Largo Announces Cost Reduction and Productivity Improvements at its Maracás Menchen Mine; Reports Q1 2024 Production and Sales Results
Largo Announces Cost Reduction and
Productivity Improvements at its Maracás
Menchen Mine; Reports Q1 2024 Production
and Sales Results
All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated.
Q1 2024 Highlights
• V2O5 production of 1,729 tonnes (3.8 million lbs1) in Q1 2024 vs. 2,111 tonnes
produced in Q1 2023; Within the lower range of Company’s quarterly production
guidance of 1,700-2,200 tonnes for Q1 2024
• Lower Q1 2024 production was expected and is largely attributable to the
completion of the Company’s planned kiln refractory replacement; Annual
maintenance actions were performed concurrently in the crushing, milling, ilmenite,
leaching and chemical sections of the plant; The Company maintains its annual
production guidance for 2024
• V2O5 equivalent sales of 2,765 tonnes (inclusive of 156 tonnes of purchased material)
in Q1 2024 vs. 2,849 equivalent tonnes sold (inclusive of 245 tonnes of purchased
material) in Q1 2023; Within the upper range of the Company’s quarterly guidance
of 2,300-2,800 tonnes
• The Company produced 9,563 tonnes and sold 513 tonnes of ilmenite concentrate in
Q1 2024, respectively; Ilmenite sales were below Q1 2024 guidance due to
operational and administrative delays; The Company expects sales to increase in the
coming months and maintains its production and sales guidance for 2024
• The Company maintains its annual cost guidance for 2024; As a result of new cost
reduction and productivity measures, the Company has lowered its cost guidance
for H2 2024, however, it is expected that these cost savings will be offset by higher
costs in H1 2024 as a result of the extended kiln maintenance period in Q1 2024
• Negotiations regarding the Company’s previously announced signing of a non-
binding letter of intent by Largo Clean Energy Corp. with Stryten Energy LLC to
establish a 50:50 joint venture in the United States are ongoing
TORONTO--(BUSINESS WIRE)--April 30, 2024--Largo Inc. ("Largo" or the "Company")
(TSX: LGO) (NASDAQ: LGO) today announces the implementation of extensive changes to
reduce production costs and improve productivity at its Maracás Menchen Mine through several
initiatives, including the reduction of haulage distances, costs of inputs as well as comprehensive
review of all contracts. The Company will reduce the number of contractors by 20% in Q2 2024
and prioritize its capital expenditures for low-cost, high-return projects in order to optimize the
use of cash. The Company also announces quarterly production of 1,729 tonnes of vanadium
pentoxide (“V2O5”) equivalent and sales of 2,765 tonnes V2O5 equivalent in Q1 2024.
As part of the plan to increase productivity, the Company plans to increase its annual crushing
capacity by approximately 220,000 tonnes or 22% by the end of Q2 2024 following the
installation of a mobile crusher, dry magnetic and wet magnetic separator from inventory, which
is expected to compensate for lower grades and higher silica levels resulting from increased
processing of disseminated vanadium ore. These actions are expected to maintain the Company’s
production capacity by providing the required throughput and grades needed to achieve its set
production targets in accordance with its 2024 mining plan.
Also, starting in Q2 2024, the Company plans to feed its ilmenite plant with ilmenite feedstock
from its non-magnetic ponds from ores processed in prior years. This action is expected to
increase ilmenite production in 2024 as well as improve titanium dioxide (“TiO2”) grades as
non-magnetic material stored in the Company’s ponds contain higher TiO2 grades than feedstock
from current mine operations.
For the remainder of 2024, the Company expects a reduction of approximately BRL$48 million
in operating expenditures and approximately BRL$12 million in ilmenite capital expenditures.
Celio Pereira, COO of Largo, Brazil, stated: "Maximizing operational output and reducing costs
remain top priorities at Largo. We have identified several avenues for cost reduction at the
Maracás Menchen Mine and we expect to realize the benefits of these initiatives in the second
half of the year. When combined with our productivity improvement initiatives this year, these
measures are expected to assist the Company in achieving its revised 2024 cost guidance and
offset some of the impact of lower vanadium prices." He continued: “In Q1 2024, the operations
team conducted the planned annual maintenance at the mine, which included the replacement of
the kiln refractory as well annual maintenance actions performed in the crushing, milling,
ilmenite, leaching and chemical sections of the plant. Following this maintenance, we also
expect to remain within our annual production guidance of 9,000 to 11,000 tonnes of V2O5 for
2024.”
