Largo Inc. (LGO) Earnings Call Transcript & Summary

Mr. Chairman, I second the motion.

Thank you. If there are no further questions, please cast your votes on Item 2 before we move into Item 3. [Voting]

The next item of business is to consider and if deem advisable to ratify and approve a special resolution amending the company's article to change its name from Largo Resources Ltd. to Largo, Inc. as more particularly described in the information circular. The resolutions must be approved by a special majority approval of the votes cast by the shareholders at this meeting, excluding any admissible persons under the option plan.

Mr. Chairman, I move the resolution set out in Schedule B to the information circular, ratifying and approving the special resolution amending the company's article to change its name that the full text of resolution containing the Schedule B to the information circular be taken as read and make part of the minutes of the meeting.

Mr. Chairman, I second the motion.

Thank you. Please cast your votes on Item 3. [Voting]

Are there any questions in respect of the formal business before the meeting? Questions related to this matter of other than the formal business of the meeting will be dealt with after the formal business has terminated. Okay. I don't see any questions. If there are no other -- no questions, is there any other formal business? Thank you for your participation at our virtual meeting. For those of you who have voted on all of the resolutions, please do so as I will shortly close the poll. I will now give you a few additional seconds to complete your voting and allow online viewers to catch up. [Voting]

The polls are now closed. Based on the proxies received prior to the cut-off time, I can provisionally declare all resolutions have been passed and note that the formal results of the voting will be disclosed later today via press release. I will now ask someone to move and someone to second a resolution that this meeting now terminated.

Mr. Chairman, I move the following resolution, be it resolved that this meeting be terminated.

Mr. Chairman, I second the motion.

I declare that this meeting is now terminated. Thank you. Paulo Misk, President and CEO of Largo, will now provide a brief overview of the company's achievements in 2020 in addition to an outlook for the year ahead. Following Paulo's presentation, we will open the meeting to questions. Paulo?

