Largo Resources: Maracas Menchen Hits Daily Production Records

Production appears to be ramping up well at Largo Resources’ (TSXV:LGO) Maracas Menchen vanadium mine in Brazil. The mine hit a daily production record this past Sunday when it put out 27 tonnes of vanadium pentoxide (V205), representing 102 percent of the plant’s design capacity. The next day, it produced 110 percent of its design capacity, or 29 tonnes of V205.
“This is an enormous achievement for Largo and the Maracas Menchen Mine. Following a record month of production in July of 607 tonnes, we have again set new records in August by achieving daily production rates above design capacity over two consecutive days,” said Largo President and CEO Mark Smith in a press release. “These records demonstrate the Plant’s increasing operating efficiency as well as proves that we are able to achieve stability at levels at and above the plant’s design capacity.”

Largo had hoped to reach 90 to 95 percent of its annual production capacity by Q3 2015, and it looks like it’s surpassed that goal. Smith added that the company expects to see further increases in average production rates in the coming months as it installs engineering improvements at Maracas Menchen.
The mine has produced 10 million pounds of V205 since production began in August 2014. Nameplate annual production capacity at Maracas Menchen is 9,500 tonnes, and the company is targeting average annual production of 17.3 million pounds of V205.
The company also reported in April that it was moving forward with its goal of lowering production costs at the mine, bringing them down to $3.91 per pound from an earlier average of $4.15. It’s aiming to lower costs to $3.21 per pound by the end of the year.

Earlier this year, at least one analyst was concerned about the company’s ability to meet its short-term liabilities, arguing that Largo’s balance sheet obligations overshadowed the profitability of Maracas Menchen.
However, the company appears to be doing well on that front as well. It completed a $75.2-million financing in May, and received final approval for the restructuring of its debt facilities in June. At the time, Smith stressed that the restructuring would provide Largo with a strong financial foundation as it continued ramp up at the plant.
“The Company has now addressed its financial structure in response to a dramatic decline in the price of vanadium earlier this year — we strongly believe that this Project is already a success, and will continue to demonstrate this as we move forward towards reaching our target capacity,” Largo said at the time.
Largo’s share price was down 6.15 percent, at $0.61 on Thursday. The company’s share price has lost 79 percent over the past year.
 
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.