[Ferro-Alloys.com] Largo Reports Fourth Quarter and Full Year 2021 Operational Results; Sales Exceeds Lower End of Guidance Despite Rain-Related Production Disruption in November-December; Provides 2022 Guidance (Businesswire)

Largo Inc. ("Largo" or the "Company") (TSX: LGO) (NASDAQ: LGO) today announces annual production of 10,319 tonnes (22.7 million lbs¹) of vanadium pentoxide (“V₂O₅”) and sales 11,393 tonnes of V₂O₅ equivalent from its Maracás Menchen Mine in 2021.

Paulo Misk, President and CEO of Largo, stated: “Despite encountering global logistical delays throughout the year and heavy rains in Brazil in Q4 2021, our team adapted to the challenges presented and managed to exceed the lower range of the Company’s vanadium sales guidance in 2021. I am also pleased to report the Company had a strong finish to the year with V₂O₅ equivalent sales of 1,029 tonnes in December. Abnormally elevated levels of rainfall in November and December significantly impacted operational results at the MaracásMenchen Mine in Q4 2021 which our operations team worked diligently to implement an effective divert channel system that is expected to prevent heavy rainfall impacts in the future. The Company returned to normalized production levels following the planned 6-day maintenance shutdown which took place early in January.”

He concluded: “Looking ahead, the Company remains focused on completing a significant milestone following the delivery of its first VCHARGE VRFB to Enel in Q3 2022 and will begin executing Phase 1 of its operational plan as presented in the Company’s recently released technical report for the Maracás complex in Brazil. We believe the expected incremental cash flows generated by the production and sale of ilmenite concentrate and TiO₂ pigment and future planned expansion of vanadium production will provide clear value creation upside to our shareholders going forward. 2022 will undoubtedly present new challenges for our team but we remain focused on the tremendous growth opportunity that exists in our profitable vanadium business and our vanadium-based energy storage business from the deployment of additional VRFB systems expected in the years ahead.”

Q4 and FY 2021 Operational Highlights

• Operational Results Largely Impacted by Heavy Rainfall in Maracás: Production from the MaracásMenchen Mine was 2,003 tonnes of V₂O₅ in Q4 2021, representing a decrease of 40% over Q4 2020, which was historically the Company’s strongest production quarter. Lower quarterly production was due to heavy rainfall at the Company’s Maracás operation in November and December. Annual V₂O₅ production was 10,319 tonnes in 2021, being 13% lower than 2020. Lower annual production was due to the commissioning and ramp up activities associated with the Company’s kiln and cooler upgrades in Q1 2021 and heavy rainfall in November and December. In Q4 2021, global recoveries³ averaged 76.0% as compared to the 80.6% averaged in Q4 2020. The Company achieved an annual average global V₂O₅ recovery³ rate of 79.7% in 2021, representing a 2.0% decrease over the 81.4% averaged in 2020. The Company mined 1,248,967 tonnes of ore with an effective V₂O₅ grade² of 1.00% in 2021 compared to 1,087,518 tonnes with an effective V₂O₅ grade² of 1.29% in 2019. The decrease in global recoveries³ and mined ore in 2021 is primarily due to the impacts mentioned above.
• Lower End of Annual Sales Guidance Met: In Q4 2021, V₂O₅ equivalent sales were 2,899 tonnes, representing a 23% decrease over Q4 2020. Total V₂O₅ equivalent sales of 11,393 tonnes in 2021 exceeded the lower end of the Company’s 2021 annual sales guidance (11,200 – 11,800 tonnes) and were 11% higher than total sales in 2020. The Company continued to navigate challenges presented by global logistical delays in Q4 2021, which have impacted all aspects of the Company’s supply chain.
• Summary of Rainfall Effects and Drainage Improvements: During November and December, higher than expected rain volume of approximately 580 millimeters fell in Maracás, representing an increase of 690% over monthly rainfall average (2014 – 2020) and 360% over the rainfall average for the Q4 period (2014 – 2020). Following impacts in Q4 2021 from abnormally higher rainfall levels, the Company installed a rainwater diversion system surrounding the Campbell Pit and has revamped its pumping system. The Company expects that these actions will prevent future impacts to operations from higher-than-expected rainfall.
• Vanadium Trioxide (“V₂O₃”) Plant: In Q4 2021, the Company completed the ramp up of its V₂O₃ plant and provided samples to prospective clients for product specification analysis. The Company expects to begin shipping V₂O₃ to customers in Q1 2022.

2022 Production, Sales and Cost Guidance

The Company has provided solid production, sales and cost guidance for 2022 and management expects to maintain its global competitive position in the vanadium sector. A table summarizing 2022 production, sales and cost guidance has been provided below:

2022 Capital Expenditures Guidance

In 2022, the Company plans to invest approximately $64.0 million on capital expenditures of which approximately $2.0 million has been carried over from the 2021 capital expenditures budget. The $64.0 million capital expenditure budget includes approximately $9.5 million for sustaining capital requirements, $10.5 million for capitalized stripping, $29.5 million for the construction of the Company’s ilmenite concentration plant, $9.5 million for its TiO₂ processing plant and $2.0 million for additional LCE development. For its ilmenite concentration plant project, the Company’s current capex plans increased by $6.8 million versus its prior estimate (see press release dated March 18, 2021) due to the incorporation of improvements in its ilmenite concentration which should increase ilmenite concentrate grades to above 45% TiO₂ from 40%. The increase in overall capital expenditures versus prior years will allow Largo to advance its planned growth projects to enhance future profitability and market competitiveness. The Company expects to fund these capital expenditure projects through internal cash flows.

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