Largo, the Toronto listed producer that operates the Maracas Menchen mine in Brazil, the world’s largest primary vanadium operation, began producing copper, gold, platinum and palladium as byproducts in the third quarter. Copper output was 108 tonnes contained in concentrates, gold 289 ounces, platinum 166 ounces and palladium 291 ounces, all first production from material associated with its vanadium operations. No ilmenite was produced in the quarter, as the company chose to use its flotation plant for the higher margin byproduct output instead.
Vanadium pentoxide production was 2,093 tonnes in the quarter, down from 2,636 tonnes a year earlier under a strategy of reducing inventories and refocusing on high margin products, while sales held steady at 2,428 tonnes. Nine month production of 7,609 tonnes was up 23 percent year on year. Largo maintained its vanadium sales guidance of 7,500 to 9,500 tonnes but lowered production guidance to 9,500 to 10,500 tonnes from 10,500 to 12,000 tonnes. The company mined 543,688 tonnes of ore in the quarter at an effective grade of 0.41 percent vanadium pentoxide and a recovery of 81.4 percent, against 0.52 percent and 79.4 percent a year earlier.
The economics explain the shift. Recent sales of copper and platinum group metal concentrates generated about $4.7 million of revenue at an operating profit margin above 90 percent, making them the company’s highest margin product, and Largo is evaluating an expansion to double that concentrate production in 2027. High purity vanadium is the other leg, including a first $60 million purchase order from the United States Defense Logistics Agency. Management has said the strategy may reduce overall vanadium volumes while raising value per tonne.
The balance sheet remains the constraint. Largo has executed a definitive restructuring agreement with Banco Santander Brasil, and together with earlier agreements the arrangements cover approximately 58.4 percent of its commercial bank senior debt. The rest is still to be restructured, which is why a byproduct stream with very high margins matters out of proportion to its tonnage.