Largo Reports Fourth Quarter and Full Year 2023 Financial Results; Continued Focus on Operational Improvements and Cost Reduction to Offset Depressed Vanadium Prices
Largo Reports Fourth Quarter and Full Year
2023 Financial Results; Continued Focus on
Operational Improvements and Cost
Reduction to Offset Depressed Vanadium
Prices
All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated.
Q4, Full Year 2023 and Other Highlights
• Revenues of $44.2 million in Q4 2023, 7% below Q4 2022; Revenues per pound sold1
of $7.69 in Q4 2023 vs. $7.77 in Q4 2022
• Operating costs of $43.2 million in Q4 2023 vs. $44.5 million in Q4 2022; Cash
operating costs excluding royalties per pound1 V2O5 equivalent sold of $5.44 in Q4
2023 vs. $5.15 in Q4 2022
• Net loss of $13.3 million in Q4 2023, which included $6.6 million in non-recurring
items vs. net loss of $15.6 million in Q4 2022, which included $6.3 million in non-
recurring items; Basic loss per share of $0.21 in Q4 2023 vs. basic loss per share of
$0.24 in Q4 2022
• Adjusted EBITDA2 of $1.4 million in Q4 2023 increased by 138% from that seen in
Q4 2022
• Revenues of $198.7 million in 2023, 13% below 2022; Revenues per pound sold1 of
$8.66 in 2023 vs. $9.38 in 2022
• Operating costs of $174.8 million in 2023 vs. $169.7 million in 2022, and cash
operating costs excluding royalties per pound1 V2O5 equivalent sold of $5.30 in 2023
vs. $4.57 in 2022; Within revised annual cash operating costs excluding royalties1
per pound guidance for 2023
• Net loss of $32.4 million in 2023, which included $10.3 million in non-recurring
items vs. net loss of $2.2 million in 2022, which included $13.8 million in non-
recurring items; Basic loss per share of $0.51 in 2023 vs. basic loss per share of $0.03
in 2022
• Adjusted EBITDA2 of $12.1 million in 2023 vs. $41.6 million in 2022
• Cash balance of $42.7 million, net working capital3 surplus of $94.7 million and debt
of $75.0 million exiting 2023
• V2O5 production of 2,768 tonnes in Q4 2023, a 38% increase over the 2,004 tonnes
produced in Q4 2022; Annual V2O5 production of 9,681 tonnes in 2023 vs. 10,436
tonnes in 2022 and within the Company’s revised 2023 production guidance range
of 9,000 – 11,000 tonnes
• Quarterly sales of 2,605 tonnes of V2O5 equivalent (inclusive of 139 tonnes of
purchased material) in Q4 2023 vs. 2,774 tonnes in Q4 2022; Annual V2O5
equivalent sales of 10,396 (inclusive of 929 tonnes of purchased material) tonnes in
2023 vs. 11,091 tonnes in 2022 and within the Company’s revised 2023 sales
guidance of 8,700 – 10,700 tonnes
• In Q4 2023, Largo Clean Energy’s (“LCE”) 6 megawatt-hour vanadium flow
battery deployment for Enel Green Power España (“EGPE”) was validated to
operate on test conditions according to EGPE specifications and LCE test
procedures
• On March 18, 2024, the Company announced the signing of a non-binding letter of
intent with Stryten Energy LLC (“Stryten”) to establish a 50:50 joint venture that
would combine the Company’s wholly owned subsidiary, LCE with Stryten’s
vanadium redox flow battery (“VRFB”) business
• The Company produced 8,970 tonnes of ilmenite concentrate in Q4 2023; In
January and February 2024, the Company produced 5,100 tonnes and 2,000 tonnes
of ilmenite concentrate, respectively
• Q4 and FY 2023 results conference call: Friday, March 22 at 1:00 p.m. ET
Vanadium Market Update4
• The average benchmark price per pound of V2O5 in Europe was $6.46 in Q4 2023, a
22% decrease from the average of $8.25 seen in Q4 2022; The average benchmark
price per pound of V2O5 in Europe was $6.53 as at December 31, 2023, a 31%
decrease from the average of $9.44 seen as at December 31, 2022
• Vanadium spot demand was soft in Q4 2023, primarily due to adverse conditions in
the Chinese and European steel industries, however, strong demand from the
aerospace sector continued
• The average benchmark price per pound of V2O5 in Europe as of March 15, 2024
was $6.05
TORONTO--(BUSINESS WIRE)--March 21, 2024--Largo Inc. ("Largo" or the "Company")
(TSX: LGO) (NASDAQ: LGO) today released financial and operating results for the three and
twelve months ended December 31, 2023. The Company reported annual vanadium pentoxide
(“V2O5”) equivalent sales of 10,396 tonnes at a cash operating cost excluding royalties per
pound1 sold of $5.30.
