Largo Reports Fourth Quarter and Full Year 2023 Financial Results; Continued Focus on Operational Improvements and Cost Reduction to Offset Depressed Vanadium Prices
- Increased V2O5 equivalent production in Q4 2023 compared to Q3 2023 and Q4 2022.
- Successful construction and commissioning of a new ilmenite concentration plant in 2023.
- Exploration efforts around the Maracás Menchen Mine are progressing.
- Signing of a non-binding letter of intent with Stryten Energy for a joint venture.
- Deployment of a 6 megawatt-hour vanadium flow battery for Enel Green Power España.
- Annual revenues for 2023 were $198.7 million, 13% below 2022.
- Net loss of $32.4 million in 2023 compared to a net loss of $2.2 million in 2022.
- Average benchmark price per pound of V2O5 in Europe decreased in Q4 2023.
- Annual vanadium pentoxide sales of 10,396 tonnes in 2023 at a cash operating cost of $5.30 per pound.
- Adjusted EBITDA increased by 138% in Q4 2023.
- Net loss of $32.4 million in 2023, largely driven by a 13% decrease in revenues and increased expenses.
- Decrease in benchmark price per pound of V2O5 in Europe in Q4 2023.
- Increase in certain expenses in 2023, including operating costs, finance costs, and exploration costs.
- Write down of vanadium assets of $4.9 million in 2023.
Insights
The reported financials from Largo Inc. indicate a challenging fiscal period, with a significant 13% year-over-year decline in revenues and a net loss widening from $2.2 million in the previous year to $32.4 million in 2023. This was despite a decrease in operating costs and an increase in V2O5 production in the last quarter. The decline in revenues could be attributed to the drop in vanadium prices, which is a key concern for stakeholders, as it directly impacts the company's profitability. The 22% decrease in the European V2O5 price in Q4 2023 compared to Q4 2022 is particularly noteworthy, as it reflects broader market trends and the health of the steel and aerospace industries, which are major consumers of vanadium.
Investors should be aware that the vanadium market is susceptible to cyclical fluctuations and sector-specific challenges, such as the current adverse conditions in the Chinese and European steel industries. The company's efforts to diversify revenue streams through the construction of an ilmenite concentration plant and the potential joint venture with Stryten Energy LLC could mitigate some of the risks associated with vanadium price volatility. However, the success of these initiatives will be key to the company's future financial health.
From a financial perspective, the increase in finance costs by 506% and the 195% increase in exploration and evaluation costs are significant. These increases, along with the write-down of vanadium assets of $4.9 million, have contributed to the company's net loss. The Adjusted EBITDA improvement in Q4 2023, however, suggests that some of the cost-saving measures and operational improvements may be starting to take effect.
It is important to consider the company's cash position and debt levels. The cash balance decreased from $54.5 million to $42.7 million year-over-year, while debt increased from $40 million to $75 million. This could potentially put pressure on the company's liquidity and financial flexibility. The commitment to purchase vanadium from GMR also adds to future cash outflow obligations. Investors should closely monitor how these factors impact the company's ability to fund operations and invest in growth opportunities.
The dynamics of the vanadium market, as reflected in Largo Inc.'s financial results, demonstrate the impact of global commodity prices on producers. Vanadium, primarily used in steel production and emerging technologies like vanadium redox flow batteries, has been affected by softening demand in key markets, particularly in China and Europe. While the aerospace sector continues to show strong demand, it may not be sufficient to offset the challenges faced in the steel industry.
Furthermore, the company's production increase and the validation of Largo Clean Energy's vanadium flow battery deployment signify progress in operational capabilities and entry into the energy storage market. The strategic joint venture with Stryten Energy LLC could position the company to capitalize on the growing demand for energy storage solutions, which could be a long-term positive despite short-term market volatility. Understanding these market trends is essential for stakeholders to assess the potential future performance of Largo Inc.
