Largo targeting higher-margin sectors with its pure vanadium product

VANCOUVER (miningweekly.com) – Vanadium producer Largo Resources is targeting higher-margin markets for its pure vanadium product being produced at the Maracás Menchen mine, in Bahia, Brazil.

The company announced Tuesday that it intends to produce, qualify and sell its vanadium products at the specifications required for use in the aerospace alloy market sector via Glencore International, the existing exclusive offtaker of all vanadium product currently produced from the Maracás Menchen operation.

The TSX-listed company notes that high strength low alloy vanadium steels are replacing lower strength traditional steels at an accelerating pace as the steel industry increasingly demands stronger and lighter products for advanced applications.

Largo believes that its vanadium products are among the highest quality in the industry, which enables it to pursue the use of its vanadium products at higher price points in specialty steel and alloy applications. The benefit of participating in a more profitable market sector along with rising vanadium prices presents a unique opportunity to the company and its shareholders.

"Now that the Maracás Menchen mine has demonstrated stable and consistent operations, it is poised to benefit greatly from selling its vanadium products into higher margin market sectors as well as from general increases in vanadium prices, which we anticipate will strengthen further during 2017,” stated president and CEO Mark Smith.

As a result of continuing pressure on vanadium prices and the company’s cash resources, Largo announced in the third quarter that it will defer the previously considered expansion. However, the price of vanadium pentoxide had found a floor at a ten-year low of around $2.38/lb in December 2015, and had about doubled since then to a mid-range of $4.75/lb as at the end of October.

Largo also announced a new daily production record of 39 t, which was achieved on December 17. This daily production record exceeds nameplate capacity on a daily basis by about 48%.