Paulo Misk, President and Chief Executive Officer for Largo, stated: "The acquisition of patented VRFB electrolyte processing technology along with the utilization of industry-leading flow battery stack design and supply of Largo's reliable, high purity vanadium has culminated in the formation of a uniquely positioned renewable energy storage business. We have also hired key team members previously employed by VionX Energy who we believe have developed one of the most advanced VRFB technologies in the world and when combined with Largo Resources' proven operational and commercial capabilities, will result in immediate synergies and unparalleled competitive advantages. We are very pleased to welcome this new team into our organization and following the launch of Largo Clean Energy, we expect to drive new VRFB adoption worldwide and capture greater market share of the rapidly growing renewable energy storage sector. This forward-thinking approach also provides new and existing investors with a rare opportunity to capture value from a vertically integrated renewable energy storage investment with a focus on reducing carbon emissions worldwide." He continued: "The patented VRFB technology and proprietary vanadium electrolyte processing system can deliver cost-competitive performance over a 20+ year life cycle with nominal degradation. In general, the VRFB is intrinsically safe with no fire risk from thermal runaway. Additionally, the contained vanadium electrolyte can be recycled for reuse in other VRFB installments at the end of the battery life. We are confident that these essential attributes make VRFB applications one of the safest and most sustainable options offered in the renewable energy storage market."
He concluded: "Looking ahead, we are very excited to begin working with this advanced VRFB technology to capitalize on new renewable energy storage opportunities around the world. Largo's revenues will continue to be largely driven by sales in the global steel industry and high purity aerospace and chemical markets—but as vanadium demand from global VRFB deployments expands in the coming years, we expect significant growth in the VRFB sector. The launch of Largo Clean Energy also provides Largo with additional flexibility to deploy more of its high purity vanadium production into energy storage products. Our goal is to continue contributing to a lower carbon future through the supply of our exceptionally high-quality vanadium products and through the deployment of Largo Clean Energy's VCHARGE± systems."
Largo Clean Energy – A Leading, Vertically Integrated Renewable Energy Storage Provider
The launch of Largo Clean Energy creates a vertically integrated energy storage provider for the growing renewable energy storage market. Global energy storage capacity is estimated to grow at a compound annual growth rate ("CAGR") of 31%, recording over 741 gigawatt-hours ("GWh") of cumulative capacity by 2030[1]. The VRFB has emerged as a preferred renewable energy storage system for industrial and commercial microgrids, renewables integration, EV charging and grid applications. Through the combination of Largo's unrivalled high purity vanadium products and today's launch of Largo Clean Energy's VRFB business, the Company is confident that it is well positioned to capture a significant portion of future renewable energy storage demand going forward.
Solving a Fundamental Vanadium Supply Problem Associated with VRFB Deployments
The VRFB is well-known for its technical and economic merits, but a fundamental issue that plagues most VRFB deployment projects is the secure and reliable supply of high purity vanadium. We believe that the launch of Largo Clean Energy helps to solve this problem by combining industry leading VRFB technology with Largo's world class supply of high purity vanadium. Additionally, Largo's cost-efficient expansion plans are expected to support the anticipated future demand of Largo Clean Energy's VCHARGE± deployments.
Flexible Use of Largo's High Purity Vanadium Products
We believe the formation of Largo Clean Energy leverages Largo's unique position as one of the world's highest-quality vanadium producers. In building a VRFB business, Largo is moving downstream in order to diversify its product and customer base, and increase its flexibility in any vanadium price environment.
VCHARGE± System: Advanced VRFB Technology with Unrivaled Performance
Largo Clean Energy will utilize the patented flow battery stack technology and proprietary vanadium electrolyte processing technology it now has at its disposal to further develop and deploy its VCHARGE± battery systems with a view of providing safe and continuous energy storage over a 20+ year life cycle with nominal degradation.
