Largo Inc (LGO) 2023 Q4 法說會逐字稿

Good day, and thank you for standing by, and welcome to Largo's fourth-quarter and full-year 2023 financial results conference call. (Operator Instructions) I would now like to hand the conference over to your speaker today, Alex Guthrie, Senior Manager of External Relations. Please go ahead.

美好的一天，感謝您的支持，歡迎參加 Largo 第四季和 2023 年全年財務業績電話會議。（操作員指示）我現在想將會議交給今天的發言人，對外關係高級經理 Alex Guthrie。請繼續。

Thank you, operator, and thanks to all those who could attend our fourth-quarter and full-year 2023 financial results conference call. Our annual financial statements, related MD&A, and most recent AIF can be accessed on our website at largoinc.com as well as on SEDAR+ and EDGAR.

謝謝營運商，也感謝所有能夠參加我們 2023 年第四季和全年財務業績電話會議的人。我們的年度財務報表、相關 MD&A 以及最新的 AIF 可在我們的網站 largoinc.com 以及 SEDAR+ 和 EDGAR 上存取。

Before continuing the call, I would like to remind you that some of the information you'll hear during today's discussion will consist of forward-looking statements, including, without limitation, those regarding future business outlook. Please refer to the cautionary statements and the related MD&A, consolidated financial statements, and AIF, which can be found on our website within the Investor Relations Resources section. And finally, all figures discussed today are in US dollars unless otherwise stated.

在繼續通話之前，我想提醒您，您在今天的討論中將聽到的一些資訊將包含前瞻性陳述，包括但不限於有關未來業務前景的資訊。請參閱警示性聲明以及相關 MD&A、合併財務報表和 AIF，這些內容可以在我們網站的投資者關係資源部分找到。最後，除非另有說明，今天討論的所有數字均以美元為單位。

On the call today is Daniel Tellechea, Largo's Interim Chief Executive Officer and Director; Ernest Cleave, Largo's CFO; Paul Vollant, Largo's Chief Commercial Officer; and Francesco D'Alessio, the President of Largo Clean Energy. Following delivery of our prepared remarks, we'll open the call for questions. We ask that participants restrict their questions to two and then re-queue if there are additional questions to allow the others the opportunity to participate. I'll now turn the call over to Daniel.

今天參加電話會議的是 Largo 臨時執行長兼董事 Daniel Tellechea； Ernest Cleave，Largo 財務長； Paul Vollant，Largo 首席商務官；以及 Largo Clean Energy 總裁 Francesco D'Alessio。在發表我們準備好的演講後，我們將開始提問。我們要求參與者將問題限制為兩個，然後如果還有其他問題，請重新排隊，以便其他人有機會參與。我現在將電話轉給丹尼爾。

Thank you, Alex, and thank you all for joining us today as we discuss Largo's performance over the last past year. Despite facing a mix of accomplishments and challenges, we remain committed to ensuring the longevity and success of Largo's well into the future.

謝謝 Alex，也謝謝大家今天加入我們，討論 Largo 在過去一年的表現。儘管面臨著各種成就和挑戰，我們仍然致力於確保 Largo 在未來的長久發展和成功。

As we have pre-reported our results yesterday evening, I will speak to providing the important highlights before we open it up for questions from the audience. Our primary focus has been on enhancing operational efficiency at the Maracás Menchen Mine to meet production and sales targets, particularly given the current depressed vanadium prices.

由於我們昨天晚上預先報告了我們的結果，因此在我們向觀眾提問之前，我將提供重要的要點。我們的主要重點是提高 Maracás Menchen 礦的營運效率，以實現生產和銷售目標，特別是考慮到目前釩價格低迷。

Despite the industry-wide pressure, we have diligently worked to control what we can within Largo and believe that our lower-cost profile position us better than others to weather these challenging times. Throughout the year, we encountered various hurdles such as delay in our infill drilling program, a traffic accident, a tragic accident at our mine facility, and technical setbacks with the equipment commissioning due to engineering and design problems.

儘管面臨全行業的壓力，我們仍然努力控制 Largo 內部的控制能力，並相信我們較低的成本使我們比其他公司更能應對這些充滿挑戰的時期。在這一年裡，我們遇到了各種障礙，例如加密鑽探計劃延遲、交通事故、礦山設施悲慘事故以及由於工程和設計問題導致設備調試遇到技術挫折。

However, we remain focused on enhancing operational efficiency at the Maracás Menchen Mine, investing significantly in waste rock, pre-stripping, new crushing system, and refining our operational management practices and policies, resulting in notable improvements in the latter quarters of 2023, particularly in Q4.

