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TORONTO - Vanadium producer Largo Inc. (TSX:LGO) (NASDAQ:LGO), currently valued at $8.93 million in market capitalization, has obtained a $6 million secured loan from ARG International AG to bolster its working capital position as it navigates through a period of low vanadium prices, according to a press release statement. InvestingPro data shows the company has been quickly burning through cash amid challenging market conditions.
The six-month promissory note bears an annual interest rate of 15% with a 1% arrangement fee. The loan is secured against Largo’s 65.7% equity stake in Largo Physical Vanadium Corp. (TSX.V:VAND, OTCQX:VANAF).
Daniel Tellechea, Interim CEO of Largo, indicated that while the company’s operations have stabilized, market pricing conditions remain challenging. The loan proceeds are intended to provide flexibility as the company transitions from turnaround efforts to steady-state operations at its Maracás Menchen Mine in Brazil. With a current ratio of 1.1 and trading at just 0.52 times book value, the company’s financial metrics reflect these operational challenges. Discover more detailed financial insights and 12 additional ProTips with InvestingPro.
"This loan strengthens our working capital position at a time when our operations have stabilized but market pricing conditions remain challenging," Tellechea stated in the release.
The company reports it has made progress on production and cost efficiencies and expects the facility to help manage current price pressures while working toward meeting its targets for the year.
Largo describes itself as one of the world’s largest primary vanadium producers, supplying materials to industries including steel, aerospace, defense, chemical, and energy storage sectors. The company also maintains a 50% ownership stake in Storion Energy, a joint venture focused on vanadium flow battery energy storage solutions in the United States. According to InvestingPro’s analysis, the company maintains a FAIR financial health score despite recent market challenges.
The company’s shares trade on both the Nasdaq Stock Market and the Toronto Stock Exchange under the symbol "LGO."
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