Largo is no longer a cash machine On May 11 2021, just one year after gaining its commercial independence, Largo announced a solid Q1-21 performance with US$4.1M in Net Income (EPS = US$0.07) on a revenue of US$39.8M. The revenue per pound sold was US$6.49 and the average price per lb of the benchmark V2O5 in Europe was US$7.09. The sp closed at C$20.28. The company market cap was approximately C$1.3 Billion. (Yes Billion with a capital B)
Fast forward two years, on May 10 2021, Largo declared a Net Loss of (US$1.2M) on a revenue of US$57.4M in Q1-23. The revenue per pound sold was US$9.14 and the average price per lb of the benchmark V2O5 in Europe was US$10.39. The sp closed at C$5.93. The company market cap decreased to approximately C$380M. While shareholders are experiencing excruciating pain as the value of Largo has declined ~71% over the past two years, Management decides to mark the occasion by rewarding one of their own with a promotion to "Chief Commercial Officer” to reflect his “unwavering commitment/support of the Company's sales efforts”. Talking about bad timing.
Incurring a Net Loss while the revenue per pound sold = US$9.14? Saying that Largo is no longer a cash machine is a gross understatement especially when the price of the benchmark V2O5 in Europe has recently dropped to around US$8.6/lb. The company is in trouble amid a downward revision of the 2023 annual production guidance due to heavy rainfall in Dec 2022. Management said that 2022 was a challenging transition year. Is there any chance that 2023 will be any better?