About Largo
Largo Inc. (Largo) operates as a Canadian natural resource and battery energy storage system company. The company is one of the world's preferred vanadium companies focused on the production of vanadium pentoxide (V2O5) at the company’s Maracás Menchen Project located in Bahia, Brazil, being the company's sole material project for the purposes of NI 43-101 (the Canadian Securities Administrators National Instrument 43-101). The Maracás Menchen Project consists of the operating Maracás Menchen Mine (Campbell Pit) and includes a number of other deposits being explored throughout the project area. The two most advanced projects are the Novo Amparo Norte (‘NAN’) and the Gulçari A North (‘GAN’) deposits. The Maracás Menchen Mine is the company’s principal operating asset. The company is in the process of developing additional potential revenue streams from the deposit, including ilmenite and TiO2 pigment. The company also has a portfolio of secondary projects consisting of the Campo Alegre de Lourdes project, an iron vanadium property in Bahia, Brazil; the Northern Dancer project, a tungsten and molybdenum property in Yukon, Canada; and Currais Novos, a tungsten project. Following the acquisition of VRFB (vanadium redox flow battery) technology in 2020, the company began a strategic transformation to vertically integrate the company’s vanadium products with its VCHARGE vanadium battery technology. The company’s VCHARGE batteries support improved reliability and grid stability and are an efficient, safe and ESG-aligned long duration solution that is recyclable at the end of its 25+ year lifespan. Uses of the company’s VCHARGE batteries include, but are not limited to, renewable integration, grid optimization and, microgrid enablement. The company has entered into an agreement to supply the company’s first VCHARGE VRFB system to EGPE, and delivery remains a priority focus. Hot commissioning of the system is expected to be completed by the end of March 2023, and provisional acceptance is expected to be completed by the end of May 2023. The company is exploring opportunities to form a joint venture with AGT (Ansaldo Green Tech S.P.A.) for the manufacturing and commercial deployment of VRFBs in the European, African and Middle East power generation markets. Operations On January 22, 2020, the company announced the launch of VPURE and VPURE+, newly developed brands for the company’s industry preferred line of vanadium products. In April 2020, the company constructed a chemical pilot plant to test the ability to further upgrade its potential ilmenite product to TiO2 pigment. Test work to further understand and evaluate the company's TiO2 project remains on-going. In July 2020, the company began construction of a vanadium trioxide processing plant at the Maracás Menchen Mine (the ‘Vanadium Trioxide Plant’) which was completed in Q3 2021, with ramp up in Q4 2021. The Vanadium Trioxide Plant is anticipated is expected to increase sales for the high-purity aerospace market, the chemical industry and for vanadium electrolyte used for VRFBs. On December 8, 2020, the company announced the launch of Largo Clean Energy, a newly formed subsidiary in Delaware (U.S), following its acquisition on December 8, 2020, of the certain assets, primarily consisting of 12 patent families (the ‘VionX Assets’) of VionX Energy Corporation (‘VionX’), from VXE (ABC) LLC, in its capacity as assignee for the benefit of the creditors of VionX. VionX had been involved in the development and production of VRFB primarily for use in large scale energy grid storage solutions since 2002. Largo Clean Energy was launched so that the company could develop a clean energy storage business with an intention of providing safe and sustainable VRFB systems to the fast-growing renewable energy market. In November 2021, the company’s subsidiary, Largo Resources USA Inc., signed a 10-year exclusive off-take agreement with Gladieux Metals Recycling (‘GMR’) for the purchase of all standard and high purity grade vanadium products from GMR's recycling facility located in Freeport, Texas. On February 3, 2022, the company announced the creation of Largo Physical Vanadium Corp. and a proposed qualifying transaction pursuant to the policies of the TSX Venture Exchange with Column Capital Corp. (‘CCC’), a capital pool company, the terms of which are set out in a definitive agreement dated April 14, 2022. The Maracás Menchen Project is the company’s sole material project for the purposes of NI 43-101. The Maracás Menchen Project consists of the operating Maracás Menchen Mine (Campbell Pit) and includes a number of other deposits being explored throughout the project area. The two most advanced projects are the NAN and the GAN deposits. The Maracás Menchen Mine is the company’s principal operating asset. The company is in the process of developing additional potential revenue streams from the deposit, including ilmenite and TiO2 pigment. The company’s VCHARGE batteries support improved reliability and grid stability and are an efficient, safe and ESG-aligned long duration solution that is recyclable at the end of its 25+ year lifespan. Uses of the company’s VCHARGE batteries include, but are not limited to, renewable integration, grid optimization and, microgrid enablement. The Maracás Menchen Project produces V2O5 products from the Campbell Pit and effective as of October 10, 2021 had an estimated mine life of over 11 years. Largo is one of the lowest cost producers of V2O5 