Largo Resources Ltd (TSX: LGO) yesterday announced its plan to expand production capacity at the Maracás Menchen Mine from the nameplate rate of approximately 800 tonnes per month of vanadium pentoxide (“V2O5“) to 1,000 tonnes per month, being an increase of 25% over nameplate capacity.
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. Capital expenditures for the plan are anticipated to total approximately US$15.5 million using current exchange rates. Construction is expected to begin at the beginning of June 2018 with an expected timetable for completion of approximately 12 months, including the required permitting and commissioning. The expansion plan focuses on increasing the production capacity of the milling, fusion (deammoniator, furnace and flaking wheel), leaching and filtering areas. Management believes that total production capacity could be further increased by an additional 100 tonnes per month to an aggregate total of 1,100 tonnes of V2O5 per month if certain other upgrades and improvements are made to the kiln refractory. The Company has commissioned studies to evaluate this opportunity.
Mark Smith, President and Chief Executive Officer for Largo, stated: “The relatively low expected capex for this expansion project when compared to the anticipated significant increase in capacity made approving this expansion an easy decision for the Company. The new expansion plan for the Maracás Menchen Mine paves the way for a new chapter of growth for Largo and culminates in additional and significant free cash generation for the Company assuming current V2O5 prices. Largo’s vanadium flake, high purity vanadium flake and high purity vanadium powder are of the highest quality and have been qualified or are being qualified by every major end user of the metal in high purity applications, further underscoring the quality of our world-class asset. As the demand for vanadium increases worldwide, Largo remains committed to being the go-to name for vanadium.”
Current operations at the Maracás Menchen Mine will not be affected by the expansion plans and current production and cash operating cost guidance is maintained for 2018. Largo remains focused on continuing stable production at the Maracás Menchen Mineand delivering significant free cash flow with its low cash operating costs for 2018.
Anglo Pacific Group plc (LON:APF) has a 2% NSR royalty on all mineral products sold from the area of the Maracás Menchen project to which the royalty interest relates. The project is located 250km south-west of the city of Salvador, the capital of Bahia State, Brazil and is 99.97% owned and operated by TSX Venture Exchange listed Largo Resources Limited (‘Largo’).
