- Strong Q4 2019 operational finish: Production of 3,011
tonnes of V2O5 in Q4 2019, a 16% increase
over Q4 2018
- Record FY 2019 production, achieving midpoint
production guidance: 10,577 tonnes (23.3 million
lbs1) of V2O5
produced in 2019, an increase of 8% over FY 2018
- Record monthly V2O5 production
of 1,162 tonnes in December
2019
- Maracás Menchen Mine expansion
project completed in December
2019
- New safety record: 238 days (1.5 million man-hours
worked) without a Lost Time Injury
- 2020 Guidance: Annual V2O5
production of 11,750 – 12,250 tonnes; Average annual cash operating
cost excluding royalties2 of
US$3.30 –
3.50/lb
V2O5; Annual sales of 9,500 – 10,000
tonnes5; Sustaining capital expenditures6 of
US$9 – 11 million; Ferrovanadium
conversion plant capital expenditures of US$5 – 7 million
TORONTO,
Jan. 14, 2020 /CNW/
- Largo Resources Ltd.
("Largo" or the
"Company") (TSX: LGO) (OTCQX:
LGORF) is pleased to report fourth quarter and full year 2019
production results from its Maracás Menchen Mine highlighted by a
new annual production record, with 10,577 tonnes of
vanadium pentoxide
("V2O5")
produced. In 2019, the Company performed well
operationally, achieving its annual midpoint production guidance of
10,500 tonnes of
V2O5. Management is
confident that it will be able to execute on its 2020 production
and cost guidance building upon the Company's operational successes
achieved in FY 2019.
Total production from the Maracás Menchen Mine in FY 2019
was 10,577 tonnes of
V2O5, representing an
increase of 8% over FY 2018. The Company also produced 3,011 tonnes
of V2O5 in Q4 2019,
which is an increase of 16% over Q4 2018. Production in Q4 2019
represents the third consecutive quarter-over-quarter of production
growth in 2019 and is the strongest quarter of production since
commencement of operations in 2014. Increased production in Q3 2019
and Q4 2019 is largely due to the ramp-up and completion of the
Company's expansion project which concluded in December following
the commissioning of the pre-evaporator and leaching, de-silication
and precipitation tanks.
In Q4 2019, 329,792 tonnes of ore with an effective
V2O5 grade3 of
1.36% were mined and the crushing unit was fed with 311,148 tonnes
with an effective V2O5
grade3 of 1.20%. The Company also produced 100,879
tonnes of concentrate ore with an average
V2O5 grade of 3.28% in Q4
2019 compared to 92,190 tonnes produced in Q4 2018 with a grade of
3.27%.
Global V2O5 recovery
rates4 averaged 78.5% in FY 2019 which is an improvement
over the 77.0% averaged in FY 2018. In Q4 2019, global
recoveries4 averaged 77.3% which compares favourably to
75.3% averaged in Q4 2018. Global recoveries4 declined
quarter-over-quarter in 2019 primarily due to some process
variability during the expansion ramp-up phase.
A summary of Q4 and FY 2019 production results from the
Maracás Menchen Mine is presented below:
|
2019
|
2018
|
|
Q4
|
Q3
|
Q2
|
Q1
|
Full Year
|
Q4
|
Full Year
|
|
|
|
|
|
|
|
|
Total Ore Mined
(tonnes)
|
329,792
|
267,257
|
308,858
|
250,109
|
1,156,016
|
256,436
|
822,795
|
Ore Grade Mined -
Effective Grade
|
1.36
|
1.52
|
1.21
|
1.29
|
1.34
|
1.33
|
1.30
|
(%)3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Grade of
Ore Milled (%)3
|
1.57
|
1.44
|
1.49
|
1.51
|
1.50
|
1.53
|
1.68
|
Concentrate Produced
(tonnes)
|
100,879
|
92,629
|
102,320
|
86,673
|
382,501
|
92,190
|
343,126
|
Grade of Concentrate
(%)
|
3.28
|
3.26
|
3.30
|
3.32
|
3.29
|
3.27
|
3.41
|
Contained
V2O5 (tonnes)
|
3,310
|
3,016
|
3,380
|
2,874
|
12,580
|
3,016
|
11,718
|
|
|
|
|
|
|
|
|
Crushing Recovery
(%)
|
96.6
|
96.5
|
98.0
|
97.0
|
97.0
|
97.4
|
97.2
|
Milling Recovery
(%)
|
96.0
|
97.0
|
97.9
|
96.8
|
96.9
|
97.9
|
96.9
|
Kiln Recovery
(%)
|
89.7
|
88.8
|
88.8
|
89.2
|
89.1
|
84.3
|
86.6
|
Leaching Recovery
(%)
|
