The pullback in shares of Largo Resources Ltd (OTCMKTS:LGORF) continues, with the stock now down as much as 68% in the past 8 months, retesting levels not seen since it went parabolic to the upside as it gained significant attention following an endorsement by famed fund manager Leon Cooperman on CNBC. To help possibly establish some meaningful and important support, the company just announced its first quarter 2019 operational and financial results with 2,099 tonnes of vanadium pentoxide produced at an average global V2O5 recovery rate of 80% and cash operating costs excluding royalties2 of US$3.41 per pound of V2O5.
Mark Smith, Chief Executive Officer for Largo, stated: “The decline in the price of vanadium and the significant remeasurement of trade receivables under the Company’s off-take agreement greatly impacted profitability this quarter. Despite continued pressure on vanadium prices, the operations team successfully completed the kiln refractory replacement ahead of schedule in addition to increasing global recoveries by 5% from the same quarter last year, setting a new quarterly record. Cash operating costs2 for the quarter were 4% lower compared to the same quarter last year and I am very pleased with the team’s ability to remain focused on cost discipline at the mine.”
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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As noted above, LGORF just announced its first quarter 2019 operational and financial results with 2,099 tonnes of vanadium pentoxide produced at an average global V2O5 recovery rate of 80% and cash operating costs excluding royalties2 of US$3.41 per pound of V2O5.
The stock has suffered a bit of late, with shares of LGORF taking a hit in recent action, down about -19% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -12%. In addition, the company has seen a jump in recent trading volume to the tune of 84% above its longer-run average levels.
Mr. Smith continued, “The Company’s exploration initiatives are progressing as planned with drilling at the Novo Amparo Norte and Novo Amparo deposits now complete and the commencement of drilling at the São Jose deposit. The Company’s work on a new resource estimate for Novo Amparo Norte is now well advanced and we look forward to providing an update to the market towards the end of Q2 2019.”
He concluded, “We are committed to implementing a comprehensive capital return program to return cash to our shareholders in the form of dividends and/or the repurchase of shares and/or warrants following the intended repayment of the Company’s remaining debt balance of US29.1 million. We intend to communicate the details of the comprehensive capital return program at or before our Annual Meeting of Shareholders in June.”
Currently trading at a market capitalization of $580.83M, LGORF has a significant war chest ($190.7M) of cash on the books, which stands against about $85.7M in total current liabilities. LGORF is pulling in trailing 12-month revenues of $474.6M. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -51.4%. This may be a very interesting story and we will look forward to updating it again soon. 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.