Daniel Tellechea, Interim CEO and Director of Largo, stated: “The Company's financial results
continued to be adversely affected by lower vanadium prices as highlighted by a sharp decline in
the European V2O5 price of 22% in Q4 2023 compared to Q4 2022. We remain committed to
achieving greater levels of operational efficiency at the Maracás Menchen Mine in order to meet
production and sales targets improve cash flow going forward.”
He continued: “A number of notable achievements were made by the Company during 2023,
including the successful construction and commissioning of a new ilmenite concentration plant.
We continue with the ramp-up of production at this facility, further diversifying our revenue
stream from our existing vanadium operations. Largo's exploration efforts surrounding the
Maracás Menchen Mine have become an increasingly important part of our story over the last
few quarters, and we continue to advance our efforts in this area. Following our recent
announcement on our review and evaluation of strategic alternatives to unlock and fully
maximize the value of LCE, we look forward to continuing discussions with Stryten over the
coming weeks.”
He concluded: “While vanadium appears to have very promising long-term fundamentals, the
Company remains solely focused on reducing costs and meeting its production and sales targets
to withstand the current period of low vanadium prices.”
Financial and Operating Results – Highlights
(thousands of U.S. dollars, except as otherwise stated)
Three months ended Year ended
Dec. 31,
2023
Dec. 31,
2022
Dec. 31,
2023
Dec. 31,
2022
Revenues 44,170 47,501 198,684 229,251
Operating costs (43,218) (44,455) (174,758) (169,719)
Net income (loss) (13,301) (15,636) (32,358) (2,226)
Basic earnings (loss) per share (0.21) (0.24) (0.51) (0.03)
Adjusted EBITDA2 1,385 (3,680) 12,127 41,583
Cash (used) provided before working capital items (2,364) (14,055) 5,267 21,424
Cash operating costs excl. royalties5 ($/lb) 5.44 5.15 5.30 4.57
Cash 42,714 54,471 42,714 54,471
Debt 75,000 40,000 75,000 40,000
Total mined – dry basis (tonnes) 3,490,711 2,737,149 14,864,394 10,517,210
Total ore mined (tonnes) 473,958 326,552 1,752,982 1,359,927
Effective grade6 of ore milled (%) 1.03 1.06 1.04 1.26
V2O5 equivalent produced (tonnes) 2,768 2,004 9,681 10,436
Q4 & Full Year 2023 Notes and Other Highlights
• The Company recorded a net loss of $32.4 million in 2023 compared with a net loss of
$2.2 million in 2022, largely driven by a 13% decrease in revenues and an increase in
certain expenses, most notably a 3% increase in operating costs, a 506% increase in
finance costs, a 195% increase in exploration and evaluation costs and a write down of
vanadium assets of $4.9 million.
• In 2023, the Company saw increased direct mine and production costs, primarily due to
an increase in total ore mined in 2023, the cost impacts of low ore availability
experienced earlier in the year and plant shutdowns for corrective maintenance during
2023. The Company’s direct mine and production costs decreased in Q4 2023 as
compared with Q4 2022, reflecting the impact of the cost saving and operational
improvement initiatives implemented at the mine, as well as the softening of prices for
critical consumables.
• The Company continues to actively work towards achieve higher levels of operational
efficiency to better manage its costs as it navigates lower grades of ore mined as
compared with prior years. In Q4 2023, V2O5 equivalent production was 28% higher than
the 2,163 tonnes produced in Q3 2023 and 38% higher than the 2,004 tonnes produced in
Q4 2022. The global recovery7 achieved in Q4 2023 was 79.4%, an increase of 6.3%
from the 74.7% achieved in Q4 2022 and 3.3% higher than the 76.9% achieved in Q3
2023. The total ore mined in Q4 2023 was 473,958 tonnes, an increase of 45% in
comparison with Q4 2022. 1,752,982 tonnes of ore were mined in 2023, an increase of
29% as compared with 2022. Actions were taken to increase crushing availability and
normal production levels were recovered in Q4 2023. Total ore crushed in Q4 2023 was
8% higher than in Q3 2023 and 35% higher than in Q4 2022. For 2023, total ore crushed
was 9% higher than in 2022.
• For 2023, total professional, consulting and management fees decreased by 9% from
2022 and other general and administrative expenses decreased by 18% from 2022, both
as a result of reduced activity and headcount at LCE as a result of the initiation of the
strategic review. Additionally, technology start-up costs decreased by 52% in 2023
compared with 2022 primarily due to a write down of battery components inventory in
Q4 2022 of $6.4 million and a decrease in activities at LCE in Q4 2023 as the installation
of its battery project nears conclusion.
