Largo Resources Announces Record Operational Performance in Q3 2020 with V2O5 Production of 3,092 Tonnes and Lowers 2020 Cost Guidance
PRESS RELEASE October 19, 2020
Largo Resources Announces Record Operational Performance in Q3 2020 with
V2O5 Production of 3,092 Tonnes and Lowers 2020 Cost Guidance
• Record V2O5 production of 3,092 tonnes (6.8 million lbs1) in Q3 2020, a 5.0% increase
over Q3 2019
• Total sales exceeded production levels in August and September 2020 for the first time
since commercial independence, h
strategy
• Record global V2O5 recovery rate2 of 84.2% in Q3 2020, an increase of 8.0% over Q3 2019
• 2020 cash cost guidance reduced: Cash operating cost excluding royalties3 guidance
lowered to US$2.60
$2.80 / lb V2O5; Total cash cost3 guidance lowered to US$3.20 to
$3.40 / lb V2O5
• Postponing cost-efficient nameplate capacity increase to Q1 2021: Planned kiln
with a CAPEX of only US$1.3 million are postponed to Q1 2021 due to COVID-19
restrictions
• Focus on safe business continuity: On track to meet lower end of 2020 production
guidance with strong production results expected in Q4 2020; 2020 sales guidance
maintained
• Strong vanadium demand in Q3 2020 in China from increased infrastructure spending on
the back of recently announced stimulus packages as well as development of green
technology applications to meet carbon footprint reduction targets
TORONTO
Largo Resources Ltd. ("Largo" or the "Company") (TSX: LGO) (OTCQX: LGORF) is pleased to report
third quarter 2020 production and global sales results from its Maracás Menchen Mine highlighted by a new
quarterly production record of 3,092 tonnes (6.8 million lbs1)
V2O5
and a new record
global recovery rate2 of 84.2%.
Paulo Misk, President and Chief Executive Officer for Largo, stated: "The health and safety of our workforce
continues to remain a top priority for Largo and o ur focus on preventative measures early on has enabled the
Company to continue operations in a safe manner since March 2020. In Q3 2020, operations performed exceptionally
well with the Company achieving a new quarterly V2O5 production record of 3,092 tonnes and a new quarterly global
recovery2 rate record of 84.2%. The Company has also reduced its cash operating cost excluding royalties3 and total
cash cost3 guidance for 2020 to US$2.60 - $2.80 and US$3.20 - $3.40 / lb V 2O5, respectively. This reflects our positive
year-to-date performance and
expectations for the balance of the year. Additionally, the Company is
on track to meet the lower end of its 2020 production guidance of 11,750
12,250 tonnes of V2O5 and we look forward
to ending the year on a nother high note. I am very proud of the entire operations team as they conti nue to
demonstrate their ability to effectively meet and exceed operational targets, especially
He continued:
I am also very happy with our sales and trading performance in Q3 2020 with V2O5 equivalent sales of
1,062 tonnes in August 2020 and 1,060 tonnes in September 2020 . From May to July 2020, we successfully built the
necessary inventories to fill our sales pipeline and meet customer commitments as planned. Creating value through
the control of our product from mine to end-user is a key priority for Largo and we are confident in delivering on our
2020 sales guidance of 9,500 to 10,000 tonnes of V 2O5.
