V2O5 production of 2,831 tonnes (6.2 million lbs1) in Q1 2020, an increase of 35% over Q1 2019
Global V2O5 recovery rate2 of 79.9% in Q1 2020 compared to 80.0% in Q1 2019 and 77.3% in Q4 2019
Planned kiln upgrades and cooler maintenance in April 2020 postponed due to COVID-19 precautions; Enhanced chemical plant preventative maintenance to be performed
2020 production, sales and cost guidance maintained
TORONTO , April 13, 2020 /CNW/ – Largo Resources Ltd. (“Largo” or the “Company”) (TSX: LGO) (OTCQX: LGORF) announces first quarter 2020 production results from its Maracás Menchen Mine with production of 2,831 tonnes of vanadium pentoxide (“V2O5”) produced at an average global recovery rate2 of 79.9%.
Total production in Q1 2020 from the Maracás Menchen Mine was 2,831 tonnes of V2O5 representing an increase of 35% over Q1 2019. Production in January 2020 was 956 tonnes of V2O5, with 915 tonnes of V2O5 produced in February 2020 and 960 tonnes produced in March 2020 . Production in January 2020 was impacted by shutdowns of the kiln and cooler to fix the refractory and for maintenance to correct instability in the kiln feed. Production in February and March 2020 was impacted by additional kiln shutdowns to fix hot spots in the refractory. The Company’s planned upgrades to the kiln and improvements in the cooler have been postponed until further notice as a result of precautionary measures such as limiting mine site personnel and contractors in light of the COVID-19 pandemic. The Company will instead be performing an enhanced preventative maintenance program in the chemical plant for approximately 15 days and, as a result, estimates that April 2020 production will be approximately 500 tonnes of V2O5.
In Q1 2020, 203,966 tonnes of ore with an effective V2O5 grade3 of 1.61% were mined and the crushing unit was fed with 226,394 tonnes with an effective V2O5 grade3 of 1.43%. The Company also produced 100,072 tonnes of concentrate ore with an average V2O5 grade3 of 3.36% compared to 86,673 tonnes produced in Q1 2019 with a grade of 3.32%.
Global V2O5 recovery rates2 averaged 79.9% in Q1 2020 which compares to 80.0% in Q1 2019. Global recoveries2 in Q1 2020 increased 3% over Q4 2019 (77.3%) following improved recoveries in the crushing, milling, leaching and chemical plant areas but were partially offset by lower recoveries in the kiln.
Paulo Misk , President and Chief Executive Officer for Largo, stated: “Production was impacted during the quarter as a result of kiln shutdowns caused by the formation of hot spots in the kiln refractory. We expect to complete the previously planned kiln upgrades and cooler improvements in the second half of 2020 but will continue to evaluate this timing as the evolving COVID-19 pandemic progresses. In the meantime, our operations team is working diligently to mitigate any potential future impacts to production.”
He continued: “We understand that these are uncertain times and we continue to do our part to help stop the spread of COVID-19. The Company has purchased approximately 6,000 COVID-19 test kits to donate to local communities and hospitals and has donated four ventilators in addition to PPE materials such as protective coveralls, safety boots, masks and safety glasses. Largo has also donated 4,500 food baskets to families in the State of Bahia to further help with impacts caused by the COVID-19 pandemic. Largo continues to take all necessary measures provided by health authorities to ensure the health and safety of its people and communities.”
He concluded: “To date, there has been no interruptions to our operations or with the shipment of material from the mine. We continue to maintain our production, sales and cost guidance for 2020 and the Company expects to be well positioned following the expiration of its offtake agreement on April 30, 2020 . The Company’s expected forecast cash at April 30, 2020 is approximately US$123.0 million with an estimated revenue adjustment payable4 due to Glencore of US$64.0 million for a net of US$59.0 million ,5. Vanadium prices in Europe bottomed in November 2019 to US$4.73 /lb V2O5 and increased consistently by approximately 40% to US$6.75 /lb V2O5 as of the end of February 2020 . As a result of the increased uncertainties and potential disruptions mainly linked to the evolving challenges of the COVID-19 pandemic, prices softened by approximately 15% to US$5.50 /lb V2O5 as of March 20, 2020 . Vanadium prices have since increased approximately 4% to US$5.73 /lb V2O5 as of April 10, 2020 largely due to a fear of supply constraints as a result of the government enforced lockdown of South Africa (approximately 8% of global vanadium supply) due to the COVID-19 pandemic. The overall global vanadium supply and demand impacts remain unknown at this time, but we continue to monitor the situation diligently and will provide updates as developments occur.”
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