Largo Resources Provides Operational Update; Reports Strong V2O5 Production of 3,260 Tonnes in Q3 2021
Largo Resources Provides Operational Update; Reports Strong V2O5
Production of 3,260 Tonnes in Q3 2021
All amounts expressed are in U.S. dollars, denominated by “$”.
V2O5 production of 3,260 tonnes (7.2 million pounds1) in Q3 2021, a 5% increase
over Q3 2020 and 6% above Q2 2021
Total V2O5 equivalent sales of 2,685 tonnes in Q3 2021, a 16% increase over Q3
2020 and 11% below Q2 2021 due to logistical challenges
Largo Clean Energy (“LCE”) selected to receive $4.2 million in funding from the
Department of Energy (“DOE”) to scale up U.S.-based manufacturing of flow
battery and long duration storage systems; Receipt of funding is subject to the
completion of the award negotiation with the DOE
On July 30, 2021, LCE received a notice to proceed (“NTP”) on its previously
announced sales contract with Enel Green Power España (“Enel”) for the delivery
of a 5 hour 6.1 MWh VCHARGE± system located in Spain
Revised 2021 production and sales guidance: Production guidance lowered to 11,400
to 11,800 tonnes of V2O5 equivalent from 12,000 to 12,500 tonnes; Sales guidance
lowered to 11,200 to 11,800 tonnes of V2O5 equivalent from 12,250 to 12,750 tonnes
Demand in all of the Company’s key vanadium markets remained strong in Q3
2021: Average Fastmarkets European V2O5 price of approximately $9.40 per lb in
Q3 2021, a 76% increase over the average in Q3 2020
TORONTO--(BUSINESS WIRE)--October 20, 2021--Largo Resources Ltd. ("Largo" or the
"Company") (TSX:LGO) (NASDAQ:LGO) announces quarterly production of 3,260 tonnes
(7.1 million lbs1) of vanadium pentoxide (“V2O5”) and sales of 2,685 tonnes of V2O5 equivalent
from its Maracás Menchen Mine in Q3 2021.
Paulo Misk, President and Chief Executive Officer of Largo, stated: “The Company remains well
positioned to continue making headway on the suite of value-add projects in our pipeline. This
quarter we received a NTP on our first battery sales contract with Enel and are progressing on
schedule with the build out of LCE’s product development and stack manufacturing facility in
Massachusetts with an expected annual capacity of 1.4 GWh. We look forward to a strong finish
to the year and remain fully committed to driving the world’s transition to a low-carbon future
through innovative energy storage solutions powered by our responsibly produced vanadium.”
He continued: “On the operational front, our performance improved in Q3 2021 as highlighted
by a 5% increase in production over Q3 2020 and a 6% increase over Q2 2021. The strong
production performance during the quarter was largely driven by increased throughput and
improved recoveries following the completion of the Company’s expansion project in Q2 2021.
Despite improved production results and steady vanadium demand in all regions, the Company
experienced logistical challenges which resulted in lower sales for the quarter.”
A summary of the Company’s Q3 2021 production and sales results is presented below:
Maracás Menchen Mine Production and Sales Q3 2021 Q2 2021 Q1 2021 Q3 2020
Total Ore Mined (tonnes) 366,484 340,734 263,966 287,969
Ore Grade Mined - Effective Grade (%)2 1.10 1.15 1.22 1.28
Concentrate Produced (tonnes) 113,879 98,372 100,467 104,921
Grade of Concentrate (%) 3.32 3.23 3.21 3.32
Global Recovery (%)3 83.7 79.9 77.4 84.2
V2O5 produced (Flake + Powder) (tonnes) 3,260 3,070 1,986 3,092
V2O5 produced (equivalent pounds)1 7,187,061 6,768,183 4,378,375 6,816,685
Total V2O5 equivalent sold (tonnes) 2,685 3,027 2,783
2,320Produced V2O5 equivalent sold (tonnes) 2,549 2,819 2,654
Purchased V2O5 equivalent sold (tonnes) 136 208 129
Corporate Highlights
DOE Selects LCE for Energy Storage Development Funding: On September 23,
2021, the United States DOE announced funding for research and development projects
to scale up American manufacturing of flow battery and long duration storage systems.
LCE is expected to receive $4.2 million of this funding to develop and demonstrate
highly efficient manufacturing processes for affordable, grid-scale flow batteries. The
receipt of funds is subject to the completion of the award negotiation of with the DOE
and the negotiation is scheduled to be completed within 60 days of the date of
announcement. The DOE’s funding will help provide the materials needed to expand the
grid with new, clean energy sources, deliver affordable electricity to disadvantaged
communities, and help reach the Biden Administration’s goal of net-zero carbon
emissions by 2050.
Manufacturing Strategy and VCHARGE± Certification Progressing on Schedule:
The buildout of LCE’s product development and stack manufacturing facility in
Massachusetts is proceeding on schedule with substantial completion expected in Q1
2022. The Underwriters Laboratories (“UL”) certification of the VCHARGE± system is
on schedule for completion in Q4 2021 and LCE expects to proceed and obtain
Conformité Européenne (“CE”) certification by Q2 2022. CE certification is the
European parallel to UL certification.
