Largo Resources Advances its Strategic Focus on Vanadium-Based Energy Storage Systems and Announces Solid Second Quarter 2021 Financial Results with Net Income of $8.4 million
All amounts expressed are in U.S. dollars, denominated by “$”.
Q2 2021 Highlights
At the Company’s investor-oriented virtual ‘Battery Day’ held on June 9, 2021, the Company discussed its transformational strategic shift to the production of vanadium based electrical energy storage systems. The Company believes that moving to vertically integrate its financially strong vanadium operations with its superior vanadium redox flow battery (“VRFB”) technology will present a higher value market opportunity for the Company’s vanadium products in the future and will also create a unique competitive advantage for Largo in the rapidly growing long duration energy storage market
Aligned with its commitment to the energy storage sector, Ian Robertson has been appointed as Co-Chair of the Board of the Company and as interim President of Largo Clean Energy Corp. (“LCE”)
LCE entered into its first VCHARGE± VRFB sales contract with Enel Green Power España (“EGPE”) and received notice to proceed on July 26, 2021
The Company reported net income of $8.4 million vs. a net loss of $7.0 million in Q2 2020
The Company recognized revenues of $54.3 million, 546% higher than Q2 2020
Cash provided before working capital items of $16.2 million vs. 1.0 million in Q2 2020
The Company exited Q2 2021 with a cash balance of $80.7 million
The Company will host a webcast and conference call for its Q2 2021 results on Wednesday, August 11th at 10:00 a.m. ET
Other Significant Highlights
Total V2O5 equivalent sales of 3,027 tonnes, a 197% increase over Q2 2020
Revenues per lb sold2 of $8.14, a 119% increase over Q2 2020
Cash operating costs excluding royalties1 of $3.39 per lb of V2O5 vs. $1.89 per lb in Q2 2020
Production of 3,070 tonnes (6.8 million lbs3) of V2O5, a 20% increase over Q2 2020 and 55% above Q1 2021
Vanadium demand in all of the Company’s key markets remained strong in Q2 2021: Average European V2O5 price per lb of $8.19, representing a 16% increase over Q1 2021 and 33% above Q2 2020
Commissioning of vanadium trioxide (“V2O3”) processing plant initiated
2021 production, sales, cash operating costs excluding royalties1 and capital expenditure guidance maintained
TORONTO--(BUSINESS WIRE)-- Largo Resources Ltd. ("Largo" or the "Company") (TSX: LGO) (NASDAQ: LGO) today announces its second quarter 2021 financial results highlighted by revenues of $54.3 million and net income of $8.4 million.
During the second quarter, the Company hosted an investor-oriented virtual ‘Battery Day’ during which the Company discussed its transformational strategic shift to the production of vanadium based electrical energy storage systems. The Company believes that moving to vertically integrate its financially strong vanadium operations with its superior long duration energy storage technology will present a higher value market opportunity for the Company’s vanadium products in the future and will also create a unique competitive advantage for Largo in the rapidly growing long duration energy storage market.
Aligned with its belief in the opportunities expected to arise in the transition to VRFB production, the Company announced the appointment of Mr. Ian Robertson as Co-Chair of the Board of Directors of the Company and as Interim President of LCE. During the quarter, the Company continued to augment its strategic, commercial, technical and manufacturing teams including the appointment of Mr. Salvatore Minopoli as VP of LCE Operations.
During the quarter, LCE secured a facility in Massachusetts, U.S. for its global headquarters, including its product development and stack manufacturing centre, which is sufficiently sized to support a manufacturing capacity of energy systems representing up to 1.4 gigawatt hours of storage per year. The team moved into the office facility in May 2021 and building modifications are underway for the installation and commissioning of the stack manufacturing capacity and test equipment required to support the business plan.
On July 20, 2021, the Company announced that LCE had entered into its first VCHARGE± VRFB sales contract with EGPE and has now received notice to proceed for this installation. Under the contract, LCE is obligated to deliver a five hour, 6.1 MWh VCHARGE± system for a project in Spain with expected commissioning in Q4 2022.
With respect to continued VRFB deployments, LCE is focused on obtaining the required regulatory certification to support expected 2022 project sales, with certifications on track to be received by the end of Q4 2021. In addition, the Company is progressing with establishing the supply chain and resources required to deliver on the anticipated project deployment timelines and cost targets.
Ian Robertson, Co-Chair of Largo, stated: “During our Battery Day we confirmed our belief that vertically integrating our highly efficient vanadium production capacity with our superior vanadium based energy storage technology will present a more financially and societally valuable proposition for the Company. I am pleased with the recently announced milestone energy storage system sales contract with a world-class partner and remain confident that it represents validation of the transformational opportunity to generate substantial long-term value for the Company. Looking ahead, we see the planned change in our name to “Largo Inc.” as evidence of the Company’s confidence in the significant opportunity that exists for Largo to profitably participate in the growing long duration energy storage market. We expect to proceed with the Company’s name change and extensive rebrand in late Q3 2021.”
Paulo Misk, President and Chief Executive Officer for Largo, stated: “Continued momentum across all key markets resulted in increased vanadium demand and strong revenue growth for the Company in Q2 2021. This has led to a substantial increase in revenues per lb2 sold of 119% over Q2 2020 and contributed to healthy cash flow generation, building upon our solid cash position. Following the additional debt funding obtained in Q2 2021 of $15 million, the Company exited the quarter with a cash balance of $80.7 million. We will continue to capitalize on the strong demand in the vanadium markets we serve with the goal of improving profit margins going forward.”