New Ilmenite Revenue Stream “Largo has also made progress in the construction of its ilmenite concentration plant at the Maracs Menchen mine in the last quarter of 2022 and expects commissioning to be completed by Q2 of this year. It expects a new revenue stream in 2024 from ilmenite sales.”
The full-scale ilmenite concentration plant is on schedule to be commissioned in Q2-23. The ramp-up period is expected to be about 5 months before reaching the production capacity of 145,000-150,000 tonnes of ilmenite by the start of Dec 2023. It should be noted that Largo has been selling a small quantity of ilmenite produced from the pilot plant since 2019. The ramp-up production is to be sold on the open market.
1) 2023
Let’s assume for the sake of argument that 50,000T of ilmenite will be produced and sold in 2023.
Ilmenite Estimated Processing Costs = ~US$28/T
Ilmenite Estimated Selling Price = ~US$210/T
Ilmenite Estimated Gross Profit = ~US$182/T
In the above scenario the new stream would bring in ~US$10.5M in estimated revenue and ~US$9.1M in estimated gross profit. (It’s also worth noting that Paulo Misk said in the Q1-22 CC that the ilmenite gross profit could even be as high as US$393 per tonne. So imagine a gross profit of US$393 x 50,000T = ~ US$19.7M out of a revenue of US$400 x 50,000T = US$20M).
2) 2024
Annual production capacity of 145,000-150,000 tonnes of ilmenite
Let’s assume for the sake of argument that the annual sales = 145,000T
Let’s also assume the estimated processing costs and selling price are unchanged:
Ilmenite Estimated Processing Costs = ~US$28/T
Ilmenite Estimated Selling Price = ~US$210/T
Ilmenite Estimated Gross Profit = ~US$182/T
In the above scenario the new ilmenite business would bring in ~US$30.5M in estimated revenue and ~US$26.4M in estimated gross profit in 2024.