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Largo Resources (TSE:LGO)
TSX:LGO

Largo Resources (LGO) AI Stock Analysis

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Largo Resources

(TSX:LGO)

Rating:48Neutral
Price Target:
C$2.00
▲(3.09%Upside)
Largo Resources is currently under financial pressure with declining revenues and profitability challenges. While technical indicators show mixed signals, the valuation is concerning due to a negative P/E ratio. Positively, recent corporate events indicate efforts to improve production and liquidity. Addressing financial weaknesses and operational challenges is crucial for better performance.
Positive Factors
Cost Management
The firm's commitment to cutting its cost base is highlighted, with operating costs and adjusted cash operating costs excluding royalties decreasing 15% and 27% YoY, respectively.
Joint Venture Potential
The Storion Joint Venture is anticipated to play a significant role in the North American vanadium flow battery sector, highlighting its potential future value.
Operational Efficiency
Notable progress on operational turnaround with improved production rates for V concentrate, including a 75% increase in May.
Negative Factors
Market Weakness
Vanadium markets in China and Europe remain weak, with the European average benchmark price per pound declining significantly YoY.
Production Challenges
The company produced 2.9 million pounds of vanadium equivalent, representing a 25% decrease year over year.
Revenue Decline
Largo's notable decrease in revenue was driven by a sharp decline in the company's production and further exacerbated by weakness in the market price of vanadium.

Largo Resources (LGO) vs. iShares MSCI Canada ETF (EWC)

Largo Resources Business Overview & Revenue Model

Company DescriptionLargo Inc. engages in the development and sale of vanadium-based utility scale electrical energy storage systems in Canada. The company operates in five segments: Sales & Trading, Mine Properties, Corporate, Exploration and Evaluation Properties, and Largo Clean Energy. Its products include VPURE+ vanadium flakes that are used in the production of master alloys and aerospace applications; VPURE vanadium flakes ferrovanadium and vanadium carbon nitride for the steel industry; and VPURE+ vanadium powder for catalyst applications. The company offers renewable energy solutions through Largo Clean Energy. Its products are sourced from vanadium deposits at the Maracás Menchen Mine in Brazil. The company was formerly known as Largo Resources Ltd. and changed its name to Largo Inc. in November 2021. Largo Inc. was incorporated in 1988 and is headquartered in Toronto, Canada.
How the Company Makes MoneyLargo Resources generates revenue primarily through the mining, processing, and sale of vanadium products. The company's primary revenue stream comes from the sale of vanadium pentoxide (V2O5) and other vanadium-based products to global markets, including steel manufacturers and producers of energy storage systems. Largo has strategic partnerships and supply agreements with various industrial and commercial clients, which ensure a stable demand for its products. Additionally, the company is exploring opportunities in the renewable energy sector, particularly in the development and commercialization of vanadium redox flow batteries, which could further diversify its revenue streams.

