (12,695 | ) | |||
Write-down of vanadium assets | (4,862 | ) | — | ||||
Exploration and evaluation costs | (5,705 | ) | (1,935 | ) | |||
(233,740 | ) | (225,212 | ) | ||||
Net income (loss) before tax | $ | (35,056 | ) | $ | 4,039 | ||
Income tax expense | (88 | ) | (7,688 | ) | |||
Deferred income tax recovery | 2,786 | 1,423 | |||||
Net loss | $ | (32,358 | ) | $ | (2,226 | ) | |
Other comprehensive income | |||||||
Items that subsequently will be reclassified to operations: | |||||||
Unrealized gain on foreign currency translation | 13,965 | 6,607 | |||||
Comprehensive income (loss) | $ | (18,393 | ) | $ | 4,381 | ||
Net loss attributable to: | |||||||
Owners of the Company | $ | (30,343 | ) | $ | (1,451 | ) | |
Non-controlling interests | $ | (2,015 | ) | $ | (775 | ) | |
$ | (32,358 | ) | $ | (2,226 | ) | ||
Comprehensive income (loss) attributable to: | |||||||
Owners of the Company | $ | (16,378 | ) | $ | 5,156 | ||
Non-controlling interests | $ | (2,015 | ) | $ | (775 | ) | |
$ | (18,393 | ) | $ | 4,381 | |||
Basic loss per Common Share | $ | (0.51 | ) | $ | (0.03 | ) | |
Diluted loss per Common Share | $ | (0.51 | ) | $ | (0.03 | ) | |
Weighted Average Number of Shares Outstanding (in 000's) | |||||||
- Basic | 64,038 | 64,446 | |||||
- Diluted | 64,038 | 64,446 | |||||
Consolidated Statements of Cash Flows
Expressed in thousands / 000's of U.S. dollars
Years ended December 31, | |||||||
2023 | 2022 | ||||||
Operating Activities | |||||||
Net loss for the year | $ | (32,358 | ) | $ | (2,226 | ) | |
Depreciation | 29,250 | 23,278 | |||||
Share-based payments | (362 | ) | 2,372 | ||||
Unrealized foreign exchange (gain) | (509 | ) | (4,580 | ) | |||
Non-cash listing expense | — | 571 | |||||
Loss on sale of vanadium assets | 156 | — | |||||
Finance costs | 9,630 | 1,588 | |||||
Interest income | (2,018 | ) | (1,109 | ) | |||
Write down of vanadium assets | 4,862 | — | |||||
Income tax expense | 88 | 7,688 | |||||
Deferred income tax recovery | (2,786 | ) | (1,423 | ) | |||
Income tax paid | (686 | ) | (4,735 | ) | |||
Cash Provided Before Working Capital Items | 5,267 | 21,424 | |||||
Change in amounts receivable | (3,861 | ) | 3,573 | ||||
Change in inventory | 5,361 | (15,710 | ) | ||||
Change in prepaid expenses | 7,961 | (7,232 | ) | ||||
Changes in accounts payable and provisions | 4,614 | 5,176 | |||||
Change in deferred revenue | 1,855 | (3,771 | ) | ||||
Net Cash Provided by Operating Activities | 21,197 | 3,460 | |||||
Financing Activities | |||||||
Receipt of debt | 70,000 | 55,000 | |||||
Repayment of debt | (35,000 | ) | (30,000 | ) | |||
Interest paid | (7,065 | ) | (616 | ) | |||
Interest received | 2,014 | 1,109 | |||||
Lease payments | (580 | ) | (569 | ) | |||
Change in restricted cash | (242 | ) | (22 | ) | |||
Sale of non-controlling interest | — | 7,344 | |||||
Share repurchase | — | (6,088 | ) | ||||
Issuance of common shares | — | 277 | |||||
Net Cash Provided by Financing Activities | 29,127 | 26,435 | |||||
Investing Activities | |||||||
Intangible assets | (157 | ) | (3,444 | ) | |||
Mine properties, plant and equipment | (53,546 | ) | (42,193 | ) | |||
Purchase of vanadium assets | (10,115 | ) | (14,510 | ) | |||
Sale of vanadium assets | 933 | — | |||||
Net Cash Used in Investing Activities | (62,885 | ) | (60,147 | ) | |||
Effect of foreign exchange on cash | 804 | 933 | |||||
Net Change in Cash | (11,757 | ) | (29,319 | ) | |||
Cash position – beginning of the year | 54,471 | 83,790 | |||||
Cash Position – end of the year | $ | 42,714 | $ | 54,471 | |||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240321493592/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
Battery Ready Vanadium Electrolyte Produced
KEY POINTS
- AVL has successfully produced its first high purity vanadium electrolyte for use in vanadium flow batteries at its electrolyte manufacturing facility.
