TORONTO, Nov. 13, 2019 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") (TSX: LGO) (OTCQX: LGORF) announces its third quarter 2019 operational and financial results highlighted by 2,952 tonnes of vanadium pentoxide ("vanadium" or "V2O5") produced at a cash operating cost excluding royalties2 of US$2.81 per pound of V2O5.
Paulo Misk, President and Chief Executive Officer for Largo, stated: "Operations at the Maracás Menchen Mine performed well in the third quarter 2019 following increased production from the expansion project. Cash operating costs excluding royalties2 were US$2.81 per pound V2O5 in Q3 2019 representing a decrease of 8% over Q3 2018. Although the Company achieved lower operating and unit costs during the quarter, profitability continued to be impacted as a result of lower vanadium prices combined with the Company's re-measurement of trade receivables / payables as a result of its current off-take agreement and consequently, the Company recorded a net loss of $8.6 million in Q3 2019. The Board realizes that the share price does not currently reflect the business value of the Company and is considering instituting a share repurchase program by way of a Normal Course Issuer Bid."
He continued: "The Company believes that vanadium prices are unsustainably low and expects sentiment and prices to improve as evidenced by the recent price increase for ferrovanadium in Europe. Despite greater vanadium consumption in China over the last two years, the current price environment is largely attributable to high iron ore prices and a dramatic increase in Chinese V2O5 slag production earlier in 2019 from vanadium-titano magnetite (VTM) deposits. The increase in Chinese vanadium supply, combined with greater than anticipated niobium substitution put vanadium prices under pressure throughout 2019. Going forward, we expect vanadium market sentiment to improve following current shutdowns from high cost stone coal producers, a decline in V2O5 slag production and a reverse in niobium substitution on the back of lower vanadium prices."
"Largo is pleased to report that the Board has approved the construction of a ferrovanadium conversion plant at the Maracás Menchen Mine. Ferrovanadium is essential in the production of steel products, which make up approximately 91% of global vanadium consumption. The construction of the Company's own ferrovanadium conversion plant creates downstream advantages as it eliminates the need to convert Largo's V2O5 using third party convertors. The Company has begun the basic engineering studies associated with the construction of the plant and looks forward to providing an update to the market in the near future."
"The Company is advancing basic engineering studies to further evaluate the economics associated with upgrading the Maracás Menchen Mine's non-magnetic tailings using concentrate flotation to produce TiO2 concentrate. The Company's non-magnetic tailings are composed of ilmenite which also contain titanium dioxide (TiO2). The Company began a pilot plant study in October to prove flotation performance and anticipates results of the ongoing study in Q4 2019."
"The Company continues to advance its sales and trading business with the recently announced appointment Mr. Francesco D'Alessio as Head of Sales, Americas, who will support the Company's vanadium sales strategy in the North and South American markets. The Company has attended multiple conferences and continues to build the back-office team to support sales and ensure highest quality of service from May 2020 onwards."
He concluded: "We are also pleased to announce a strategic partnership with Boston Metal to further advance its Molten Oxide Electrolysis (MOE) testing using Largo's V2O5 to produce ferrovanadium. Boston Metal's patented metals-production process is more efficient, less costly and greener with Molten Oxide Electrolysis."