Largo Resources has had an amazing run over the past 12 months but there should be more upside to come, according to RBC Capital Markets analyst Andrew D. Wong, who recently raised his target price on the company. Wong said Largo’s new clean energy business shows promise and adds value to the company.
Largo Resources, a mining and exploration company, launched its Largo Clean Energy (LCE) initiative in December 2020 where the company aims to be a player in the large battery and electricity storage business. Largo is one of a small handful of companies globally to focus on mining vanadium, a metal commonly used in energy storage but one that has the unique property of allowing an energy storage system to last forever without degradation, as its rechargeable electrolyte never wears out.
Largo hosted its Battery Day in early June to tout what it calls its sizeable growth opportunity in long-duration batteries, with president and CEO Paulo Misk calling Largo’s LCE business model “truly disruptive” to the long-duration battery sector.
“Through our unique vertical vanadium integration, Largo has a powerful opportunity to provide potential customers with a competitive and commercial solution to the growing need for long-duration energy storage with its vanadium redox flow battery system,” Misk said in a June 9 press release.
Largo’s share price has been up and down in recent years, mainly due to volatility in the price of vanadium, but the stock really started to pick up the pace since this past November, going from C$9 per share to as high as C$22 by early May. LGO has pulled back a bit in the weeks since, but Wong sees a boost in share price coming from Largo’s new battery segment.
“We believe that Largo’s transition to a vertically integrated VRFB business creates significant additional value over and above the traditional mining business. We think the new Largo Clean Energy business should attract a higher valuation if executed properly,” Wong
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