LGO

Good day, and thank you for standing by. Welcome to Largo's Third Quarter 2024 Financial Results Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Alex Guthrie, Director of Investor Relations. Please go ahead.

Thank you, operator and thanks to everyone who has joined us for Largo's Third Quarter Financial Results Conference Call. Our Q3 2024 financial statements related MD&A and most recent AIF are available on our website at largoinc.com, as well as on SEDAR+ and EDGAR. Before we proceed, please note that some information discussed today will include forward-looking statements and non-IFRS measures. Please refer to the cautionary notes and non-GAAP section of the company's latest MD&A, financial statements, and AIF which are all available online. Additionally, all figures mentioned are in US dollars, unless otherwise stated. Today's speakers include Daniel Tellechea, Interim CEO and Director; Celio Pereira, CEO of Largo Brazil; David Harris, CFO; and Francesco D'Alessio, CEO and President of Largo Clean Energy. Following the prepared remarks, we will open the call to questions. Please limit your questions to two and requeue if you have further inquiries to allow everyone a chance to participate. I will now turn the call over to Daniel.

Thank you, Alex and good morning, everyone. Thank you for joining us today to discuss our third quarter results. In Q3 Largo continued to make positive strides on several fronts, and I am pleased to highlight a few areas where we are seeing real progress. First, we delivered our highest quarterly vanadium production in seven quarters, producing 3,072 tonnes, up 42% from Q3 last year. Additionally, we saw another strong quarter in ramping up our ilmenite production, contributing to our efforts in diversifying revenues at Largo. Largo's cost improvements have been equally important during the quarter. We reduced our operating cost by 31%, allowing us to maintain a competitive position within the vanadium sector. And as announced, our vanadium supply agreement, which unlocks approximately $23.5 million of additional liquidity from our vanadium inventories upon delivery, now enables us to strategically manage our inventory while delivering, still meeting our ongoing and future sales commitments -- sorry. In terms of our commercial strategy, we’ve taken decisive steps to realign our sales approach to better navigate together a challenging market environment. In September, Francesco D'Alessio was promoted to Chief Commercial Officer bringing a wealth of industry experience and strategic vision to our sales leadership. With Francesco's expertise, we’re implementing a refreshed sales strategy aimed at optimizing inventory, following stronger customer relationships, and position in Largo as a trusted and reliable supplier in both the vanadium and the ilmenite market. Looking forward, our recently announced technical report highlights update supports Largo's long-term potential with a 67% increase in mineral reserves and a 64% increase in mineral resources expanding our mine life to 2054. This strengthened resources base paired with our production and cost initiatives sets the stage for future value creation going forward. With that, I’ll hand it over to Celio to discuss our operational progress in more detail.

Thank you, Daniel and good morning, everyone. This quarter, our team's hard work paid off as we reached a significant production milestone. In Q3, we produced 3,072 tonnes of V2O5 equivalent, a testament to the effectiveness of the operational enhancements we put in place earlier this year. Our global V2O5 recovery rate also improved to 81.1%, up from 76.9% last year. On the mining side, we achieved a 34% increase in total ore mined compared to Q3 2023, reaching 600,000 tonnes. Those improvements highlight the changes we've made to enhance processing efficiencies and address variability in magnetic and V2O5 ore grades. [[Technical Difficulty] our operations are as efficient as possible while maintaining high safety environmental standards. Ilmenite production also saw strong gains, reaching 16,383 tonnes in Q3, an increase of 90% over the previous quarter. Finally, to maintain optimal operational continuity, we've moved our annual kiln maintenance to Q4 to coincide with the upcoming rainy season, minimizing the impact of any weather-related disruptions. And consequently, Q4 production is expected to be impacted by the maintenance period, resulting in lower production levels and higher operating costs for the quarter. However, we remain confident in our ability to meet our full year 2024 guidance for production, costs, and sales. Before concluding, I'd like to highlight that our third quarter results reflect substantial progress in production and cost management; however, we remain focused on further optimizing our vanadium and ilmenite operations. Largo is still in the process of a broader turnaround initiative aimed at driving consistent improvements across the mine. This includes enhancing operational efficiency, advancing silica control measures, and continuing recovery optimizations in our ilmenite plant. While we have made meaningful strides, we remain committed to further progress as we work towards fully realizing our operational goals and fostering a culture of continuous improvement across our team. With that, I will now pass it over to David Harris for the financial results.