Strong Vanadium Production from Maracás: Production from the Maracás Menchen
Mine was 3,260 tonnes of V2O5 in Q3 2021, representing a 5% increase over Q3 2020
and the second-best quarter of production since commencement of operations. V2O5
production was 1,068 tonnes in July, with 1,101 tonnes being produced in August and
1,091 tonnes in September. Increased quarter-over-quarter production was largely due to
higher throughput and increased global recoveries3 following the completion of the
Company’s expansion project in Q2 2021. The Company achieved an excellent global
recovery3 of 83.7% in Q3 2021, being 1% lower than Q3 2020 but 5% higher than the
79.9% achieved in Q2 2021. The Company also produced 113,879 tonnes of concentrate
ore with an average V2O5 grade of 3.32% in Q3 2021 compared to 104,921 tonnes in Q3
2020 with an average V2O5 grade of 3.32%.
Lower Vanadium Sales Driven by Logistical Delays: The Company continues to
actively manage its operations to provide premium products and service to its customers.
Increased delays and global logistical challenges have impacted all aspects of the
Company’s supply chain resulting in lower V2O5 equivalent sales of 2,685 tonnes in Q3
2021. Diligent planning and a comprehensive sales strategy have allowed the Company
to deliver on all its commercial commitments up to this point. The Company does not
expect the global logistics situation to improve until mid-2022 following increased port
equipment availability, at which point the Company expects to reduce its in-transit
inventory.
Vanadium Market Demand Remains Steady: Demand in all of the Company’s key
markets remained strong in Q3 2021 highlighted by a quarterly increase of 76% in the
European FMB V2O5 price. However, lower activity in the steel related spot market and a
general worsening of sentiment in the steel industrial complex following the significant
drop in the iron ore price has recently led to some negative pressure on global vanadium
prices. Aerospace industry demand continues to recover slowly but remains significantly
below pre-COVID demand levels. The Company expects a gradual recovery in vanadium
demand from this market over the next two to four years. Largo maintains a strong focus
on developing new markets for its high purity vanadium products supported by the
addition of vanadium trioxide (“V2O3”) to its product range. The Company continues
with the commissioning of its V2O3 plant and expects to conclude this work in Q4 2021.
Revised 2021 Production and Sales Guidance
The Company’s full-year V2O5 equivalent production and sales guidance has been lowered to the
range of 11,400 and 11,800 tonnes and 11,200 and 11,800 tonnes, respectively. These
adjustments have been made to reflect the Company’s operational performance to date and
account for the global logistical challenges expected for the remainder of the year. The Company
expects to exit the year with a solid quarter of production and sales results in Q4 2021.
2021 Guidance Revised 2021 Guidance
Annual V2O5 equivalent production tonnes 12,000 – 12,500 11,400 – 11,800
Annual V2O5 equivalent sales tonnes 12,250 – 12,750 11,200 – 11,800
About Largo Resources
Largo is a Canadian domiciled company that has historically been solely committed to the
production and supply of high-quality vanadium products. The Company believes that the
development and sale of vanadium-based electrical energy storage systems to support the
planet's on-going transition to renewable energy presents both an attractive economic
opportunity for the use of the Company's vanadium products and an opportunity to enhance the
Company's sustainability. Consequently, the Company is in the process of vertically integrating
its highly efficient vanadium production operations with its vanadium-based energy storage
technology to create a unique competitive advantage in the rapidly growing long duration energy
storage market. The Company is confident that using its VPURE™ and VPURE+™ products,
which are sourced from one of the world's highest-grade vanadium deposits at the Company's
Maracás Menchen Mine in Brazil, in its VCHARGE± vanadium redox flow battery technology
results in a competitive and practical long duration energy storage product.
For more information on Largo please visit www.largoresources.com.
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 applicable 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; the impact of global delays and related price increases on
the Company’s global supply chain and future V2O5 equivalent sales; the timing of the
conclusion of the commissioning of the V2O3 plant; the increasing demand for vanadium in the
aerospace industry in coming years, the ability to successfully conclude award negotiations with
the DOE; the timing of completion of the product development and stack manufacturing facility
in Massachusetts and the completion of the UL and CE certifications. Forward-looking
information in this press release also includes, but is not limited to, statements with respect to
our ability to build, finance and operate a VRFB business, our ability to protect and develop our
technology, our ability to maintain our IP, our ability to market and sell our VCHARGE± battery
system on specification and at a competitive price, our ability to secure the required production
resources to build our VCHARGE± battery system, and the adoption of VRFB technology
generally in the market. 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 Largo Clean Energy 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.sedar.com and 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 annual and interim MD&As
which also apply.
Trademarks are owned by Largo Resources Ltd.
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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.
3Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching
recovery and chemical plant recovery.
Contacts
Investor Relations:
Alex Guthrie
Senior Manager, External Relations
+1 416-861-9797