Largo faces liquidity crisis amid US tariffs on vanadium imports

Largo Inc. (NASDAQ: LGO) reported production progress but disclosed significant financial difficulties stemming from US tariffs and working capital constraints that have disrupted customer deliveries.

The Canadian vanadium producer manufactured 931 tonnes of vanadium pentoxide in August and 856 tonnes in July, maintaining production levels during the third quarter. The company produced 4,141 tonnes of ilmenite concentrate in July and 3,298 tonnes in August.

Executive Order 14323, effective August 6, increased tariffs on Brazilian imports to the US from 10% to 50%, impacting Largo's high purity vanadium sales contracts. The tariffs did not affect ferrovanadium sales. Combined with liquidity issues, these factors resulted in delayed shipments and some contract defaults to US customers.

Limited working capital has prevented Largo from releasing inventory under financing facilities for delivery to customers and affected payments to suppliers and service providers. The company stated it is evaluating financing solutions to address the situation.

Largo installed additional flotation cell circuits in September to increase ilmenite capacity from 42,000 tonnes to 115,000 tonnes annually. The ilmenite circuit stopped production for equipment installation and is expected to resume operations in November, with expanded production levels targeted by year end.

The company disclosed it believes Cirque Capital LLC defaulted on payment obligations related to factoring transactions. Largo is seeking resolution while reserving legal remedies.

Largo owns tungsten projects including the Northern Dancer tungsten-molybdenum project in Yukon, Canada and the Currais Novos tungsten project in Brazil. The company is evaluating strategic alternatives for these assets.

Interim CEO Daniel Tellechea said the company continues navigating liquidity issues and challenging market conditions following the tariff implementation while operational turnaround initiatives deliver production results.

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