Company Announcements

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

Q4, Full Year 2023 and Other Highlights

• Revenues of $44.2 million in Q4 2023, 7% below Q4 2022; Revenues per pound sold¹ of $7.69 in Q4 2023 vs. $7.77 in Q4 2022
• Operating costs of $43.2 million in Q4 2023 vs. $44.5 million in Q4 2022; Cash operating costs excluding royalties per pound¹ V₂O₅ equivalent sold of $5.44 in Q4 2023 vs. $5.15 in Q4 2022
• Net loss of $13.3 million in Q4 2023, which included $6.6 million in non-recurring items vs. net loss of $15.6 million in Q4 2022, which included $6.3 million in non-recurring items; Basic loss per share of $0.21 in Q4 2023 vs. basic loss per share of $0.24 in Q4 2022
• Adjusted EBITDA² of $1.4 million in Q4 2023 increased by 138% from that seen in Q4 2022
• Revenues of $198.7 million in 2023, 13% below 2022; Revenues per pound sold¹ of $8.66 in 2023 vs. $9.38 in 2022
• Operating costs of $174.8 million in 2023 vs. $169.7 million in 2022, and cash operating costs excluding royalties per pound¹ V₂O₅ equivalent sold of $5.30 in 2023 vs. $4.57 in 2022; Within revised annual cash operating costs excluding royalties¹ per pound guidance for 2023
• Net loss of $32.4 million in 2023, which included $10.3 million in non-recurring items vs. net loss of $2.2 million in 2022, which included $13.8 million in non-recurring items; Basic loss per share of $0.51 in 2023 vs. basic loss per share of $0.03 in 2022
• Adjusted EBITDA² of $12.1 million in 2023 vs. $41.6 million in 2022
• Cash balance of $42.7 million, net working capital³ surplus of $94.7 million and debt of $75.0 million exiting 2023
• V₂O₅ production of 2,768 tonnes in Q4 2023, a 38% increase over the 2,004 tonnes produced in Q4 2022; Annual V₂O₅ production of 9,681 tonnes in 2023 vs. 10,436 tonnes in 2022 and within the Company’s revised 2023 production guidance range of 9,000 – 11,000 tonnes
• Quarterly sales of 2,605 tonnes of V₂O₅ equivalent (inclusive of 139 tonnes of purchased material) in Q4 2023 vs. 2,774 tonnes in Q4 2022; Annual V₂O₅ equivalent sales of 10,396 (inclusive of 929 tonnes of purchased material) tonnes in 2023 vs. 11,091 tonnes in 2022 and within the Company’s revised 2023 sales guidance of 8,700 – 10,700 tonnes
• In Q4 2023, Largo Clean Energy’s (“LCE”) 6 megawatt-hour vanadium flow battery deployment for Enel Green Power España (“EGPE”) was validated to operate on test conditions according to EGPE specifications and LCE test procedures
• On March 18, 2024, the Company announced the signing of a non-binding letter of intent with Stryten Energy LLC (“Stryten”) to establish a 50:50 joint venture that would combine the Company’s wholly owned subsidiary, LCE with Stryten’s vanadium redox flow battery (“VRFB”) business
• The Company produced 8,970 tonnes of ilmenite concentrate in Q4 2023; In January and February 2024, the Company produced 5,100 tonnes and 2,000 tonnes of ilmenite concentrate, respectively
• Q4 and FY 2023 results conference call: Friday, March 22 at 1:00 p.m. ET

Vanadium Market Update⁴

• The average benchmark price per pound of V₂O₅ in Europe was $6.46 in Q4 2023, a 22% decrease from the average of $8.25 seen in Q4 2022; The average benchmark price per pound of V₂O₅ in Europe was $6.53 as at December 31, 2023, a 31% decrease from the average of $9.44 seen as at December 31, 2022
• Vanadium spot demand was soft in Q4 2023, primarily due to adverse conditions in the Chinese and European steel industries, however, strong demand from the aerospace sector continued
• The average benchmark price per pound of V₂O₅ in Europe as of March 15, 2024 was $6.05

TORONTO--(BUSINESS WIRE)--Mar. 21, 2024-- Largo Inc. ("Largo" or the "Company") (TSX: LGO) (NASDAQ: LGO) today released financial and operating results for the three and twelve months ended December 31, 2023. The Company reported annual vanadium pentoxide (“V₂O₅”) equivalent sales of 10,396 tonnes at a cash operating cost excluding royalties per pound¹ sold of $5.30.

