Largo reports successful product diversification
Largo has, during the quarter ended September 30, successfully diversified its product mix with the start of production of copper, gold, platinum and palladium as new by-products of its core vanadium production.
During the quarter, it produced 2 093 t of vanadium pentoxide (V2O5) at its Maracás Menchen mine, in Brazil, and sold 2 428 t of V2O5-equivalent.
For the first nine months of this year, production totalled 7 609 t and sales 7 223 t, representing year-on-year increases of 23% and 15%, respectively.
The company says this reflects Largo pursuing a conscious strategy of reducing inventory to enhance its liquidity and to try to target its sales to profitable demand.
The company reports that copper production reached 108 t contained in concentrates in the third quarter of this year, while gold production was 289 oz contained in concentrates in the third quarter, with first production recorded, derived as a vanadium by-product.
Platinum production for the quarter was 166 oz contained in concentrates, while palladium production was 291 oz contained in concentrates.
Largo says it sold 13 902 t of iron-ore calcine to the Brazilian domestic market.
Ilmenite production during the quarter was nil as the company decided to use its flotation plant infrastructure for higher-margin copper, gold and platinum group metals (PGMs) production.
Largo says current studies are under way to potentially resume ilmenite production in the medium term.
Moreover, Largo adds that it sold copper, gold and PGMs production to three large commodity traders and one European smelter, reflecting the commercial attractiveness of Largo’s by-product concentrates, which include copper, gold, platinum and palladium.
Largo executive chairperson and co-CEO Alberto Arias says that while the diversification strategy may lower overall vanadium production volumes, Largo’s objective is to improve the value generated per tonne produced, strengthening the economics of its operations.
“In addition, the previously announced potential expansion of our high-profit-margin copper/gold/PGM business and our continued focus on cost discipline to offset currently high specific consumables costs aim to maximise the value recovered from the Maracás Menchen mine and metallurgical complex and support Largo’s longer-term financial and operating objectives.”
Largo co-CEO James Bannantine adds that the commercial strategy is focused on expanding demand for Largo’s higher-value vanadium products by deepening relationships with customers in the defence, aerospace and energy storage sectors, including delivering Largo’s first purchase order of $60-million of high-purity vanadium to the US Defense Logistics Agency, while advancing the commercial development of the company’s copper, gold and PGM vanadium by-product business.
He says the company is aiming to increase its high-purity vanadium volumes, with the objective of enhancing realised pricing, improving margins and strengthening cash generation.
He explains that Largo’s recent optimisation study indicated the potential to produce high-purity vanadium representing about 68% of total output at an overall production rate of about 876 t a month.
“We are evaluating the implications of this product mix for production volumes, realised prices, operating margins and cash flow. Alongside our vanadium business, primarily converted into ferro-vanadium, we are focused on progressing copper, gold and PGM sales and customer deliveries as we build on the start of full-scale production,” says Bannantine.