96.7
|
97.2
|
95.7
|
97.7
|
96.8
|
96.5
|
97.2
|
Chemical Plant
Recovery (%)
|
96.1
|
96.7
|
97.1
|
97.7
|
96.8
|
97.2
|
97.0
|
Global Recovery
(%)4
|
77.3
|
78.1
|
79.1
|
80.0
|
78.5
|
75.3
|
77.0
|
|
|
|
|
|
|
|
|
V2O5 produced
(tonnes)
|
3,011
|
2,952
|
2,515
|
2,099
|
10,577
|
2,595
|
9,830
|
V2O5 produced (equivalent
pounds1)
|
6,638,111
|
6,508,038
|
5,544,619
|
4,627,497
|
23,318,266
|
5,720,989
|
21,671,415
|
Paulo Misk, President and
Chief Executive Officer of Largo, stated: "I am very pleased
with the Company's outstanding operational performance in 2019
further underscoring the dedication demonstrated by the whole Largo
team. The Company experienced another solid year of production in
2019 following the successful completion of its expansion project
which contributed to a new monthly V2O5
production record of 1,162 tonnes in December. Additionally, as a
result of effective cost management, the Company expects its 2019
annual average cash operating cost excluding royalties2
to be lower than its updated 2019 cash cost guidance range of
US$3.30 to $3.40 per pound
V2O5."
He continued: "The Company also achieved a new safety
record in 2019 operating 238 days (1.5 million man-hours worked)
without a Lost Time Injury (LTI) surpassing its previous LTI safety
record of 203 days (1.3 million man-hours worked). Safety remains a
top priority at Largo and the Company plans to update the market
with all of its responsible mining initiatives following the
release of its 2019 environmental, social and governance report
which is expected in Q1 2020. We look forward to another solid year
in 2020 as we continue our focus on achieving operational targets
in addition to advancing our sales and trading business. I remain
extremely confident in our team as we continue this momentum in the
year ahead."
2020 Production, Cost and Sales Guidance
Building on the success of our increased name plate
capacity in FY 2019, the Company expects total
V2O5 production for 2020 will be in the range
of 11,750 and 12,250 tonnes which is inclusive of high purity
vanadium flake and high purity vanadium powder production.
Additionally, the Company expects annual average cash operating
cost excluding royalties2 will be in the range of
US$3.30 – 3.50/lb
V2O5 in 2020 and anticipates sustaining
capital expenditures6 will be in the range of
US$9.0 and $11.0 million.
Largo's Board of Directors has approved the construction
of a ferrovanadium conversion plant at the Maracás Menchen Mine
subject to available liquidity. The Company expects the total
capital expenditures for the conversion plant to be in the range of
US$8.0 to $10.0 million, with US$5.0 to $7.0
million being incurred in 2020. In addition, the Company
plans to perform cooler refractory maintenance in April 2020 and anticipates lower production
during this month and higher cash operating costs in Q2 2020. The
Company will also utilize this downtime to perform feed rate
improvements on the kiln which is expected to increase the
nameplate production capacity to 1,100 tonnes of
V2O5 per month from 1,000. In addition to the
Company's sustaining capital expenditures for 2020, the expected
cost of the kiln feed rate improvement is approximately
US$1.3 million.
Largo's current offtake agreement with Glencore
International AG expires on April 30,
2020 and the Company will be responsible for its own sales
and distribution directly to end-users from May 2020 onwards. Consequently, the Company
anticipates total sales in 2020 will be in the range of 9,500 to
10,000 tonnes, with approximately 2,000 to 2,500 tonnes of its
total V2O5 production in 2020 forming part of
inventory working capital due to shipping and delivery lead times.
The Company's expected total sales in 2020 will consist of
V2O5, high purity V2O5,
and ferrovanadium.
