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On Wednesday, H.C. Wainwright adjusted its price target for Largo Resources Ltd. (NASDAQ:LGO) to $3.70, down from the previous $4.20, while maintaining a "Buy" rating on the stock. The firm’s decision follows Largo’s recent announcement of its production results for the year 2024. According to InvestingPro data, the company, currently valued at $124.21 million, is trading below its Fair Value, despite facing significant operational challenges.
Largo Resources reported that it produced 9,264 tonnes of vanadium in 2024, marking a 4% decrease year-over-year but meeting the company’s guidance range of 9,000 to 11,000 tonnes. Vanadium equivalent sales also aligned with expectations, reaching 9,600 tonnes, a decrease of 8% compared to the previous year, and fitting within the guided range of 8,700 to 10,700 tonnes. This performance comes amid a challenging period, with InvestingPro data showing a significant 28.31% decline in revenue over the last twelve months and negative EBITDA of $20 million.
Despite a significant 28% year-over-year increase in annual ore production to 2.2 million tonnes, this was overshadowed by a 22% decline in the effective ore grade mined. Additionally, the company experienced a 5% decrease in recovery rates. These factors contributed to the year-over-year reduction in vanadium production.
On a positive note, Largo has successfully ramped up its ilmenite concentrate production to 44,863 tonnes, which is closely aligned with the sales volume of 42,916 tonnes. This aspect of production has shown a promising performance.
In the face of these mixed results, H.C. Wainwright emphasized Largo’s cost-cutting efforts throughout the year. The firm expressed confidence in Largo’s future prospects, despite the fact that vanadium production levels did not show an increase from the previous year. The reiteration of the "Buy" rating indicates a continued positive outlook for the company, albeit with a reduced price target. InvestingPro subscribers have access to additional insights, including 7 key investment tips and a comprehensive Pro Research Report that provides deep analysis of Largo’s financial health and future prospects.
In other recent news, Largo Resources Ltd. reported mixed results in its third-quarter earnings, with a significant 42% year-over-year surge in vanadium production but a net loss of $10.1 million due to lower vanadium prices. The company’s new Chief Commercial Officer, Francesco D’Alessio, has initiated a revamped sales strategy focusing on the North American market. Concurrently, Largo Resources also announced a joint venture with Stryten Energy LLC to form Storion Energy LLC. The deal, still subject to customary closing conditions, involves Stryten Energy agreeing to pay Largo $1.0 million upfront and an additional $6.0 million to fund Storion’s operations. H.C. Wainwright reaffirmed its Buy rating and a price target of $4.20 for Largo following the announcement. In another development, Largo Inc. filed an independent NI 43-101 Technical Report outlining an updated Life of Mine Plan for the Gulçari A and a Pre-Feasibility Study for several other deposits. These recent developments highlight Largo’s strategic moves to optimize operations and expand its market presence.
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