in the world due to the characteristics of the Maracás Menchen Mine's ore body and the company’s operating efficiency. Largo is solely responsible for the global sales, distribution and marketing of its vanadium products through its established team of sales professionals. The company also has a portfolio of secondary projects consisting of the Campo Alegre de Lourdes project, vanadiferous titano-magnetite property in Bahia, Brazil; the Northern Dancer project, a tungsten and molybdenum property in Yukon, Canada; and Currais Novos, a tungsten project in Rio Grande do Norte, Brazil. Energy Storage Business The company's energy storage business is run through its wholly-owned subsidiary, LCE, based in Wilmington, Massachusetts. LCE's business focuses on the manufacturing, sale, installation, and operation and maintenance of Largo's VRFB LDES. The product name VCHARGE denotes the scale, configuration, and services the battery renders to a customer. LCE's systems allow for the storage of energy in chemical form and then convert the electrolyte into electric energy when needed. The VCHARGE battery system is most economical when the power system design requires repeated cycling for durations between 6 hours to 12 hours. The systems are frequently paired with renewable energy resources that require optimization via the VRFB due to the intermittency or insufficient durations of renewable energy production when reconciled with contracted supply agreements. LCE's VRFB systems are configured and enabled with embedded control systems that allow for a multitude of ancillary services, as well as peak shaving and power shifting. The company's VCHARGE system uses patented battery technology and vanadium electrolyte processing and purification methods to provide a fully integrated renewable energy storage system consisted of power conditioning, system control and thermal management subsystems. VRFBs can be preferred for use over non-vanadium-based LDES applications in densely populated and risk sensitive areas as the electrolyte solution used in VRFB is non-volatile, as it is neither flammable nor explosive as a result of its high-water content. VRFBs also have a comparatively long-life cycle due to the non-degrading properties of vanadium. The applications of the VRFB system include, but are not limited to: Renewable Integration: Enabling the shift of renewable generated electricity to align with consumer demand by storing and delivering clean energy to consumers or businesses when the renewables are otherwise not producing power. Utilities/Grid Optimization: Storing energy when electricity lines, substations, and other equipment have excess bandwidth and then discharge to handle power quality and ancillary services, which allows for delaying or avoiding upgrades of T&D assets. Microgrids: Providing microgrids and island energy systems with a reliable source of clean energy, potentially enabling a full transition away from conventional generation with fossil fuels. VRFBs also provide a source of power for microgrids when access to neighboring grids is unavailable. Commercial and Industrial Energy Independence: Enabling a transition away from conventional fossil fuels utilizing long-duration renewable energy storage integration. VRFB systems can serve as excellent surrogates for balancing and reserves of PV and wind integration for commercial and industrial applications. EV Charging Integration: Reducing grid demands through ultra-fast 350kW charging. The inherent non-flammability of VRFB systems allows for installation near occupied structures like vehicle service stations, office parks, or parking garages. The company is in the process of finalizing the development of the VCHARGE+ system, an open battery solution which allows for the large-scale deployment of LCE's patented VRFB technology. The VCHARGE+ system leverages the same stack (reactor) building blocks as the VCHARGE system but is paired with significantly larger tanks of electrolyte without containerization for electrolyte containment. This configuration allows for the deployment of hundreds of megawatt hours being requested by developers of grid scale solar and wind projects. LCE (Largo Clean Energy Corp.) continues to validate VCHARGE+ with regional environmental requirements and therefore this product configuration is still under development. Sales to Customers On July 20, 2021, LCE entered into its first battery sales contract with the Enel Green Power España (EGPE) to deliver a 5 hour 6.1 MWh VCHARGE VRFB system for a project in Spain. In Q4 2022, LCE continued to make significant progress on the delivery under the EGPE contract, which remains a priority focus. As at the date of this AIF, all the hardware is either in transit to or is in Spain awaiting installation. The last six of 12 necessary electrolyte storage containers were shipped in early 2023. LCE's Field Service team has been on site in Q1 2023 and work is ongoing to install and interconnect the AC and DC power systems. Hot commissioning of the VRFB system is expected to be completed by the end of March 2023. Provisional acceptance, which requires the completion of as-build drawings, manuals, final punch-list items, and operational testing by EGPE, is expected to be completed by the end of May 2023. Production and Services LCE has a manufacturing and test facility in Wilmington, MA, with a potential capacity of 1.4GWh per year. Battery stacks produced at the LCE facility will be transported to the project