Largo (LGO) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues fell to $28.6 million, mainly due to lower vanadium prices and sales volumes, but operational improvements and cost reductions were achieved despite challenging market conditions.

• Net loss for Q2 2024 was $14.5 million, including $8.5 million in non-recurring items, widening from $6.0 million loss in Q2 2023.

• Operating costs decreased to $36.4 million, reflecting a 15% drop and successful cost reduction initiatives.

• Ilmenite sales surged to 12,261 tons in Q2 2024, up from 513 tons in Q1 2024, due to a catch-up in sales.

• Published 2023 sustainability report, advancing ESG initiatives and biodiversity management.

Financial highlights

• Q2 2024 revenue was $28.6 million, with revenues per lb sold of V2O5 equivalent dropping to $6.46 from $9.42 year-over-year.

• Net loss for Q2 2024 was $14.5 million, including $8.5 million in non-recurring items such as inventory write-downs and FX losses.

• Operating costs decreased to $36.4 million, reflecting a 40% drop in direct mine and production costs.

• Cash operating costs (excluding royalties) were $5.97/lb sold, up from $5.18/lb in Q2 2023, impacted by lower recoveries and inventory write-downs.

• Adjusted EBITDA was negative $0.8 million, down from $6.0 million in Q2 2023.

Outlook and guidance

• Annual V2O5 equivalent production guidance remains at 9,000–11,000 tons.

• Ilmenite concentrate production and sales guidance revised to 40,000–50,000 tons and 27,000–42,000 tons, respectively, due to maintenance timing.

• Annual kiln maintenance rescheduled to November 2024 to avoid rainy season, not expected to impact vanadium production guidance.

• Anticipates positive impact on vanadium demand from new Chinese rebar standards effective September 2024.

• Ongoing cost reduction and operational efficiency initiatives continue.