Largo Reports Big Improvement to Production Levels Exiting Q2 2023

This quarter proved to be much better operationally for Largo. The company updated the market with improved quarterly production results in Q2 2023. More importantly, Largo proved decisively that operations are returning to normalized levels after disruptions experienced late last year, exiting the quarter producing above 1,000 tonnes of V2O5 per month in June.

Given the level of the beat in both sales and production vs quarterly guidance, we expect that Largo’s full year 2023 guidance may turn out to be slightly conservative.

Q2 2023 Earnings Review

With operations largely back to full capacity, the focus now shifts to two important catalysts on the horizon in 2023.

First, Largo announced construction of its Ilmenite plant is complete and the facility will be commissioned in Q3, ramp up in Q4 and begin first sales early 2024. The ilmenite plant will add an additional source of revenue and cashflow for Largo that is not currently reflected in the stock price.

The second catalyst to look forward to is hot commissioning and customer acceptance of Largo’s very first vanadium battery installation. This is an exciting and critical milestone for the company due to the massive demand potential VRFBs (Vanadium Redox Flow Batteries) hold for the vanadium market.

Demand for VRFBs is taking off in China and elsewhere and Largo is one of the best positioned companies to supply that demand as the owner of the largest and one of the highest grade primary vanadium mines in the world.

In our view, the next 12 months hold the most promise in Largo’s 20 year history as a public company.

Production Review

Largo reported very strong production growth in the second quarter as operations recovered from maintenance and flooding in the prior six months.

Production grew 25% quarter over quarter and exceeded even the high end of its guidance production guidance by 10%.

More importantly, production exited the quarter in-line with some of the best quarters Largo has ever had and tells us the company is back to operating near full capacity.

Monthly Vanadium Production (Tonnes)

Source: Largo

Q2 Production Summary


Sales of Vanadium came in at 2,557 tonnes for the quarter, down 10% quarter over quarter due the fact that lower production in Q4 and Q1 meant the company had less inventory to sell. A sales decline was already forecast by management and was expected.

Sales did come in 7% higher than the midpoint of guidance which was a positive result.

Ilmenite Plant On Track for First Sales Early Next Year

Largo announced the completion of construction this quarter on the value added ilmenite plant. Ilmenite is used extensively in industrial and consumer products and is expected to serve as a margin enhancer for Largo’s overall production.

The plant is now ready for commissioning in Q3, production ramp up in Q4 and the company is expected to begin selling product into the market early in 2024.

VRFB Battery Commissioning Close to Complete

A very exciting catalyst for Largo is the imminent hot commissioning of the company’s first commercial vanadium battery. Commissioning and final acceptance by customer Enel Green Power Spain are both expected to be finished by year end.

Global demand for VRFB technology is rapidly tightening the supply and demand balance for Vanadium with forecasts calling for 10% of all vanadium supply to go into batteries in 2023.

Recent Vanadium Battery Announcements in China

Source: Largo Physical Vanadium

For long term VRFB installation forecasts to be realized, all vanadium would need to be redirected to this use by the end of the decade. Vanadium batteries are truly revolutionizing the vanadium supply chain.

Global VRFB Deployment Potential for Vanadium Demand

Source: Largo Physical Vanadium

As one of the largest pure-play producers of vanadium in the world, Largo is well positioned to become a key supplier of grid level battery storage globally.


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