Largo Inc. (LGO:TSX; LGO:NASDAQ) has put out a press release that details the results of Q3, 2023, where the company reports that it produced a total of 2,163 tons of vanadium pentoxide equivalent (V2O5) and sold a total of 2,385 tons at a price of CA$8.03 per pound on the European market, a region where Largo has major contracts. According to the press release, further highlights of Q3 include a recovery rate of 76.9% for V2O5 production, an increase in production at the company’s ilmenite plant, and the conclusion of testing preceding the deployment of its vanadium redox flow battery (VRFB) for Enel Green Power Espana. The company also reported that the guidance for 2023 has remained unchanged.
According to Daniel Tellechea, the interim CEO of Largo, “despite production setbacks in the third quarter caused by the previously reported accident in our chemical plant and delays in the ramp of our new magnetic separator in the crushing plant, Largo remains steadfast in its commitment to rectifying operations in the fourth quarter and has maintained its production, cost and capex guidance for 2023.” He also stated that Largo was enthusiastic about the advancements in its installment of the VRFB for Enel Green Power Espana, and that “the review of strategic alternatives to unlock and fully maximize the value of LCE remains ongoing and has garnered interest from various parties thus far.
A Growing Market of Green Energy
According to Mordor Intelligence, the market for vanadium batteries is supposed to grow by 9.5% between 2023 and 2028, and identified drivers of the market as the search for energy efficient infrastructure, and the desire for safer batteries, as lithium ion batteries involve risks related to fire. Mordor Intelligence reported that the utility sector, the solar energy industry, and the wind turbine industry are most likely to invest in vanadium batteries, especially on the Asian market.
Value and Growth Characteristics
Price Target Research released a report on Largo Inc. on October 6, 2023, and gave the company a neutral rating. The report named a target price of CA$6.00 for Largo, significantly higher than the current selling price of CA$2.76. According to this report, “relative to the S&P 500 Composite, Largo Inc. has slightly more Value than Growth characteristics; its appeal is likely to be to Capital Gain-oriented investors; the perception is that LGO is higher risk.”
On September 14, 2023, Sadif Investment Analytics rated the company as “above average,” and predicted a potential 44.36% increase in business. The report stated that “Largo is a high quality company. With good business rating, it has fair financials and reasonable corporate governance. In terms of risk, Largo Inc, is safe.”
A further press release put out by the company reported that the analyst Bryce Adams of CIBC kept his "neutral" rating of the company, and stated that his target price for the company is CA$8.25.
Ownership and Share Structure
Streetwise Ownership Overview*Reuters provided a breakdown of the company’s ownership and share structure, where management and insiders own 0.29% of the company. According to Reuters, Chairman J. Alberto Arias owns 0.10% of the company with 0.06 million shares, CFO Ernest Cleave owns 0.05% of the company with 0.03 million shares, Director David W. Brace owns 0.05% of the company with 0.03 million shares, Director Daniel Tellechea Salido owns 0.03% of the company with 0.02 million shares, COO of Brazil Alvaro Jose Do Carmo Resende owns 0.02% of the company with 0.01 million shares, President Stephen Prince owns 0.02% of the company with 0.01 million shares, and CCO Paul Marie Michel Vollant owns 0.02% of the company with 0.01 million shares.
According to Reuters, insiders own approximately 22.28% of the company. Reuters reports that West Family Investments, Inc. owns 8.70% of the company with 5.57 million shares, Grantham Mayo Van Otterloo & Co LLC owns 8.27% of the company with 5.30 million shares, Baker Steel Capital Mangers LLP owns 2.59% of the company with 1.66 million shares, Mellon Investments Corporation owns 1.45% of the company with 0.93 million shares, Konwave AG owns 0.55% of the company with 0.35 million shares, Credit Suisse Funds AG owns 0.20% of the company with 0.13 million shares, Russell Investments Trust Company owns 0.18% of the company with 0.12 million shares, Mid-Continent Capital, LLC, owns 0.18% of the company with 0.12 million shares, and Claybrook Capital, LLC, owns 0.16% of the company with 0.10 million shares.
Arias Resource Capital Management LP, a strategic investor, owns 43.78% of the company with 28.04 million shares.
There are 64.05 million shares outstanding and 35.83 million free float traded shares, Reuters reports, and the company has a market cap of CA$189.1 million and trades in the 52 week period between CA$3.54 and CA$9.48.
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- Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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