In Q3 2024, Largo reported revenues of $29.9 million, including $27.2 million from vanadium sales and $2.7 million from ilmenite sales. Revenue was impacted by lower vanadium prices and reduced sales volumes with the average benchmark price per pound of V2O5 in Europe down to $5.71 compared to $8.03 in Q3 2023. Operating costs decreased from $44 million in Q3 2023 to $29.5 million this quarter, a 31% reduction from Q3 2023. Cash operating costs, excluding royalties, were $3.12 per pound sold, a 43% reduction from last year. As Celio highlighted just now, these results underscore our continued focus on cost management, and I'd like to recognize the hard work from our teams who played a crucial role in realizing these savings. The net loss for Q3 was $10.1 million, including non-recurring items of $3.3 million which is an improvement over the net loss of $11.9 million in Q3 2023. Adjusted EBITDA for our mining operations was $2.4 million in Q3 2024 compared to $2.7 million in Q3 2023, reflecting the impact of the vanadium market conditions, but also highlighting ongoing cost management efforts. At the close of the quarter, we had a cash balance of $30.4 million and a net working capital surplus of $46.7 million. While the recently announced vanadium supply agreement is expected to contribute approximately $23.5 million upon delivery of material between Q4 this year and Q1 next year. We continue to focus on managing liquidity carefully to support Largo's financial flexibility. In addition, we are working closely with a group of banks to explore restructuring options for our existing loan facilities. These discussions are aimed at optimizing our capital structure to ensure that we're well prepared to navigate current market conditions with a continued focus on managing liquidity carefully to support Largo's financial flexibility. Before I hand it over to Francesco, I'll reiterate that we remain committed to achieving sustained cost improvements at the Maracas Menchen Mine. We are closely monitoring all operational expenses, as part of our broader strategy to optimize performance and enhance profitability, and we look forward to updating you on our continued progress in the quarters to come. With that, I'll turn it over to Francesco for an update on our sales and commercial activities.

Thank you, David, and welcome everyone, to the call. It's a privilege to join today as Largo's Chief Commercial Officer and provide an update on our commercial activities for Q3 2024, along with a brief update on Largo Clean Energy. In Q3 '24, we recorded V2O5 equivalent sales of 1,961 tonnes which includes 124 tonnes of purchased material. This represents an 18% decrease from Q3 2023, driven primarily by softer spot demand in key markets, particularly Asia and Europe, where we continue to face significant headwinds affecting vanadium demand, especially within the steel sector. Low prices and an oversupply in the Chinese market have contributed to a more challenging supply-demand balance, pressuring prices across regions. The average benchmark price per pound of V2O5 in Europe was $5.71 in Q3, down from $8.03 in the same period last year, reflecting these ongoing market challenges. In response to these conditions, we are refining our sales approach to strengthen direct sales to end users and expand our reach, particularly in North America. With the recent appointment of Randy Doyle, an industry leader with deep vanadium experience to our commercial team, we're enhancing our sales efforts and building closer customer relationships, solidify Largo's position as a trusted supplier of vanadium and ilmenite products. Our recent contract campaign for both high purity and ferrovanadium products has been successful, reinforcing our strategy to grow market share and secure stable long-term partnerships. Additionally, given current geopolitical factors, our increased presence in North America further positions Largo as a key supplier to this market, which is becoming increasingly crucial amidst shifting global dynamics. While we continue to see softness in demand in Europe and expect this to extend into 2025, we are encouraged by early signs of recovery in the US market, which has been less affected by low-priced vanadium supply from China. This trend is reflected in the growing interest from US-based end users, particularly in sectors such as aerospace and defense, where demand is rising for reliable and secure sources of vanadium supply. These factors, along with the narrowing production supply gap globally, position Largo favorably in the current environment. On the ilmenite front, we achieved a strong performance in Q3 with sales totaling 19,572 tonnes, a 60% increase over Q2 2024. Demand for ilmenite continues to grow, and we remain optimistic that this trend will support revenue growth as we build a stable diversified revenue stream alongside our vanadium business. Turning to Largo Clean Energy. We are advancing discussions with Stryten Energy towards a potential joint venture. This partnership will leverage Largo's expertise of vanadium flow battery technology alongside Stryten manufacturing and market reach, positioning us strongly within the energy storage sector, particularly in North America where demand for grid-scale solutions is expanding. We remain focused on maximizing LCE's role in Largo's overall growth strategy, ensuring that our technology aligns with the rising demand for reliable and sustainable energy storage solutions. While we recognize the challenges in the vanadium market, we're optimistic about future demand prospects, bolstered by recent regulatory developments a recovering US market, and increasing demand from key sectors. Our team's strategic focus on efficient production and sales management keeps us well-positioned to meet these emerging opportunities. With that, I'll turn it back to Daniel for closing remarks.

