Largo Resources announces record quarterly and full year 2020 operational results and exceeds 2020 sales guidance

Q4 and FY 2020 Production and Sales Highlights:

• Record quarterly V₂O₅ (vanadium) production of 3,340 tonnes (7.4 million lbs¹) in Q4 2020, an 11% increase over Q4 2019
• Record annual V₂O₅ production of 11,825 tonnes (26.1 million lbs¹) in 2020, an increase of 12% over 2019; Within 2020 V₂O₅ production guidance of 11,750 – 12,250 tonnes
• Quarterly global V₂O₅ recovery⁴ of 80.6% in Q4 2020, a 4% increase over Q4 2019
• Record annual global V₂O₅ recovery⁴ of 81.4% in 2020; a 4% increase over 2019
• 2020 sales guidance exceeded: Total V₂O₅ equivalent sales of 10,260 tonnes in 2020, exceeding high-end V₂O₅ sales guidance by 260 tonnes
• Record quarterly sales of 3,751 tonnes of V₂O₅ equivalent in Q4 2020, a 31% increase over Q4 2019

2021 Guidance

• V₂O₅ equivalent production of 12,000 – 12,500 tonnes; V₂O₅ equivalent sales of 12,250 – 12,750 tonnes; Cash operating cost excluding royalties² of $3.10 – 3.30/lb V₂O₅ sold; Total cash costs of $3.50 – 3.70/lb V₂O₅ sold; Sustaining capital expenditures⁶ of $8.0 – 10.0 million; Vanadium trioxide (“V₂O₃”) processing plant expenditures of $7.0 – 9.0 million
• Planned shutdown in January 2021: Implementation of kiln feed rate improvements to increase nameplate production capacity to 1,100 tonnes of V₂O₅ per month; Kiln and cooler refractory replacements; Planned preventative maintenance program
• The Company will strongly focus on the advancement of Largo Clean Energy and its VCHARGE± battery technology for the fast-growing renewable energy storage sector

Largo Resources Ltd., Toronto, Canada, (TSX: LGO) (OTCQX: LGORF) has achieved record quarterly and annual 2020 operational results at the Maracás Menchen Mine and has exceeded its 2020 annual sales guidance by 260 tonnes. Building upon the operational and sales accomplishments in 2020, management is confident in its ability to deliver on its production, sales and cost guidance in 2021. The Company is also heavily focused on the strategic development of Largo Clean Energy, Arlington, Virginia, United States, in 2021 to provide safe, grid-scale VRFBs to fast-growing renewable energy storage sector.

Paulo Misk, President and Chief Executive Officer of Largo, stated: “Operations at the Maracás Menchen Mine had an exceptionally strong finish to the year resulting in new quarterly and annual production records. I am also delighted to report that the Company has exceeded its 2020 sales guidance by 260 tonnes, with Q4 2020 V₂O₅ equivalent sales of 3,751 tonnes representing a new quarterly sales record for the Company. 2020 was transformational and demanding year for Largo; one in which the Company implemented its new sales and trading operations, started construction of its V₂O₃ plant and launched Largo Clean Energy in the midst of a global pandemic. The entire Largo team would like to take this opportunity to extend our sympathies to everyone who has been affected by this virus.” He continued: “I remain confident that the operational and sales processes we instituted in 2020 have set a solid foundation for continued growth in 2021. We are pleased to report that we expect to increase Largo’s annual V₂O₅ production from 11,825 tonnes in 2020 to between 12,000 – 12,500 tonnes of V₂O₅ equivalent in 2021. We also expect to increase our V₂O₅ equivalent sales to 12,250 – 12,750 tonnes in 2021, representing an increase of 22% over 2020. Further, we expect to maintain our low-cost profile in 2021 with cash operating costs excluding royalties² and total cash costs² expected to be between $3.10 to $3.30 and $3.50 to 3.70 per pound V₂O₅ sold, respectively. Lastly, we continue to advance the Company’s robust project pipeline with the goal of significantly increasing shareholder value at Largo. We plan to release an updated technical report in late Q1 2021 to upgrade and expand known resources, and incorporate the V₂O₃ plant and titanium dioxide (“TiO₂”) pigment projects.”

He concluded: “In the first weeks of 2021, vanadium prices have increased in all main markets on the back of solid demand, low inventories and renewed optimism in the overall metals and industrial complex. We also believe that growing interest from the battery sector will continue to drive future vanadium demand growth in 2021 and beyond. With the addition of Largo Clean Energy in December 2020, we are working to develop our clean energy storage business in 2021 to provide safe and sustainable vanadium redox flow battery (“VRFB”) systems to the fast-growing renewable energy market. Global energy storage deployment is expected to reach 1,095 GW/2,850 GWh³ in 2040 and we believe long-duration VRFBs will play a critical role in addressing this significant demand. We remain very excited for the year ahead as the Company continues the necessary work to become a key player in the renewable energy storage industry.”

