Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Largo Inc (LGO, Financial) achieved its highest quarterly vanadium production in seven quarters, with a 42% increase from the previous year.
- Operating costs were reduced by 31%, maintaining a competitive position within the vanadium sector.
- A new vanadium supply agreement is expected to unlock approximately $23.5 million of additional liquidity.
- The company reported a 67% increase in mineral reserves and a 64% increase in mineral resources, extending mine life to 2054.
- Largo Inc (LGO) is implementing a refreshed sales strategy to optimize inventory and strengthen customer relationships.
Negative Points
- Revenues were impacted by lower vanadium prices and reduced sales volumes, with a net loss of $10.1 million for Q3.
- The average benchmark price per pound of vanadium decreased significantly from the previous year.
- Q4 production is expected to be lower due to maintenance, resulting in higher operating costs.
- The company continues to face significant headwinds in the vanadium market, particularly in Asia and Europe.
- Largo Clean Energy's battery storage project has not yet been completed, and no revenue has been recognized from it.
Q & A Highlights
Q: Recent data indicates that the oversupply gap is narrowing. Where is this demand coming from, and will it impact Q4 results or is it more of a 2025 trend?
A: The demand is mainly from the aerospace sector in the US, driven by restrictions on imports from certain countries. This will primarily show in 2025 contracts as we are currently in the midst of contract season. (Francesco de Laios, CEO and President of Largo Clean Energy)
Q: Can you provide an outlook on vanadium prices for 2025 given the improvements you've worked on?
A: We expect a two-tiered market with higher prices in the US due to limited import origins and increased demand from the aerospace sector. The US market is expected to recover faster than Europe. (Francesco de Laios, CEO and President of Largo Clean Energy)
Q: What are the expected costs for 2025 given the operational efficiencies you've implemented?
A: We expect costs to trend lower as we continue to optimize logistics and supply chain efficiencies. The turnaround process is ongoing, and we anticipate further cost reductions. (David Harris, CFO)
Q: Regarding the recent vanadium supply agreement, how do prices compare to spot pricing?
A: The recent agreement is the only one of its kind currently, complementing our Q4 shipments. Future agreements will be standard sales to the steel and aerospace industries. (Francesco de Laios, CEO and President of Largo Clean Energy)
Q: How much debt is attributed to the Majorca storage facility, and how does your vanadium technology compare to other battery technologies?
A: There is no debt related to the Majorca storage facility; it has been self-funded. The project is in the final stages of commissioning, and we have not yet recognized revenue from it. (David Harris, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