- Independent testing shows that the vanadium electrolyte complies with typical specifications required by vanadium flow battery manufacturers.
Independent analysis of the vanadium electrolyte produced at the Facility shows that the impurities in the electrolyte were well within limits typically expected by vanadium flow battery manufacturers.
AVL’s Chief Executive Officer, Graham Arvidson comments, “The completion of the facility, coupled with the confirmation of the production of on-specification vanadium electrolyte from Western Australia’s first manufacturing facility, achieves another major milestone for AVL and is a positive reflection of the technical and operational expertise within our organisation. We are ready to accept orders for electrolyte and are actively pursuing sales.”
Vanadium electrolyte is one of the key components of vanadium flow batteries. These batteries are well suited to large-scale energy storage applications, such as those required for electrical grids. They offer a high capacity for energy storage and a long cycle life, having the ability to be charged and discharged repeatedly without significant degradation. AVL’s wholly owned subsidiary, VSUN Energy Pty Ltd, is establishing a long duration energy storage pilot for Horizon Power in Kununurra, in the north of Western Australia.3 Projects such as this have the potential to use vanadium electrolyte produced by the Facility, demonstrating the potential for a high local content solution for Australia’s long-duration energy storage needs.
The unique advantages of vanadium flow batteries, including their scalability, long lifespan and the ability to maintain capacity over time, makes vanadium electrolyte a critical component in addressing the challenges of energy storage and distribution in a world increasingly reliant on intermittent renewable energy sources.
The successful establishment of the Facility is an important milestone for AVL and the development of industries to support Australia’s long-term carbon emission reduction plans. The Facility was built with Federal government assistance in the form of a $3.69 million Australian Government Modern Manufacturing Translation grant, awarded to AVL under the National Manufacturing Priority Roadmap in 2021.4 The majority of the grant was used to contribute to the cost of building the Facility.
The Facility, located in Wangara, Perth, was designed to produce high-purity electrolyte to support up to 33 MWh per year of VFB energy storage.5 AVL is able to expand the Facility easily. The ability to source local electrolyte will enable AVL to become a trusted supplier of vanadium electrolyte for battery projects in Australia and the wider region, at a time when there is increasing community and government interest in ensuring capabilities to support the energy transition.
Figure 1 - Ben Davis and Haley Knighten Criss (USV) and Flormirza Cabalteja (AVL) with first vanadium electrolyte samples
The Company is using proven electrolyte manufacturing technology licensed from U.S. Vanadium LLC (USV) exclusively to AVL in Australia and New Zealand. Staff from USV travelled from the United States to assist with commissioning. Supplies of the vanadium oxides required by the Facility for the production of vanadium electrolyte are currently being provided by USV. When the Australian Vanadium Project is in production, the Company will provide full ‘pit to battery’ downstream value addition, by generating a vanadium concentrate at the mine site, to be fed to AVL’s proposed processing plant for producing the vanadium pentoxide used as a feedstock for the Facility.
Click here for the full ASX Release
This article includes content from Australian Vanadium, 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 Announces a Proposed Joint Venture with Stryten Energy to Bring Innovation and Scale to North American Vanadium Flow Battery Market
New Relationship Would Establish Integrated Supply Chain for Vanadium and Vanadium Electrolyte Manufacturing; Support Growing Demand For Long-duration Energy Storage Solutions
Largo Inc. (TSX: LGO) (NASDAQ: LGO) is pleased to announce the signing of a non-binding letter of intent with Stryten Energy LLC (" Stryten ") to establish a 50:50 joint venture that would combine the Company's wholly owned subsidiary, Largo Clean Energy Corp. (" LCE ") with Stryten's vanadium redox flow battery (" VRFB ") business (the " Proposed Transaction "). This announcement comes in concert with Enel Green Power España and LCE's go-live of a 5.5-megawatt hour VRFB in Spain, the deployment of one of the largest utility scale vanadium system in Europe.
The combination of the parties' decades of VRFB technology expertise, access to raw vanadium supplies from friendly sources, and high-volume electrolyte production capabilities is expected to transform the long-duration energy storage (" LDES ") sector in North America.
