A quick Q1-24 revenue estimation
Note: Ilmenite contribution to Q1-24 revenue is immaterial.
Q1-24 Largo sales = 2,765T (or 6,095,774 lbs) of V2O5 equivalent as compared with Q4-23’s 2,605T . In Q1-24 the average quarterly price for the benchmark EuroV2O5 = US$6.44 as compared to Q1-23’s US$6.46/lb. In Q1-23 Largo’s average per pound sold = US$7.69/lb. Let’s assume that the same price will also be achieved in Q1-24.
Thus Q1-24 V2O5 revenue = $7.69 x 6,095,774 lbs = ~$47M or ~US$2.8M higher than the previous US$44.17M of Q4-23.
In Q4-23 the Total Costs = US$60.6M and Net Loss before tax = $44.17 - $60.6 = (US$16.4M);
Let’s assume a 10% cost reduction across the board in Q1-24. Thus Q1-24 Total Costs = $60.6M x 90% = $54M vs a Total Revenue $47M. Thus Q1-24 Net Loss before tax = $47 - 54 = (US$7M) as compared with Q4-23’s ($16.4M). Note: Imho, I think a 10% cost reduction (or ~$6M down) from last quarter’s can be likely achieved considering the fact that in Q4-23 we had to book $5.94M in inventory and vanadium assets write-down. There should not be any write-down made in Q1.
If we generously assume a 22% cost reduction across the board in Q1-24 then Q1-24 Total Costs would = $60.6M x 78% = ~$47M vs a Total Revenue ~$47M
If Largo could achieve a revenue of US$7.69 per pound of V2O5 equivalent sold, then a cost reduction of 22% would allow the company to break even in terms of Net Income before tax in Q1-24.