Largo Resources Ltd (OTCMKTS: LGORF) is up 13% at the time of writing and the driver seems to be a solid financial performance for Q3 that is now sinking in with investors. The stock was a little herky-jerky earlier in the week as an exercise of all unlisted warrants to be exercisable on a cashless basis triggered a fear of dilution.
However, the stock is now recovering those losses after revenues were $149.5 million in Q3 2018, a 179% increase over Q3 2017 and a 45% increase over Q2 2018. Net income of $71.4 million and basic earnings per share of $0.14. The record numbers from Largo comas as production output was 2% higher than in Q3 2017 and 4% higher than in Q2 2018. The global recovery rate in Q3 2018 (77.1%) was slightly lower than Q2 2018 (79.2%), due to operational instability in the kiln as a result of the refractory liner maintenance in July and August. The kiln performance also impacted the leaching recovery during the same period. Additionally, the milling recovery was negatively affected by a coarser grind size. The September global recovery level was however a record 82.2%, mainly due to improved kiln stability and better control of the milling section.
Largo Resources Ltd (OTCMKTS: LGORF) bills itself as a natural resource development and exploration company, engages in the acquisition, exploration, and development of mining and exploration properties located in Brazil and Canada. The company primarily explores for vanadium, iron, tungsten, molybdenum, chromite, palladium, and platinum group metals. Its flagship project is the Maracás Menchen Mine that consists of 18 concessions covering an area of 17,690.45 hectares located in Bahia State, Brazil.
The company was formerly known as Consolidated Kaitone Holdings Ltd. and changed its name to Largo Resources Ltd. in June 2004. Largo Resources Ltd. was incorporated in 1988 and is headquartered in Toronto, Canada.
Moreover, Largo Resources Ltd. is a mid-tier mining development company primarily focused on the production of vanadium at its Maracas Menchen Mine in Brazil.
According to company materials, “Largo is a Toronto-based strategic mineral company focused on the production of vanadium flake, high purity vanadium flake and high purity vanadium powder at the Maracás Menchen Mine located in Bahia State, Brazil. The Company’s common shares are principally listed on the Toronto Stock Exchange.“
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Mark Smith, Chief Executive Officer for LGORF, stated on Q3 results “Largo delivered robust financial performance as a result of record operational output from the Maracás Menchen Mine in the third quarter. The Company also reported the highest ever revenues and operating cash flows to date of $149.5 million and $113.4 million, respectively, and continues to strengthen its balance sheet every quarter. Production at the Maracás Menchen Mine continued to be strong delivering its best quarter of the year with record production of 2,563 tonnes of V2O5. We continue to advance the expansion project at the Maracás Menchen Mine and the Company remains on track to achieve its increased production guidance for 2018.”
Previously, LGORF announced an expansion of the Maracás Menchen Mine. It will increase the production capacity of the milling, fusion (deammoniator, furnace and flaking wheel), leaching and filtering areas. According to the press, the enhanced production rate at the Maracás Menchen Mine is expected to result in an additional 200 tonnes of V2O5 being produced per month from and after June 2019 and capital expenditures for the plan are anticipated to total approximately US$15.5 million using current exchange rates.
Now commanding a market cap of $1.33B, LGORF has a nice reserve of cash that gives them a good-sized runway as they accelerate projects. Also, LGORF is obviously seeing major top-line growth, with y/y quarterly revenues growing at 179.3%. We will update the story again as soon as further details emerge. Sign-up for continuing coverage on shares of $LGORF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $LGORF, either long or short, and we have not been compensated for this article.