Maracás Menchen Mine Operational and Sales Results
Q1 2024 Q1 2023
Total Mined – Dry Basis (tonnes) 3,243,492 3,523,656
Total Ore Mined (tonnes) 604,231 341,967
Ore Grade Mined - Effective Grade (%)2 0.53 0.81
Concentrate Produced (tonnes) 74,986 78,695
Grade of Concentrate (%) 2.90 2.99
Global Recovery (%)3 70.5 83.0
V2O5 produced (Flake + Powder) (tonnes) 1,729 2,111
V2O5 produced (equivalent pounds) 2 3,811,788 4,653,953
Total V2O5 equivalent sold (tonnes) 2,765 2,849
Produced V2O5 equivalent sold (tonnes) 2,609 2,604
Purchased V2O5 equivalent sold (tonnes) 156 245
Ilmenite concentrate produced (tonnes) 9,563 Nil
Ilmenite concentrate sold (tonnes) 513 Nil
Q1 2024 Production and Sales Overview
• Lower Expected Production in Q1 2024 Due to Kiln Refractory Maintenance: V2O5
production in January was 582 tonnes, with 276 tonnes produced in February and 871
tonnes produced in March, for a total of 1,729 tonnes produced in Q1 2024. Production in
Q1 2024 was largely impacted by the replacement of the kiln refractory and associated
restart of operations following the performed maintenance during the quarter. During this
shutdown, the Company completed its yearly maintenance activities in the crushing,
milling, ilmenite, leaching and chemical sections of the plant. In Q1 2024, global
recoveries3 averaged 70.5%, being 15% lower than the 83.0% averaged in Q1 2023 and
11% lower than the 79.4% achieved in Q4 2023. Lower global recoveries3 achieved
during Q1 2024 is largely attributable to the kiln refractory maintenance performed
during the quarter. As part of its ongoing efforts to offset lower grades of ore mined in
Q1 2024, the Company continued to increase mining throughput during the quarter to
604,231 tonnes with an effective V2O5 grade2 of 0.53%, compared to 341,967 tonnes
with an effective V2O5 grade2 of 0.81% in Q1 2023. Total crushed ore also increased by
50% over Q1 2023 (344,265 tonnes) to 516,547 tonnes in Q1 2024 and 11% over the
465,619 tonnes crushed in Q4 2023.
• Sales Results in Q1 2024 In Line with Quarterly Guidance – Steel Sector Demand
Remains Soft: V2O5 equivalent sales of 2,765 tonnes (inclusive of 156 tonnes of
purchased material) was within the upper end of the Company’s quarterly guidance range
for Q1 2024 but represented a 3% decrease over the 2,849 tonnes sold in Q1 2023. Spot
demand remained soft in Q1 2024, primarily due to ongoing adverse conditions in the
Chinese and European steel sectors. The average benchmark price per pound of V2O5 in
Europe was $6.44 in Q1 2024, a 38% decrease from the average of $10.39 seen in Q1
2023. The average benchmark price per kg of ferrovanadium in Europe was $27.96 in Q1
2024, a 30% decrease from the average of $39.46 seen in Q1 2023.
Revised 2024 Cash Operating Costs Excluding Royalties1
Cash operating costs excluding royalties ($ / lb V2O5 sold)i
Previous
Q2
Previous
Q3
Previous
Q4 Unchanged 2024
Low High Low High Low High
Low
4.50
High
5.50
4.15 5.15 4.75 5.75 4.75 5.75
Revised
Q2
Revised
Q3
Revised
Q4
Low High Low High Low High
4.50 5.50 4.50 5.50 4.50 5.50
Ilmenite Concentrate Plant Capital Expenditures
Previous 2024 Revised 2024
$3.2 – 3.8
million $1.0 – 2.0 million
About Largo
Largo is a globally recognized vanadium company known for its high-quality VPURETM and
VPURE+TM products, sourced from its Maracás Menchen Mine in Brazil. The Company is
currently focused on implementing an 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.
Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange
under the symbol "LGO". For more information on the Company, please visit
www.largoinc.com.
Cautionary Statement Regarding Forward-looking Information:
This press release contains "forward-looking information" and "forward-looking statements"
(collectively, “forward looking statements”) within the meaning of applicable Canadian and
United States securities legislation. Forward‐looking statements in this press release include, but
are not limited to: the achievement of operational stability; Largo’s ability to improve cash flow
in the future; implemented cost reduction measures; expected sales; diversifying the Company's
product offering; optimizing operations, continued advancements at the Maracás Menchen
Mine; the conclusion of the installation of Largo’s battery project; and future commitments to
purchase V2O5.
The following are some of the assumptions upon which forward-looking statements are 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 Maracás Menchen
Mine or relating to LCE; the availability of financing for operations and development; the ability
to mitigate the impact of continuing heavy rainfall; the Company's ability to procure equipment
and operating supplies in sufficient quantities and on a timely basis; that the estimates of the
resources and reserves at the Maracás 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 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 LCE 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.sedarplus.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 most recent annual and interim MD&A, which also
apply. Largo's most recent annual and interim MD&A are available on Largo’s SEDAR+ profile
at www.sedarplus.com.
Trademarks are owned by Largo Inc.
1 Conversion of tonnes to pounds, 1 tonne = 2,204.62 pounds or lbs.
2 Effective grade represents the percentage of magnetic material mined multiplied by the
percentage of V2O5 in the magnetic concentrate.
3 Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching
recovery and chemical plant recovery.
Contacts
For further information:
Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778