Largo Inc T.LGO

RE:RE:RE:new video interview

[kha341]

kha341 wrote:

Nothing is new here except the revelation that LPV will be a commodity ETF (Exchange-Traded Fund) which is focused on 1 single commodity, Vanadium. 

My 2-cents take regarding LPV:

1) LPV will own by rights all Vanadium (VPure / Vpure+ and V2O3 powder) produced by Maracas as well as those leased to the VRFB customers. The production, inventory and sales of the V products as well as the maintenance of the VRFBs will be under the responsibility / safekeeping of Largo. The mechanism for the transfer of ownership of the V products from Largo to LPV is still not clear. My guess is that Largo will sell 100% of its V production to LPV at some sort of pre-negotiated prices. In case of outright sales LPV will own the V products on paper until they are delivered to the customers. If the prices paid by the customers at delivery turned out to be different from the prices paid by LPV then gain / loss would be absorbed by Largo minus a pre-established discount / commission to be kept by LPV. 

For the sake of simplicity, the following is an illustration of an outright sale in a non-battery deal:

Largo’s production = 1 pound of V2O5 flake. The ownership of that 1 pound is transferred from Largo to LPV at US$10/lp. LPV owes Largo US$10 on credit (no cash payment). 

Largo sells 1 pound of V2O5 flake to customer X. At delivery customer X will pay $12/lb (based on the price at delivery) to LPV and LPV will turn around and give Largo $12/lb minus a commission of let’s say 5%. So Largo revenue = US$11.40 (= 12 - 5%)  and Largo gross profit = US$11.40 minus costs of production. LPV revenue = US$0.60 (= 5% of 12) and LPV profit = $0.60. 

 

Should read: So Largo revenue = US$11.40 (= 12 - 5%)  and Largo gross profit = US$11.40 minus costs of production.