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Largo Resources (Otc) (TSE:LGO)
:LGO
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Largo Resources
(NASDAQ:LGO)
46Neutral
Positive Factors
Operational Capabilities
The ramp-up of ilmenite concentrate production was successful, affirming the company's operational capabilities.
Strategic Partnerships
The formation of a joint venture with Stryten Energy could become a major force in the U.S. domestic vanadium production and supply chain.
Negative Factors
Production Challenges
Unexpected challenges with refractory replacement at the site further impacted production levels.
Largo Resources (LGO) vs. S&P 500 (SPY)
Market Cap
C$157.71M
Dividend YieldN/A
Average Volume (3M)34.29K
Price to Earnings (P/E)―
Beta (1Y)1.65
Revenue Growth-27.73%
EPS Growth-44.62%
CountryCA
Employees533
SectorBasic Materials
Sector Strength63
IndustryMining
Share Statistics
EPS (TTM)-1.04
Shares Outstanding64,111,000
10 Day Avg. Volume32,832
30 Day Avg. Volume34,289
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.77
Price to Cash Flow (P/CF)-5.20
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$5.34Price Target Upside117.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Largo Resources Business Overview & Revenue Model
Company DescriptionLargo Resources Ltd. (LGO) is a Canadian-based natural resource company primarily engaged in the production and supply of vanadium. The company operates one of the highest-grade vanadium mines in the world, the Maracás Menchen Mine located in Brazil. Largo Resources focuses on the mining, production, and commercialization of vanadium products, which are essential in various industrial applications including steel manufacturing, aerospace, and energy storage solutions.
How the Company Makes MoneyLargo Resources generates revenue primarily through the mining and sale of vanadium products. The company extracts vanadium ore from its Maracás Menchen Mine, processes it into different vanadium compounds, and sells these products to a global customer base. The key revenue streams include the sale of vanadium pentoxide, which is used in the production of ferrovanadium for steel strengthening, and vanadium trioxide, used in the aerospace industry. Additionally, Largo is expanding its presence in the renewable energy sector by developing vanadium redox flow batteries for energy storage, which represents a growing segment of its business. The company's earnings are also influenced by strategic partnerships with industrial manufacturers and fluctuations in global vanadium prices.
Largo Resources Financial Statement Overview
Summary
Largo Resources faces significant financial challenges with declining revenues and profitability. The balance sheet provides some stability, but cash flow issues and negative profit margins highlight operational inefficiencies and potential liquidity risks. Strategic changes may be necessary to improve financial health.Income Statement
The income statement shows a declining trend in revenue from the previous year, with a significant negative net income leading to unfavorable net profit margins. The TTM (Trailing-Twelve-Months) period exhibits negative gross profit and EBIT margins, highlighting operational challenges. The EBITDA margin has also deteriorated, indicating reduced operational efficiency.35
Negative
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio, which indicates some reliance on debt but not overly leveraged. However, the return on equity is negative due to losses, which is concerning. The equity ratio remains relatively healthy, providing some stability.60
Neutral
Cash Flow
Cash flow analysis reveals negative free cash flow growth and a weakened operating cash flow to net income ratio. These factors suggest potential liquidity challenges. However, the company maintains a positive operating cash flow, which provides some operational liquidity, albeit insufficient to cover capital expenditures.40
Negative
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 144.82M | 198.68M | 229.25M | 198.28M | 119.99M | 107.18M | Gross Profit |
| -14.02M | 23.93M | 59.53M | 65.27M | 31.60M | 12.38M | EBIT |
| -46.02M | -16.28M | 16.97M | 36.97M | 18.80M | ― | EBITDA |
| -29.52M | 3.82M | 37.71M | 69.45M | 35.58M | 19.69M | Net Income Common Stockholders |
| -48.86M | -30.34M | -2.23M | 22.57M | 6.76M | ― |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 42.71M | 42.71M | 54.47M | 83.79M | 79.14M | 127.14M | Total Assets |
| 381.62M | 381.62M | 355.75M | 313.91M | 297.81M | 356.83M | Total Debt |
| 76.53M | 76.53M | 42.05M | 17.55M | 24.79M | 0.00 | Net Debt |
| 33.81M | 33.81M | -12.42M | -66.24M | -54.36M | -127.14M | Total Liabilities |
| 125.82M | 125.82M | 81.20M | 48.21M | 50.64M | 85.40M | Stockholders Equity |
| 248.65M | 248.65M | 265.39M | 265.70M | 247.16M | 271.43M |
| Cash Flow | Free Cash Flow | ||||
| -31.41M | -32.51M | -42.18M | 12.38M | -77.61M | 68.05M | Operating Cash Flow |
| 9.26M | 21.20M | 3.46M | 39.78M | -59.51M | 106.63M | Investing Cash Flow |
| -39.74M | -62.88M | -60.15M | -27.40M | -18.11M | ― | Financing Cash Flow |
| 22.22M | 29.13M | 26.43M | -6.90M | 30.23M | ― |
Largo Resources Technical Analysis
Negative
2.46
Price Trends
2.57
Negative
2.74
Negative
2.67
Negative
Market Momentum
-0.04
Positive
45.33
Neutral
47.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:LGO, the sentiment is Negative. The current price of 2.46 is below the 20-day moving average (MA) of 2.53, below the 50-day MA of 2.57, and below the 200-day MA of 2.67, indicating a bearish trend. The MACD of -0.04 indicates Positive momentum. The RSI at 45.33 is Neutral, neither overbought nor oversold. The STOCH value of 47.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:LGO.