Daniel Tellechea, Interim CEO and Director of Largo, stated: “The Company's financial results continued to be adversely affected by lower vanadium prices as highlighted by a sharp decline in the European V₂O₅ price of 22% in Q4 2023 compared to Q4 2022. We remain committed to achieving greater levels of operational efficiency at the Maracás Menchen Mine in order to meet production and sales targets improve cash flow going forward.”

He continued: “A number of notable achievements were made by the Company during 2023, including the successful construction and commissioning of a new ilmenite concentration plant. We continue with the ramp-up of production at this facility, further diversifying our revenue stream from our existing vanadium operations. Largo's exploration efforts surrounding the Maracás Menchen Mine have become an increasingly important part of our story over the last few quarters, and we continue to advance our efforts in this area. Following our recent announcement on our review and evaluation of strategic alternatives to unlock and fully maximize the value of LCE, we look forward to continuing discussions with Stryten over the coming weeks.”

He concluded: “While vanadium appears to have very promising long-term fundamentals, the Company remains solely focused on reducing costs and meeting its production and sales targets to withstand the current period of low vanadium prices.”

Financial and Operating Results – Highlights

Q4 & Full Year 2023 Notes and Other Highlights

• The Company recorded a net loss of $32.4 million in 2023 compared with a net loss of $2.2 million in 2022, largely driven by a 13% decrease in revenues and an increase in certain expenses, most notably a 3% increase in operating costs, a 506% increase in finance costs, a 195% increase in exploration and evaluation costs and a write down of vanadium assets of $4.9 million.
• In 2023, the Company saw increased direct mine and production costs, primarily due to an increase in total ore mined in 2023, the cost impacts of low ore availability experienced earlier in the year and plant shutdowns for corrective maintenance during 2023. The Company’s direct mine and production costs decreased in Q4 2023 as compared with Q4 2022, reflecting the impact of the cost saving and operational improvement initiatives implemented at the mine, as well as the softening of prices for critical consumables.
• The Company continues to actively work towards achieve higher levels of operational efficiency to better manage its costs as it navigates lower grades of ore mined as compared with prior years. In Q4 2023, V₂O₅ equivalent production was 28% higher than the 2,163 tonnes produced in Q3 2023 and 38% higher than the 2,004 tonnes produced in Q4 2022. The global recovery⁷ achieved in Q4 2023 was 79.4%, an increase of 6.3% from the 74.7% achieved in Q4 2022 and 3.3% higher than the 76.9% achieved in Q3 2023. The total ore mined in Q4 2023 was 473,958 tonnes, an increase of 45% in comparison with Q4 2022. 1,752,982 tonnes of ore were mined in 2023, an increase of 29% as compared with 2022. Actions were taken to increase crushing availability and normal production levels were recovered in Q4 2023. Total ore crushed in Q4 2023 was 8% higher than in Q3 2023 and 35% higher than in Q4 2022. For 2023, total ore crushed was 9% higher than in 2022.
• For 2023, total professional, consulting and management fees decreased by 9% from 2022 and other general and administrative expenses decreased by 18% from 2022, both as a result of reduced activity and headcount at LCE as a result of the initiation of the strategic review. Additionally, technology start-up costs decreased by 52% in 2023 compared with 2022 primarily due to a write down of battery components inventory in Q4 2022 of $6.4 million and a decrease in activities at LCE in Q4 2023 as the installation of its battery project nears conclusion.
• In 2021, the Company signed a 10-year exclusive off-take agreement with Gladieux Metals Recycling (“GMR”) for the purchase of all standard and high purity grade vanadium products GMR produces. The Company is committed to the purchase of a minimum of 360 tonnes of V₂O₅ in 2024 and its onward distribution to customers.
• Subsequent to Q4 2023, production in January 2024 was 582 tonnes of V₂O₅ equivalent with 276 tonnes of V₂O₅ equivalent produced in February 2024. Lower production achieve in the first two months of Q1 2024 is attributable to the Company’s previously announced kiln refractory maintenance. Subsequent to Q4 2023, sales in January 2024 were 1,072 tonnes of V₂O₅ equivalent, with 1,065 sold in February 2024.

