TSXV: LGO www.largoresources.com
The Only ‘Pure-Play’ VANADIUM Producer NOV 2014
CORPORATE PRESENTATION NOV 2014 www.largoresources.com Forward - - PowerPoint PPT Presentation
TSXV: LGO The Only Pure - Play VANADIUM Producer CORPORATE PRESENTATION NOV 2014 www.largoresources.com Forward Looking Statements The information presented contains forward-looking statements, within the meaning of the United
TSXV: LGO www.largoresources.com
The Only ‘Pure-Play’ VANADIUM Producer NOV 2014
TSXV: LGO
The information presented contains “forward-looking statements,” within the meaning of the United States Private Securities Litigation Reform Act of 1995, and “forward-looking information” under similar Canadian legislation, concerning the business, operations and financial performance and condition of the Company. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to the estimation of mineral reserves and mineral resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; metal prices and demand for materials; capital expenditures; success of exploration and development activities; permitting time lines and permitting, mining or processing issues; government regulation of mining operations; environmental risks; and title disputes or claims. Generally, forward-looking statements and forward-looking information can be identified by the use of forward-looking terminology such as “plans,” “expects” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates” or “does not anticipate,” or “believes,”, “projects” or variations of such words and phrases or state that certain actions, events or results “may,” “could,” “would,” “might” or “will be taken,” “occur” or “be achieved.” Forward-looking statements and forward-looking information are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward- looking statements or forward-looking information, including, but not limited to, unexpected events during operations; variations in ore grade; risks inherent in the mining industry; delay or failure to receive board approvals; timing and availability of external financing on acceptable terms; risks relating to international operations; actual results of exploration activities; conclusions of economic valuations; changes in project parameters as plans continue to be refined; and fluctuating metal prices and currency exchange rates. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or
such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except in accordance with applicable securities laws. Investors are advised that National Instrument 43-101 of the Canadian Securities Administrators requires that each category of mineral reserves and mineral resources be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources The information presented uses the terms “measured,” “indicated” and “inferred” mineral resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically
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As at October 10, 2013
Project as at February 20, 2013
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Best Mining Deal
Metals and Mining Deal of the Year
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First concentrate produced, Feb 2014 First Production, Aug 2014
Record 24hr production at 71% capacity Oct 2014 Shipments of material commenced Sept 2014 First production achieved Aug 2014 Final CAPEX within 2% of budget July 2014 Feed to plant commenced May 2014 Construction completed April 2014
Operational break-even Dec 2014 Target 100% Phase 1 Capacity June 2015
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Source: vanitec.org/Roskill, 2013
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Source: vanitec.org
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Source: Roskill, 2013
Uses of Vanadium in Steels Vanadium in Steel
High Strength Low Alloy Steels (HSLA) are the leading market for vanadium in the steel industry Steel is the largest end-use for vanadium 91% 48%
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Source: Roskill, 2013
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Source: Vanitec
Rebar for construction Buildings, bridges, tunnels Automotive parts Aviation and aerospace Power lines and power pylons Pipelines Railway lines, railway cars, cargo containers Chemical plants, oil refineries, offshore- platforms High strength steel structures Various tools and dies Construction machinery and equipment Missiles and defense Ships Heavy-wear mechanical parts Vanadium applications are growing…
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Source: Autosteel.org, Popular Mechanics, 2008
strength steel instead of aluminum to make its cars lighter and also to improve fuel efficiency to comply with the strict emissions regulations.
soon be 250 to 750 pounds lighter with HSLA steels.
towing capacity than previous version, by using high- strength steel Despite the recent rapid growth in the automotive sector with new HSLA steels, Vanadium has a long history with automobiles
the his Model T for the purpose of making it lighter and stronger
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Growth in Consumption of High-Strength Steels in Automobiles %
Source: Roskill, 2013
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for 1/4 of steel production in China.
significantly higher resistance to seismic events
reduces the amount of steel used by 10%-20% (and as an added benefit, results in energy saving as well as emissions cutting)
for Design and Concrete Structures in 2010 and an Update on the Code in 2011.
increase in Vanadium content in steel rebar.
(Global Steel 2013, Ernest&Younge) (Gan Yong,Dong Han “Proceedings of International Seminar on Production and Application of HIgh Strength Seismic Grade Rebar Containing Vanadium”)
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Source: Les Ford Vanadium and Steel presentation, PDAC 2010 Source: Roskill 2013
% of Vanadium Used per Tonne of Steel by Region Total Tonnes by Region (V2O5 Equiv.)