All dollar amounts expressed are in thousands of
Q4, Full Year 2023 and Other Highlights
-
Revenues of
$44.2 million 7% below Q4 2022; Revenues per pound sold1 of$7.69 $7.77 -
Operating costs of
$43.2 million $44.5 million $5.44 $5.15 -
Net loss of
$13.3 million $6.6 million $15.6 million $6.3 million $0.21 $0.24 -
Adjusted EBITDA2 of
$1.4 million 138% from that seen in Q4 2022 -
Revenues of
$198.7 million 13% below 2022; Revenues per pound sold1 of$8.66 $9.38 -
Operating costs of
$174.8 million $169.7 million $5.30 $4.57 -
Net loss of
$32.4 million $10.3 million $2.2 million $13.8 million $0.51 $0.03 -
Adjusted EBITDA2 of
$12.1 million $41.6 million -
Cash balance of
$42.7 million $94.7 million $75.0 million -
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 22% decrease from the average of$8.25 Europe was$6.53 31% decrease from the average of$9.44 - 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$6.05
Daniel Tellechea, Interim CEO and Director of Largo, stated: “The Company's financial results continued to be adversely affected by lower vanadium prices as highlighted by a sharp decline in the European V2O5 price of
He continued: “A number of notable achievements were made by the Company during 2023, including the successful construction and commissioning of a new ilmenite concentration plant. We continue with the ramp-up of production at this facility, further diversifying our revenue stream from our existing vanadium operations. Largo's exploration efforts surrounding the Maracás Menchen Mine have become an increasingly important part of our story over the last few quarters, and we continue to advance our efforts in this area. Following our recent announcement on our review and evaluation of strategic alternatives to unlock and fully maximize the value of LCE, we look forward to continuing discussions with Stryten over the coming weeks.”
He concluded: “While vanadium appears to have very promising long-term fundamentals, the Company remains solely focused on reducing costs and meeting its production and sales targets to withstand the current period of low vanadium prices.”
Financial and Operating Results – Highlights
(thousands of |
Three months ended |
Year ended |
||
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Revenues |
44,170 |
47,501 |
198,684 |
229,251 |
Operating costs |
(43,218) |
(44,455) |
(174,758) |
(169,719) |
Net income (loss) |
(13,301) |
(15,636) |
(32,358) |
(2,226) |
Basic earnings (loss) per share |
(0.21) |
(0.24) |
(0.51) |
(0.03) |
Adjusted EBITDA2 |
1,385 |
(3,680) |
12,127 |
41,583 |
Cash (used) provided before working capital items |
(2,364) |
(14,055) |
5,267 |
21,424 |
Cash operating costs excl. royalties5 ($/lb) |
5.44 |
5.15 |
5.30 |
4.57 |
Cash |
42,714 |
54,471 |
42,714 |
54,471 |
Debt |
75,000 |
40,000 |
75,000 |
40,000 |
Total mined – dry basis (tonnes) |
3,490,711 |
2,737,149 |
14,864,394 |
10,517,210 |
Total ore mined (tonnes) |
473,958 |
326,552 |
1,752,982 |
1,359,927 |
Effective grade6 of ore milled (%) |
1.03 |
1.06 |
1.04 |
1.26 |
V2O5 equivalent produced (tonnes) |
2,768 |
2,004 |
9,681 |
10,436 |
Q4 & Full Year 2023 Notes and Other Highlights
-
The Company recorded a net loss of
$32.4 million $2.2 million 13% decrease in revenues and an increase in certain expenses, most notably a3% increase in operating costs, a506% increase in finance costs, a195% 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 and38% higher than the 2,004 tonnes produced in Q4 2022. The global recovery7 achieved in Q4 2023 was79.4% , an increase of6.3% from the74.7% achieved in Q4 2022 and3.3% higher than the76.9% achieved in Q3 2023. The total ore mined in Q4 2023 was 473,958 tonnes, an increase of45% in comparison with Q4 2022. 1,752,982 tonnes of ore were mined in 2023, an increase of29% 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 was8% higher than in Q3 2023 and35% higher than in Q4 2022. For 2023, total ore crushed was9% higher than in 2022. -
For 2023, total professional, consulting and management fees decreased by
9% from 2022 and other general and administrative expenses decreased by18% 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 by52% in 2023 compared with 2022 primarily due to a write down of battery components inventory in Q4 2022 of$6.4 million - 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
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
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
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.
