Largo (TSX: LGO NASDAQ: LGO) just lately reported their Q1 earnings. Here is why I feel they’re one to observe. For these of you unfamiliar they’re primarily a vanadium miner – vanadium is a metallic which will be alloyed to extend the tensile power of metal, with out including an excessive amount of weight. Its anti-corrosive and important for aerospace and utilized in constructing building for metal framing and different metallic alloy functions. Its additionally used for making grid-scale batteries for establishments (hospitals, companies and many others.) Largo produces these batteries as properly and is moving into giving buyers publicity to vanadium with an ETF-like product – however I will get into that in one other put up once they additional develop that aspect of their enterprise.
The value of vanadium goes up, +29% because the identical quarter final yr. The provides world wide are tightening – there are provide chain points in China, employee shortages (COVID), the Russia/Ukraine struggle and many others. Largo’s steering has been up to date, with their vanadium pentoxide manufacturing anticipated to extend 16% this yr. Their revenues off of vanadium gross sales per pound are up 34% year-over-year. They’re additionally planning a inventory buyback of 10% this yr – an enormous quantity to provoke – so administration is assured they may make sufficient income to cowl it. Here is a pic from the article above:
Q1 Outcomes – Income & Manufacturing Rising, Rising Demand, Provide Tightening
So, the expectation is for vanadium demand to extend together with lithium, copper, cobalt and many others. together with different important metals. We will see the entire “battery metals” improve over the long run.
The post-earnings response has been excellent – inventory has gone up +20% over the previous couple of days. Though I anticipate some volatility with metals this yr, I feel the outlook is extraordinarily optimistic because the demand retains rising for electrical autos and “inexperienced” industrial processes – I will write extra on all of these things after I get the possibility.