Largo Resources Reports V2O5 Production Of 2562 Tons In Q2 2020

Q2 2020 Highlights
Production of 2,562 tonnes (5.6 million pounds 1 ) of V2O5, an increase of 2.0% over Q2 2019
Two consecutive months of V2O5 production above nameplate capacity: 1,052 tonnes in May 2020 and 1,030 tonnes in June 2020
Global V2O5 recovery rate 2 of 80.8%; Second quarter of strong global recoveries in 2020
Solid financial position: Cash at June 30, 2020 totaled $78.2 million
Record low cash operating costs excluding royalties 3 of $1.89 per lb of V2O5 , 44% decrease over Q2 2019 (after tax credit benefits of $2.2 million )
Revenues of $8.4 million (net of the re-measurement of trade receivables / payables of $2.4 million on vanadium sales from contracts with customers of $10.8 million)
Net loss of $7.0 million and a loss per share of $0.01
Company maintains its 2020 sales, cost and production guidance
Other Significant Highlights
2019 Sustainability Report released: Including improved performance metrics and new reporting standards
Nameplate capacity increase by 10%: Planned kiln upgrades and cooler maintenance scheduled for Q4 2020 with a capex of $1.3 million
2020 drilling program underway following delays caused by COVID-19
On 13 August 2020, Largo Resources Ltd. (“Largo” or the “Company”) (TSX: LGO) (OTCQX: LGORF) announced its second quarter 2020 financial and operating results with revenues of $8.4 million from vanadium pentoxide (“V2O5”) equivalent sales of 1,018 tonnes. Production from the Maracás Menchen Mine in Q2 2020 was 2,562 tonnes (5.6 million lbs1) of V2O5 produced at an average global recovery rate4 of 80.8%.
Paulo Misk, President and Chief Executive Officer for Largo, stated: “The Company’s balance sheet and financial position remains solid exiting Q2 2020. Operations performed well during the quarter following our preventative maintenance program and the Company’s cash balance at the end of Q2 2020 was $78.2 million. Although profitability was impacted by lower recognized sales during the quarter, the Company’s working capital investment was necessary to fill our sales pipeline and build strategic global V2O5 stockpiles in order to fulfil customer demand going forward. Also, despite some minor delays caused by the COVID-19 pandemic, our sales and trading performance remains in-line with expectations. We continue to maintain the Company’s 2020 sales guidance of 9,500 to 10,000 tonnes of V2O5 as we realize the economic benefits associated with our commercial independence. Largo has demonstrated substantially lower unit costs versus Q2 2019, despite the fact that such costs now include sales and distribution costs (while under the previous off-take agreement, the Company’s sales and marketing commissions were netted off against revenue).”
He continued: “On the market front, Chinese V2O5 prices strengthened by approximately 15% to $6.95 per lb during Q2 2020 as a result of increased steel sector demand. We continue to receive inquires for our products from end users and remain very optimistic about expected future demand growth as a result of recently announced stimulus programs, globally. Additionally, despite experiencing a period of low demand within the aerospace industry, we continue to prioritize increasing our high purity vanadium customer portfolio, particularly following the completion of our vanadium trioxide plant next year. Our focus remains on capturing these high value sales when demand returns to normalized levels as well as additional sales opportunities in new jurisdictions as the preferred producer and supplier of high purity vanadium.”
He concluded: “I am also very encouraged by the support and dedication shown by our entire team during these challenging times while at the same time achieving operational targets. Since March 2020, our team has supported local seamstress businesses who have produced over 230,000 protective masks which have aided in the fight against the spread of COVID-19 in Maracás. Going forward, we continue to prioritize the health and safety of our workforce and extend our support to our local communities as we proactively manage the circumstances related to the global COVID-19 pandemic.”