|
Three months ended |
Year ended |
||||||||||
|
December 31, 2023 |
December 31, 2022 |
December 31, 2023 |
December 31, 2022 |
||||||||
Revenues - V2O5 produced1 |
$ |
25,182 |
$ |
24,908 |
$ |
115,534 |
$ |
123,529 |
||||
V2O5 sold - produced (000s lb) |
|
3,215 |
|
3,483 |
|
13,113 |
|
14,307 |
||||
V2O5 revenues per pound of V2O5 sold - produced ($/lb) |
$ |
7.83 |
$ |
7.15 |
$ |
8.81 |
$ |
8.63 |
||||
|
|
|
|
|
||||||||
Revenues - V2O5 purchased1 |
$ |
1,497 |
$ |
— |
$ |
9,028 |
$ |
3,184 |
||||
V2O5 sold - purchased (000s lb) |
|
265 |
|
— |
|
1,279 |
|
265 |
||||
V2O5 revenues per pound of V2O5 sold - purchased ($/lb) |
$ |
5.65 |
$ |
— |
$ |
7.06 |
$ |
12.02 |
||||
|
|
|
|
|
||||||||
Revenues - V2O51 |
$ |
26,679 |
$ |
24,908 |
$ |
124,562 |
$ |
126,713 |
||||
V2O5 sold (000s lb) |
|
3,480 |
|
3,483 |
|
14,392 |
|
14,571 |
||||
V2O5 revenues per pound of V2O5 sold ($/lb) |
$ |
7.67 |
$ |
7.15 |
$ |
8.65 |
$ |
8.70 |
||||
|
|
|
|
|
||||||||
Revenues - V2O3 produced1 |
$ |
6,213 |
$ |
4,736 |
$ |
13,788 |
$ |
8,534 |
||||
V2O3 sold - produced (000s lb) |
|
596 |
|
426 |
|
1,215 |
|
734 |
||||
V2O3 revenues per pound of V2O3 sold - produced ($/lb) |
$ |
10.42 |
$ |
11.12 |
$ |
11.35 |
$ |
11.63 |
||||
|
|
|
|
|
||||||||
Revenues - V2O3 purchased1 |
$ |
— |
$ |
480 |
$ |
1,155 |
$ |
962 |
||||
V2O3 sold - purchased (000s lb) |
|
— |
|
42 |
|
88 |
|
85 |
||||
V2O3 revenues per pound of V2O3 sold - purchased ($/lb) |
$ |
— |
$ |
11.43 |
$ |
13.13 |
$ |
11.32 |
||||
|
|
|
|
|
||||||||
Revenues - V2O31 |
$ |
6,213 |
$ |
5,216 |
$ |
14,943 |
$ |
9,496 |
||||
V2O3 sold (000s lb) |
|
596 |
|
468 |
|
1,303 |
|
819 |
||||
V2O3 revenues per pound of V2O3 sold ($/lb) |
$ |
10.42 |
$ |
11.15 |
$ |
11.47 |
$ |
11.59 |
||||
|
|
|
|
|
||||||||
Revenues - FeV produced1 |
$ |
11,278 |
$ |
15,664 |
$ |
57,686 |
$ |
71,025 |
||||
FeV sold - produced (000s kg) |
|
479 |
|
559 |
|
2,070 |
|
2,135 |
||||
FeV revenues per kg of FeV sold - produced ($/kg) |
$ |
23.54 |
$ |
28.02 |
$ |
27.87 |
$ |
33.27 |
||||
|
|
|
|
|
||||||||
Revenues - FeV purchased1 |
$ |
— |
$ |
1,713 |
$ |
1,386 |
$ |
22,017 |
||||
FeV sold - purchased (000s kg) |
|
— |
|
64 |
|
50 |
|
603 |
||||
FeV revenues per kg of FeV sold - purchased ($/kg) |
$ |
— |