然而，我們仍然專注於提高 Maracás Menchen 礦的營運效率，在廢石、預剝離、新破碎系統方面進行大量投資，並完善我們的營運管理實踐和政策，從而在 2023 年下半年取得顯著改善，特別是在第四季。

In Q4 2023, our V2O5 equivalent production saw a 38% increase compared to Q4 2022, with total coal mine and crush also experiencing substantial growth. Notably, we achieved record high-purity vanadium production in Q4 2023, achieving a record production of 1,670 tonnes of high-purity V2O5 equivalent, representing 60% of the company quarterly V2O5 output.

2023年第四季，我們的五氧化二釩當量產量較2022年第四季成長38%，煤礦和壓礦總量也大幅成長。值得注意的是，我們在 2023 年第四季實現了創紀錄的高純度釩產量，達到創紀錄的 1,670 噸高純度 V2O5 當量產量，占公司季度 V2O5 產量的 60%。

Although our annual V2O5 production is slightly dipped compared to the previous year, we remain our annual production guidance range. Also, 2023 marked several significant milestones for Largo, including the successful construction and commissioning of a new ilmenite concentration plant. We have seen steady improvement in ilmenite concentrate production and quality over the last quarter, which will contribute to the diversification of our revenue stream beyond vanadium in the future.

儘管我們的五氧化二釩年產量與前一年相比略有下降，但我們仍維持年產量指引範圍。此外，2023 年標誌著 Largo 的幾個重要里程碑，包括新鈦鐵礦選礦廠的成功建設和調試。上季我們看到鈦鐵礦精礦產量和品質穩定提高，這將有助於我們未來除釩以外的收入來源多元化。

Our exploration program surrounding the Maracás Menchen Mine has become an increasingly important part of our story over the last few quarters. And I'd like to spend a brief moment discussing some of the highlights. We are conducting exploration efforts in the area surrounding the [Campbell Pit] to both optimize current operations and plan for future development and expansion through the identification and conversion of resources.

在過去幾季中，我們圍繞 Maracás Menchen 礦場的勘探計劃已成為我們故事中越來越重要的一部分。我想花一點時間討論其中的一些亮點。我們正在 [Campbell Pit] 週邊地區進行勘探工作，以優化當前運營，並透過資源識別和轉換來規劃未來的開發和擴張。

Our ongoing program aims to expand our understanding of the mineralization surrounding the Campbell Pit so that we may gauge the possibility of continuing mineralization north and south of the pit. As part of this program, we have also identified significant PGM grades in non-magnetic tailing ponds.

我們正在進行的計劃旨在擴大我們對坎貝爾礦坑周圍礦化的了解，以便我們可以評估礦坑北部和南部繼續礦化的可能性。作為該計劃的一部分，我們還在非磁性尾礦池中確定了重要的鉑族金屬品位。

The major significance of this discovery is that the higher grades of PGMs could be associated with our non-magnetic materials rather than massive vanadium ore as previously thought. We plan to conduct further studies to evaluate the potential to recover PGMs as an additional byproduct of Largo's vanadium and ilmenite operations following the completion of our ilmenite concentration plant.

這項發現的主要意義在於，較高品位的鉑族金屬可能與我們的非磁性材料有關，而不是像先前認為的那樣與塊狀釩礦石有關。我們計劃進行進一步的研究，以評估在我們的鈦鐵礦選礦廠竣工後，回收鉑族金屬作為 Largo 釩和鈦鐵礦業務的額外副產品的潛力。

Additionally, our clean energy division reached a significant milestone in 2023 following the delivery of our 6-megawatt-hour VRFP to our clean energy partner, Enel Green Power, in Spain. This installation represents the largest VRFP being installed in Europe and has become a key catalyst in our recent announcement regarding the strike in energy in Largo Clean Energy. I will let Francesco thoughts more on that later in the call.

此外，在向西班牙的清潔能源合作夥伴 Enel Green Power 交付 6 兆瓦時 VRFP 後，我們的清潔能源部門在 2023 年達到了一個重要的里程碑。該裝置是歐洲安裝的最大的 VRFP，並成為我們最近關於 Largo Clean Energy 能源罷工的公告的關鍵催化劑。我將在稍後的電話會議中讓弗朗西斯科更多地思考這一點。

While the current vanadium market presents great challenges to our financial performance, we remain focused on executing on our strategic initiatives, reducing costs and meeting production and sales targets in the year ahead. We appreciate continuous support as we navigate through these dynamic times and remain committed to creating long-term value for our shareholders.

