Cash cow or not In 2021, the first full year of commercial independence, Largo paid a tax rate of 29% or 2.4 x the previous year’s. In 2022 the company embarked on a new “Two Pillars”growth strategy with the profitable Mining Pillar supporting the start-up costs of the new “Energy Storage Pillar”and somehow the tax rate skyrocketed more than fivefold from 29% to 155% for the same year. The excessively high tax rate continued into Q1-23. To date no explanation has been given by Management with regard to the reasons behind this crazy jump in tax rates despite the facts that Maracs Menchen Mine has been granted an effective tax rate of 6.25% by the Brazilian government until 2028 (Technical Report, section 22.1) and that no public company, cash cow or not, can survive for long under such an excessive income tax rate as 100% or above. What the Hell happened to Largo?
| | 1 | 2 | 3 | 4 |
| Period | Net Income (Loss) before Tax | Total Income Tax | Net Income (Loss) after Tax | Tax Rate (col 2 / col 1) |
| FY2020 | 7.7M | (0.9M) | 6.8M | 12% |
| FY2021 | 31.8M | (9.2M) | 22.6M | 29% |
| FY2022 | 4.0M | (6.2M) | (2.2M) | 155% |
| Q1-23 | 0.7M | (1.9M) | (1.2M) | 271% |
DYDD