Q2 2023 and Other Highlights
V2O5 production of 2,639 tonnes (5.8 million lbs 1 ) in Q2 2023 vs. 3,084 tonnes produced in Q2 2022 and 25% above production in Q1 2023
V2O5 production of 676 tonnes in April, 945 tonnes in May and 1,018 tonnes in June
The Company achieved normalized production levels in June after completing the following actions in Q2 2023: the completion of its infill drilling campaign for 2023 resulting in a further refinement of the Company’s short-term mining model, the completion of upgrades to its crushing process as well as an improvement in its mining performance over levels seen in Q1 2023
The Company completed all planned upgrades to its crushing process in Q2 2023, including the installation of a new dry magnetic separator and updates to its crushing circuit, which is expected to reduce operational maintenance costs and provide more flexibility in the blending of different ores to stabilize V 2 O 5 production going forward
Global V2O5 recovery rate 3 of 81.0% in Q2 2023 vs. 81.8% in Q2 2022
The Company completed construction of its ilmenite concentration plant in June and subsequently began commissioning of the facility shortly thereafter; The Company expects to complete the commissioning phase in Q3 2023 and start a gradual ramp-up of ilmenite production in Q4 2023
V2O5 equivalent sales of 2,557 tonnes in Q2 2023 vs. 3,291 tonnes sold in Q2 2022 due to lower available inventory
During Q2 2023, the average benchmark price per lb of V 2 O 5 in Europe was $8.46, a 24% decrease from the average of $11.08 seen in Q2 2022 following softer spot market demand during the quarter, primarily due to adverse conditions in the Chinese and European steel sectors
Francesco D’Alessio was appointed as President of Largo Clean Energy (“LCE”)
Cold commissioning of LCE’s Enel Green Power España (“EGPE”) vanadium redox flow battery (“VRFB”) was completed in Q2 2023; Hot commissioning and provisional acceptance by EGPE is expected in Q3 2023
2023 production, sales, cost and capital expenditures guidance remain unchanged
Largo Inc. (” Largo ” or the ” Company “) ( TSX: LGO ) ( NASDAQ: LGO ) today announces quarterly production of 2,639 tonnes (5.8 million lbs 1 ) and sales of 2,557 tonnes of vanadium pentoxide (“V 2 O 5 “) equivalent, respectively, in Q2 2023.
Daniel Tellechea, Interim CEO and Director of Largo, stated: “We are pleased to report that key operational actions taken in Q2 2023 have resulted in improved production rates exiting the quarter, particularly in June with over 1,000 tonnes of V 2 O 5 produced. He continued: “In Q2 2023, construction of the Company’s ilmenite concentration plant was completed, followed by the start of commissioning, marking a significant milestone for the Company. As we look forward to completing commissioning and ramp-up processes in the following quarters, we anticipate having sufficient stocks of produced ilmenite concentrate for sale by the start of 2024.”
Francesco D‘Alessio, President of LCE commented: “With this new role, I am fully committed to leading LCE with the immediate objective of evaluating all strategic options for this business in order to fully maximize its unique value proposition in the energy storage sector. This includes but is not limited to the potential strengthening and formalization of existing industry relationships, developing additional collaborative partnerships, evaluating alternative deployment strategies, and performing a comprehensive review of cost reduction measures. Going forward, I anticipate providing updates as this process continues to evolve.”
