LPV: The Pure Play Vanadium Investment

We’ve been covering battery and critical metals for some time now, pointing out that our current supplies aren’t going to cut it. That is, if the world is to meet demand for electric vehicles and move towards a low carbon future. One such metal is vanadium, and Largo Inc. has created a new investment vehicle for exposure to this green metal.

Largo Physical Vanadium Corp (LPV) will be a publicly traded entity on the TSX – common shares will commence trading under the symbol VAND, expected by the end of September 2022.  We looked at a recent presentation from Paul Vollant President and CEO of LPV and we’ll break it down here – let’s get ahead of the crowd and take a quick look at this new investment vehicle.

Structure & Function

LPV facilitates the storage of the pure metal form of vanadium and vanadium electrolyte. With aqueous vanadium electrolyte there is no risk of theft or fire loss. Also, there’s no degradation of the vanadium when stored in batteries; the electrolyte can be converted back into vanadium pentoxide form as required, at Largo’s expense. So, before we get confused (I can see the posts and emails coming), let’s examine the relationship between the entities involved.

A Key Agreement with Sprott

LPV Partners has raised funds to be deployed for vanadium storage to be warehoused in metal/powder form and in electrolyte in batteries. Sprott has a marketing and financial advisory agreement – a key partnership for this new public company. Sprott will provide marketing, capital markets support and provide advice / recommendations to the Board of Directors. They will advise on capital raising initiatives and whether their vanadium purchases affect market conditions.

Sprott operates the Sprott Physical Uranium Trust, a similar vehicle that serves as an alternative storage investment for uranium – so we imagine LPV went to the right people to benefit from their expertise.

The Relationship with Largo Inc.

LPV has a technical services agreement with Largo Inc. They will provide commercial services to the management of the storage of vanadium and all LPV’s transactions involving the purchase and sale of vanadium. Largo will optimize LPVs portfolio value and oversee the conversion of powder/flake vanadium into vanadium sulfate salts and vice versa.

Summing it Up

LPV is offering up the opportunity to invest in an underlying commodity – vanadium, associated with Vanadium Redox Flow Battery (VRFB) technology. This is a strong energy transition technology that will have a role in major global ESG initiatives. Like it or not, ESG is an important factor in corporate and government decisions as the world moves to lower its carbon emissions.

Inelastic production is expected to taper over time as we move away from fossil fuels. The market presence of LPV is expected to dramatically reduce the battery cost to the VRFB customer whilst driving VRFB demand. A more liquid market will be available to investors, reducing price volatility. Price stability should enhance the attractiveness to new producers, thus supporting new supply sources.

So, LPV intends to create a positive feedback loop and provide a pure-play vanadium investment, while growing the overall vanadium market. LPV hits major points in a green metals investment thesis. Like copper, lithium and battery metals demand will grow for the foreseeable future.