$ |
26.77 |
$ |
27.72 |
$ |
36.51 |
||||
|
|
|
|
|
||||||||
Revenues - FeV1 |
$ |
11,278 |
$ |
17,377 |
$ |
59,072 |
$ |
93,042 |
||||
FeV sold (000s kg) |
|
479 |
|
623 |
|
2,120 |
|
2,738 |
||||
FeV revenues per kg of FeV sold ($/kg) |
$ |
23.54 |
$ |
27.89 |
$ |
27.86 |
$ |
33.98 |
||||
|
|
|
|
|
||||||||
|
|
|
|
|
||||||||
Revenues1 |
$ |
44,170 |
$ |
47,501 |
$ |
198,577 |
$ |
229,251 |
||||
V2O5 equivalent sold (000s lb) |
|
5,743 |
|
6,116 |
|
22,920 |
|
24,451 |
||||
Revenues per pound sold ($/lb) |
$ |
7.69 |
$ |
7.77 |
$ |
8.66 |
$ |
9.38 |
||||
|
||||||||||||
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.
|
Three months ended |
Year ended |
||||||||||
|
December 31, 2023 |
December 31, 2022 |
December 31, 2023 |
December 31, 2022 |
||||||||
Operating costsi |
$ |
43,218 |
|
$ |
44,455 |
|
$ |
174,758 |
|
$ |
169,719 |
|
Professional, consulting and management feesii |
|
887 |
|
|
1,185 |
|
|
3,102 |
|
|
4,969 |
|
Other general and administrative expensesiii |
|
718 |
|
|
530 |
|
|
1,750 |
|
|
1,390 |
|
Add: insurance proceedsi |
|
— |
|
|
683 |
|
|
— |
|
|
683 |
|
Less: iron ore costsi |
|
(84 |
) |
|
(22 |
) |
|
(722 |
) |
|
(659 |
) |
Less: conversion costsi |
|
(1,768 |
) |
|
(2,231 |
) |
|
(7,319 |
) |
|
(8,070 |
) |
Less: product acquisition costsi |
|
(1,974 |
) |
|
(3,775 |
) |
|
(15,354 |
) |
|
(24,426 |
) |
Less: distribution costsi |
|
(2,366 |
) |
|
(2,282 |
) |
|
(8,540 |
) |
|
(9,169 |
) |
Less: inventory write-downiv |
|
(192 |
) |
|
(332 |
) |
|
(1,853 |
) |
|
(1,987 |
) |
Less: depreciation and amortization expensei |
|
(6,592 |
) |
|
(5,959 |
) |
|
(26,048 |
) |
|
(20,882 |
) |
Cash operating costs |
|
31,847 |
|
|
32,252 |
|
|
119,774 |
|
|
111,568 |
|
Less: royalties1 |
|
(2,243 |
) |
|
(2,106 |
) |
|
(9,162 |
) |
|
(10,371 |
) |
Cash operating costs excluding royalties |
|
29,604 |
|
|
30,146 |
|
|
110,612 |
|
|
101,197 |
|
Produced V2O5 sold (000s lb) |
|
5,437 |
|
|
5,855 |
|
|
20,871 |
|
|
22,121 |
|
Cash operating costs per pound ($/lb) |
$ |
5.86 |
|
$ |
5.51 |
|
$ |
5.74 |
|
$ |
5.04 |
|
Cash operating costs excluding royalties per pound ($/lb) |
$ |
5.44 |
|
$ |
5.15 |
|
$ |
5.30 |
|
$ |
4.57 |
|
|
||||||||||||
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.
