Largo Inc T.LGO

Q2 Financials

[Clipper2]

Will be announced on Aug 10th.

As the price of V2O5 increases the costs should not increase too much.

So without any unexpected cost surpises I have put together some numbers.

I'm staying with my original prediction of approx. 55m Revenue and .14m to 15m net income.

Not including any iron-ore sales and Royalties. 

I hope this darn post formats correctly.

	Q3-20	Q4-20	Q1-21	Q2-21	Q2-21
production in tonnes	3,092	3,340	1,986	3,072	3,072
pounds per tonne	2,204.62	2,204.62	2,204.62	2,204.62	2,204.62
production in lbs	6,816,685	7,363,431	4,378,375	6,772,593	6,772,593
total tonnes sold	2,321	3,751	2,783	3,027	3,027
total lbs sold	5,116,923	8,269,530	6,135,457	6,673,385	6,673,385
revenue actual sales	27,474,000	42,254,000	39,801,000	46,713,693	53,387,078
revenue per lb sold	5.37	5.11	6.49
				test V2O5 price	test V2O5 price
Actual avg price V2O5	5.33	5.29	7.09	7.00	8.00
				avg total costs	avg total costs
total costs	24,122,000	36,231,000	35,354,000	31,902,333	31,902,333
net income before tax	3,352,000	6,023,000	4,447,000	14,811,360	21,484,745
royalties	1,552,000	1,958,000	1,470,000
royalties per lbs sold	0.30	0.24	0.24

[Drhoho]

Clipper, great format, very helpful at looking at Q2 and H1. With either steady or further V2O5 $US rise in Q3 and Q4 and production and sales at least even with Q2, I estimate that 2021 earnings will be ~$US1.00/share which should justify a P/E ratio of at least 16 or higher. If my best guess is correct or close, the  big question is what LGO does with $US 60-75 million net cash increase.

[Drhoho]

2020 full year: net income $US 6.8 million, $US 0.12/share.

[Drhoho]

 2020 full year net income = $US6.8 million, =$US 0.12/share  2021 1H  net income = $US12.589 million, = $US 0.20/share Bring on 2H and 2021full year!  on Yahoo finance, 2020 full year net income was $US 0.11/share and P/E stock ratio 151/1. Whether thou goest 2021 P/E stock ratio?

[Clipper2]

I agree doc. The average AsianMetals price of V2O5 for Q3 to date is USD 9.18 and the most recent V price is USD 9.80. Each $1 increase in the price of V2O5 increases the Revenue by approx. USD 6.5m. Looking good going forward. GL

[screamer99]

Haven't followed this company since the peak in vanadium, but I completed my position today and the table that Clipper shared is why.  For the Q2 average price, I'm estimating $8.25 or higher.  For the costs (total cash costs), I'm taking the company's guidance of $3.50 - $3.70.  The question is SG&A.  My estimate and being consevative, is $4.5m.  

[screamer99]

Revenues of $54.3m, average selling price of just over $8/lb I calculate EBITDA of $21m+ but there are high professional, consulting and management fees. I hope $1m  - $1.5m is non-recurring. Net income of $8.4m with an FX gain of $3m. Net debt repayment with no change in the cash balance which is sitting at over $80m Tomorrow will be a good day.

[kha341]

Clipper,  Your average costs for Q2-21 are too low and are based on a calculation which is not accurate in my opinion. Your calculation of the average costs for Q2-21: 24,122,000 (Q3-20) + 36,231,000 (Q4-20) + 35,354,000 (Q1-21) = 95,707,000 / 3 = 31,902,333 representing a cost/revenue ratio of 31,902 / 46,714 = 68.3% which is too low. Have you ever seen a cost/revenue ratio of 68.3% in

[Clipper2]

kha wrote: Thus "Q2-21 estimated Net Income =  46,731,693 (estimated revenue) - 40,827,767 (average costs) = US$5,903,926".  The (estimated revenue) of 46,731,693 is based on a V2O5 price of $7. I believe the average will come in closer to $8. We have yet to see any premiums, so we could see V higher than $8. $8 average V price will increase the revenue to $53,387

[kha341]

Clipper,  So let’s assume Q2-21 revenue = $53,387,078 Your calculation of the average costs for Q2-21 doesn’t change: : 24,122,000 (Q3-20) + 36,231,000 (Q4-20) + 35,354,000 (Q1-21) = 95,707,000 / 3 = 31,902,333 which now represents a cost/revenue ratio of 31,902 / 53,387 = 59.8% which is certainly too low. Have you ever seen a cost/revenue ratio of 59.8% in the financial reports of