A summary of the Company's 2020 guidance is listed in the
table below:
2020 Guidance
|
Annual
V2O5 Production Guidance
|
11,750 – 12,250
tonnes
|
Annual Sales
Guidance5
|
9,500 – 10,000
tonnes
|
Average Annual Cash
Operating Cost Guidance Per Pound Excluding
Royalties2
|
US$3.30 –
3.50
|
Sustaining Capital
Expenditures6
|
US$9.0 – 11.0
million
|
Ferrovanadium
Conversion Plant Capital Expenditures
|
US$5.0 – 7.0
million
|
About Largo Resources
Largo is a Toronto-based strategic mineral company
focused on the production of vanadium flake, high purity vanadium
flake and high purity vanadium powder at the Maracás Menchen
Mine located in Bahia State, Brazil. The Company's
common shares are principally listed on the Toronto Stock
Exchange under the symbol "LGO". For more information
on Largo, please visit our website
at www.largoresources.com.
Neither the Toronto Stock Exchange (nor its regulatory
service provider) accepts responsibility for the adequacy or
accuracy of this press release.
Forward-looking Information
This press release contains forward-looking information
under Canadian securities legislation, some of
which may be considered "financial outlook" for the purposes of
applicable Canadian securities legislation ("forward-looking
statements"). Information in this press release includes, but is
not limited to, statements with respect the annual cash operating
costs; ferrovanadium conversion plant and the costs associated
therewith; the timing and amount of estimated future production; ;
anticipated total sales of V2O5; cash costs
of future activities and operations; and the extent of capital and
operating expenditures. Forward-looking
statements can be identified by the use of forward-looking
terminology such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes",
or variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved". All information
contained in this news release, other than statements of current
and historical fact, is forward looking information.
Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of the Largo to be
materially different from those expressed or implied by such
forward-looking statements, including but not limited to those
risks described in the annual information form of Largo and in its
public documents filed on SEDAR from time to time. Forward-looking
statements are based on the opinions and estimates of management as
of the date such statements are made. Although management of Largo
has attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Largo does not
undertake to update any forward-looking statements, except in
accordance with applicable securities laws. Readers should also
review the risks and uncertainties sections of Largo's annual and
interim MD&As.
Future Oriented Financial
Information:
Any financial outlook or future oriented financial
information contained in this press release, as such term is
defined by applicable securities laws, has been approved by
management of Largo as of the date hereof and is provided for the
purpose of providing information about management's current
expectations and plans relating to the Company's 2019 production
guidance. Readers are cautioned that any such future oriented
financial information contained herein should not be used for
purposes other than those for which it is disclosed herein. The
Company and its management believe that the prospective financial
information as to the Company's anticipated 2019 production
guidance has been prepared on a reasonable basis, reflecting
management's best estimates and judgments. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results.
Non-GAAP Measures
The Company uses certain non-GAAP financial performance
measures in its MD&A, which are described in the following
section.
Cash Operating Costs
The Company's press release refers to cash operating
costs per pound produced, a non-GAAP performance measure, in order
to provide investors with information about a key measure used by
management to monitor performance. This information is used to
assess how well the Maracás Menchen Mine is performing compared to
plan and prior periods, and also to assess its overall
effectiveness and efficiency.
Cash operating costs includes mine site operating costs
such as mining costs, plant and maintenance costs, sustainability
costs, mine and plant administration costs, royalties and sales,
general and administrative costs, but excludes depreciation and
amortization, share-based payments, foreign exchange gains or
losses, commissions, reclamation, capital expenditures and
exploration and evaluation costs. These costs are then
divided by the pounds of production from the Maracás Menchen Mine
to arrive at the cash operating costs per pound
produced.
The measure, along with revenues, is considered to be
one of the key indicators of the Company's ability to generate
operating earnings and cash flow from its Maracás Menchen Mine.
These cash operating costs do not have any standardized meaning
prescribed by IFRS and differ from measures determined in
accordance with IFRS. They are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. These measures are not necessarily indicative of net earnings
or cash flow from operating activities as determined under
IFRS.
____________________________________
|
1
|
Conversion of
tonnes to pounds, 1 tonne = 2,204.62 pounds or lbs.
|
2
|
The cash operating
costs per pound produced and cash operating costs excluding
royalties per pound produced reported are on a non-GAAP basis.
Refer to the
"Non-GAAP Measures" section of this press release.
|
3
|
Effective grade
represents the percentage of magnetic material mined multiplied by
the percentage of V2O5 in the magnetic
concentrate.
|
4
|
Global recovery is
the product of crushing recovery, milling recovery, kiln recovery,
leaching recovery and chemical plant recovery.
|
5
|
Inclusive of V2O5, high purity
V2O5, and
ferrovanadium.
|
6
|
Excludes
capitalized waste stripping costs.
|
SOURCE Largo Resources Ltd.