site, with other components sourced from regional/local suppliers. Long-term service of LCE's VCHARGE system will be provided by LCE's team of engineers and project managers under a long-term services agreement. Depending on the location of a project, some technical aspects of the long-term service may be performed by local service providers, as agreed with the VCHARGE system customer, and in accordance with LCE's policies, procedures, and best practice. Under the Safekeeping Agreement with Largo Physical Vanadium Corp. (LPV), whereby the company has agreed to provide for the management and safekeeping of the physical vanadium owned by LPV, the company has the right to lease available LPV-owned vanadium to VRFB customers upon certain conditions (including that associated conversion costs between electrolyte and powder/flake requirements be borne by the company), thereby lessening the cost of in-battery vanadium electrolyte for such customers. Components LCE's products are reliant on the availability and cost of a variety of components. Vanadium is the most expensive input material in the VCHARGE system. LCE is at a unique advantage as it is able to readily access high-quality vanadium given Largo's position as one of the world's largest high-quality vanadium producers. This is of crucial importance given the small size of the global vanadium market. Other key components are sourced from external providers based on quality, availability and price. Such components include, but are not limited to, sulphuric acid, transformers, reclosers, inverters, and electrolyte tanks. Where possible, LCE plans to enter into long term agreements to secure predictable supplies of key inputs. As noted above, under the Safekeeping Agreement with LPV, the company has the right to lease available LPV-owned vanadium to VRFB customers, on certain conditions, thereby lessening the cost of in-battery vanadium electrolyte for such customers. Intangible Properties LCE holds issued and pending patents and licenses for the technology underlying its products in key jurisdictions, such as the United States, Europe, Japan, Russia, China, and Japan, which are kept in good standing. The majority of such patents are valid for 20 years from the date of filing. Environmental Protection and Licensing and Permits The operations of the company, including development and mining activities and the development, manufacturing, deployment, installation and maintenance of VRFB products, are subject to extensive federal, provincial (or state) and local laws and regulations governing, amongst other things, environmental protection, employee health and safety, exploration, development, tenure, production, taxes, labour standards, occupational health, wastes disposal, greenhouse gas emissions, protection and remediation of environment, reclamation, mine safety, toxic substances and other matters. Marketing and Distribution Principal markets of the VCHARGE system are expected to be North America and Europe in the near to medium term. Largo's commercial team are also responsible for the sales and distribution of the company’s VRFB products. LCE and AGT continue to focus on the formation of a joint venture for the manufacturing and commercial deployment of VRFBs in the European, African and Middle East power generation markets. The memorandum of understanding has been extended to March 31, 2023 to allow for the completion of the agreement. AGT and LCE continue to develop a business path for the joint venture to service the European markets with long duration energy storage (LDES). Material Project - Maracás Menchen Mine The only material project of the company for the purposes of NI 43-101 is the Maracás Menchen Project. The company plans to continue mining at the Campbell Pit and based on significant exploration and engineering work anticipates bringing the GAN and NAN deposits into the overall mine plan in the coming years. The company will continue to mine for V2O5 as its primary metal but plans to also process non-magnetic concentrates from the V2O5 process stream to produce ilmenite for further processing to TiO2 pigment. The company intends to extend and increase production at the Maracás Menchen Project by developing the NAN and GAN deposits scheduled to begin mining operations when the Campbell Pit is depleted in 2032. The GAN and NAN deposits are expected to extend the mine life of the Maracás Menchen Project to 2041. The Maracás Menchen Mine is a high-grade, open pit vanadium mine located in the state of Bahia, Brazil. The property consists of eighteen (18) concessions totalling 17,690.5 hectares, and all permits are owned 100% by Largo Vanádio de Maracás S.A. (VMSA), which is controlled 99.94% directly and indirectly by Largo. Of this total, VMSA controls two mining permits of 1,000 hectares each, and one exploration permit (977.20 hectares). Largo controls the remaining fourteen exploration permits and final mining permit (1,713.88 hectares). The company also plans to develop a Titanium Plant in the city of Camaçari, Bahia State. The first phase of this project commenced in 2022 and is expected to be completed in 2023 and will be designed to produce 30,000 t/a of TiO2 pigment as main product and 20,000 t/a of ammonium sulfate and 14,500 t/a of sodium carbonate as coproducts. History The company was incorporated in 1988 in the province of British Columbia. The company was formerly known as Largo Resources Ltd. and changed its name to Largo Inc. in November 2021.