[Clipper2]

kha wrote So let’s assume Q2-21 revenue = $53,387,078 Your calculation of the average costs for Q2-21 doesn’t change: : 24,122,000 (Q3-20) + 36,231,000 (Q4-20) + 35,354,000 (Q1-21) = 95,707,000 / 3 = 31,902,333 which now represents a cost/revenue ratio of 31,902 / 53,387 = 59.8% which is certainly too low. Have you ever seen a cost/revenue ratio of 59.8% in the financial reports of Largo

[Clipper2]

kha I have to call it a night. My head is buzzing. lol. I'm sure we will talk again.

[kha341]

Clipper,    A good and quick way to estimate the total costs of a company is to look at them in conjunction with revenues. In Q4-20 the total costs = 36,231,000 while the revenue = 42,254,000. In Q2-21 you estimate the revenue to be 53,387,000 (or an increase of ~11,000,000 over Q4-20) and you expect the total costs to stay unchanged? Surely we should also expect an increase in total

[kha341]

Let’s assume Revenue = 53,387,000 and Net Margin = 15% Q2-21 Back-of-the-envelope Estimated Revenue =  53,387,000 Estimated Total Costs = 53,387,000 x 85% = ~45,379,000 Estimated Net Income = 53,387,000 - 45,379,000 = 53,387,000 x 15% = US$8M or around $10M without FX Loss.

[kha341]

Net Profit Margin (or Net Margin)  Q3-20 = 3,352,000 / 27,474,000 = 12.3% Q4-20 = 6,023,000 / 42,254,000 = 14.3% Q1-21 = 4,447,000 / 39,801,000 = 11.2%

[kha341]

Reminder Iron ore sales are not included. in the above guesstimation.

[jcw604]

Analysts expect a lot higher: .32*64.6m=20.6m. See: https://ca.finance.yahoo.com/quote/LGO.TO/analysis?p=LGO.TO Are they expecting too much? Has their expectation been reflected in the SP? Will we see a big drop, if income or revenue below expectation? Their revenue expectation is only 56M. Therefore, they expect over 1/3 of revenue is profit. Are these estimates non-gaap? Does not make sense to

[kha341]

Unfortunately we have no details about the sales of iron ore in Q2. So let’s assume 3 scenarios for Largo’s iron sales booked in Q2 Scenario 1 =  25,000T ; Scenario 2 = 30,000T; Scenario 3 = 40,000T Largo’s iron ore is of a lower quality than the 62% Fe benchmark, perhaps around 55 - 58% Fe. The prices of the benchmark 62% Fe were somewhere around US$220/T in Q2-21. So for the sake of

[kha341]

Note: The analysts consensus estimate is in C$                                                          

[jcw604]

where did you get the current estimate of 29 cents. I believe your estimate is a lot more realistic than the yahoo one I got.

[kha341]

I have another look at my guesstimation and reckon that if Revenue = US$53.3M (a big IF) then there is a possibility for a Net Profit Margin of 20%.    Q2-21 Back-of-the-envelope Estimated Revenue =  53,387,000 Estimated Total Costs = 53,387,000 x 80% = ~42,709,000 Estimated Net Income = 53,387,000 - 42,709,000 = 53,387,000 x 20% = US$10.7M or around $13M without FX

[kha341]

Notice that in the above guesstimation Q2-21 Net Income = US$10.7M which is more than double the Q1 Net Income of US$4.4M while Q2 Revenue (53.3M) only increases by 34% over Q1’s (39.8M).

[skidie11]

I believe i have seen DRHOHO  estimate is around 16 m   that would be great, but i'm hoping to beat $10 mil  just not as whishfull as some

[kha341]

[kha341]

Clipper,  So let’s assume Q2-21 revenue = $53,387,078 Your calculation of the average costs for Q2-21 doesn’t change: : 24,122,000 (Q3-20) + 36,231,000 (Q4-20) + 35,354,000 (Q1-21) = 95,707,000 / 3 = 31,902,333. Your way of calculating the average costs to be US$31,902,333 for Q2-21 would result in a humongous Q2-21 Net Income of US$21,484,745 out of a total revenue of US$53,387