儘管目前的釩市場對我們的財務表現提出了巨大挑戰，但我們仍然專注於執行我們的策略舉措，降低成本並實現未來一年的生產和銷售目標。我們感謝在這個充滿活力的時代中得到的持續支持，並繼續致力於為股東創造長期價值。

With that, I will turn the call over to Ernest to provide an overview of our financial performance in 2023.

接下來，我將把電話轉給 Ernest，概述我們 2023 年的財務表現。

Thanks, Daniel. As highlighted on this call, the impact of declining vanadium prices on our financial performance over the last year has been significant. In Q4 2023, our revenues were $44.2 million, down 7% from Q4 2022, with revenues per pound sold of $7.69 compared to $7.77 in the same period last year. For the full year 2023, revenue stood at $198.7 million, a 13% reduction from 2022, with revenues per pound sold at $8.66 compared to $9.38 in 2022.

謝謝，丹尼爾。正如本次電話會議所強調的那樣，釩價格下跌對我們去年的財務表現產生了重大影響。2023 年第四季，我們的營收為 4,420 萬美元，比 2022 年第四季下降 7%，每磅銷售收入為 7.69 美元，而去年同期為 7.77 美元。2023 年全年營收為 1.987 億美元，比 2022 年減少 13%，每磅銷售收入為 8.66 美元，而 2022 年為 9.38 美元。

This decline is primarily attributed to the substantial reduction in the European vanadium price, which dropped by 22% in Q4 2023 compared to Q4 2022 and a 31% year-over-year reduction, with the most recent price hitting $5.90 per pound. Despite these challenges, our focus remains on optimizing operations to mitigate costs.

這一下降主要歸因於歐洲釩價大幅下跌，2023年第四季較2022年第四季下跌22%，年減31%，最新價格觸及每磅5.90美元。儘管存在這些挑戰，我們的重點仍然是優化營運以降低成本。

As discussed in previous quarters, we made notable progress in this area, seeing reductions in key consumable costs such as sodium carbonate and overhead costs through targeted headcount reductions. Our operating costs in Q4 2023 totaled $43.2 million, slightly down from $44.5 million in Q4 2022, while for the full-year 2023, operating costs were $174.8 million compared to $169.7 million in 2022.

正如前幾季所討論的，我們在這一領域取得了顯著進展，透過有針對性的裁員，減少了碳酸鈉等關鍵消耗品成本和管理費用。我們 2023 年第四季的 4,450 萬美元，而 2023 年全年的營運成本為 1.748 億美元，而 2022 年為 1.697 億美元。

Direct mine and production costs increased in 2023 due to higher total ore mined, cost impacts from low ore availability earlier in the year, and planned shutdowns for maintenance. However, direct mine and production costs decreased in Q4 2023 compared to the same period last year, reflecting cost-saving initiatives and softer prices for consumables.

由於開採的礦石總量增加、年初礦石供應量低造成的成本影響以及計畫停產維護，2023 年直接礦場和生產成本增加。然而，2023 年第四季的直接開採和生產成本與去年同期相比有所下降，反映出成本節約措施和消耗品價格疲軟。

Cash operating costs, excluding royalties per pound of V2O5 equivalent sold, were $5.30 for 2023, and this compares with $4.37 last year, remaining within our revised annual guidance for 2023.

2023 年的現金營運成本（不包括每磅出售的 V2O5 等價物的特許權使用費）為 5.30 美元，而去年為 4.37 美元，仍在我們修訂後的 2023 年年度指導範圍內。

In terms of other expenses, total professional consulting and management fees decreased by 9% in 2023 compared to 2022, and other general and administrative expenses decreased by 18%, primarily due to reduced activity and head count at Largo Clean Energy during the strategic review.

就其他費用而言，2023年專業諮詢和管理費用總額較2022年下降9%，其他一般和行政費用下降18%，主要是由於策略審查期間Largo Clean Energy的活動和員工人數減少。

Additionally, technology startup cost decreased by 52% in 2023 compared to the same period last year. We reported a net loss of $13.3 million in Q4 2023 versus a net loss of $15.6 million in Q4 2022, which included $8 million in non-recurring items. For the full year, we recorded a net loss of $32.4 million compared to a net loss of $2.2 million in 2022, which also included $10.3 million in non-recurring items.

此外，2023年技術啟動成本較去年同期下降52%。我們報告 2023 年第四季的淨虧損為 1,330 萬美元，而 2022 年第四季的淨虧損為 1,560 萬美元，其中包括 800 萬美元的非經常性項目。全年淨虧損為 3,240 萬美元，而 2022 年淨虧損為 220 萬美元，其中還包括 1,030 萬美元的非經常性項目。

To provide better insights into our financial performance, we've introduced a new metric to our financial reporting this quarter, adjusted EBITDA. In Q4 2023, adjusted EBITDA increased by 138% compared to Q4 2022, reaching $1.4 million. For the full year, adjusted EBITDA was $12.1 million, and that compares with $41.6 million in 2022.