• In 2021, the Company signed a 10-year exclusive off-take agreement with Gladieux
Metals Recycling (“GMR”) for the purchase of all standard and high purity grade
vanadium products GMR produces. The Company is committed to the purchase of a
minimum of 360 tonnes of V2O5 in 2024 and its onward distribution to customers.
• Subsequent to Q4 2023, production in January 2024 was 582 tonnes of V2O5 equivalent
with 276 tonnes of V2O5 equivalent produced in February 2024. Lower production
achieve in the first two months of Q1 2024 is attributable to the Company’s previously
announced kiln refractory maintenance. Subsequent to Q4 2023, sales in January 2024
were 1,072 tonnes of V2O5 equivalent, with 1,065 sold in February 2024.
The information provided within this release should be read in conjunction with Largo's annual
consolidated financial statements for the years ended December 31, 2023 and 2022 and its
management's discussion and analysis for the year ended December 31, 2023 which are available
on our website at www.largoinc.com or on the Company’s respective profiles at
www.sedarplus.com and www.sec.gov.
About Largo
Largo is a globally recognized vanadium company known for its high-quality VPURE™ and
VPURE+™ products, sourced from its Maracás Menchen Mine in Brazil. The Company is
currently focused on the ramp-up its 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; 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 "two-pillar" business strategy will be
successful; 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.
Non-GAAP8 Measures
The Company uses certain non-GAAP measures in this press release, which are described in the
following section. Non-GAAP financial measures and non-GAAP ratios are not standardized
financial measures under IFRS, the Company's GAAP, and might not be comparable to similar
financial measures disclosed by other issuers. These measures are intended to provide additional
information and should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Management believes that non-GAAP financial
measures, when supplementing measures determined in accordance with IFRS, provide investors
with an improved ability to evaluate the underlying performance of the Company.
Revenues Per Pound Sold
This press release refers to revenues per pound sold, a non-GAAP performance measure that is
used to provide investors with information about a key measure used by management to monitor
the performance of the Company.
This measure, along with cash operating costs and total cash costs, is considered to be one of the
key indicators of the Company’s ability to generate operating earnings and cash flow from its
Maracás Menchen Mine and sales activities. This revenues per pound sold measure does not
have any standardized meaning prescribed by IFRS and differs from measures determined in
accordance with IFRS. This measure is intended to provide additional information and should
not be considered in isolation or as a substitute for measures of performance prepared in
accordance with IFRS. This measure is not necessarily indicative of net earnings or cash flow
from operating activities as determined under IFRS.
The following table provides a reconciliation of this measure per pound sold to revenues as per
the Q4 2023 and annual unaudited condensed interim consolidated financial statements.
Three months ended Year ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Revenues - V2O5 produced1 $ 25,182 $ 24,908 $ 115,534 $ 123,529