Contributing to a Lower Carbon Future with the VCHARGE± Battery Technology

In December 2020, the Company launched Largo Clean Energy to provide safe, long-duration VRFBs for the fast-growing global renewable energy storage market. The Company believes that the renewable energy storage market has reached an inflection point and grid-scale VRFBs are expected to be a strategic solution for this growing sector. The VRFB’s strengths lie within its longevity, lack of degradation in performance over time (even after many thousands of cycles), non-flammability, deep discharge capability and key sustainability characteristics such as the ability to re-use the vanadium electrolyte at the end of the battery’s life. These attributes make the VRFB ideally suited for industrial and commercial microgrids, renewables integration, EV charging and grid applications. The Company believes that its acquisition of patented VRFB electrolyte processing technology along with the utilization of industry-leading flow battery stack design and supply of Largo’s reliable, high purity vanadium sets Largo Clean Energy apart from other competing battery technologies. The Company’s team of industry experts will continue the advancement of Largo Clean Energy and its superior VCHARGE± battery technology to begin capitalizing on new renewable energy storage opportunities around the world.

A summary of Q4 and FY 2020 production results from the Maracás Menchen Mine is presented below:

The Company achieved a new annual production record in 2020 with total V₂O₅ production of 11,825 tonnes, representing an increase of 12% over 2019. Total V₂O₅ production of 3,340 tonnes in Q4 2020 represented a new quarterly production record for the Company, being 11% higher than Q4 2019 and 8% higher than the previous record of 3,092 tonnes set in Q3 2020. Operational stability and an increase in the global recovery rate⁴ drove our production performance in Q4 and over 2020 as a whole.

The Company achieved a new annual average global V₂O₅ recovery⁴ record of 81.4% in 2020 which represents a 4% increase over the 78.5% averaged in 2019. In Q4 2020, global recoveries⁴ averaged 80.6% which compares favourably to 77.3% averaged in Q4 2019. The increase in global recoveries⁴ over 2020 is primarily due to the completion of continuous improvement projects in the plant focused on improving recoveries. This was highlighted by consecutive quarter-over-quarter global recovery rate⁴ increases in 2020, with a new quarterly average global recovery record⁴ of 84.2% being achieved in Q3 2020 (80.8% in Q2 2020 and 79.9% in Q1 2020).

The Company mined 1,087,518 tonnes of ore with an effective V₂O₅ grade⁵ of 1.29% in 2020 compared to 1,156,016 tonnes with an effective V₂O₅ grade⁵ of 1.34% in 2019. In Q4 2020, 338,226 tonnes of ore with an effective V₂O₅ grade⁵ of 1.18% were mined compared to 329,792 tonnes with an effective V₂O₅ grade⁵ of 1.36% in Q4 2019. The Company also produced 412,661 tonnes of concentrate ore with an average V₂O₅ grade of 3.28% in 2020 compared to 382,501 tonnes produced in 2019 with a grade of 3.29%. In Q4 2020, 108,609 tonnes of concentrate ore was produced with an average V₂O₅ grade of 3.24% compared to 100,879 tonnes produced in Q4 2019 with a grade of 3.28%. The decrease in total ore mined in 2020 when compared to 2019 is largely due to operational adjustments to limit the mine site contractor workforce during the COVID-19 pandemic as well as the usage of weathered ore stockpiles in first half of 2020. The operational performance in 2020 remained in-line with the Company’s plans despite the COVID-19 restrictions put in place.

2021 Production, Cost and CAPEX Guidance

The Company began a planned shutdown on January 11, 2021 to replace the kiln and cooler refractories which will result in approximately 19 days of down time. As a result of this shutdown, the Company anticipates lower production during the month of January and slightly higher cash operating costs² in Q1 2021. The Company will 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. Following the planned ramp period, the Company expects to reach the full operational run rate of 1,100 tonnes of V₂O₅ per month by Q2 2021. The Company will also conduct a preventative maintenance program downstream of the kiln and cooler during this time.

The Company expects to complete the construction and subsequent ramp up and commissioning of its V₂O₃ plant in Q3 2021. Total capital expenditures are expected to be in the range of approximately $10.0 to 11.0 million, with the remaining $7.0 – 9.0 being incurred in H1 2021. One of the main applications of V₂O₃ is vanadium electrolyte, which is required in the manufacturing of VRFB systems. The Company expects its V₂O₃ nameplate production capacity will be 14 tonnes per day (or 420 tonnes per month), an increase of 100% from the 7 tonnes per day as originally planned.

The Company is continuing to monitor the evolving impacts of the COVID-19 pandemic and will take all possible actions to help minimize the impact on the Company and its people. The Company’s 2021 guidance is presented on a “business as usual” basis.

About Largo Resources

Largo Resources is an industry preferred producer and supplier of high-quality vanadium. Largo can service multiple vanadium market applications through the supply of its unrivaled VPURE™ and VPURE+™ products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine located in Brazil. Largo is also focused on the advancement of renewable energy storage solutions through Largo Clean Energy and its world-class VCHARGE± vanadium redox flow battery technology. The Company’s common shares are listed on the Toronto Stock Exchange under the symbol “LGO”.

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 BloombergNEF
⁴ Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching recovery and chemical plant recovery.
⁵ Effective grade represents the percentage of magnetic material mined multiplied by the percentage of V₂O₅ in the magnetic concentrate.
⁶ Includes capitalized waste stripping costs.