為了更了解我們的財務業績，我們在本季的財務報告中引入了一個新指標，即調整後的 EBITDA。2023 年第四季，調整後 EBITDA 較 2022 年第四季成長 138%，達到 140 萬美元。全年調整後 EBITDA 為 1,210 萬美元，而 2022 年為 4,160 萬美元。

Exiting the year, we maintained a cash balance of $42.3 million and net working capital surplus of $94.7 million and debt of $75 million. It's evident that our financial performance, along with the broader market conditions presents significant challenges. As Daniel emphasized, our primary focus remains on implementing cost-reduction initiatives driven by operational efficiencies to combat this downward pressure.

今年結束時，我們的現金餘額為 4,230 萬美元，淨營運資本盈餘為 9,470 萬美元，債務為 7,500 萬美元。顯然，我們的財務表現以及更廣泛的市場狀況提出了重大挑戰。正如丹尼爾所強調的，我們的主要重點仍然是實施由營運效率驅動的成本削減舉措，以應對這種下行壓力。

I'll now turn it over to Paul for his update.

我現在將其轉交給保羅以獲取最新情況。

Thanks, Ernest, and thank you all for joining us today. I'd like to echo the sentiments shared by my colleagues regarding the ongoing challenges we faced in the vanadium market, particularly with the continued downward trend in prices through 2023, culminating in a significant decline in Q4. In Europe, V2O5 ended the year 2023, 31% lower than at December 31, 2022, and ferrovanadium dropped 21% over the same period.

謝謝歐內斯特，也謝謝大家今天加入我們。我想呼應我的同事對釩市場持續面臨的挑戰的看法，特別是價格在 2023 年之前持續下降，最終在第四季大幅下降。在歐洲，V2O5截至2023年，較2022年12月31日下跌31%，釩鐵同期下跌21%。

Despite soft demand in 2023, largely driven by challenges in the Chinese steel industry, we observed continued strong demand from the aerospace and VFRB sector, which presents promising opportunities for future quarters.

儘管 2023 年需求疲軟，主要是由於中國鋼鐵業面臨的挑戰，但我們觀察到航空航太和 VFRB 產業的需求持續強勁，這為未來幾季提供了充滿希望的機會。

Looking at Largo's results, we sold 2,605 tonnes of V2O5 equivalent in Q4, inclusive of 139 tonnes of purchased material compared to 2,774 tonnes in Q4 2022. Annual V2O5 equivalent sales for 2023 totaled 10,396 tonnes, inclusive of 929 tonnes of purchased material, which is on the high side of our sales guidance of 8,700 tonnes to 10,700 tonnes. Subsequent to Q4, we maintained sales momentum with 1,072 tonnes sold in January 2024, followed by 1,065 tonnes sold in February.

從 Largo 的業績來看，我們在第四季度銷售了 2,605 噸 V2O5 當量，其中包括 139 噸採購材料，而 2022 年第四季為 2,774 噸。2023 年 V2O5 當年銷售量總計 10,396 噸，其中包括 929 噸採購材料，高於我們 8,700 噸至 10,700 噸的銷售指導值。第四季之後，我們保持了銷售勢頭，2024 年 1 月售出 1,072 噸，隨後 2 月售出 1,065 噸。

On the M&A front, we're excited about the prospect of diversifying Largo's product offering and revenues in 2024. We completed our first 500 tonnes ilmenite sale in January and anticipate selling between 18,000 tonnes and 20,000 tonnes at a healthy profit in the first half of this year.

在併購方面，我們對 2024 年 Largo 產品供應和收入多元化的前景感到興奮。我們在 1 月完成了第一批 500 噸鈦鐵礦銷售，預計今年上半年的銷售量將在 18,000 噸至 20,000 噸之間，並獲得可觀的利潤。

Finally, I'd like to highlight the significance of our exclusive offtake agreement with Gladieux Metals Recycling signed in 2021. In December 2023, we got delivery of the first lot of vanadium pentoxide produced by Gladieux in Texas. And after converting it in Canada, we will soon deliver our first fully American-made ferrovanadium to a US customer. Largo has a 10-year offtake agreement covering the entire vanadium production from Gladieux, further solidifying our presence in the American and global markets.

