[Ferro-Alloys.com] Largo Reports First Quarter 2024 Financial Results; Cost Reduction Measures and Productivity Initiatives Underway

All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated.

Q1 2024 and Other Highlights

Revenues of $42.2 million in Q1 2024 vs. 57.4 million in Q1 2023; Lower revenues driven by a significant decrease in vanadium prices; Revenues per pound soldⁱ of $6.91 in Q1 2024 vs. $9.14 in Q1 2023

Operating costs of $49.7 million in Q1 2024 vs. $45.9 million in Q1 2023

Cash operating costs excluding royalties per pound⁶ of $6.12 per lb V₂O₅ equivalent sold in Q1 2024 vs. $5.15 per lb in Q1 2023; Higher operating costs are largely associated with the extended maintenance period in Q1 2024 and included a write-down of produced vanadium products of $4.5 million

Net loss of $13.0 million in Q1 2024, which included $4.4 million in non-recurring items vs. a net loss of $1.2 million in Q1 2023, which included $0.1 million in non-recurring items; Basic loss per share of $0.20 in Q1 2024 vs. basic loss per share of $0.02 in Q1 2023

Cash balance of $45.7 million, net working capitalⁱⁱ surplus of $70.8 million and debt of $75.0 million exiting Q1 2024

V₂O₅ equivalent sales of 2,765 tonnes (inclusive of 156 tonnes of purchased material) in Q1 2024 vs. 2,849 equivalent tonnes sold (inclusive of 245 tonnes of purchased material) in Q1 2023

V₂O₅ production of 1,729 tonnes (3.8 million lbsⁱⁱⁱ) in Q1 2024 vs. 2,111 tonnes produced in Q1 2023; Lower production in Q1 2024 was expected and is largely attributable to the completion of the Company’s planned kiln refractory replacement and other plant maintenance activities during the quarter

The Company produced 9,563 tonnes of ilmenite concentrate in Q1 2024, an increase of 7% from Q4 2023, and sold 513 tonnes of ilmenite concentrate in Q1 2024; Ilmenite sales were below Q1 2024 guidance due to operational and administrative delays

Q1 2024 results conference call: Thursday, May 16th at 10:00 a.m. ET

Vanadium Market Update^iv

Due to adverse conditions in the Chinese and European steel industries, spot demand for Q1 2024 continued to be weak; however, strong aerospace demand continued; Future quarters are expected to witness an increase in demand for energy storage, specifically in China

The average benchmark price per pound of V₂O₅ in Europe was $6.44 in Q1 2024, a 38% decrease from the average of $10.39 seen in Q1 2023. The average benchmark price per kg of ferrovanadium in Europe was $27.96 in Q1 2024, a 30% decrease from the average of $39.46 seen in Q1 2023

The average benchmark price per pound of V₂O₅ in Europe as of May 10, 2024 was $5.87

TORONTO--(BUSINESS WIRE)-- Largo Inc. ("Largo" or the "Company") (TSX: LGO) (NASDAQ: LGO) today released financial results for the three months ended March 31, 2024. The Company reported quarterly vanadium pentoxide (“V₂O₅ ”) equivalent sales of 2,765 tonnes at a cash operating cost excluding royalties per pound⁶ sold of $6.12.

Daniel Tellechea, Interim CEO and Director of Largo, stated: “Having navigated challenges in the first quarter, such as an extended maintenance period which led to increased costs, and a sharp decline in vanadium prices, our focus remains on restoring profitability at Largo. We continued to realize cost savings at our clean energy division this quarter as a result of initiating our strategic review process, and negotiations with Stryten Energy LLC remain ongoing. While we anticipate elevated costs in the first half of the year, we expect improvements in the second half as the full effects of our previously announced productivity initiatives and cost reduction measures materialize at our Maracás Menchen Mine.”

Financial and Operating Results – Highlights

Q1 2024 Notes

The Company recorded a net loss of $13.0 million in Q1 2024 compared with a net loss of $1.2 million in Q1 2023, primarily due to a 27% decrease in revenues and an 8% increase in operating costs, which were partially offset by a 24% decrease in professional, consulting and management fees and a 73% decrease in technology start-up costs.

In Q1 2024, the Company’s direct mine and production costs of $29.9 million increased by 5% over Q1 2023, primarily due to the impact of the scheduled plant shutdown in Q1 2024 and the associated lower global recoveries and higher costs as the plant resumed operations. During the shutdown, the kiln refractory was replaced, and annual maintenance activities were performed in the crushing, milling, ilmenite, leaching and chemical sections of the plant.

Cash operating costs excluding royalties⁶ of $6.12 per lb sold in Q1 2024 increased by 19% over Q1 2023 ($5.15 per lb) due to the reasons noted above and included a write-down of produced vanadium products of $4.5 million. Additionally, increased quantities of ore mined and lower grades also impacted the financial performance during the quarter. The Company is actively working to achieve operational stability and operating norms in order to better manage its unit costs and has implemented a number of initiatives with the goal of reducing production costs and improving productivity. These include reducing haulage distances, reducing the number of contractors and a comprehensive review of all contracts.

Professional, consulting and management fees in Q1 2024 decreased from Q1 2023 by 24% ($1.3 million), primarily due to reduced activity and headcount at Largo Clean Energy Corp. (“LCE”) as a result of the initiation of its strategic review process. Technology start-up costs in Q1 2024 also decreased from Q1 2023 by 73% ($2.0 million), which is primarily attributable to a decrease in activities at LCE in Q1 2024 as the installation of its battery project nears conclusion.

Subsequent to Q1 2024, production and sales in were 815 tonnes and 757 tonnes of V₂O₅ equivalent, respectively, in April 2024, with 2,500 tonnes of ilmenite concentrate being produced during this period and 8,363 dry tonnes of ilmenite being sold.

In May 2024, the Company secured a working capital debt facility with a bank in Brazil for a total limit of $8.0 million. Drawdowns on the facility are repayable in 90 days together with accrued interest at a rate of 8.25% p.a., with renewals subject to approval by the bank.

On May 15, 2024, the Company signed a binding term sheet for up to $10.0 million in inventory financing. Under the terms of this facility, which shall have a minimum duration of 12 months, the Company will use its vanadium finished products inventory to secure drawdowns of up to $10.0 million for a maximum period of 90 days. Amounts repaid will include a commission fee of 1%, interest at an expected rate of the U.S. Secured Overnight Financing Rate ("SOFR") plus 2.5% and other direct costs.

The information provided within this release should be read in conjunction with Largo's unaudited condensed interim consolidated financial statements for the three months ended March 31, 2024 and 2023 and its management's discussion and analysis for the three months ended March 31, 2024

• [Editor:tianyawei]