Thank you, Francesco. As we head into Q4, Largo remains committed to improving operational efficiency, reducing costs, and diversifying our revenue streams. Despite the current headwinds in the vanadium prices, our recent technical report update and strategic agreements position us to well deliver value in the quarters ahead. Thank you to our entire team for their efforts and our shareholders for their support. We look forward to sharing our continued progress in the future. With that, we will now open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Heiko Ihle at H.C. Wainwright. Please go ahead.

Hi, good morning everybody. You state that recent data indicated that the oversupply gap is gradually narrowing and that there is some early indications of maybe a touch more favorable market dynamics. Where exactly is this demand coming from? I mean earlier on this call, you mentioned the Americas, if I heard you correctly. And we are now halfway through Q4. Is this impact going to be showing up in the Q4 results? Or is this something that's maybe more of a 2025 thing?

Francesco, can you --.

Yes. Yes. So it's going to mainly show in next year's contracts, right? We are in the midst of contract season right now. We are seeing the demand from both -- from mainly the aerospace sector. As you probably know, the US market has several restrictions and depending on the origin of the products, there is anti-dumping on Chinese ferrovanadium, antidumping on the South African ferrovanadium, and high duties on Korean ferrovanadium, which puts Largo's ferrovanadium in advantageous position for freight contracts for the steel sector in the US. And then in addition to that -- there is much higher demand from the forecast that we're receiving from our aerospace customers, which will be reflected in 2025 contracts for next year.

Got it. And then just a clarification on that supply -- that vanadium supply agreement that you signed a couple of weeks ago. I mean, it is going to sound like a fairly large-scale thing. Just talk to me a little bit about in your experience, how are prices for these agreements when compared to spot pricing? Is this a bit like in the uranium space where these agreements tend to trade at a premium since people want to ensure supply? Or is this just more or less market-based? Maybe not even the specific agreement just in general?

You mean the agreement we signed recently for $23.5 million?

Yes. I mean that's obviously one agreement, but there is presumably more of those coming.

Well, at this particular time this is the only agreement we have planned for something like this. And this will complement our shipments for Q4, where out of the 2,100 tonnes in this agreement, we are planning to ship a good chunk of that quantity during the fourth quarter. And the rest -- so that will complement our sales and shipments for the fourth quarter. And this is -- Heiko, this is the only agreement we have in place now. The rest of the agreements for 2025 will be standard sales to the steel industry and defense and aerospace industries. It will be normal agreement. Will that respond your question?

Yes. No, that's pretty good. And with that, I think I will get back in queue.

Thank you.

Thank you. The next question comes from Andrew Wong at RBC Capital Markets. Please go ahead.

Hi, good morning. Can you just provide maybe a bit of an outlook on where you think prices could land in 2025, given some of the improvements that you've worked on?

Francesco, can you take that question?

