Largo Resources Ltd. (“Largo” or the “Company”) (TSX: LGO) (NASDAQ: LGO) is very pleased to announce positive results of an updated mining plan to provide enhanced access to the vanadium needed for the Company to continue to execute on its energy storage transition strategy. An independent technical report (the “Technical Report”) is being prepared in respect of the Company’s Maracás Menchen Mine in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). See Appendix A for additional details on the Technical Report.
Largo’s Board of Directors has approved the vertical integration of the Company’s foundational mining business with its recently announced energy storage operations, with a view of becoming a global leader in the redox flow battery sector. In executing on this shareholder value creation strategy, the Company has undertaken a comprehensive optimization study for the Maracás Menchen Mine, with the objectives of improving forecast vanadium production efficacy and extending mine life. Drilling and engineering work performed on the Campbell Pit, and NAN and GAN deposits, in addition to the inclusion of titanium dioxide (“TiO2”) has resulted in a significant increase in reserves and resources. In comparison to the Company’s restated 2020 Annual Information Form, the Technical Report details a 305% tonnage increase in Proven and Probable reserves and a 128% tonnage increase in Measured and Indicated resources for the Maracás Menchen Mine supported by a robust economic assessment, which indicates a material increase in the profitability and net present value of the Company’s mining operations.
The materially enhanced Company profitability forecast by the Technical Report is driven by expanded V2O5 production and incremental cash flows generated by the production and sale of TiO2 pigment as a co-product. The Company believes the enhanced profitability of the mining operations contemplated by the Technical Report will unlock the flexibility to allocate operating costs between V2O5 and TiO2 in a manner that will drive increased market competitiveness and create additional shareholder value.
Ian Robertson, Co-Chair of Largo, stated: “The increase in V2O5 production, extension of planned mine life and opportunity to deliver significant enhanced cash flow support our ambition of becoming an industry leader in the long duration energy storage sector with our vanadium redox flow battery solution. Following Board approval of our strategic transition to become an energy storage leader and approval of Phase 1 of our operational scenario contained in the Technical Report, I look forward to working collaboratively with Paulo Misk to pursue our clear and profitable path forward for Largo, one that we believe will create significant value for our shareholders.”
Paulo Misk, President and CEO of Largo, stated: “Our updated mine plan contemplates a phased expansion approach to include the production of TiO2 pigment. When combined with the results from our existing vanadium production, significant free cash flow of more than $4.0 billion dollars over the life of mine is forecast. Part of the TiO2 feedstock will be sourced from non-magnetic concentrate and from the TiO2 content in the vanadium ore created from our ongoing operations making our TiO2 production more profitable compared to a business engaged in the full scope of TiO2 mining activities.”
Implications of the Technical Report:
Enhanced Profitability and Market Competitiveness: In addition to the significant shareholder value created through the enhanced profitability delivered from the sale of TiO2 pigment, expanded V2O5 production is expected to drive increased competitiveness of the Company’s products in the energy storage market
V2O5 production expansion: Current nameplate production capacity of 13,200 tonnes per annum expected to increase to an approximate average of 15,900 tonnes per annum in 2032
Updated Mine Life of 20 Years: Total operating mine life for the Maracás Menchen Mine of 20 years, representing an increase of 12 years in mine life compared to the parameters set forth in the Company’s 2017 technical report
Technical Report Indicates $2.8 billion Pre-Tax NPV7% / $2.0 billion After-Tax NPV7% for Largo’s Mining Operations: Using weighted average price of $8.80/lb vanadium pentoxide (“V2O5”)(inclusive of high purity V2O5 premium), $3,685.0/tonne TiO2 pigment and $210.0/tonne ilmenite. Anticipated cash flow generated from the Company’s TiO2 pigment product sales are expected to self-fund additional processing plant expansions of the Company’s TiO2 pigment chemical processing plant; in due course, the Company’s energy storage business may add significant additional value in conjunction with the Maracás Menchen Mine operations
About Largo
Largo is a Canadian-based company that has historically been solely committed to the production and supply of high-quality vanadium products. The Company believes that the development and sale of vanadium-based utility scale electrical energy storage systems to support the planet’s on-going transition to renewable energy presents both an attractive economic opportunity for the use of the Company’s vanadium products and an opportunity to enhance the Company’s sustainability. The Company is confident that using its VPURETM and VPURE+TM products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil, in its VCHARGE± vanadium redox flow battery technology results in a competitive and practical long duration energy storage product. Consequently, the Company is undergoing a strategic transformation through the creation of energy storage business operations to be vertically integrated with its highly efficient vanadium production mining operations, to create a unique competitive advantage in the rapidly growing long duration energy storage market.
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