Largo Resources Earnings Call Summary

Earnings Call Date:May 14, 2025
(Q3-2024)
|
% Change Since: -7.62%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed view with significant achievements in production and cost management but faced challenges due to lower vanadium prices and market demand. While operational efficiencies and strategic initiatives show promise for future growth, current financial performance is still under pressure from external market factors.
Q3-2024 Updates
Positive Updates
Record Vanadium Production
Largo delivered its highest quarterly vanadium production in 7 quarters, producing 3,072 tonnes, up 42% from Q3 last year.
Cost Reduction Achievements
Operating costs decreased by 31% from $44 million in Q3 2023 to $29.5 million in Q3 2024, and cash operating costs, excluding royalties, were reduced by 43%.
Ilmenite Production Increase
Ilmenite production reached 16,383 tonnes, an increase of 90% over the previous quarter.
Increase in Mineral Reserves and Resources
A 67% increase in mineral reserves and a 64% increase in mineral resources were reported, expanding mine life to 2054.
Successful Ilmenite Sales
Ilmenite sales totaled 19,572 tonnes, a 60% increase over Q2 2024.
Negative Updates
Revenue Impacted by Lower Vanadium Prices
Revenues were $29.9 million, impacted by lower vanadium prices and reduced sales volumes, with the average benchmark price per pound of V205 in Europe down to $5.71 compared to $8.03 in Q3 2023.
Net Loss Reported
A net loss of $10.1 million was reported in Q3 2024, compared to a net loss of $11.9 million in Q3 2023.
Decreased Vanadium Sales Volume
Vanadium sales volume decreased by 18% due to softer spot demand, particularly in Asia and Europe.
Challenges in Vanadium Market
Continued headwinds in the vanadium market, especially within the steel sector, and oversupply in the Chinese market have pressured prices.
Potential Impact on Q4 Production
Q4 production is expected to be impacted by annual kiln maintenance, resulting in lower production levels and higher operating costs.
Company Guidance
During the Q3 2024 earnings call for Largo, the company provided detailed guidance on several operational and financial metrics. They reported their highest quarterly vanadium production in seven quarters, reaching 3,072 tonnes, a 42% increase compared to Q3 2023. Operating costs were reduced by 31%, dropping from $44 million in the previous year to $29.5 million this quarter, with cash operating costs excluding royalties at $3.12 per pound sold, a 43% decrease. Their net loss improved to $10.1 million, including $3.3 million in nonrecurring items, compared to a $11.9 million loss the previous year. Additionally, Largo announced a vanadium supply agreement expected to unlock $23.5 million in liquidity. The company also highlighted a 67% increase in mineral reserves and a 64% increase in mineral resources, projecting a mine life extending to 2054. Despite ongoing challenges in vanadium prices, the strategic initiatives and production efficiencies position Largo to capitalize on future opportunities.

Largo Resources Financial Statement Overview

Summary
Largo Resources faces significant financial challenges with declining revenues and negative profit margins. While the balance sheet shows moderate stability, increased debt levels and negative returns on equity are concerns. Cash flow generation is under pressure, necessitating strategic actions to optimize operations and improve financial resilience.
Income Statement
45
Neutral
Largo Resources has experienced significant volatility in its financial performance. The gross profit margin has turned negative, and there is a notable decline in total revenue from $198.68 million in 2023 to $124.92 million in 2024, resulting in a revenue growth rate of -37.13%. The net profit margin also remains negative, highlighting profitability challenges. These factors indicate a need for strategic improvements to stabilize revenue streams and manage costs effectively.
Balance Sheet
60
Neutral
The balance sheet shows a moderate level of stability, with the equity ratio at 51.71% in 2024, suggesting a balanced structure between debt and equity. However, the debt-to-equity ratio has increased to 0.11, reflecting a higher reliance on debt compared to previous years. Return on equity is negative, which is concerning for investor returns. While the company is managing its liabilities, improving profitability is crucial for enhanced financial health.
Cash Flow
50
Neutral
The cash flow statements reveal challenges with free cash flow, which remains negative at -$31.07 million in 2024. Operating cash flow to net income ratio is positive at 0.22, indicating some operational cash generation despite losses. However, free cash flow to net income ratio is negative, suggesting difficulties in generating free cash. Improving operating efficiencies and reducing capital expenditures could enhance liquidity.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue124.92M198.68M229.25M198.28M119.99M
Gross Profit-20.90M23.93M59.53M65.27M31.60M
EBITDA-33.11M3.82M37.71M69.45M35.58M
Net Income-49.83M-30.34M-2.23M22.57M6.76M
Balance Sheet
Total Assets318.67M381.62M355.75M313.91M297.81M
Cash, Cash Equivalents and Short-Term Investments22.11M42.71M54.47M83.79M79.14M
Total Debt17.50M76.53M42.05M17.55M24.79M
Total Liabilities147.44M125.82M81.20M48.21M50.64M
Stockholders Equity164.82M248.65M265.39M265.70M247.16M
Cash Flow
Free Cash Flow-31.07M-32.51M-42.18M12.38M-77.61M
Operating Cash Flow11.16M21.20M3.46M39.78M-59.51M
Investing Cash Flow-42.23M-62.88M-60.15M-27.40M-18.11M
Financing Cash Flow12.04M29.13M26.43M-6.90M30.23M

Largo Resources Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price1.94
Price Trends
50DMA
1.88
Positive
100DMA
2.15
Negative
200DMA
2.45
Negative
Market Momentum
MACD
-0.01
Negative
RSI
62.86
Neutral
STOCH
95.65
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:LGO, the sentiment is Neutral. The current price of 1.94 is above the 20-day moving average (MA) of 1.75, above the 50-day MA of 1.88, and below the 200-day MA of 2.45, indicating a neutral trend. The MACD of -0.01 indicates Negative momentum. The RSI at 62.86 is Neutral, neither overbought nor oversold. The STOCH value of 95.65 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:LGO.