The estimated market in North America for VRFB LDES solutions is hundreds of Gigawatts in size, requiring the creation of a vertically integrated vanadium supply chain to reliably meet this demand. It is expected that this joint venture would provide access to U.S.-produced vanadium electrolyte needed for VRFB manufacturers to accelerate the commercial deployment of vanadium battery solutions.
"The agreement is a direct result of our review and evaluation of strategic alternatives to unlock and fully maximize the value of LCE," said Daniel Tellechea, Director and Interim Chief Executive Officer of Largo. "The distinctive value proposition LCE presents for vanadium batteries and the long-duration energy storage sector, including its patented vanadium flow battery stack technology, electrolyte purification technology and access to vanadium through Largo Physical Vanadium Corp. (TSX.V:VAND, OTCQX:VANAF), were key determining factors in advancing our discussions with Stryten. Additionally, Stryten's ability to produce electrolyte in large volumes will help reduce the overall cost for VRFB solutions, a critical factor in catalyzing the commercial adoption of the technology and meeting the DOE LCOS targets."
The Proposed Transaction remains subject to, among other conditions, negotiation of definitive agreements, completion of due diligence by both parties and receipt of any required Board and regulatory approvals. There can be no assurance that the Proposed Transaction will be completed, nor can there be any assurance, if the Proposed Transaction is completed, that the potential benefits of the Proposed Transaction will be realized.
About Stryten Energy
Stryten Energy helps solve the world's most pressing energy challenges with a broad range of energy storage solutions across the Essential Power, Motive Power, Transportation, Military and Government sectors. Headquartered in Alpharetta, Georgia, Stryten Energy partners with some of the world's most recognized companies to meet the growing demand for reliable and sustainable energy storage capacity. Stryten Energy powers everything from submarines to subcompacts, microgrids, warehouses, distribution centers, cars, trains and trucks. Its stored energy technologies include advanced lead, lithium and vanadium redox flow batteries, intelligent chargers and energy performance management software that keep people on the move and supply chains running. An industry leader backed by more than a century of expertise, Stryten has The Energy to Challenge the status quo and deliver top-performing energy solutions for today and tomorrow. Learn more at www.stryten.com .
About Largo Physical Vanadium Corp.
LPV aims to provide a secure, convenient and exchange-traded investment alternative for investors interested in having direct exposure to physical vanadium, a metal essential to achieving a greener world in key industries such as steel, aerospace and energy storage. Vanadium is non-degrading and fully recyclable when used as electrolyte in vanadium redox flow batteries (VRFBs) and offers carbon reducing attributes when used in steel alloying applications. LPV offers pure-play exposure to vanadium through its holdings of physical vanadium. LPV's strategy is not only to achieve appreciation through the acquisition of vanadium, but to own and actively supply vanadium to end users of VRFBs to advance to integration of renewable energy in long duration storage. This strategy is integral to LPV's business plan, as it necessarily defrays the costs to LPV associated with storage of vanadium, and demonstrates the benefits and utility of vanadium, therefore supporting vanadium's value. For more information, please visit www.lpvanadium.com .
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 ramping up production of its 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 Proposed Transaction, the entering into of a definitive agreements, the conditions to Closing, including receipt of all necessary regulatory approvals.
The following are some of the assumptions upon which forward-looking information is based: receipt of regulatory and governmental approvals and permits in connection with the Proposed Transaction in a timely manner; that the Parties will be able to work collaboratively as parties to a joint venture; that due diligence in connection with the Proposed Transaction will be completed and the results thereof being acceptable to the parties; and the ability of management of the joint venture 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; the risk that the Proposed Transaction may not be completed in a timely manner or at all; the failure to satisfy the conditions to the consummation of the Proposed Transaction, including receiving the necessary regulatory approvals; failure to realize the anticipated benefits of the Proposed Transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the letter of intent prior to a definitive agreement being reached; the inability to implement business plans, forecasts, and other expectations after the completion of the Proposed Transaction; and any inability to raise additional funds to meet capital requirements and pursue the growth strategy of the joint venture when and in the amounts needed. 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240318566497/en/
For further information:
Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778
aguthrie@largoinc.com
News Provided by Business Wire via QuoteMedia
Australian Vanadium Investor Kit
- Corporate info
- Insights
- Growth strategies
- Upcoming projects