Yes, I can take that, Daniel. Look, it's obviously a tricky question talking about pricing forecasts, right? If we had a crystal ball, obviously -- but for sure, prices in the market, for sure, you're going to see a 2-tiered market. You are going to see higher prices in the US for the reasons that I mentioned earlier, right mainly driven by the fact that it's limited in terms of origins that can come into the US market. So that is already being reflected. If you look at the current CRU index versus Metal Bulletin index, you're seeing a disparity between the two markets. And then obviously, the bulk of the aerospace volume is obviously done at a premium to the industry right? So we are expecting a faster recovery in prices in the US vis-a-vis Europe or the rest of the world, right?

And a little bit on costs for 2025, given some of the operational efficiencies, improvements that you've worked on?

Celio, can you take that question?

Yes, for sure. We keep moving our turnaround and increasing our efficiencies at the mine. We are now having a very strong look at logistics and good supply. So we expect that the average cost of 2025 should be having the lower direction based -- compared to this year.

Andrew on the cost side, we will continue with this trend of trying to finalize analysis of each of the contracts, concentrating ourselves on logistics. So there is still a way to go in this turnaround process that we started months ago. So we expect that the cost of production will continue to take the benefits of those adjustments and those analysis for next year.

Okay. And just looking out a little bit here, when we look at the mine plan and the resources and like what the deposits look like longer-term, the grades come down, Campbell Pit is a lot higher grade. So the best material I think, that you have in your resource inventory. Does it still make sense to be depleting your best resource at relatively minimal profitability and prices today?

Can you take that question, Celio?

Yes. Thank you Daniel. So we have added two new pits to our reserve base that we didn't have before. Campbell is our current pit that we mine. Of course, we have seen weaker prices in this last year. But our operational -- our mining plan for Campbell goes until 2031, 2032. So it is a world-class asset with very high grades for V2O5. And we believe that it is strategic to keep mining Campbell for now and for the next years until we are prepared to move to the lower-grade assets and reserves pits that we have in Maracas.

Okay, thank you.

Thank you. The next question comes from Gordon Lawson at Paradigm Capital. Please go ahead.

Sorry, I was on mute. So the beat on cash cost this quarter was pretty significant and really stands out. What should we expect for – you have already talked about what to expect in terms of beating this year, but how much should we add to cost for the ilmenite production on a per pound basis?

Celio, can you take that question?

Yes. If we consider that ilmenite is a new revenue stream that we still in the ramp-up phase and optimizing recoveries and production. I believe when we reach our full capacity at ilmenite and optimize all of this process, I think we will be talking -- we'll be seeing $0.30 to $0.50 range in terms of vanadium production costs.

That is quite cheap. So on that front -- the $22 million investment to double the production of ilmenite seems like a rather low threshold. So what parameters are behind the sanctioning decision going in terms of lining up customers versus return on investment?

Celio, can you take that question? And most of this is in the technical reporting. So we can get the information from that.

Yes. Sorry, I didn't understand the investment side of the question. Can you please repeat?

Well, it seems rather inexpensive to double the production. So I'm just wondering if this is an issue of lining up customers for the product or whether there is more to it beyond a simple ROI?

Yes. The strategy to double the production is linked with the vanadium side as well because the ilmenite is produced from our non-magnetic tailings from our current milling that produces the vanadium concentrate. So the strategy is linked with a 20% actually, it's 33% expansion in our current kiln happening first. And then we will have of course, an upgrade in the milling and crushing together with this kiln expansion. And after that, we will have more material to process and do the full expansion of the ilmenite. So that's more because of the vanadium strategy, we also link this ilmenite strategy ramp-up and expansion in the future.

So the grades of the -- hits beyond the Campbell Pit? That's obviously playing much more of a role than lining up the customers as I stated?

Yes, correct.

Okay, thank you.

Thank you. [Operator Instructions] Our next question comes from Gary Bryck at Northern Insights Asset Management. Please go ahead.

Good morning. Could you tell me how much debt on the balance sheet is attributable to the Majorca storage facility? Could you discuss how it's working and whether you're generating any revenue from it? And could you compare that vanadium technology to other battery technologies that you may be competing with? And I have one other question, which I've asked for the last 5 years. Could you discuss the elasticity of demand for vanadium?