Maracás Menchen Mine Operational and Sales Results
| Q2 2023 | Q1 2023 | Q2 2022 | |
| Total Ore Mined (tonnes) | 489,892 | 341,967 | 378,273 |
| Ore Grade Mined – Effective Grade (%) 2 | 0.86 | 0.81 | 1.18 |
| Total Mined – Dry Basis (tonnes) | 3,671,842 | 3,523,656 | 2,503,696 |
| Concentrate Produced (tonnes) | 99,083 | 78,695 | 124,317 |
| Grade of Concentrate (%) | 3.34 | 2.99 | 3.28 |
| Global Recovery (%) 3 | 81 | 83 | 81.8 |
| V 2 O 5 produced (Flake + Powder) (tonnes) | 2,639 | 2,111 | 3,084 |
| High purity V 2 O 5 equivalent produced (%) | 35.8 | 47.8 | 18.7 |
| V 2 O 5 produced (equivalent pounds) 1 | 5,817,992 | 4,653,953 | 6,799,048 |
| Total V 2 O 5 equivalent sold (tonnes) | 2,557 | 2,849 | 3,291 |
| Produced V 2 O 5 equivalent sold (tonnes) | 2,268 | 2,604 | 2,783 |
| Purchased V 2 O 5 equivalent sold (tonnes) | 289 | 245 | 508 |
Q2 2023 Additional Highlights
Normalized Production Levels in June: V 2 O 5 production from the Maracás Menchen Mine was 676 tonnes in April, 945 tonnes in May and 1,018 tonnes in June for a total of 2,639 tonnes produced in Q2 2023. In addition to certain mining performance and crushing process improvements made during the quarter, the Company also completed its 2023 infill drilling campaign in Q2 2023, resulting in a further refinement of the Company’s short-term mining model. In Q2 2023, global recoveries 3 averaged 81.0%, largely in line with 81.8% averaged in Q2 2022. The Company mined 489,892 tonnes of ore with an effective V 2 O 5 grade 2 of 0.86% in Q2 2023 compared to 378,273 tonnes with an effective V 2 O 5 grade 2 of 1.18% in Q2 2022 and 341,967 tonnes with an effective V 2 O 5 grade 2 of 0.81% in Q1 2023, demonstrating a significant improvement in total ore mined over the prior quarter and prior comparative quarter. The increase in total ore mined as well as increased crushed and milled ore is a direct result of the Company’s strategy to successfully recover delays caused by the previously announced mine contractor transition in September 2022 and heavy rains experienced in December 2022.
Mine Site Cost Reduction Measures: The Company continues to focus on identifying and implementing various cost reduction measures at its Maracás Menchen Mine during the current period of sustained inflationary pressures. In addition to upgrading its crushing process to reduce operational maintenance costs, the Company has identified several other areas for cost reduction and is in the process of implementing the following initiatives: a reduction in sodium carbonate and other raw materials expenditures, a reduction of mining costs, with a primary focus on reducing rehandling activities and implementing an optimization of haulage distance and a reduction of equipment rental expenditures. The Company expects to begin realizing the benefits of these cost reduction measures in Q3 2023.
2023 and 2024 Infill Drilling Campaigns: The Company has completed its 2023 infill drilling campaign and has completed approximately 90% of its 2024 infill drilling campaign. Data generated from infill drilling is expected to create greater accuracy and reliability of the short-and mid-term mining plan for the Maracás Menchen Mine. Going forward, the Company plans to conduct infill drilling on a bi-annual basis to create greater certainty and efficiency in its planning process. Largo expects that a consistent infill drilling campaign should assist the Company in improving the reliability and accuracy of its production guidance on a go forward basis.
Q2 2023 Sales In Line with Quarterly Target – Focus on High Purity Vanadium Demand: In Q2 2023, V 2 O 5 equivalent sales of 2,557 tonnes (which includes 289 tonnes of purchase material sold) were in line with expectations for the quarter but represented a 22% decrease in tonnes sold over Q2 2022. In Q2 2023, the Company continued to experience strong aerospace demand for its products and focused on selling its high purity vanadium units to this market. The Company produced approximately 36% of its quarterly production as high purity in Q2 2023.
Cold Commissioning of Enel Green Power España VRFB Completed: During Q2 2023, LCE finalized the pumping of electrolyte for EGPE’s VCHARGE VRFB deployment and completed cold commissioning of the system in June. The battery system was also successfully interconnected with the grid and the system inverter was successfully utilized to form the chemistry in Q2 2023. The battery is currently performing charge-discharge cycles as part of the ongoing hot commissioning phase, which is anticipated to be completed in Q3 2023, along with provisional acceptance of the system by EGPE.
Appointment of Francesco D’Alessio as President of LCE: Mr. D’Alessio has over 15 years of experience in metals sales and trading, including overseeing sales and shipment of vanadium, as well as more recent experience in clean energy storage sales. Over the last three years, he has been actively involved in the overall sales strategy at Largo, contributing to the Company’s ongoing initiatives in the energy storage sector. Mr. D’Alessio began his tenure at Largo in 2019 as Head of Sales, Americas, and was subsequently promoted to the position of Commercial Director in 2022.
About Largo
Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURE TM 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. Aiming to enhance value creation at Largo, the Company is in the process of implementing a ilmenite concentrate plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business to support a low carbon future.
www.ferroalloynet.com
