Largo Reports Solid Q1 2022 Operational and Sales Results

Largo Inc. (TSX: LGO) (NASDAQ: LGO) announced solid Q1 operational results with production of 2,442 tonnes of V205; an increase of 23% year-over-year.  The company expects further production improvements in Q2 along with logistics improving through the year.

Vanadium: The Strategic Green Metal

In early March Capital 10X identified vanadium as a key strategic green metal along with copper and lithium. Vanadium not only increases efficiencies and adds value to a number of manufacturing processes but is also considered a foundational element of the “green” industrial revolution. Vanadium’s key applications:

  1. Increase the tensile strength and production efficiency of steel
  2. Improve the fuel efficiency of aircraft and other vehicles
  3. Essential in the manufacture of vanadium redox flow batteries (institutional and electrical grid efficiency)

In the report we highlighted Largo as the vanadium pureplay, it is among the 3 largest producers of the metal. Largo is one of the lowest cost producers in the industry and the company currently trades at a substantial discount to its life of mine NPV ($4.2 billion).

Solid Q1 Operational Results

On April 19th Largo announced solid Q1 2021 operational results, producing 2,442 tonnes of V2O5 (Vanadium Pentoxide), a 23% increase from the previous year. While global recovery rates of 77.5% were inline with last year.

Q1 2022 operational results were impacted by preventative and corrective maintenance on the Company’s plant facility in Maracás; V2O5 production improved in March and the Company expects additional production improvements moving forward.

Paulo Misk, President and CEO stated the following about production improvements and construction of the ilmenite concentration plant:

“We continue our focus on production improvements throughout the facility and are pleased to report improved V2O5 equivalent production for the month of March with 1,009 tonnes produced. We expect further improvements to production in the second quarter. 

We are also excited to report that construction on the Company’s ilmenite concentration plant as part of the phased operational approach outlined for Largo’s TiO2 pigment project has commenced at our Maracás operation in Brazil. This is an important first step in advancing one of the Company’s two strategic pillars and we look forward to providing additional updates as we progress through the first phase of this project”

Q1 2022 Sales Update

In Q1 2022, the Company sold 2,232 tonnes of V2O5 equivalent compared to 2,783 tonnes sold in Q1 2021. The Company delivered both standard grade and high purity V2O5 as well as ferrovanadium (“Fev”) to its customers, globally.

Despite logistical challenges and elevated transport costs impacting Largo’s supply chain and sales, the company continued to deliver on all its commercial commitment through careful planning. Largo does not expect the logistics situation to improve until mid-2022, at which point the company anticipates being able to reduce its inventory in transit through increased sales.

Q1 2022 Cash Cost Guidance

Due to operational impacts previously mentioned, lower sales, global inflationary pressures and the strengthening of the Brazilian Real against the U.S. Dollar, management anticipates cash operating costs cand excluding royalties of approximately US $4.50 per pound sold for Q1 2022.

Clean Energy Manufacturing Facility and VCHARGE Certification Progress

LCE’s headquarter configuration, including a VRFB product development and stack manufacturing center, is nearing completion, with formal acceptance scheduled for May 2022. LCE began producing stacks and purifying electrolyte in the new facility and has scheduled prospective customer visits in May. LCE also proceeded with Conformité Européenne (“CE”) certification of the VCHARGE product, and ISO 9001 certification of LCE’s Quality Management System (“QMS”) with audits scheduled for May 2022.

Largo Inc. is a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.


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