I expect Q4 2023 to be another difficult period for Largo. Headwinds abound. It would not be a surprise for me to see the sp lingering below C$3-4 for the rest of 2023. So let's focus on 2024
Will Largo be able to embark on the road to recovery in 2024? I hope so.
However the only concrete bright spot for 2024 that I can find in the Q3-23 Earnings Call transcript is the “light” Ilmenite project. Why do I call it a “light” Ilmenite project? Because the 2024 expectation has gone down from
“4-5 months-ramp-up-required-to-achieve-a-full-production-capacity-of-12,000T-per-mth” (145,000T/year) to “8-months-ramp-up-required-to-achieve-a-full-production-capacity-of-8,000-9,000-per-mth-in-April-2024”
On the energy front, I expect LCE to continue to incur costs / consume cash without generating significant revenues in 2024.
In Q3-23 Largo’s mining operating costs alone = 97% of revenues despite Daniel Tellechea focus on cost reduction. Will management be able to reduce the operating costs to let’s say 85% (for the sake of argument) in 2024?
I dare say (but it’s just me) that the following projects / conditions are prerequisite for Largo to embark on the road to recovery in 2024:
1) Successful delivery of the Ilmenite revenue stream (within management control)
2) Successful cost reduction in a meaningful way (within management control)
3) Successful delivery of strategic alternatives for LCE (within management control), and
4) Most important of all: A strong V price throughout the year (US$9.00/lb or higher)
DYODD