最後，我想強調我們在 2021 年與 Gladieux Metals Recycling 簽署的獨家承購協議的重要性。2023年12月，我們收到了德州Gladieux生產的第一批五氧化二釩。在加拿大進行轉換後，我們很快就會向美國客戶交付第一批完全美國製造的釩鐵。Largo 簽訂了為期 10 年的承購協議，涵蓋 Gladieux 的全部釩產量，進一步鞏固了我們在美國和全球市場的地位。

In conclusion, despite the challenges, we remain fully committed to navigating this condition strategically while capitalizing on emerging opportunities to drive growth for Largo.

總之，儘管面臨挑戰，我們仍然完全致力於策略性地應對這一狀況，同時利用新出現的機會來推動 Largo 的成長。

Let me now turn it over to Francesco.

現在讓我把它交給弗朗西斯科。

Great. Thanks, Paul. Welcome, everyone. And again, I appreciate the opportunity to update everyone on some significant developments within our clean energy business. Firstly, I'd like to revisit a milestone we mentioned during our last quarterly update, which has now been officially announced by our partners this week.

偉大的。謝謝，保羅。歡迎大家。我再次感謝有機會向大家介紹我們清潔能源業務的一些重大進展。首先，我想回顧一下我們在上一季更新中提到的一個里程碑，我們的合作夥伴現在已在本周正式宣布了這一里程碑。

Back in October, Largo Clean Energy successfully deployed its 6-megawatt-hour redox flow battery at the Son Orlandis plant in Majorca, Spain. This deployment marks a significant achievement as it now stands as the largest energy storage deployment in Europe utilizing vanadium flow batteries. Integration of our vanadium redox flow battery system with a 3.34-megawatt peak photovoltaic plant at Son Orlandis is truly special.

早在 10 月份，Largo Clean Energy 就在西班牙馬略卡島的 Son Orlandis 工廠成功部署了 6 兆瓦時的氧化還原液流電池。此次部署標誌著一項重大成就，因為它目前是歐洲最大的利用釩液流電池的儲能部署。我們的釩氧化還原液流電池系統與 Son Orlandis 的 3.34 兆瓦峰值光伏電站的整合確實很特別。

With the specific management system in place, the battery optimizes loading and unloading operations based on renewable production and grade requirements, thereby effectively managing demand peaks. This technological advancement is a crucial step towards establishing long-term storage solutions, particularly vital for energy management in regions like Majorca.

透過特定的管理系統，電池可以根據再生能源的產量和品位要求優化裝卸操作，從而有效管理需求高峰。這項技術進步是建立長期儲存解決方案的關鍵一步，對於馬略卡島等地區的能源管理尤其重要。

Furthermore, the implementation of the battery system will play a pivotal role in enhancing grid stability and facilitating increased adoption of renewable energy sources, thereby reducing reliance on fossil fuels and hastening the journey towards energy self-sufficiency for the islands.

此外，電池系統的實施將在增強電網穩定性和促進更多採用再生能源方面發揮關鍵作用，從而減少對化石燃料的依賴，並加速島嶼實現能源自給自足的進程。

Now alongside this significant achievement, I'm thrilled to share another major development that was announced just this past Monday. Building on the success of our partnership with Enel, we've taken a significant step towards -- a significant step forward in concluding the strategic review of Largo Clean Energy with the announcement of a proposed joint venture with Stryten Energy.

現在，除了這項重大成就之外，我很高興與大家分享上週一宣布的另一項重大進展。在我們與 Enel 成功合作的基礎上，我們已經邁出了重要的一步——宣布與 Stryten Energy 擬建合資企業，從而在完成 Largo Clean Energy 的策略審查方面邁出了重要的一步。

The proposed JV is a testament to the unique value proposition that Largo Clean Energy brings to the vanadium flow battery market, particularly in the realm of long-duration energy storage. This includes our patented vanadium flow batteries, stack technology, electrolyte purification technology, and access to vanadium through Largo Physical Vanadium.

擬議的合資企業證明了Largo Clean Energy為釩液流電池市場帶來的獨特價值主張，特別是在長期儲能領域。這包括我們專利的釩液流電池、電堆技術、電解液淨化技術以及透過 Largo Physical Vanadium 獲取釩。

Stryten's extensive experience in the US-based manufacturing and their robust infrastructure, including five North American R&D facilities with more than 2 million square feet of manufacturing space and a team of 2,500 employees, make them an ideal partner to capitalize on our efforts made thus far in clean energy. Together, we envision transforming the landscape of long-duration energy storage in North America. While discussions are ongoing, it's important to note that the proposed joint venture is subject to various conditions, including the negotiation of definitive agreements, completion of due diligence and regulatory approvals.

