*Record V2O5 production of 3,092 tonnes (6.8 million lbs1) in Q3 2020, a 5.0% increase over Q3 2019
*Total sales exceeded production levels in August and September 2020 for the first time since commercial independence, highlighting successful rollout of the Company's strategy
*Record global V2O5 recovery rate2of 84.2% in Q3 2020, an increase of 8.0% over Q3 2019
*2020 cash cost guidance reduced: Cash operating cost excluding royalties guidance lowered to US$2.60 – $2.80 / lb V2O5; Total cash cost guidance lowered to US$3.20 to $3.40 / lb V2O5
*Postponing cost-efficient nameplate capacity increase to Q1 2021: Planned kiln upgrades and cooler maintenance that will increase Largo's production capacity by 10% with a CAPEX of only US$1.3 million are postponed to Q1 2021 due to COVID-19 restrictions
*Focus on safe business continuity: On track to meet lower end of 2020 production guidance with strong production results expected in Q4 2020; 2020 sales guidance maintained
*Strong vanadium demand in Q3 2020 in China from increased infrastructure spending on the back of recently announced stimulus packages as well as development of green technology applications to meet carbon footprint reduction targets.
TORONTO, Oct. 19, 2020 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") (TSX: LGO) (OTCQX: LGORF) is pleased to report third quarter 2020 production and global sales results from its Maracás Menchen Mine highlighted by a new quarterly production record of 3,092 tonnes (6.8 million lbs1) of vanadium pentoxide ("V2O5") and a new record global recovery rate2 of 84.2%.
Paulo Misk, President and Chief Executive Officer for Largo, stated: "The health and safety of our workforce continues to remain a top priority for Largo and our focus on preventative measures early on has enabled the Company to continue operations in a safe manner since March 2020. In Q3 2020, operations performed exceptionally well with the Company achieving a new quarterly V2O5 production record of 3,092 tonnes and a new quarterly global recovery2 rate record of 84.2%. The Company has also reduced its cash operating cost excluding royalties3 and total cash cost3 guidance for 2020 to US$2.60 - $2.80 and US$3.20 - $3.40 / lb V2O5, respectively. This reflects our positive year-to-date performance and the Company's expectations for the balance of the year. Additionally, the Company is on track to meet the lower end of its 2020 production guidance of 11,750 – 12,250 tonnes of V2O5 and we look forward to ending the year on another high note. I am very proud of the entire operations team as they continue to demonstrate their ability to effectively meet and exceed operational targets, especially during these uncertain times."
He continued: "I am also very happy with our sales and trading performance in Q3 2020 with V2O5 equivalent sales of 1,062 tonnes in August 2020 and 1,060 tonnes in September 2020. From May to July 2020, we successfully built the necessary inventories to fill our sales pipeline and meet customer commitments as planned. Creating value through the control of our product from mine to end-user is a key priority for Largo and we are confident in delivering on our 2020 sales guidance of 9,500 to 10,000 tonnes of V2O5." He concluded: "As a result of our commercial independence and sales flexibility, Largo has increased its sales in China to take advantage of higher prices and greater overall demand in Q3 2020. China continues to be the driver of global vanadium demand from increased infrastructure spending and the development of green technology applications. We expect additional global vanadium demand growth as a result of recently announced stimulus packages and a focus on carbon footprint reduction. These significant, long-term trends are forecast to increase the consumption of vanadium in rebar, high-quality steel applications and through new vanadium redox flow battery deployments around the world."
A summary of Q3 2020 production results from the Maracás Menchen Mine is presented below:
Total production from the Maracás Menchen Mine was 3,092 tonnes of V2O5, representing an increase of 5.0% over Q3 2019 and a new quarterly production record for the Company. Production in Q3 2020 was 3% above current nameplate production capacity and is largely attributable to greater operational stability and higher global recoveries achieved during the quarter. Production was 1,055 tonnes of V2O5 in July 2020, 1,100 tonnes in August 2020 and 937 tonnes in September 2020.
In Q3 2020, 287,969 tonnes of ore with an effective V2O5 grade4 of 1.28% were mined compared to 267,257 tonnes in Q3 2019 with an effective V2O5 gradeof 1.52%. The Company also produced 104,921 tonnes of concentrate ore with an average V2O5 grade of 3.32% in Q3 2020 compared to 92,629 tonnes in Q3 2019 with an average V2O5 grade of 3.26%.
The Company achieved a new record global V2O5 recovery rate2 of 84.2% in Q3 2020 representing an 8.0% increase over Q3 2019 (78.1%). This is primarily attributable to continuous improvement projects performed on the plant during the quarter with a focus on greater overall recoveries.
2020 Cash Cost Guidance Update
Cost-efficient Nameplate Capacity Increase of 10% Postponed to Q1 2021
As a result of ongoing precautions related to the COVID-19 pandemic which limit the number of contractors permitted on site, the Company has postponed its kiln upgrades and cooler maintenance to Q1 2021. The Company's planned nameplate capacity increase is expected to increase monthly production from 1,000 tonnes of V2O5 per month to 1,100 tonnes for a CAPEX of US$1.3 million. Largo does not expect this to affect production levels in Q1 2021.
Source: Largo Resources Ltd
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