Largo Resources Announces Q4 And Fy 2020 Production And Sales, And Provides 2021 Guidance

Q4 and FY 2020 Production and Sales Highlights:
* Record quarterly V2O5 production of 3,340 tonnes (7.4 million lbs1) in Q4 2020, an 11% increase over Q4 2019
* Record annual V2O5 production of 11,825 tonnes (26.1 million lbs1) in 2020, an increase of 12% over 2019; Within 2020 V2O5 production guidance of 11,750 – 12,250 tonnes
* Quarterly global V2O5 recovery4 of 80.6% in Q4 2020, a 4% increase over Q4 2019
* Record annual global V2O5 recovery4 of 81.4% in 2020; a 4% increase over 2019
* 2020 sales guidance exceeded: Total V2O5 equivalent sales of 10,260 tonnes in 2020, exceeding high-end V2O5 sales guidance by 260 tonnes
* Record quarterly sales of 3,751 tonnes of V2O5 equivalent in Q4 2020, a 31% increase over Q4 2019
2021 Guidance
* V2O5 equivalent production of 12,000 – 12,500 tonnes; V2O5 equivalent sales of 12,250 – 12,750 tonnes; Cash operating cost excluding royalties2 of $3.10 – 3.30/lb V2O5 sold; Total cash costs of $3.50 – 3.70/lb V2O5 sold; Sustaining capital expenditures6 of $8.0 – 10.0 million; Vanadium trioxide (“V2O3”) processing plant expenditures of $7.0 – 9.0 million
* Planned shutdown in January 2021: Implementation of kiln feed rate improvements to increase nameplate production capacity to 1,100 tonnes of V2O5 per month; Kiln and cooler refractory replacements; Planned preventative maintenance program
* The Company will strongly focus on the advancement of Largo Clean Energy and its VCHARGE± battery technology for the fast-growing renewable energy storage sector
Largo Resources Ltd. (“Largo” or the “Company”) (TSX: LGO) (OTCQX: LGORF) is very pleased to announce that it has achieved record quarterly and annual 2020 operational results at the Maracás Menchen Mine and has exceeded its 2020 annual sales guidance by 260 tonnes. Building upon the operational and sales accomplishments in 2020, management is confident in its ability to deliver on its production, sales and cost guidance in 2021. The Company is also heavily focused on the strategic development of Largo Clean Energy in 2021 to provide safe, grid-scale VRFBs to fast-growing renewable energy storage sector.
The Company achieved a new annual production record in 2020 with total V2O5 production of 11,825 tonnes, representing an increase of 12% over 2019. Total V2O5 production of 3,340 tonnes in Q4 2020 represented a new quarterly production record for the Company, being 11% higher than Q4 2019 and 8% higher than the previous record of 3,092 tonnes set in Q3 2020. Operational stability and an increase in the global recovery rate4 drove our production performance in Q4 and over 2020 as a whole.
The Company achieved a new annual average global V2O5 recovery4 record of 81.4% in 2020 which represents a 4% increase over the 78.5% averaged in 2019. In Q4 2020, global recoveries4 averaged 80.6% which compares favourably to 77.3% averaged in Q4 2019. The increase in global recoveries4 over 2020 is primarily due to the completion of continuous improvement projects in the plant focused on improving recoveries. This was highlighted by consecutive quarter-over-quarter global recovery rate4 increases in 2020, with a new quarterly average global recovery record4 of 84.2% being achieved in Q3 2020 (80.8% in Q2 2020 and 79.9% in Q1 2020).
The Company mined 1,087,518 tonnes of ore with an effective V2O5 grade5 of 1.29% in 2020 compared to 1,156,016 tonnes with an effective V2O5 grade5 of 1.34% in 2019. In Q4 2020, 338,226 tonnes of ore with an effective V2O5 grade5 of 1.18% were mined compared to 329,792 tonnes with an effective V2O5 grade5 of 1.36% in Q4 2019. The Company also produced 412,661 tonnes of concentrate ore with an average V2O5 grade of 3.28% in 2020 compared to 382,501 tonnes produced in 2019 with a grade of 3.29%. In Q4 2020, 108,609 tonnes of concentrate ore was produced with an average V2O5 grade of 3.24% compared to 100,879 tonnes produced in Q4 2019 with a grade of 3.28%. The decrease in total ore mined in 2020 when compared to 2019 is largely due to operational adjustments to limit the mine site contractor workforce during the COVID-19 pandemic as well as the usage of weathered ore stockpiles in first half of 2020. The operational performance in 2020 remained in-line with the Company’s plans despite the COVID-19 restrictions put in place.
The Company began a planned shutdown on January 11, 2021 to replace the kiln and cooler refractories which will result in approximately 19 days of down time. As a result of this shutdown, the Company anticipates lower production during the month of January and slightly higher cash operating costs2 in Q1 2021. The Company will utilize this downtime to perform feed rate improvements on the kiln which is expected to increase the nameplate production capacity to 1,100 tonnes of V2O5 per month from 1,000. Following the planned ramp period, the Company expects to reach the full operational run rate of 1,100 tonnes of V2O5 per month by Q2 2021. The Company will also conduct a preventative maintenance program downstream of the kiln and cooler during this time.
The Company expects to complete the construction and subsequent ramp up and commissioning of its V2O3 plant in Q3 2021. Total capital expenditures are expected to be in the range of approximately $10.0 to 11.0 million, with the remaining $7.0 – 9.0 being incurred in H1 2021. One of the main applications of V2O3 is vanadium electrolyte, which is required in the manufacturing of VRFB systems. The Company expects its V2O3 nameplate production capacity will be 14 tonnes per day (or 420 tonnes per month), an increase of 100% from the 7 tonnes per day as originally planned.
The Company is continuing to monitor the evolving impacts of the COVID-19 pandemic and will take all possible actions to help minimize the impact on the Company and its people. The Company’s 2021 guidance is presented on a “business as usual” basis.
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