Stryten 在美國製造方面擁有豐富的經驗及其強大的基礎設施，包括擁有超過200 萬平方英尺製造空間的五個北美研發設施以及由2,500 名員工組成的團隊，使他們成為利用我們迄今為止所做努力的理想合作夥伴在清潔能源方面。我們共同設想改變北美長期儲能的格局。雖然討論仍在進行中，但值得注意的是，擬議的合資企業須滿足各種條件，包括最終協議的談判、盡職調查的完成和監管部門的批准。

Now I'll turn it back over to the operator to begin our question-and-answer session. Thank you.

現在我將把它轉回操作員以開始我們的問答環節。謝謝。

(Operator Instructions) Heiko Ihle, H.C. Wainwright.

（操作員說明）Heiko Ihle, H.C.溫賴特。

Hello, Daniel, Ernest, Alex, and team. I appreciate you taking my questions.

大家好，丹尼爾、歐內斯特、亞歷克斯和團隊。感謝您回答我的問題。

Hi, Heiko.

嗨，海子。

Let's talk about ilmenite concentrate a little bit. A few things, first of all, how come there is some such strong variability between January and February? I mean, I get that this is all going up and running, but nonetheless, what's -- how do you think we should best model this out by quarter for the remainder of the year?

我們來談談鈦鐵礦精礦。有幾件事，首先，為什麼一月和二月之間會有如此強烈的變化？我的意思是，我知道這一切都在啟動並運行，但儘管如此，您認為我們應該如何在今年剩餘時間裡按季度最好地對此進行建模？

Do you have that, Paul?

保羅，你有嗎？

Yes, sure. I could. Thanks for the question. Just to clarify, are you mainly focusing on sales or production?

是的，當然。我可以。謝謝你的提問。順便問一下，你們主要是做銷售還是做生產？

I meant production, but I mean, either is probably useful.

我指的是生產，但我的意思是，兩者都可能有用。

I can give you that production number for the year. We are expecting to produce 88,000 tonnes of ilmenite during the full year of 2024. You were referring that we have some issues when -- during January and February. And the main reason is that the issues are --

我可以給你當年的生產編號。我們預計 2024 年全年鈦鐵礦產量為 88,000 噸。您提到我們在一月和二月期間遇到了一些問題。主要原因是問題是--

I didn't mean issues. I meant variability.

我不是指問題。我的意思是可變性。

Okay. All right. So our expectation is to produce 88,000 tonnes of ilmenite ore for the full year.

好的。好的。因此我們預計全年鈦鐵礦產量為 88,000 噸。

And quarterly?

還有季度的？

If I can complement, maybe the variability that you're seeing is -- we're still somewhat in a -- we had the end of our ramp-up phase, right? But we are still ramping up. And now that production is getting more stable with the grade that we were aiming for, there's the process of getting our product vetted by customers.

如果我可以補充一下，也許你看到的變化是——我們仍然處於——我們的加速階段已經結束，對吧？但我們仍在加緊努力。現在生產越來越穩定，達到了我們目標的等級，接下來就是讓客戶審查我們的產品的過程。

We already went through a large campaign to vet small samples from our initial production. And now, customers are requesting much larger commercial trials. So that's why you're going to see in the in the first months some months with very large sales, so most with much lower sales. But over time we are modeling that by probably the end of Q2, early Q3. You're going to see much more regular sales. We're still in a ramp-up phase.

我們已經進行了大規模的活動來審查我們最初生產的小樣品。現在，客戶要求進行更大規模的商業試驗。因此，這就是為什麼您會在最初的幾個月中看到某些月份的銷售額非常大，而大多數月份的銷售額卻要低得多。但隨著時間的推移，我們可能會在第二季末、第三季初進行建模。您會看到更多的常規銷售。我們仍處於起步階段。

Okay, so that's extremely helpful. So essentially, if we if we start trend lining up Q2, Q3, and beyond, we'll be on the same page?

好的，這非常有幫助。所以本質上，如果我們開始排列第二季、第三季及以後的趨勢，我們會處於同一頁上嗎？

Yes, I think you'll see a normal run rate by Q3 in terms of sales and probably Q2 in terms of production.

是的，我認為您會在第三季看到銷售的正常運作率，可能在第二季的生產方面看到正常的運作率。

Got it. Very helpful. Speaking of ilmenite, prices for globally sourced ilmenite ores, obviously some variability. I know that hedging vanadium is quite tough price wise. Is there a way to hedge ilmenite pricing? And if so, have you looked into it? And also, what prices are you seeing, please? Thank you.