Thank you, Alberto, and thanks to everyone for attending today. During this presentation, I will highlight our accomplishments in 2020 as well our outlook for the year ahead. Could you -- next slide, please. Yes. Ladies and gentlemen, as a standard practice, with all presentations. So let's -- okay, the third one. Vanadium is critical in the green economy and the world decarbonization efforts. It plays an important role in reducing the footprint of the entire steel production chain. As you can see, [indiscernible] which -- we can [indiscernible] when we use vanadium. Also used with -- in VRFBs for integrated renewable energy plus the V electrolyte lasts forever. And it's also in the titanium alloys for superior fuel efficiency aerospace components. Largo is focused on its vertical integration strategy using its high-quality vanadium and superior VRFB technology, further its commitment to driving sustainable growth with a focus on the green energy economy. Next slide, please. 2020 was a transformational year for Largo, and we threw the seeds to be even better in the future. Instituted our internal sales and traded in vision to drive additional value for the company, began construction of the V2O3 plant, navigated the COVID-19 pandemic. I'm proud to report that Largo team rallied, despite travel restrictions, work-at-home regulations and the difficulties of safety, operating a mine in Brazil. From the onset, we have done our best to ensure a safe and healthy place to work at Maracás Menchen mine, and we have made every effort to provide better conditions for communities to face this challenge period of pandemic. At the mine, we established with strict or guideline with frequent testing. In the community, we established Largo as a source of trust and prevention. We conducted information campaigns, donated enormous quantity of PPEs and COVID test and helped those who were economically affected, including donating a large amount of food basket. We funded an equipment frontline medical professionals and supported a local government workshop, which we had helped establish years ago to make and distribute thousands of free masks. Largo exited 2020 with a strong operation and financial momentum following new quarterly and annual production records and a new quarterly sales record. Strategically, we have made the transition to vertically integrate the company with our newly developed Clean Energy division. In 2021, we remain focused on value creation and Largo through our outstanding operation performance, vanadium sales, starting the implementation of new vanadium plant, which is the first step of our titanium project. New product addition with the V2O3 and downstream is our vertical integrated Clean Energy division. The vanadium market remains robust with price nearly $9 per pound. With the addition of V2O3, we expect to assess more of the readily recovering high market and have the perfect raw material for the V electrolyte production. We expect to sign VRFB contracts in 2021 and delivery of an expected 40-megawatt hour in 2022. Responsible mining -- the next slide, please. Responsible mining of vanadium is the foundation of our business operation. We continue to focus on improvements integrating new ESG principles and values throughout our organization. The company conducted an ESG GAAP analysis in 2020, which has led to several recommendations. The company is now working on improvement opportunities to reach overall ESG performance and disclosure. In 2020, we completed the external [indiscernible] of our sustainability performance. We progresses towards -- through ISO 9001 certification, which we expect to complete by mid-2021. We're committed to align it with the 17 sustainable development goals of the United Nation, which will have an increasing impact on our actions and decisions making in coming years. New safety record with 2 million hours result on an LTI. We expect to release our updated and improved 2020 sustainability report in July. This report itself is longer than previous report with greater depth and detail. This is not just a direct response to investor demand for increased transparency but is also in line with our beliefs, values and environmental and social responsibilities, new metrics and increase the KPIs, notably the greenhouse gas emission reporting reflect improvements in data collection. In future reports, we will not only continue to increase the metrics reported, but we will be able to analyze year-on-year data to review trends and bottoms. I'm pleasant to say that our growth, technology and diverse were recognized by the Brazil Mineral Magazine, who named us a company of the year in the mining sector of 2020. Next slide, please. 2020 was a record year for production and sales for Largo. We produced a record of 11,825 tonnes, a 12% increase over 2019 and within 2020 V2O5 production guidance and with a continued focus on cost control at the mine with annual cash operating costs excluding royalties of $2.56 were bound of V2O5. It's 5% lower than 2020 cost guidance and 16% lower than 2019. We continue to be the world's lowest cost primary vanadium producer with some of the highest-grade product. Next slide, please. Looking ahead to 2021, I remain confident that the operation and sales processes, where we instituted in 2020, has set a solid foundation for continued growth in 2021. We are pleasant to report that we expect to increase Largo annual V2O5 production to between 12,000 and 12,500 tonnes of V2O5 equivalent in 2021. We also expect to increase our V2O5 equivalent sales to 12,250 to 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 royalties and total costs, expected to be between $3.10 and $3.30 per pound and $3.50 to $3.70 per bound of V2O5 sold, respectively. Next slide, please. We expect a digital shareholder value increase from our vertically integrated Clean Energy division, as recently discussed during the Largo Day. The reason of our strategic shift from being a pure vanadium producer to a high-purity supplier and integrated vanadium clean energy storage business company is based on our ability to find a higher value opportunity for the company's vanadium products. Our business model shows that Largo should generate more cash flows per unit of vanadium at price below $13 per pound of V2O5 with V2O5 price are $8.75 per pound. Second, the creation of the innovative business model involving vanadium electrolyte rental with that is a cornerstone of the Clean Energy division's competitive advantage and a source of long-term recurring cash flows. Is this possible to do the unique correcter risk of the in which vanadium does not degrade and is easily reusable unlike vanadium -- unlike lithium and other batteries material. Lastly, we believe that the success of our VRFB business model will generate additional global vanadium demand, providing support for vanadium as we transition to using an increased amount of vanadium battery products. With growing demand, Largo is positioned to maximize the full potential value of its existing vanadium mineral assets. Largo can provide the world with increased vanadium supply needs with cost-efficient brownfield expansions of our mine and our deposits in Brazil. The transformation of Largo business model should result in a material increase of -- in the company's growth profile and cash flows, less earnings volatility and increase shareholder value. Next slide, please. To close out today, I'd like to highlight some of the company's near-term catalysts. We remained focused on our operational excellence in Maracás, with a laser focus on cost discipline. We remain the largest primary producer of high-quality vanadium at one of the lowest cost, uniquely positioned Largo. Namely, we'd like to highlight the robust vanadium market fundamentals in the year ahead. We expect price to remain at these levels for the remainder of the year. With the resolution of the U.S. and Europe economies, as a result of the post-COVID stimulus package, we believe the vanadium market is poised for additional growth in the near term. We expect to release our updated tech report in the coming months incorporating the titanium in our resource and reserve as well into our business plan. Lastly, we remain focused on advancing our clear and decision with the announcement of our first contract in the coming weeks. With that, we'd like to take any additional questions from the audience. I see no further questions. Thank you, everyone, for joining us today. That concludes our annual and special meeting.

Ladies and gentlemen, thank you for joining today's meeting. You may now disconnect.