- The VCHARGE± battery system can be comprised of 4, 6, 8, 10 and 20 megawatt-hour ("MWh") high-quality, modular energy storage options;
- Stack Power Density Unmatched: The VCHARGE± battery system is based on a proprietary vanadium electrolyte processing system combined with patented flow battery stack technology, allowing for 3 times higher power density than most other competitors;
- Cost-Competitiveness Advantage: The VCHARGE± battery system can deliver unrivaled Levelized Cost of Storage at discharge durations greater than 4 hours due to low capital and operating costs, and from a product life of over 20+ years with almost no performance degradation;
- One of the Safest Battery Solutions: The VCHARGE± battery system technology has been proven safe for use in urban applications in proximity to adjacent structures and densely populated areas due to its inherent non-flammability;
- Sustainability: Electrolyte contained within a VRFB has a 100% depth of discharge without any damage to the battery system. There is also the ability to re-use vanadium electrolyte at the end of the battery's life which results in a more sustainable battery option as compared with competitors.
- Disruptive and Exclusive Battery IP: Largo Clean Energy has acquired the battery technology developed by VionX Energy which provides a competitive advantage;
- Proven Durability: The VCHARGE± product durability has been proven and validation of commercial design has been completed;
- Long-life: The VCHARGE± battery system will employ a modular architecture based on 1 megawatt ("MW") power and 2 MWh energy building blocks that have been engineered to meet grid reliability standards and have undergone significant durability testing demonstrating up to 40 years of stack life.
Transaction Summary – Key Terms
Largo Clean Energy entered into an asset purchase agreement dated effective November 25, 2020 (the "Purchase Agreement") pursuant to which it has now acquired certain assets of VionX Energy, including 12 patent families (the "Assets") out of an assignment for the benefit of creditors under Massachusetts law. Closing of the purchase of the Assets was conditional upon Largo Clean Energy entering into the License Agreement (as defined below) which occurred today. The Assets were acquired for deemed net consideration equal to US$3,862,000 that was satisfied through the issuance of 2,518,453 common shares of Largo (at a deemed price per common shares of CAD$1.035, being the 5-day VWAP prior to the execution of the Purchase Agreement) and 3,622,007 share purchase warrants of Largo, which have an exercise price of CAD$0.67 and a term of five years. In connection with the transaction, Largo Clean Energy has also entered into a non-exclusive license agreement (the "License Agreement") with Raytheon Technologies Corporation in respect of certain technology used by Largo Clean Energy.
Vanadium Redox Flow Batteries: Critical to Harnessing Clean Energy Generation
Largo believes the VRFB stands out above other battery contenders as being most ideally suited for large-scale utility, commercial and industrial renewable energy storage applications. The VRFB contains a vanadium electrolyte liquid solution that stores and releases large amounts of energy—and in most cases simultaneously—over long periods of time. Unlike a conventional battery, a VRFB uses a vanadium electrolyte to store energy in separated storage tanks, not in the power cell of the battery. During operation these electrolytes are pumped through a stack of power cells, or membranes, where an electrochemical reaction takes place and electricity is produced.
The VRFB's strengths lie within its longevity, lack of degradation in performance over time (even after many thousands of cycles), non-flammability, 100% depth of discharge without any damage to the battery system and the ability to re-use the vanadium electrolyte at the end of the battery's life. The electrolyte solution employed in the VRFB is non-volatile – it is neither flammable, nor explosive as a result of its high water content and has very little, or no self-discharge current, which offers a very high degree of operational safety compared to other battery energy storage systems. This inherent non-flammability of the water-based electrolyte used in VRFBs makes them ideal for deployment in densely populated areas, airports, schools and wooded areas where mitigating the safety risk caused by fire and smoke is paramount.
Suitable for both grid and decentralized energy applications, the VRFB is one of the preferred battery energy storage technologies that provides an effective solution to address the challenges associated with grid modernization and stabilization, as well as renewable energy integration. VRFBs can also be employed in utility-scale energy storage projects, micro-grids, renewable energy generation integration, grid smoothing, backup power and in remote and off-grid power applications.
To learn more about vanadium redox flow batteries and the growing global energy storage market, please visit the About Vanadium section of our website at www.largoresources.com.
Webcast and Conference Call Details
Largo Resources' management will host a webcast and conference call on Wednesday, December 9, 2020, at 10:00 a.m. ET, to discuss the Largo Clean Energy and VCHARGE± battery technology transaction highlights.
Conference Call Details:
| Date: | December 9, 2020 |
| Time: | 10:00 a.m. ET |
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