知道了。很有幫助。說到鈦鐵礦，全球採購的鈦鐵礦礦石的價格顯然有些波動。我知道對沖釩的價格是相當困難的。有沒有辦法對沖鈦鐵礦價格？如果是這樣，你調查過嗎？另外，請問您看到的價格是多少？謝謝。

Yes. So there's no way to hedge ilmenite such as a [whole kind of] electronically traded commodities. But the good news is that ilmenite is a much more stable commodity in terms of price if you compare it to vanadium, right? The variations are much lower. We were able to secure some contracts forward at a fixed price. But we cannot really say that we are hedging, right?

是的。因此，沒有辦法對沖鈦鐵礦（例如一種電子交易商品）。但好消息是，如果與釩相比，鈦鐵礦在價格方面是一種更穩定的商品，對吧？變化要低得多。我們能夠以固定價格獲得一些遠期合約。但我們不能真的說我們在對沖，對吧？

We can fix prices two, three months ahead, maybe not as long as six months ahead, but not much more. And yes, so our strategy is also to follow the market. But again, I mean this price is much more stable than the than what you've been used to in vanadium.

我們可以提前兩三個月確定價格，也許不會提早六個月，但也不會太久。是的，所以我們的策略也是跟著市場走。但我再說一遍，我的意思是這個價格比您習慣的釩價格穩定得多。

In terms of price level, it's still somewhat -- we're still in a price discovery phase because of the price of ilmenite is not increasing linearly with quality. Actually, you've got massive premium for higher-quality product, which is where we're getting to now. So the prices that we achieved in our initial sales for a material that we produce during the ramp up at lower quality should be very different in a few quarters when we have stable production at higher grade. So we can probably give you more color on that in the next -- either next quarter or the following month.

就價格水準而言，我們仍處於價格發現階段，因為鈦鐵礦的價格並不會隨品質線性成長。實際上，您可以為更高品質的產品獲得巨額溢價，而這就是我們現在所達到的目標。因此，當我們穩定生產較高等級的產品時，我們在較低品質的生產過程中生產的材料的初始銷售價格在幾個季度內應該會非常不同。因此，我們可能會在下個季度或下個月為您提供更多資訊。

Very helpful answer. Thank you. I'll get back in queue.

非常有幫助的答案。謝謝。我會回到隊列中。

Thanks.

謝謝。

Andrew Wong, RBC Capital Markets.

安德魯‧黃（Andrew Wong），加拿大皇家銀行資本市場部。

Hi. Thanks for taking my questions. So with prices hovering in the $5 to $6 per pound range, how close are we to marginal costs? And does that provide some downside support to prices at this level? And how does Largo think about the production positions as those prices are nearing your cost structure? And then just probably what's your outlook for prices for the rest of this year? Thanks.

你好。感謝您回答我的問題。那麼，隨著價格徘徊在每磅 5 至 6 美元的範圍內，我們距離邊際成本有多近？這是否為當前水準的價格提供了一些下行支撐？當價格接近您的成本結構時，Largo 如何考慮生產狀況？那麼您對今年剩餘時間的價格前景有何看法？謝謝。

Daniel, I'll take the first part.

丹尼爾，我來聽第一部分。

Okay.

好的。

Andrew, as you know, we've guided on cost, $4.50 to $5.50. Obviously, the current prices we've seen, $5.90 in the market, we will not be making cash at those levels, but it's very hard for us to forecast where things go. We want to see, and I think as I've mentioned to you before, we want to see a couple of months of production at our full production run rate to actually fully assess costs. We have an ambition to get to lower end of our cost guidance. But obviously, given where the price is right now, this is not a cash-positive territory for us. So I'll leave it at that, and I'll let Paul talk about his expectation on prices.

Andrew，如您所知，我們的成本指引為 4.50 美元至 5.50 美元。顯然，以我們目前看到的市場價格 5.90 美元，我們不會在這個水平上賺錢，但我們很難預測事情的走向。我們希望看到，我想正如我之前向大家提到的，我們希望看到幾個月的生產以我們的全部生產運行速度進行，以真正全面評估成本。我們的目標是達到成本指導的較低水準。但顯然，考慮到目前的價格，這對我們來說不是一個現金積極的領域。所以我就到此為止，我會讓保羅談談他對價格的期望。

Yes. Thanks, Andrew. As you know, we do not give guidance on pricing. The only thing that we can do is just -- looking back, we went below historical average. We are seeing also primary producer really struggling to turn a profit at these levels. Altogether, primary producer represents about 20% of the global supply sources.