|
Three months ended |
Year ended |
||||||||||
|
December 31, 2023 |
December 31, 2022 |
December 31, 2023 |
December 31, 2022 |
||||||||
Net loss |
$ |
(13,301 |
) |
$ |
(15,636 |
) |
$ |
(32,358 |
) |
$ |
(2,226 |
) |
Finance costs |
|
4,096 |
|
|
801 |
|
|
9,630 |
|
|
1,588 |
|
Interest income |
|
(280 |
) |
|
(311 |
) |
|
(2,018 |
) |
|
(1,109 |
) |
Income tax expense |
|
40 |
|
|
(1,336 |
) |
|
88 |
|
|
7,688 |
|
Deferred income tax recovery |
|
(3,119 |
) |
|
(252 |
) |
|
(2,786 |
) |
|
(1,423 |
) |
Depreciationi |
|
7,393 |
|
|
6,725 |
|
|
29,250 |
|
|
23,278 |
|
EBITDA |
$ |
(5,171 |
) |
$ |
(10,009 |
) |
$ |
1,806 |
|
$ |
27,796 |
|
Inventory write-downii |
|
2,407 |
|
|
6,797 |
|
|
4,068 |
|
|
8,739 |
|
Write-down of vanadium assets |
|
3,535 |
|
|
— |
|
|
4,862 |
|
|
— |
|
Insurance proceedsiii |
|
— |
|
|
(683 |
) |
|
— |
|
|
(683 |
) |
Movement in legal provisionsiii |
|
(85 |
) |
|
215 |
|
|
692 |
|
|
5,107 |
|
Employee settlementsiii |
|
699 |
|
|
— |
|
|
699 |
|
|
624 |
|
Adjusted EBITDA |
$ |
1,385 |
|
$ |
(3,680 |
) |
$ |
12,127 |
|
$ |
41,583 |
|
|
||||||||||||
______________________________________________
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
|
|
As at |
|||||
|
|
December 31, 2023 |
December 31, 2022 |
||||
Assets |
|
|
|
||||
Cash |
|
$ |
42,714 |
|
$ |
54,471 |
|
Restricted cash |
|
|
712 |
|
|
470 |
|
Amounts receivable |
|
|
25,598 |
|
|
20,975 |
|
Inventory |
|
|
61,565 |
|
|
64,221 |
|
Prepaid expenses |
|
|
6,534 |
|
|
14,007 |
|
Total Current Assets |
|
|
137,123 |
|
|
154,144 |
|
Other intangible assets |
|
|
6,153 |
|
|
7,263 |
|
Mine properties, plant and equipment |
|
|
212,176 |
|
|
175,237 |
|
Vanadium assets |
|
|
18,674 |
|
|
14,510 |
|
Deferred income tax asset |
|
|
7,495 |
|
|
4,596 |
|
Total Non-current Assets |
|
|
244,498 |
|
|
201,606 |
|
Total Assets |
|
$ |
381,621 |
|
$ |
355,750 |
|
Liabilities |
|
|
|
||||
Current portion of lease liability |
|
$ |
600 |
|
$ |
581 |
|
Accounts payable and accrued liabilities |
|
|
31,439 |
|
|
26,634 |
|
Deferred revenue |
|
|
3,553 |
|
|
1,698 |
|
Debt |
|
|
— |
|
|
4,000 |
|
Current portion of provisions |
|
|
6,863 |
|
|
6,060 |
|
Total Current Liabilities |
|
|
42,455 |
|
|
38,973 |
|
Lease liability |
|
|
925 |
|
|
1,473 |
|
Non-current accounts payable and accrued liabilities |
|
|
724 |
|
|
326 |
|
Long term debt |
|
|
75,000 |
|
|
36,000 |
|
Provisions |
|
|
6,718 |
|
|
4,424 |
|
Total Non-current Liabilities |
|
|
83,367 |
|
|
42,223 |
|
Total Liabilities |
|
|
125,822 |
|
|
81,196 |
|
Equity |
|
|
|
||||
Issued capital |
|
|
412,295 |
|
|
411,646 |
|
Equity reserves |
|
|
12,200 |
|
|
14,138 |
|
Accumulated other comprehensive loss |
