Vanadium Producer Largo Reports Net Loss Of $2.2M In ‘Challenging’ 2022

Vanadium producer Largo (TSX: LGO) (NASDAQ: LGO) yesterday reported annual V2O5 production of 10,436 tonnes in 2022, slightly higher than 10,319 tonnes produced in 2021 and 6% below the lower range of the revised production guidance.
During 2022, the company recognized revenues of $229.3 million from sales of 11,091 tonnes of V2O5 equivalent (2021 – 11,393 tonnes). This represents a 16% increase in revenues over 2021 ($198.3 million) mainly due to higher vanadium prices in the year, particularly with revenues recognized in Q2 2022, it said.
The company added that operating costs of $169.7 million in 2022 were higher than in 2021 ($133.0 million) primarily due to increases in direct mine and production costs attributable to a decrease in the global recovery, cost increases in critical consumables, including heavy fuel oil and ammonium sulfate, as well as increased consumption of these critical consumables and sodium carbonate.
Largo also reported net loss of $2.2 million in 2022 compared to net income of $22.6 million in 2021. In 2022, the company’s net loss included approximately $15.0 million of non-recurring expenditures.
Interim CEO and Director Daniel Tellechea stated, “For Largo, 2022 was a challenging year, which led to an underperformance on both production and cost metrics, particularly in Q4 with the mining disruption caused by record rainfall at our mine, cost inflation of key raw materials and sizeable non-recurring expenditures.
“Although we continue to navigate an inflationary environment, we anticipate delivering and capitalizing on a 10% increase in production for 2023 over 2022, particularly with the recent strengthening of vanadium prices.”
In a press release, Largo noted an increased vanadium demand from the energy storage sector, especially in China, where new vanadium redox flow battery deployments totaling around 2 GWh or approximately 10% of global vanadium output are planned for the next 12-24 months.
“Other key markets including steel, aerospace, and chemical have also shown considerable demand growth in recent months,” it said.
Largo indicated it has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURETM and VPURE+TM products, which are sourced from one of the world’s highest-grade vanadium deposits at the company’s Maracás Menchen mine in Brazil.
“Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) leading vanadium supplier with an outlined growth plan and 2.) U.S.-based energy storage business support a low carbon future,” Largo said.