Can you take that one, Francesco?

Yes. So elasticity for demand for vanadium, are you referring to a specific industry? Or what would you like me to elaborate on?

Well, if you understand elasticity, maybe you could explain how prices would change if you, for example reduced your production of vanadium.

Well most of the vanadium market pricing, obviously driven by the two largest producing countries, right, which is Russia and China. So you can understand, obviously the current geopolitical situation has affected one of those origins and then the current softness of the market in China has caused the price to drop this year, right? The exports from China have drastically increased. So if you look at the supply/demand dynamics are drastically affected by the exported units from the Chinese market, right? But our strategic positioning within the US market is why we've diversified our strategy in going after a region that is not subject to those effects of the Chinese units, right?

Maybe we can take this question offline. I don't think you understand it. Could you discuss how much debt is on your balance sheet attributable to the Majorca storage facility? Could you discuss how it's functioning? Could you discuss whether you're generating any revenue from it, whether you're generating any potential sales of new storage facilities? And could you discuss your vanadium storage technology to other storage technologies?

Yes. I'll take the first part of the question --.

I'll take the second one.

Yes. Just on the debt. There's no debt on the balance sheet that relates to the battery storage facility in Majorca. That's all been self-funded. So there's no debt attributable to that. In terms of the project --.

Didn't you borrow $95 million to buy the technology in the first place?

No, that's not correct.

What is correct?

The IP that we have that was acquired, that was acquired for approximately just over $4 million in 2020, and that was sort of a share in noncash purchase that was done at the time. Any other one -- has just been funding the LCE activities as a whole. In terms of the delivery of the project, I mean, as you'll note in our MD&A, the final tests and the commissioning activities has not been completed. So the project has not been delivered and such that we have not recognized revenue from delivery of that project as of this time. But perhaps Francesco, you can just comment a bit more in terms of the status of the ramp-up and commissioning of P&L projects.

Sure. So we replaced the inverter and the transformer. So those activities have been completed, and we're now undergoing the final [FIT] (ph) factory accepted testing for the final commissioning of the battery system. So we're in the final stages of final hard commissioning of the system.

Okay. Thank you. I'm sorry, I thought you had this facility running two years ago. So it's a good update for me. Thanks.

Thank you. There are no further questions. I will turn the call back over to Alex Guthrie for closing comments.

Thank you operator. This concludes our Q&A session of the quarterly call. Thank you, everyone, and have a great day. Bye now.

Ladies and gentlemen, this concludes the conference for today. We thank you for participating, and we ask that you please disconnect your lines.

Good day, and thank you for standing by. Welcome to Largo's First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Alex Guthrie, Senior Manager of External Relations. Please go ahead.

Thank you, operator, and thanks to all those who could attend our first quarter 2024 conference call today. Largo's Q1 2024 financial statements, related MD&A and most recent AIF can be accessed on our website at largoinc.com as well as on our SEDAR+ and EDGAR profiles. Before continuing the call, I would like to remind you that some of the information you will hear during today's discussion will consist of forward-looking statements, including without limitation, those regarding future business outlook. Please refer to the cautionary statements and the related MD&A, consolidated financial statements and AIF, which can be found on our website within the Investor Relations section. And finally, all figures are in U.S. dollars unless otherwise stated. On the call today is Daniel Tellechea, Largo's Interim CEO and Director; Celio Para, Largo Brazil's Chief Operating Officer; Ernest Cleave, Largo's Chief Financial Officer; Paul Vollant, Largo's Chief Commercial Officer; and Francesco D’Alessio, the President of Largo Clean Energy. Following delivery of the prepared remarks, we'll open the call to questions. We ask that participants restrict their questions to two and then requeue if there are additional questions to allow the others the opportunity to participate. I'll now turn the call over to Daniel. Daniel, please go ahead.