Largo Resources Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
62
Neutral
$10.27B9.83-0.18%2.87%2.21%-32.50%
TSLGO
48
Neutral
$124.41M-23.26%-37.62%-12.09%
TSFL
42
Neutral
C$123.13M-82.26%25.32%
TSMSR
42
Neutral
C$107.22M11.2770.41%
TSAHR
34
Underperform
C$172.73M-516.26%37.82%
TSPWM
C$118.88M-0.28%
41
Neutral
C$134.31M21.0411.66%-7.56%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:LGO
Largo Resources
1.94
-0.51
-20.82%
TSE:AHR
Amarc Resources
0.77
0.63
450.00%
TSE:PWM
Power Metals Corp
0.77
0.51
196.15%
TSE:FL
Frontier Lithium
0.54
-0.16
-22.86%
TSE:LITH
Lithium Chile Inc
0.65
-0.02
-2.99%
TSE:MSR
Minsud Resources
0.65
0.00
0.00%

Largo Resources Corporate Events

Business Operations and StrategyFinancial Disclosures
Largo Inc. Reports Significant Production Gains Amid Operational Turnaround
Positive
Jun 25, 2025

Largo Inc. has reported significant progress in its operational turnaround efforts, marked by a substantial increase in production rates for vanadium pentoxide and ilmenite concentrate in May 2025. The company achieved a 75% increase in V₂O₅ production and a 65% increase in ilmenite concentrate production compared to April 2025, thanks to enhanced access to key mining areas and improved plant stability. These developments are part of Largo’s broader strategy to optimize resource recovery and enhance sustainable mining practices. Despite a recent default notice from a counterparty regarding V₂O₅ delivery, Largo remains optimistic about its production outlook for June 2025 and aims to meet its annual production guidance.

The most recent analyst rating on (TSE:LGO) stock is a Buy with a C$5.00 price target. To see the full list of analyst forecasts on Largo Resources stock, see the TSE:LGO Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Largo Inc. Secures $10 Million Factoring Facility to Boost Liquidity
Positive
Jun 11, 2025

Largo Inc. announced a $10 million non-recourse factoring facility through its subsidiary, Largo Resources USA, to monetize accounts receivable from vanadium product sales. This facility aims to improve working capital efficiency by providing quicker access to liquidity, aligning cash inflows with expenditures, and supporting day-to-day operations as part of the company’s operational turnaround plan. The facility may expand to $30 million, subject to customer and credit approvals, and is expected to enhance Largo’s financial flexibility, aiding in stabilizing production and improving sales.

The most recent analyst rating on (TSE:LGO) stock is a Buy with a C$5.00 price target. To see the full list of analyst forecasts on Largo Resources stock, see the TSE:LGO Stock Forecast page.

Shareholder Meetings
Largo Inc. Reports Successful Shareholder Meeting Outcomes
Positive
May 12, 2025

Largo Inc. announced the successful results of its Annual General Meeting of Shareholders, with 71.17% of common shares voted. Shareholders approved all matters, including the election of director nominees and the appointment of KPMG LLP as auditors. The Board expressed gratitude for shareholder support, highlighting the company’s strong governance and operational focus.

The most recent analyst rating on (TSE:LGO) stock is a Buy with a C$5.00 price target. To see the full list of analyst forecasts on Largo Resources stock, see the TSE:LGO Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Largo Resources Reports Q1 2025 Results Amid Operational Turnaround Efforts
Negative
Apr 24, 2025

Largo Resources reported a decrease in V2O5 production and sales in Q1 2025 compared to the previous year, attributed to mining lower-grade ore zones and operational adjustments. Despite the short-term impacts on production, the company is focused on its operational turnaround plans, which include increasing mined material and waste movement. The company has revised its annual production and sales guidance to reflect these operational challenges, but remains committed to improving performance and maintaining its market position.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 05, 2025