TORONTO - Largo Inc. ('Largo' or the 'Company') (TSX: LGO) (NASDAQ: LGO) today released financial results for the three months ended March 31, 2024.
The Company reported quarterly vanadium pentoxide ('V2O5 ') equivalent sales of 2,765 tonnes at a cash operating cost excluding royalties per pound6 sold of $6.12.
Daniel Tellechea, Interim CEO and Director of Largo, stated: 'Having navigated challenges in the first quarter, such as an extended maintenance period which led to increased costs, and a sharp decline in vanadium prices, our focus remains on restoring profitability at Largo. We continued to realize cost savings at our clean energy division this quarter as a result of initiating our strategic review process, and negotiations with Stryten Energy LLC remain ongoing. While we anticipate elevated costs in the first half of the year, we expect improvements in the second half as the full effects of our previously announced productivity initiatives and cost reduction measures materialize at our Maracas Menchen Mine.'
Q1 2024 Notes
The Company recorded a net loss of $13.0 million in Q1 2024 compared with a net loss of $1.2 million in Q1 2023, primarily due to a 27% decrease in revenues and an 8% increase in operating costs, which were partially offset by a 24% decrease in professional, consulting and management fees and a 73% decrease in technology start-up costs.
In Q1 2024, the Company's direct mine and production costs of $29.9 million increased by 5% over Q1 2023, primarily due to the impact of the scheduled plant shutdown in Q1 2024 and the associated lower global recoveries and higher costs as the plant resumed operations. During the shutdown, the kiln refractory was replaced, and annual maintenance activities were performed in the crushing, milling, ilmenite, leaching and chemical sections of the plant.
Cash operating costs excluding royalties6 of $6.12 per lb sold in Q1 2024 increased by 19% over Q1 2023 ($5.15 per lb) due to the reasons noted above and included a write-down of produced vanadium products of $4.5 million. Additionally, increased quantities of ore mined and lower grades also impacted the financial performance during the quarter. The Company is actively working to achieve operational stability and operating norms in order to better manage its unit costs and has implemented a number of initiatives with the goal of reducing production costs and improving productivity. These include reducing haulage distances, reducing the number of contractors and a comprehensive review of all contracts.
Professional, consulting and management fees in Q1 2024 decreased from Q1 2023 by 24% ($1.3 million), primarily due to reduced activity and headcount at Largo Clean Energy Corp. ('LCE') as a result of the initiation of its strategic review process. Technology start-up costs in Q1 2024 also decreased from Q1 2023 by 73% ($2.0 million), which is primarily attributable to a decrease in activities at LCE in Q1 2024 as the installation of its battery project nears conclusion.
Subsequent to Q1 2024, production and sales in were 815 tonnes and 757 tonnes of V2O5 equivalent, respectively, in April 2024, with 2,500 tonnes of ilmenite concentrate being produced during this period and 8,363 dry tonnes of ilmenite being sold.
In May 2024, the Company secured a working capital debt facility with a bank in Brazil for a total limit of $8.0 million. Drawdowns on the facility are repayable in 90 days together with accrued interest at a rate of 8.25% p.a., with renewals subject to approval by the bank.
On May 15, 2024, the Company signed a binding term sheet for up to $10.0 million in inventory financing. Under the terms of this facility, which shall have a minimum duration of 12 months, the Company will use its vanadium finished products inventory to secure drawdowns of up to $10.0 million for a maximum period of 90 days. Amounts repaid will include a commission fee of 1%, interest at an expected rate of the U.S. Secured Overnight Financing Rate ('SOFR') plus 2.5% and other direct costs.
The information provided within this release should be read in conjunction with Largo's unaudited condensed interim consolidated financial statements for the three months ended March 31, 2024 and 2023 and its management's discussion and analysis for the three months ended March 31, 2024 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 Maracas 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.
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 timing and amount of estimated future production and sales; the future price of commodities; costs of future activities and operations, including, without limitation, the effect of inflation and exchange rates; the effect of unforeseen equipment maintenance or repairs on production; timing of ilmenite production; the ability to produce high purity V2O5 and V2O3 according to customer specifications; the extent of capital and operating expenditures; the ability of the Company to make improvements on its current short-term mine plan; the impact of global delays and related price increases on the Company's global supply chain and future sales of vanadium products. Forward-looking information in this press release also includes, but is not limited to, statements with respect to our ability to build, finance and successfully operate a VRFB business, the projected timing and cost of the completion of the EGPE project; our ability to protect and develop our technology, our ability to maintain our IP, the competitiveness of our product in an evolving market, our ability to market, sell and deliver our VCHARGE batteries on specification and at a competitive price, our ability to successfully deploy our VCHARGE batteries in foreign jurisdictions; our ability to negotiate and enter into a joint venture with Ansaldo Green Tech on terms satisfactory to the Company and the success of such joint venture; the receipt of necessary governmental permits and approvals on a timely basis, our ability to secure the required resources to build and deploy our VCHARGE batteries, and the adoption of VRFB technology generally in the market.
The following are some of the assumptions upon which forward-looking information is based: that general business and economic conditions will not change in a material adverse manner; demand for, and stable or improving price of V2O5 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 Maracas Menchen Mine or relating to Largo Clean Energy, specially in respect of the installation and commissioning of the EGPE project; the availability of financing for operations and development; the availability of funding for future capital expenditures; the ability to replace current funding on terms satisfactory to the Company; the ability to mitigate the impact of heavy rainfall; the Company's ability to procure equipment, services and operating supplies in sufficient quantities and on a timely basis; that the estimates of the resources and reserves at the Maracas 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 accuracy of the Company's mine plan at the Maracas Menchen Mine, the competitiveness of the Company's VRFB technology; the ability to obtain funding through government grants and awards for the Green Energy sector, the accuracy of cost estimates and assumptions on future variations of VCHARGE battery system design, that the Company's current plans for ilmenite and VRFBs can be achieved; 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 Largo Clean Energy 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.sedar.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 annual and interim MD&As which also apply.
Contact:
Alex Guthrie
Senior Manager, External Relations
Tel: +1.416.861.9778
Email: aguthrie@largoinc.com
LARGO INC. 