Yeah. Thank you. Good morning, everyone, and thank you for joining us today for Largo's first quarter 2024 earnings call. As our team takes you through our first quarter financial results and discusses our strategy moving forward, I will keep my particular remarks brief. At Largo, our main focus remains on improving production efficiencies and reducing cash cost to return to profitability, especially amidst the current period of low vanadium prices. We recognize the challenges posed by the current market conditions and our commitment to improving our performance remains top priority. With a new operating team in place, we're confident in our ability to drive productivity improvements and operational excellence going forward at our Maracás Menchen Mine. Now I would like to introduce Celio Pereira, our Chief Operating Officer from Largo Brasil, who will provide a more comprehensive view of our operational improvement plans going forward. Our productivity initiatives, along with his operational leadership are helping us navigate through these challenges to emerge in stronger in the future. Celio, over to you. Celio?

Apology, sir, but I think you line get disconnected. Please proceed.

Okay. Probably the line is busy. If that is the case, I will take over Celio's presentation. I'm going to speak in his name. It is my pleasure to speak to you today for the first time and provide insights into our operational plans moving forward at our Maracás Menchen Mine. It is very important to stress that maximizing operational output and reducing costs remain our top priorities at Largo. We are working today on four key initiatives to maximize output. Number one, we are improving our grade control capabilities to reduce dilution in mining operations and increased ore grade feeding the crushing plants. These changes were concluding in April 2024 with the installation of a dedicated drilling machine and an increased number of sampling and analysis as well as changing in operational procedures to improve grade control. Secondly, we have been increasing our crushing volume over the last quarters, and we will add an additional 22% in crushing capacity by the end of Q2 2024 through the installation of a movie crusher as well as a dry magnetic separator. This is expected to offset the lower grades we are currently mining. Our third initiative is in the focus of an increase in M&A concentrate production and we have finished the installation of a system to pump material from not magnetic pounds to our ilmenite concentrator to support this. This will allow us for the continuation of planned production when our milling plant is expanding as well as increased grades, recovery and quality. And lastly, we will be installing screens and wet magnetic separators in the milling plant in the third quarter of this year to improve the quality of the concentrate and by doing so, improve the kiln recovery as well as reduces the sodium carbonate consumption. These initiatives are low-cost, high-return projects in order to enhance our operational efficiencies and optimize the use of cash. To complement this initiative, we have also implemented extensive measures to reduce production cost, including the reduction and optimization of college, distance, reduction in drilling and explosive consumption, cost of inputs as well as a review of all contracts at our mine site. contract at our mine site -- we have concluded a reduction in the number of contractors by 20% during April, while improving additional efficiencies through the whole operations. This included a reduction of equipment rental, increasing synergies and the testing and development of different inputs to explore lower price alternatives. For the remainder of 2024, we expect a reduction of approximately BRL40 million in operating expenditures in approximately BRL12 million in capital expenditures. When combined with our productivity initiatives, these measures are expected to assist the company in achieving its revised 2024 cost guidance and offset some of the impact of lower vanadium prices. With regards to the operation results in Q1 2024, we conducted the planning annual maintenance at the mine, including the replacement of the kiln refractory and other maintenance actions in various sections of the plant. As expected, this maintenance impacted production resulted in V2O5 -- lower V2O5 production compared to the previous year. In Q1 2024, our V2O5 of production was 1,729 tons within the lower range of the company's quarterly production guidance of 1,700, 2,200 tons for the first quarter of 2024. Global recoveries averaged 70.5% in Q1 2024, significantly lower than the previous year. This decline was largely due to the lower grades mined during the period, impacting dry magnetic wet magnetic as well as scale recoveries. On the ilmenite side, we have been focused on advancing the ramp-up of this new facility and continue to make progress with this activity. In Q1 2024, the company produced 9,563 tons, which represented an increase of 6.6% from fourth quarter of last year. Subsequent to Q1 2024 production was at 753 tons of V2O5 equivalent in April 2024, with 2,500 tons of ilmenite concentrate being produced during the same period. Before I hand the call over to Ernest, I would like to stress that despite the challenge in space in Q1 2024, we are optimistic about achieving our operational targets going forward. With our productivity initiatives underway and commitment to operational excellence, our operational team is laser focused on not only meeting our goals, but delivering better results in the future. Now I will turn the call over to Ernest for a detailed financial overview of quarter number one.