The information provided within this release should be read in conjunction with Largo's annual consolidated financial statements for the years ended December 31, 2023 and 2022 and its management's discussion and analysis for the year ended December 31, 2023 which are available on our website at www.largoinc.com or on the Company’s respective profiles at www.sedarplus.com and www.sec.gov.

About Largo

Largo is a globally recognized vanadium company known for its high-quality VPURE™ and VPURE+™ products, sourced from its Maracás Menchen Mine in Brazil. The Company is currently focused on the ramp-up its ilmenite concentrate plant and is undertaking a strategic evaluation of its U.S.-based clean energy business, including its advanced VCHARGE vanadium battery technology to maximize the value of the organization. Largo's strategic business plan centers on maintaining its position as a leading vanadium supplier with a growth strategy to support a low-carbon future.

Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol "LGO". For more information on the Company, please visit www.largoinc.com.

Cautionary Statement Regarding Forward-looking Information:

This press release contains "forward-looking information" and "forward-looking statements" (collectively, “forward looking statements”) within the meaning of applicable Canadian and United States securities legislation. Forward‐looking statements in this press release include, but are not limited to: the achievement of operational stability; Largo’s ability to improve cash flow in the future; expected sales; diversifying the Company's product offering; optimizing operations, continued advancements at the Maracás Menchen Mine; the conclusion of the installation of Largo’s battery project; and future commitments to purchase V₂O₅..

The following are some of the assumptions upon which forward-looking statements are based: that general business and economic conditions will not change in a material adverse manner; demand for, and stable or improving price of V₂O₅ and other vanadium commodities; receipt of regulatory and governmental approvals, permits and renewals in a timely manner; that the Company will not experience any material accident, labour dispute or failure of plant or equipment or other material disruption in the Company's operations at the Maracás Menchen Mine or relating to LCE; the availability of financing for operations and development; the ability to mitigate the impact of continuing heavy rainfall; the Company's ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; that the estimates of the resources and reserves at the Maracás Menchen Mine are within reasonable bounds of accuracy (including with respect to size, grade and recovery and the operational and price assumptions on which such estimates are based); the Company's "two-pillar" business strategy will be successful; the Company's sales and trading arrangements will not be affected by the evolving sanctions against Russia; and the Company's ability to attract and retain skilled personnel and directors; the ability of management to execute strategic goals.

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 Largo or LCE 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 www.sedarplus.com and available on www.sec.gov 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 most recent annual and interim MD&A, which also apply. Largo's most recent annual and interim MD&A are available on Largo’s SEDAR+ profile at www.sedarplus.com.

Trademarks are owned by Largo Inc.

Non-GAAP⁸ Measures

The Company uses certain non-GAAP measures in this press release, which are described in the following section. Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under IFRS, the Company's GAAP, and might not be comparable to similar financial measures disclosed by other issuers. These measures 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. Management believes that non-GAAP financial measures, when supplementing measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company.

Revenues Per Pound Sold

This press release refers to revenues per pound sold, a non-GAAP performance measure that is used to provide investors with information about a key measure used by management to monitor the performance of the Company.

