Largo (LGO) Q3 2024 earnings summary

Executive summary

• Achieved highest quarterly vanadium production in seven quarters at 3,072 tons, up 42% year-over-year.

• Ilmenite production ramped up, reaching 16,383 tons, a 90% increase over the previous quarter.

• Operating costs fell 31% to $29.5 million, reflecting cost reduction initiatives and productivity improvements.

• Net loss improved to $10.1 million, including $3.3 million in non-recurring items, versus $11.9 million loss in Q3 2023.

• Signed a vanadium supply agreement to unlock $23.5 million in liquidity by monetizing excess inventory, with shipments planned for Q4 and Q1 next year.

Financial highlights

• Q3 2024 revenues were $29.9 million: $27.2 million from vanadium, $2.7 million from ilmenite.

• Average European V2O5 price fell to $5.71/lb from $8.03/lb year-over-year.

• Adjusted EBITDA for mining operations was $2.4 million, down from $2.7 million in Q3 2023.

• Cash balance at quarter-end was $30.5 million; net working capital surplus was $46.7 million; debt at $93.7 million.

• Ilmenite concentrate sales increased 60% to 19,572 tons.

Outlook and guidance

• Q4 production expected to be lower and costs higher due to annual kiln maintenance, but full-year 2024 guidance for production, costs, and sales is reaffirmed.

• Cost improvements and operational efficiencies expected to continue into 2025, with further reductions anticipated.

• U.S. vanadium market expected to recover faster than Europe, with higher prices and demand from aerospace and defense sectors in 2025 contracts.

• Annual kiln shutdown for maintenance scheduled for late November to early December 2024.

• Ongoing negotiations for a 50:50 joint venture in the U.S. clean energy sector remain in progress.