|
|
(98,200 |
) |
|
(112,165 |
) |
Deficit |
|
|
(77,643 |
) |
|
(48,227 |
) |
Equity attributable to owners of the Company |
|
|
248,652 |
|
|
265,392 |
|
Non-controlling Interest |
|
|
7,147 |
|
|
9,162 |
|
Total Equity |
|
|
255,799 |
|
|
274,554 |
|
Total Liabilities and Equity |
|
$ |
381,621 |
|
$ |
355,750 |
|
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Expressed in thousands / 000’s of
|
|
Years ended December 31, |
|||||
|
|
2023 |
2022 |
||||
|
|
|
|
||||
Revenues |
|
$ |
198,684 |
|
$ |
229,251 |
|
Expenses |
|
|
|
||||
Operating costs |
|
|
(174,758 |
) |
|
(169,719 |
) |
Professional, consulting and management fees |
|
|
(23,068 |
) |
|
(25,277 |
) |
Foreign exchange (loss) gain |
|
|
(183 |
) |
|
1,584 |
|
Other general and administrative expenses |
|
(11,792 |
) |
|
(14,319 |
) |
|
Share-based payments |
|
|
362 |
|
|
(2,372 |
) |
Finance costs |
|
|
(9,630 |
) |
|
(1,588 |
) |
Interest income |
|
|
2,018 |
|
|
1,109 |
|
Technology start-up costs |
|
(6,122 |
) |
|
(12,695 |
) |
|
Write-down of vanadium assets |
|
|
(4,862 |
) |
|
— |
|
Exploration and evaluation costs |
|
|
(5,705 |
) |
|
(1,935 |
) |
|
|
|
(233,740 |
) |
|
(225,212 |
) |
Net income (loss) before tax |
|
$ |
(35,056 |
) |
$ |
4,039 |
|
Income tax expense |
|
|
(88 |
) |
|
(7,688 |
) |
Deferred income tax recovery |
|
|
2,786 |
|
|
1,423 |
|
Net loss |
|
$ |
(32,358 |
) |
$ |
(2,226 |
) |
Other comprehensive income |
|
|
|
||||
Items that subsequently will be reclassified to operations: |
|
|
|||||
Unrealized gain on foreign currency translation |
|
|
13,965 |
|
|
6,607 |
|
Comprehensive income (loss) |
|
$ |
(18,393 |
) |
$ |
4,381 |
|
Net loss attributable to: |
|
|
|
||||
Owners of the Company |
|
$ |
(30,343 |
) |
$ |
(1,451 |
) |
Non-controlling interests |
|
$ |
(2,015 |
) |
$ |
(775 |
) |
|
|
$ |
(32,358 |
) |
$ |
(2,226 |
) |
Comprehensive income (loss) attributable to: |
|
|
|||||
Owners of the Company |
|
$ |
(16,378 |
) |
$ |
5,156 |
|
Non-controlling interests |
|
$ |
(2,015 |
) |
$ |
(775 |
) |
|
|
$ |
(18,393 |
) |
$ |
4,381 |
|
Basic loss per Common Share |
|
$ |
(0.51 |
) |
$ |
(0.03 |
) |
Diluted loss per Common Share |
|
$ |
(0.51 |
) |
$ |
(0.03 |
) |
Weighted Average Number of Shares Outstanding (in 000’s) |
|
|
|
||||
- Basic |
|
|
64,038 |
|
|
64,446 |
|
- Diluted |
|
|
64,038 |
|
|
64,446 |
|
Consolidated Statements of Cash Flows
Expressed in thousands / 000’s of
|
|
Years ended December 31, |
|||||
|
|
2023 |
2022 |
||||
Operating Activities |
|
|
|
||||
Net loss for the year |
|
$ |
(32,358 |
) |
$ |
(2,226 |
) |
Depreciation |
|
|
29,250 |
|
|
23,278 |
|
Share-based payments |
|
|
(362 |
) |
|
2,372 |
|
Unrealized foreign exchange (gain) |