This measure, along with cash operating costs and total cash costs, 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 and sales activities. This revenues per pound sold measure does not have any standardized meaning prescribed by IFRS and differs from measures determined in accordance with IFRS. This measure is 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. This measure is not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

The following table provides a reconciliation of this measure per pound sold to revenues as per the Q4 2023 and annual unaudited condensed interim consolidated financial statements.

Cash Operating Costs Excluding Royalties Per Pound

The Company’s press release refers to cash operating costs excluding royalties per pound, which are non-GAAP ratios based on cash operating costs and cash operating costs excluding royalties, which are non-GAAP financial measures, 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 (all for the Mine properties segment), but excludes depreciation and amortization, share-based payments, foreign exchange gains or losses, commissions, reclamation, capital expenditures and exploration and evaluation costs. Operating costs not attributable to the Mine properties segment are also excluded, including conversion costs, product acquisition costs, distribution costs and inventory write-downs.

Cash operating costs excluding royalties is calculated as cash operating costs less royalties. Cash operating costs per pound and cash operating costs excluding royalties per pound are obtained by dividing cash operating costs and cash operating costs excluding royalties, respectively, by the pounds of vanadium equivalent sold that were produced by the Maracás Menchen Mine. Cash operating costs, cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound, along with revenues, are considered to be key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine. These measures differ from measures determined in accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

The following table provides a reconciliation of cash operating costs and cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound for the Maracás Menchen Mine to operating costs as per the 2023 annual consolidated financial statements.

EBITDA and Adjusted EBITDA

The Company’s press release refers to earnings before interest, tax, depreciation and amortization, or "EBITDA", and adjusted EBITDA, which are non-GAAP financial measures, in order to provide investors with information about key measures used by management to monitor performance. EBITDA is used as an indicator of the Company's ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures.

Adjusted EBITDA removes the effect of inventory write-downs, impairment charges (including write-downs of vanadium assets), insurance proceeds received, movements in legal provisions, non-recurring employee settlements and other expense adjustments that are considered to be non-recurring for the Company. The Company believes that by excluding these amounts, which are not indicative of the performance of the core business and do not necessarily reflect the underlying operating results for the periods presented, it will assist analysts, investors and other stakeholders of the Company in better understanding the Company's ability to generate liquidity from its core business activities.

EBITDA and adjusted EBITDA are intended to provide additional information to analysts, investors and other stakeholders of the Company and do not have any standardized definition under IFRS. These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures exclude the impact of depreciation, costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore are not necessarily indicative of operating profit or cash flow from operating activities as determined under IFRS. Other companies may calculate EBITDA and adjusted EBITDA differently.

The following table provides a reconciliation of EBITDA and adjusted EBITDA to net income (loss) as per the 2023 annual consolidated financial statements.

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1} Revenues per pound sold and cash operating costs are non-GAAP financial measures, and cash operating costs per pound and cash operating costs excluding royalties per pound are non-GAAP ratios with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the “Non-GAAP Measures” section of this press release.
² Adjusted EBITDA is a non-GAAP financial measure with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the “Non-GAAP Measures” section of this press release.
³ Defined as current assets less current liabilities per the consolidated statements of financial position.
⁴ Fastmarkets MetalBulletin
⁵ The cash operating costs excluding royalties and revenues per pound per pound sold are reported on a non-GAAP basis. Refer to the “Non-GAAP Measures” section of this press release. Revenues per pound sold are calculated based on the quantity of V2O5 sold during the stated period.
⁶ Effective grade represents the percentage of magnetic material mined multiplied by the percentage of V2O5 in the magnetic concentrate
⁷ Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching recovery and chemical plant recovery.
⁸ GAAP – Generally Accepted Accounting Principles

Appendix:

Consolidated Statements of Financial Position
Expressed in thousands / 000’s of U.S. dollars

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)

Consolidated Statements of Cash Flows
Expressed in thousands / 000’s of U.S. dollars

View source version on businesswire.com: https://www.businesswire.com/news/home/20240321493592/en/

For further information, please contact:

Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778
aguthrie@largoinc.com

Source: Largo Inc.