是的。謝謝，安德魯。如您所知，我們不提供定價指導。我們唯一能做的就是——回顧過去，我們低於歷史平均。我們也看到初級生產商確實很難在這些水平上實現盈利。初級生產商總共約佔全球供應來源的 20%。

So we hope at some point that prices will allow for a producer to turn a profit. Otherwise, we'll see how the events happening to adjust. So yes, we're well below historical average. We don't know when we'll revert to the mean. But yes, we believe we're in a very low-price environment, especially accounting for all the inflation that we had in the past few years.

因此，我們希望在某個時候價格能讓生產商轉虧為盈。否則，我們將看看事件發生後如何調整。所以是的，我們遠低於歷史平均值。我們不知道什麼時候才能恢復到平均值。但是，是的，我們相信我們正處於一個非常低的價格環境中，特別是考慮到過去幾年的通貨膨脹。

Could you maybe just talk about what marginal cost looks like for the industry right now?

您能否談談目前該產業的邊際成本是多少？

No, sorry. I cannot do that, Andrew.

不，抱歉。我不能那樣做，安德魯。

Can you talk about what marginal cost looks like for the industry?

您能談談該行業的邊際成本是多少嗎？

It’s very hard to say, the only producer that are publishing straightforward prices are the primary producer, Largo, Bushveld. The other primary producer in South Africa is not publishing its pricing directly. And you can see that people are losing money at these levels.

很難說，唯一公佈直接價格的生產商是主要生產商 Largo、Bushveld。南非的另一家初級生產商沒有直接公佈其定價。你可以看到人們在這些水平上正在賠錢。

The other type of production, either from steel slag or what we call secondary sources from oil and gas manufacturing, it’s indirect cost, which is very difficult to have clarity on. But yes, we’re seeing the oil industry struggling at the moment.

另一種類型的生產，無論是鋼渣還是我們所說的石油和天然氣製造的二次來源，都是間接成本，很難明確。但是，是的，我們現在看到石油業陷入困境。

Okay, okay. Just maybe switching to the JV was trying -- can you just talk a little bit more about that potential partnership? How does that benefit LCE? What do both parties bring to the JV? And how do you see this as a path to commercialize the technology for VRFBs? Thanks.

好吧好吧。也許轉向合資企業是一種嘗試——你能多談談潛在的合作關係嗎？這對 LCE 有什麼好處？雙方為合資企業帶來了什麼？您如何看待這是 VRFB 技術商業化的一條途徑？謝謝。

Yes, I'll take that.

是的，我會接受的。

Yes, Francesco?

是的，弗朗西斯科？

Yes, sure. So as you know, Stryten Energy brings large-scale manufacturing domestic presence in the US. They've been in the battery space for over 100 years or so. These are key essential factors when trying to establish a go-to-market strategy, large-scale availability of this technology for utility-scale deployment then C&I applications as well, right?

是的，當然。如您所知，Stryten Energy 在美國擁有大規模的國內製造業務。它們進入電池領域已經有 100 多年的歷史了。在嘗試建立進入市場策略、大規模可用性該技術以進行公用事業規模部署以及 C&I 應用程式時，這些都是關鍵要素，對嗎？

Combined with LPV, our stack technology, proprietary purification, and capabilities to set up our electrolyte facility, pretty much, we control all the aspects of the deployment for this technology in the Western world, which, as you know, has made great strides in China that has struggled in the last 20 years, to make headway in the Western world.

結合 LPV、我們的堆疊技術、專有的淨化以及建立電解液設施的能力，我們幾乎控制了該技術在西方世界部署的所有方面，如您所知，該技術在過去20年來，中國一直在努力在西方世界取得進展。

And with the growing demand of long-duration energy storage, specifically here in the US for domestic content and a lot of incentives being provided by the DOE, we feel that this partnership really complements the skill sets of both companies to achieve this target and provide a viable alternative for a long-duration energy storage solution for the US market.

隨著長期儲能需求的不斷增長，特別是在美國對國內內容的需求以及美國能源部提供的大量激勵措施，我們認為這種合作夥伴關係確實補充了兩家公司實現這一目標的技能組合，並提供美國市場長期儲能解決方案的可行替代方案。

That's great. Thank you very much for taking my questions

那太棒了。非常感謝您回答我的問題

Thank you. There are no further questions at this time. I would like to turn it back to Alex Guthrie for closing remarks.

謝謝。目前沒有其他問題。我想請亞歷克斯·格思裡 (Alex Guthrie) 發表結束語。

Thank you, operator. That concludes our question-and-answer session of the quarterly investor conference call. Have a great day, everyone. Thanks.

謝謝你，接線生。我們的季度投資者電話會議問答環節到此結束。祝大家有個美好的一天。謝謝。

Thank you. Bye-bye.

謝謝。再見。

Thank you.

謝謝。

Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

謝謝。女士們、先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。