Thank you, Daniel. In face of the challenges such as our extended maintenance period and a significant decline in vanadium prices, our primary focus remains unchanged, which is to restore profitability at the company. Despite these challenges detailed on this call, we've been diligently working to implement strategies aimed at achieving this goal. I'll now provide a very brief summary of the financial results we reported yesterday evening on our first quarter. Our revenues for Q1 2024 totaled $42.2 million, down from $57.4 million in Q1 2023, with the decrease being primarily attributable to a decrease in vanadium prices. With our realized vanadium prices dropping from $9.14 per pound in Q1 2023 to $6.91 per pound in Q1 2024. Operating costs for Q1 2024 were $49.7 million, and that's up from $45.9 million in Q1 2023. Our cash operating costs, excluding royalties stood at $6.12 per pound of V2O5 equivalents sold in Q1 2024, and that compares with $5.15 per pound, in Q1 2023. This increase can largely be attributed to the extended maintenance period, as previously mentioned, and it also includes a $4.5 million write-down of produced vanadium products. We recorded a net loss of $13 million in Q1 2024, and that's inclusive of $4.4 million in non-recurring items compared with a net loss of $1.2 million in Q1 2023, which included $100,000 in non-recurring items. Basic loss per share for Q1 was $0.20 compared to $0.02 in Q1 2023. We exited the quarter with a cash balance of $45.7 million, and net working capital surplus of $70.8 million debt of $75 million exiting Q1 2024. Despite the challenges faced, we've been actively implementing measures to reduce cost and enhance productivity, as previously pointed out on this call. While we anticipate elevated costs in the first half of the year, we expect improvements in the second half as the full effects of our productivity initiatives materialize. Now I'll pass it on to Paul to discuss sales in the vanadium market.

Thanks, Ernest. Our sales results for Q1 2024 were in the upper end of our quarterly guidance. We achieved V205 equivalent sales of 2,765 tonnes, inclusive of 156 tons of purchased material. However, this represented a small decrease compared to the 2,849 tonnes that we sold in Q1 2023. Subsequently, we sold 730 tonnes of V2O5 equivalents in April. Speaking of prices, we sold at an average price of $6.94 per pound of V205, a 7.8% premium to the V2O5 European average of $6.44 per pound of V205. The average benchmark price expands a 0.3% decline from $6.46 per pound of V2O5 on average in Q4 2023. The average benchmark price per kilogram of ferrovanadium in Europe increased to $27.96 in Q1 2024 from $26.61 in Q1 -- in Q4 2023, reflecting a 5% improvement over the period. The most recent average benchmark price per pound of V2O5 in Europe, as of May 10, was $5.87. The softness in spot demand persisted in Q1, primarily driven by adverse conditions in the Chinese steel sector. However, spot market is now starting to show signs of improvement in May. Looking ahead, the fast growth in demand for battery applications in China and its potential to support the energy transition in the rest of the world gives us hope for future quarters. Also, we're observing continued strength in the high purity sector, which represents promising opportunity for Largo's products. Shifting focus to ilmenite, our sales were 513 tonnes in Q1. This is well below our guidance as we experienced initial operational and administrative delays. Nonetheless, we're continuously improving and sold over 9,000 tons in April. We anticipate sales to rebound in the coming months and maintained our production and sales guidance for 2024. Now I'll hand it over to Francesco for a brief update on our clean energy base business.

Thank you, Paul, and welcome, everybody to the call today. Since our last update, our primary focus has been advanced negotiations concerning the strategic evaluation of our Clean Energy business, particularly regarding our proposed joint venture with Straton Energy, as previously announced. These negotiations remain ongoing and our crucial step forward for us as we look to enhance the value of our Clean Energy business and energy storage product offering. In addition to that, I'm also pleased to share that we have made considerable progress towards the completion of the second phase of our commissioning for our ERP deployment in Spain for an Albian (ph) Power. The completion of this phase will take place following the replacement of the inverters and the transformer. I'll now hand it over back to Daniel.