Actual Consumption 2010 Projected Impact of China’s 2013 Rebar Standards
Japan Europe China
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Renewable energy sources (like wind and solar) generate energy intermittently This creates a mismatch between supply and demand VRBs allow energy generated at off-peak times to be time shifted to when it is needed most Governments like Germany, the USA, China and Japan are now making the development of renewable energy resources mandatory
generated by renewable energy by 2020
renewables by 2050.
Did you know….
Source: Journal of Power Sources Source: California Energy Commission, Renewables Portfolio Standard Source: German Renewable Energies (Act, 2014)
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Source: Roskill, 2013
*Tonnage calculated in V2O5 Equivalent
Total Supply 127,000 Tonnes (V2O5 Equiv)
Tonnes V2O5 Equiv
Other 8,000
Total Demand 136,000 Tonnes (V2O5 Equiv)
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18 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Co-product (slag) production Primary Production Secondary Production % of Global Production $ Cost of Production per Lb V2O5 Equiv $ Largo Cost of Production per Lb V2O5 Equiv Global Production by Method & Cost
NTD: Prices calculated into V2O5 Equiv Source: Roskill 2013; TTP Squared/Atlantic, Vanadium Market Outlook Source: Largo forecast based on company information & industry experts
% of Global Production $ Cost of Production
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$ Largo Cost $ Price V2O5
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Best Mining Deal
Metals and Mining Deal of the Year
investment in 2013
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Source: Behre Dolbear 2013 Ranking of Countries for Mining Investment Source: The Economist, June 2013
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= Campbell Pit (first 12 Years)
Maracás concessions and strike length 21
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30.4 Million Tonnes 24.6 Million Tonnes
Gulcari “A” Deposit Satellite Deposits
Contained within
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0.0 1.0 2.0 3.0 4.0
Concentrate SiO2% Concentrate V2O5% Ore V2O5% Maracas Australian South African
*Average grade comparisons compiled by Les Ford, presentation March 8, 2011
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Higher head-grade and higher iron content Concentrate has much higher V2O5 Concentrate has fewer contaminants like silica
Lowest Cost Production
% % % % %
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NTD: As outlined in 2013 Preliminary Economic Assessment [1] including iron ore byproduct credit – OPEX without credit is $3.18 (still lowest cost producer) [2] Average years 1-15
Net Present Value $554 million After tax IRR 26.3% Discount rate 8% Exchange rate (BRL:USD) 2:1 Average Production 11,400 t V2O5 equiv Mine life 29 Years Initial CAPEX 235 million OPEX $2.10[1] V2O5 price – 3 year avg $6.37 Average annual cash flow $89 million[2] Reported after taxes, royalties, SG&A & sustaining capex
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*including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer)
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$ Largo Cost $ Price V2O5
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29 10 20 30 40 50 60 70 80 90 100 110 1 2 3 4 5 6 7 8 9 10 11 12 Year 2
Year 1 Total: 5,511 Tonnes V2O5 Year 2 Total: 9,689 Tonnes V2O5 Plant Capacity: 10,000 Tonnes V2O5 % Plant Capacity (time operating) 100% Month
We are Here
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30 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 $0 $20 $40 $60 $80 $100 $120 $140 Year 1 Year 2 Year 3 Year 4 Year 5
Production Cash-flow (MILLIONS)
Free Cashflow ($M) Operating Cashflow ($M) Tonnes V2O5 Equiv.
