Largo makes plans for long-term vanadium mine

Largo Resources (LGO-V) is looking at producing vanadium over 23 years at its Maracas project in Bahia state, Brazil.

A feasibility study released today projects that Largo could produce 4,431 tonnes per year of vanadium contained in an 80% ferrovanadium alloy over the first eight years of the mine life when higher-grade material would be processed.

After that, production would decrease as lower-grade ore is processed, stabilizing at 1,748 tonnes per year between years 14 and 22, with only partial production during the 23rd year.

The Maracas project has reserves of 13.1 million tonnes with an average grade of 1.34% V2O5 for 62,000 tonnes of vanadium contained in ferrovanadium.

Over the course of the mine life, the average strip ratio would be 2.23 to 1. It is thought that open pit mining would proceed faster than milling, leaving the pit mined out in 13 years time, with 10 years worth of stockpiled ore left for processing.

Largo is still exploring on the Maracas property and has identified the Nova Amparo target that could eventually be included in the mine plan. The company has included this zone in its application for environmental licencing, which is currently in progress in the state environmental office.

Capital costs for the open pit mining project are estimated at US$270.6 million with, plus or minus 15%.

The internal rate of return is estimated at 43.9% with a pre-tax net present value of US$489 million at a discount rate of 10% per year.

The study used a long-term ferrovanadium price of US$45.86 per kg which is equivalent to a V2O5 price of US$8 per lb. Current prices are US$66 per kg and US$17 per lb., respectively.

Next Largo plans to start engineering designs, placing orders for long-lead times and building its team to be based in Maracas. The company also has to complete key elements of the licencing process and finalize project financing.

Largo shares fell more than 13%, or 9, on the news today to 58 per share on a trading volume of nearly 4 million shares.