V2O5 sold - produced (000s lb) 3,215 3,483 13,113 14,307
V2O5 revenues per pound of V2O5 sold -
produced ($/lb) $ 7.83
$ 7.15
$ 8.81
$ 8.63
Revenues - V2O5 purchased1 $ 1,497 $ — $ 9,028 $ 3,184
V2O5 sold - purchased (000s lb) 265 — 1,279 265
V2O5 revenues per pound of V2O5 sold -
purchased ($/lb) $ 5.65
$ —
$ 7.06
$ 12.02
Revenues - V2O51 $ 26,679 $ 24,908 $ 124,562 $ 126,713
V2O5 sold (000s lb) 3,480 3,483 14,392 14,571
V2O5 revenues per pound of V2O5 sold ($/lb) $ 7.67 $ 7.15 $ 8.65 $ 8.70
Revenues - V2O3 produced1 $ 6,213 $ 4,736 $ 13,788 $ 8,534
V2O3 sold - produced (000s lb) 596 426 1,215 734
V2O3 revenues per pound of V2O3 sold -
produced ($/lb) $ 10.42
$ 11.12
$ 11.35
$ 11.63
Revenues - V2O3 purchased1 $ — $ 480 $ 1,155 $ 962
V2O3 sold - purchased (000s lb) — 42 88 85
V2O3 revenues per pound of V2O3 sold -
purchased ($/lb) $ —
$ 11.43
$ 13.13
$ 11.32
Revenues - V2O31 $ 6,213 $ 5,216 $ 14,943 $ 9,496
V2O3 sold (000s lb) 596 468 1,303 819
V2O3 revenues per pound of V2O3 sold ($/lb) $ 10.42 $ 11.15 $ 11.47 $ 11.59
Revenues - FeV produced1 $ 11,278 $ 15,664 $ 57,686 $ 71,025
FeV sold - produced (000s kg) 479 559 2,070 2,135
FeV revenues per kg of FeV sold - produced
($/kg) $ 23.54
$ 28.02
$ 27.87
$ 33.27
Revenues - FeV purchased1 $ — $ 1,713 $ 1,386 $ 22,017
FeV sold - purchased (000s kg) — 64 50 603
FeV revenues per kg of FeV sold - purchased
($/kg) $ —
$ 26.77
$ 27.72
$ 36.51
Revenues - FeV1 $ 11,278 $ 17,377 $ 59,072 $ 93,042
FeV sold (000s kg) 479 623 2,120 2,738
FeV revenues per kg of FeV sold ($/kg) $ 23.54 $ 27.89 $ 27.86 $ 33.98
Revenues1 $ 44,170 $ 47,501 $ 198,577 $ 229,251
V2O5 equivalent sold (000s lb) 5,743 6,116 22,920 24,451
Revenues per pound sold ($/lb) $ 7.69 $ 7.77 $ 8.66 $ 9.38
1. As per note 4 of the Company’s 2023 annual consolidated financial statements.
Three months ended calculated as the amount per note 22 less the corresponding amount disclosed for the
nine-month period in note 18 of the Company’s unaudited condensed interim consolidated financial
statements for the three and nine months ended September 30, 2023 and 2022.
Cash Operating Costs Excluding Royalties Per Pound
The Company’s press release refers to cash operating costs excluding royalties per pound, which
are non-GAAP ratios based on cash operating costs and cash operating costs excluding
royalties, which are non-GAAP financial measures, in order to provide investors with
information about a key measure used by management to monitor performance. This information
is used to assess how well the Maracás Menchen Mine is performing compared to plan and prior
periods, and also to assess its overall effectiveness and efficiency.
Cash operating costs includes mine site operating costs such as mining costs, plant and
maintenance costs, sustainability costs, mine and plant administration costs, royalties and sales,
general and administrative costs (all for the Mine properties segment), but excludes depreciation
and amortization, share-based payments, foreign exchange gains or losses, commissions,
reclamation, capital expenditures and exploration and evaluation costs. Operating costs not
attributable to the Mine properties segment are also excluded, including conversion costs,
product acquisition costs, distribution costs and inventory write-downs.
Cash operating costs excluding royalties is calculated as cash operating costs less royalties.
Cash operating costs per pound and cash operating costs excluding royalties per pound are
obtained by dividing cash operating costs and cash operating costs excluding royalties,
respectively, by the pounds of vanadium equivalent sold that were produced by the Maracás
Menchen Mine. Cash operating costs, cash operating costs excluding royalties, cash operating
costs per pound and cash operating costs excluding royalties per pound, along with revenues,
are considered to be key indicators of the Company’s ability to generate operating earnings and
cash flow from its Maracás Menchen Mine. These measures differ from measures determined in
accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from
operating activities as determined under IFRS.
The following table provides a reconciliation of cash operating costs and cash operating costs
excluding royalties, cash operating costs per pound and cash operating costs excluding royalties
per pound for the Maracás Menchen Mine to operating costs as per the 2023 annual
consolidated financial statements.
Three months ended Year ended
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
Operating costsi $ 43,218 $ 44,455 $ 174,758 $ 169,719
Professional, consulting and management
feesii 887 1,185 3,102 4,969
Other general and administrative expensesiii 718 530 1,750 1,390
Add: insurance proceedsi — 683 — 683
Less: iron ore costsi (84 ) (22 ) (722 ) (659 )
Less: conversion costsi (1,768 ) (2,231 ) (7,319 ) (8,070 )
Less: product acquisition costsi (1,974 ) (3,775 ) (15,354 ) (24,426 )
Less: distribution costsi (2,366 ) (2,282 ) (8,540 ) (9,169 )
Less: inventory write-downiv (192 ) (332 ) (1,853 ) (1,987 )
Less: depreciation and amortization
expensei (6,592 ) (5,959 ) (26,048 ) (20,882 )
Cash operating costs 31,847 32,252 119,774 111,568
Less: royalties1 (2,243 ) (2,106 ) (9,162 ) (10,371 )
Cash operating costs excluding royalties 29,604 30,146 110,612 101,197
Produced V2O5 sold (000s lb) 5,437 5,855 20,871 22,121
Cash operating costs per pound ($/lb) $ 5.86 $ 5.51 $ 5.74 $ 5.04
Cash operating costs excluding royalties per
pound ($/lb) $ 5.44 $ 5.15 $ 5.30 $ 4.57