(10,000 Tonnes Capacity) Initial Ramp Up
(15,000 Tonnes Capacity) Expanded Production rates & FeV
*As outlined in 2013 Preliminary Economic Assessment – Includes all taxes, royalties, and SG&A **Does not include debt repayment
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32 Mark Brennan President & CEO 25+ years experience in capital markets Michael Mutchler Chief Operating Officer 20+ years mining engineering experience operating and managing mines Les Ford SVP & Technical Director, Brazil Vanadium expert. 40+ years experience building/operating vanadium facilities globally Kurt Menchen President of Operations, Brazil 30+ years mining engineering experience operating mines in Brazil Andy Campbell VP Exploration 30+ years of mining exploration experience Ernest Cleave Chief Financial Officer 10+ years experience in financial management Andrew Hancharyk Chief Legal Officer 20+ years experience in corporate Law Casper Groenewald Deputy Technical Director 20+ years metallurgical engineering experience including 5+ in vanadium processing
Significant Experience Building and Operating Mining Facilities
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Project as at December 11, 2013
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150 meters Magnetite (ore) Gabbro (waste)
Current mining operations
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Project as at February 20, 2013
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Production Achieved
Above: First delivery September, 2014
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Crushing Circuit
30,000+ tonnes of crushed ore stockpiled
Milling Circuit
5,000+ tonnes of concentrate stockpiled
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Kiln and Cooler System
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39 Stock symbol: LGO – TSX-V Share price (Nov 7, 2014): $2.00 Shares issued (Basic): 109 million Market Cap C$218 million 52-week High/Low: $3.60 / $1.90 Management & Institutions: 75% Warrants & Options (Basic): 30 million Institutional Shareholders Arias Resource Capital - 28% Mackenzie Investments - 14.6% Eton Park Capital Management - 10.1% Ashmore Investment Management - 10.1%
Shareholders & Project Partners
Project Finance Deal of the Year Awards - March 2013
Project Partners Glencore International
100% 6 yr take-or-pay off-take for Maracas
Business Development Bank of Brazil Bank Itau, Votorantim, Bradesco
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mafic rocks like the ones discovered near the Maracas Menchen Mine
those in the Bushveld region of South Africa which produces a significant amount of the world’s chrome, PGMs and vanadium
located North of current mine area
two zones of chromite layers 20 to 25 metres wide at surface with fine-grained sulphides that potentially contain platinum
pending
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Project as at November 19, 2013 Project as at December 26, 2013 Project as at February 20, 2013
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Corporate Development dladd@largoresources.com 416-861-9406
President and CEO mbrennan@largoresources.com 416-861-9797
LARGORESOURCES.COM
Largo Resources LargoResources1 Largo Resources largoresources
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Mark Brennan Director Largo Resources President & CEO Dirk Donath Director Managing director Aimaira Capital Management Alberto Arias Director Founder & President Arias Resource Capital Dan Ioschpe Director CEO of Lopche-Maxion David Brace Director CEO of Karmin Exploration. Formerly with Aur Resources Wayne Egan Director Partner at Weir Foulds LLP Alex Monteiro Director Partner at CALT Ltd.
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Currais Novos
Region: Brazil Metal: Tungsten Stage: Care & Maintenance
Campo Alegre
Region: Brazil Metal: V, Ti, Fe Stage: Exploration
Northern Dancer
Region: Yukon, Canada Metal: Tungsten Stage: PEA Complete
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growing rapidly
amounts of titanium-vanadium alloy
Airbus 380 each contain more than 100 tonnes of vanadium alloys, more than double that in a Boeing 747
Source: Largo Source: www.asiaminer.com Source: TTP Squared
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Source: Roskill, 2013 Source: Airline Monitor
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stripping
surface continues to depth
Unit Mining Cost Total OPEX Revenue Tonne of ore $14.29 $61.50 $129.97 Per lb V2O5 /equiv.** $0.82 $2.10 $6.09
*As outlined in 2013 Preliminary Economic Assessment **Includes all royalties less credit Iron Ore byproduct
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(approx 8% of global supply)
immediate vicinity – both underground and tailings
severe regional drought in 2013
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Operational History:
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V2O5*
deposit - seven concessions covering 9,274.66 hectares
Bahia State Mining Development Agency (CBPM)
2011 suggested potential for titanium dioxide (TiO2) project
* Historical resource provided by CBPM (Bahia State Mining Development Agency)
Mineral Resources (non-NI 43-101)
Development Milestones
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0.029% Mo (M&I)
zone: 60.3 MT of 0.14% WO3 and 0.045% Mo (M&I)
0.024% Mo (I)
JV partner Development Milestones Mineral Resources
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Tungsten (per MTU) Moly (US$ per lb) IRR (%) NPV @ 8% (US$ millions) $275 $17.50 20.0 918 $300 $17.50 22.2 1,110 $325 $17.50 24.4 1,302 $350 $17.50 26.5 1,494 $365 $17.50 27.8 1,769
* The PEA is preliminary in nature, and includes inferred resources that are too speculative geologically to have economic considerations applied to them. There is no certainty that the PEA will be realized.
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tungsten (18.3 million pounds) and 5,959,000 pounds molybdenum over initial 23 years
Attractive economics at current tungsten prices Strategic asset for long term supply of tungsten