Sorry, I was on mute. To close out, I want to reiterate our commitment to continue enhancing production, efficiency and reducing cost of Largo. As we have navigated through the challenges posed by the current market conditions, I am confident in the capabilities of our dedicated team and the efficiency measures that we are undertaking. The comprehensive initiative we are implemented, which includes operational enhancement, cost reduction in measurements and productivity initiatives are expected to optimize our operations and achieve profitability in the future. We thank you all for your continued support, and we look forward to updating you in our progress in the quarters ahead. Now I will hand it back -- the call back to our operators for our questions-and-answer session. Thank you.

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We have our first question coming from the line of Andrew Wong from RBC. Go ahead, please.

Good morning. Thanks for taking my questions. So your realized prices performed quite well this quarter relative to market prices. Can you just talk about what's contributing to that? Was it high purity sales or maybe your contract prices going into the year and how do you expect your realized prices to perform for the rest of the year?

Paul, can you take that question?

Yeah. Sure, Dan. Hi, Andrew. Yes. We overperformed the market this quarter. That's mainly due to two main factors. One is our high-purity sales, which is sold at premium to market price. And two, is the fact that most of our contracts trailing the index, right? So we usually deliver material in the month quoted based on the previous months price. So in a downward market like today, structurally, we're supposed to perform a bit better than the market. That's the two main reasons that justify this overperformance.

And for the rest of this year?

Yeah, sorry. And for the rest of this year, it really depends on the market trends if -- and also sharing high purity. That's a number we're going to provide regularly now to each quarter for this call. So yeah, we expect to be a long market price, probably overperforming a bit.

Okay. Thank you. And then, just on the operations side, the grades have come down a bit relative to your historical levels. Is there any expectation for the grade to come back or is the expectation for the grade to kind of stay at these levels, given that you've installed equipment to handle more for? And then going to 2025, would your second half outlook be a good guide for cost into next year?

Are you in the call Celio, can you answer that question?

Daniel, I don't think he is.

He's not on the call.

No.

Basically, our -- as I mentioned before, Andrew, our grade has been affected right now because of the presence of the pegmatite which appears on the center of the ore body. That is the main reason why while we mine and reduce and eliminate pegmatite from our mining operation, the grade will continue to be around 0.75, 0.80, V205. So once we eliminate the pegmatite and according to our mine launch, that should be around half of it next year our grade will be going up a little bit. So for the time being, we will continue mining and going forward with this 0.75, 0.80 V205 grade in our mining operations. Also, the other thing that has been affecting us is the grade of the magnetics on the material. Remember that Maracás Menchen Mine that we do a lot of lending between the three kinds of material, massive, bundled and disseminated. What is happening today and the main reason of increasing our crushing capabilities is that they were mining much, we are mining and processing much more disseminated ore who has a lower grade, lower magnetics, and that is the main reason we're in order to produce the same amount of V205 at the end of the period. We are increasing our capacity of crushing and dry mag operation, as I explained during the presentation. I didn't hear the second part of your question, Andrew.

I can talk about it, Daniel. Andrew, so on the cost side, for the remainder of, let's talk about the second half of the year, we're going to be in that $4.50 to $5.50 excluding royalties range. Looking into the new year, it's a bit early. But with the improvements in grade, the throughput unitary throughput improvements, etc., our ambition is to be below $4 in 2025. But for now, we're maintaining our cost guidance of the $4.50 to $5.50 with the ambition to go below post that sort of six-month period.

Okay. That’s excellent. Thank you very much for the additional color.

You’re welcome.

Thanks.

Thank you. This ends our question-and-answer session for today. I'd now like to turn the call back over to Mr. Guthrie for final closing comments.

Thank you, operator, and thanks to everyone for joining us today. This concludes the Q&A session of our quarterly call. Have a great day, everyone. Thanks again. Bye.

Bye.

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.