Largo Resources Peers Comparison
Overall Rating
UnderperformOutperform
Sector (46)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $14.39B | ― | 0.02% | ― | -24.38% | 99.06% | |
56 Neutral | C$5.13B | 216.64 | 1.33% | 1.04% | 1.62% | -232.31% | |
46 Neutral | $2.64B | -3.89 | -29.36% | 3.33% | 2.89% | -29.66% | |
46 Neutral | C$157.71M | ― | -21.82% | ― | -27.73% | -44.62% | |
44 Neutral | C$12.91M | ― | -58.91% | ― | -83.85% | -24.32% | |
43 Neutral | C$18.25M | ― | -5.00% | ― | ― | -1118.18% |
* Basic Materials Sector Average
Performance Comparison
TSE:LGO
Largo Resources
2.46
-0.02
-0.81%
TSE:OR
Osisko Gold Royalties
27.46
6.04
28.17%
TSE:AVL
Avalon Advanced Materials
0.03
-0.06
-64.71%
TSE:FM
First Quantum Minerals
17.25
4.04
30.58%
TSE:GMA
Geomega Resources
0.09
-0.06
-40.00%
Largo Resources Earnings Call Summary
Earnings Call Date: Nov 12, 2024 | % Change Since: -14.88% | Next Earnings Date: Mar 21, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed view with significant achievements in production and cost management but faced challenges due to lower vanadium prices and market demand. While operational efficiencies and strategic initiatives show promise for future growth, current financial performance is still under pressure from external market factors.Highlights
Record Vanadium Production
Largo delivered its highest quarterly vanadium production in 7 quarters, producing 3,072 tonnes, up 42% from Q3 last year.
Cost Reduction Achievements
Operating costs decreased by 31% from $44 million in Q3 2023 to $29.5 million in Q3 2024, and cash operating costs, excluding royalties, were reduced by 43%.
Ilmenite Production Increase
Ilmenite production reached 16,383 tonnes, an increase of 90% over the previous quarter.
Increase in Mineral Reserves and Resources
A 67% increase in mineral reserves and a 64% increase in mineral resources were reported, expanding mine life to 2054.
Successful Ilmenite Sales
Ilmenite sales totaled 19,572 tonnes, a 60% increase over Q2 2024.
Lowlights
Revenue Impacted by Lower Vanadium Prices
Revenues were $29.9 million, impacted by lower vanadium prices and reduced sales volumes, with the average benchmark price per pound of V205 in Europe down to $5.71 compared to $8.03 in Q3 2023.
Net Loss Reported
A net loss of $10.1 million was reported in Q3 2024, compared to a net loss of $11.9 million in Q3 2023.
Decreased Vanadium Sales Volume
Vanadium sales volume decreased by 18% due to softer spot demand, particularly in Asia and Europe.
Challenges in Vanadium Market
Continued headwinds in the vanadium market, especially within the steel sector, and oversupply in the Chinese market have pressured prices.
Potential Impact on Q4 Production
Q4 production is expected to be impacted by annual kiln maintenance, resulting in lower production levels and higher operating costs.
Company Guidance
During the Q3 2024 earnings call for Largo, the company provided detailed guidance on several operational and financial metrics. They reported their highest quarterly vanadium production in seven quarters, reaching 3,072 tonnes, a 42% increase compared to Q3 2023. Operating costs were reduced by 31%, dropping from $44 million in the previous year to $29.5 million this quarter, with cash operating costs excluding royalties at $3.12 per pound sold, a 43% decrease. Their net loss improved to $10.1 million, including $3.3 million in nonrecurring items, compared to a $11.9 million loss the previous year. Additionally, Largo announced a vanadium supply agreement expected to unlock $23.5 million in liquidity. The company also highlighted a 67% increase in mineral reserves and a 64% increase in mineral resources, projecting a mine life extending to 2054. Despite ongoing challenges in vanadium prices, the strategic initiatives and production efficiencies position Largo to capitalize on future opportunities.Largo Resources Corporate Events
Largo and Stryten Join Forces for Energy Storage
Dec 19, 2024
Largo Inc. and Stryten Energy are forming a joint venture, Storion Energy, to manufacture vanadium electrolyte and battery components aimed at the growing long-duration energy storage market. This partnership is expected to leverage synergies and accelerate Largo’s strategic position in the vanadium flow battery industry, potentially boosting demand for its vanadium products.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.