|
|
(509 |
) |
|
(4,580 |
) |
Non-cash listing expense |
|
|
— |
|
|
571 |
|
Loss on sale of vanadium assets |
|
|
156 |
|
|
— |
|
Finance costs |
|
|
9,630 |
|
|
1,588 |
|
Interest income |
|
|
(2,018 |
) |
|
(1,109 |
) |
Write down of vanadium assets |
|
|
4,862 |
|
|
— |
|
Income tax expense |
|
|
88 |
|
|
7,688 |
|
Deferred income tax recovery |
|
|
(2,786 |
) |
|
(1,423 |
) |
Income tax paid |
|
|
(686 |
) |
|
(4,735 |
) |
Cash Provided Before Working Capital Items |
|
5,267 |
|
|
21,424 |
|
|
Change in amounts receivable |
|
|
(3,861 |
) |
|
3,573 |
|
Change in inventory |
|
|
5,361 |
|
|
(15,710 |
) |
Change in prepaid expenses |
|
|
7,961 |
|
|
(7,232 |
) |
Changes in accounts payable and provisions |
|
|
4,614 |
|
|
5,176 |
|
Change in deferred revenue |
|
|
1,855 |
|
|
(3,771 |
) |
Net Cash Provided by Operating Activities |
|
|
21,197 |
|
|
3,460 |
|
Financing Activities |
|
|
|
||||
Receipt of debt |
|
|
70,000 |
|
|
55,000 |
|
Repayment of debt |
|
|
(35,000 |
) |
|
(30,000 |
) |
Interest paid |
|
|
(7,065 |
) |
|
(616 |
) |
Interest received |
|
|
2,014 |
|
|
1,109 |
|
Lease payments |
|
(580 |
) |
|
(569 |
) |
|
Change in restricted cash |
|
|
(242 |
) |
|
(22 |
) |
Sale of non-controlling interest |
|
|
— |
|
|
7,344 |
|
Share repurchase |
|
|
— |
|
|
(6,088 |
) |
Issuance of common shares |
|
|
— |
|
|
277 |
|
Net Cash Provided by Financing Activities |
|
|
29,127 |
|
|
26,435 |
|
Investing Activities |
|
|
|
||||
Intangible assets |
|
|
(157 |
) |
|
(3,444 |
) |
Mine properties, plant and equipment |
|
|
(53,546 |
) |
|
(42,193 |
) |
Purchase of vanadium assets |
|
|
(10,115 |
) |
|
(14,510 |
) |
Sale of vanadium assets |
|
|
933 |
|
|
— |
|
Net Cash Used in Investing Activities |
|
|
(62,885 |
) |
|
(60,147 |
) |
Effect of foreign exchange on cash |
|
|
804 |
|
|
933 |
|
Net Change in Cash |
|
|
(11,757 |
) |
|
(29,319 |
) |
Cash position – beginning of the year |
|
|
54,471 |
|
|
83,790 |
|
Cash Position – end of the year |
|
$ |
42,714 |
|
$ |
54,471 |
|
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.
FAQ
What were Largo Inc.'s Q4 2023 revenues?
What was the net loss in Q4 2023?
What was the annual revenue for 2023?
What was the adjusted EBITDA in Q4 2023?
What joint venture did Largo Inc. announce?
What deployment did Largo Clean Energy make in Q4 2023?
What was the cash operating cost per pound in 2023?
What was the vanadium spot demand like in Q4 2023?
What was the average benchmark price per pound of V2O5 in Europe in Q4 2023?
What was the total ore mined in 2023?
What was the increase in V2O5 equivalent production in Q4 2023 compared to Q3 2023?
What was the net loss in 2023 compared to 2022?