He concluded:
As a result of our commercial independenc e
and sales flexibility, Largo has increased its sales in China to take advantage of higher prices and greater overall
demand in Q3 2020. China continues to be the driver of global vanadium demand from increased infrastructure
spending and the development of green technology applications . We expect additional global vanadium demand
growth as a result of recently announced stimulus packages and a focus on carbon footprint reductio n. These
significant, long-term trends are forecast to increase the consumption of vanadium in rebar, high-quality steel
applications and through new vanadium redox flow battery deployments around the world
A summary of Q3 2020 production results from the Maracás Menchen Mine is presented below:
Maracás Menchen Mine Production Q3 2020 Q2 2020 Q1 2020 Q3 2019
Total Ore Mined (tonnes) 287,969 257,357 203,966 267,257
Ore Grade Mined - Effective Grade (%)4 1.28 1.20 1.61 1.52
Effective Grade of Ore Milled (%)4 1.26 1.29 1.59 1.44
Concentrate Produced (tonnes) 104,921 99,059 100,072 92,629
Grade of Concentrate (%) 3.32 3.20 3.36 3.26
Contained V2O5 (tonnes) 3,487 3,174 3,365 3,016
Crushing Recovery (%) 98.1 97.7 98.3 96.5
Milling Recovery (%) 96.5 94.7 98.4 97.0
Kiln Recovery (%) 92.5 91.7 88.3 88.8
Leaching Recovery (%) 99.7 99.1 96.6 97.2
Chemical Plant Recovery (%) 96.4 96.1 96.8 96.7
Global Recovery (%)2 84.2 80.8 79.9 78.1
V2O5 produced (Flake + Powder) (tonnes) 3,092 2,562 2,831 2,952
V2O5 produced (equivalent pounds)1 6,816,685 5,648,236 6,241,279 6,508,038
Q3 2020 Production Results
Total production from the Maracás Menchen Mine was 3,092 tonnes of V2O5, representing an increase of 5.0% over
Q3 2019 and a new quarterly production record for the Company. Production in Q3 2020 was 3% above current
nameplate production capacity and is largely attributable to greater operational stability and higher global
recoveries achieved during the quarter. Production was 1,055 tonnes of V2O5 in July 2020, 1,100 tonnes in August
2020 and 937 tonnes in September 2020.
In Q3 2020, 287,969 tonnes of ore with an effective V2O5 grade4 of 1.28% were mined compared to 267,257 tonnes
in Q3 2019 with an effective V2O5 grade4 of 1.52%. The Company also produced 104,921 tonnes of concentrate ore
with an average V2O5 grade of 3.32% in Q3 2020 compared to 92,629 tonnes in Q3 2019 with an average V2O5 grade
of 3.26%.
The Company achieved a new record global V2O5 recovery rate2 of 84.2% in Q3 2020 representing an 8.0% increase
over Q3 2019 (78.1%). This is primarily attributable to continuous improvement projects performed on the plant
during the quarter with a focus on greater overall recoveries.
2020 Cash Cost Guidance Update
2020 Guidance Revised 2020 Guidance
Cash operating costs excluding royalties 3 US$/lb 3.05
3.25 2.60
2.80
Total cash costs3 US$/lb 3.45
3.65 3.20
3.40
Cost-efficient Nameplate Capacity Increase of 10% Postponed to Q1 2021
As a result of ongoing precautions related to the COVID -19 pandemic which limit the number of contractors
permitted on site , t he Company has postponed its kiln upgrades and cooler maintenance to Q1 202 1. The
planned nameplate capacity increase is expected to increase monthly production from 1,000 tonnes
of V2O5 per month to 1,100 tonnes for a CAPEX of US$1.3 million. Largo does not expect this to affect production
levels in Q1 2021.
About Largo Resources
Largo Resources is an industry preferred producer and supplier of vanadium for the global steel and high purity
markets
-grade vanadium
deposits at the Maracás Menchen Mine located in Brazil. The Company's common shares are principally listed on
the Toronto Stock Exchange under the symbol "LGO"
www.largoresources.com and www.largoVPURE.com.
For further information, please contact:
Alex Guthrie
Manager, Investor Relations and Communications
Tel: +1 416‐861‐9797
Neither the Toronto Stock Exchange (nor its regulatory service provider) accepts responsibility for the adequacy or accuracy
of this press release.
Forward-looking Information:
This press release contains forward -looking information under Canadian securities legislation, some of which may
be considered "financial outlook" for the purposes of application Canadian securities legislation ("forward -looking
statements"). Forward ‐looking information in this press release includes, but is not limited to, statements with
respect to the timing and amount of estimated future production and sales; costs of future activities and operations;
the extent of capital and operating expenditures; and the extent and overall impact of the COVID -19 pandemic in
Brazil and globally. 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 the Largo 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 SEDAR 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 pla ce 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 annual and interim MD&As which also apply.
1 Conversion of tonnes to pounds, 1 tonne = 2,204.62 pounds or lbs.
2 Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching recovery and chemical plant recovery.
3 The cash operating costs per pound sold, cash operating costs excluding royalties per pound sold and total cash costs reported are on a non-GAAP basis. Refer
-
on and Analysis for the three and six months ended June 30, 2020.
4 Effective grade represents the percentage of magnetic material mined multiplied by the percentage of V2O5 in the magnetic concentrate.