Largo Inc.

Good day, and thank you for standing by. Welcome to Largo's third quarter 2021 earnings webcast and conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. I would now like to hand the conference over to your speaker today, Alex Guthrie, Senior Manager of External Relations. Please go ahead.

Good morning, everyone. Thanks for joining our third quarter 2021 earnings conference call. On the call today is Ian Robertson, our co-chair of the board, Paulo Misk, our president and CEO, and Ernest Cleave, our CFO. Our VP of commercial, Paul Volant, will also be available during the Q&A session of the call. To accompany the call today, we've uploaded a supplemental webcast presentation, which will be available on our website at largoinc.com. Our Q3 2021 financial statements and MD&A, are also available on the website as well as on CDAR and EDGAR. Before continuing the call today, I'd like to remind you that some of the information you'll hear today during today's discussion will consist of forward-looking statements, including without limitation those regarding future business outlook. In addition, non-IFRS financial measures such as cash operating costs, cash operating costs excluding royalties, and revenues per pound will also be discussed during today's conference call. Actual results discussed during today's call could differ material from those anticipated and risk factors that could affect results are detailed in the company's AIF and other public filings, which are available on CDAR and on EDGAR. Further information regarding Largo's use of non-IFRS measures are also available in our Q3 results press release and in the company's latest MD&A, which are available on the website. Additionally, market and industry data contained and incorporated by reference during this call concerning economic and industry trends is based upon good faith estimates of our management or derived from information provided during industry sources. We believe that such market and industry data is accurate and the sources from which it has been obtained are reliable. However, we cannot guarantee the accuracy of such information and we have not independently verified these assumptions upon which projections of future trends are based. The agenda for our call this morning is as follows. AID will provide an update to the company's name change and rebrand initiative. with further highlights provided on our strategic transformation. He will then close the call with an update on our clean energy division progress. Paulo will follow Ian and will provide an update on the company's operational sales results as well as an update on the Venetian market. Ernest will follow Paulo with the Q3 financial results. Finally, we'll open the line up for questions. We kindly ask that you restrict your questions to two and then re-queue if you have any additional questions to allow others the opportunity to participate. And with that, I'll turn the call over to Ian.

Thanks, Alex, and very good morning to all of you who have taken the time to join us both on the call and online. The objectives for my prepared remarks over the next few minutes are twofold. Firstly, to ensure that the strategy behind the exciting repositioning of Largo is clear and understandable. And in this regard, I hope to put into context the public announcements you've recently seen, including our exciting announcement regarding the implications that our pre-feasibility study has on driving forward-looking profitability, enhancing access to vanadium. And the second objective is I'm hoping to share some additional insights into why we're enthused about the integration of our vanadium production business with our energy storage business. So let's start with our strategy. We see Largo as an organization which provides investors with two separate but closely related new economy-focused business propositions. Firstly, investors will continue to enjoy the profitability and value of Largo's highly capable legacy business of producing vanadium, an element which has growing recognition as a renewable energy transition enabler. We believe that this business, in the context of our recently disclosed technical report results and its plan for profitability enhancement, provides material value upside. And secondly, and additively, as our vanadium production begins to be directed for use in the vanadium-based storage systems we deliver, investors are expected to benefit from incremental and higher earnings from the manufacture and sale of these systems. This is a business whose competitiveness is improved with the enhanced access to vanadium coming from the mineral production expansion. Our strategy leverages the unique vertical integration of these two businesses to create shareholder value. We're hopeful that providing transparency into each of these businesses will allow full value to be credited to the Largo story. As you know, Largo has had a long and successful history as a producer of vanadium, a mineral, as I mentioned, which is emerging as an important energy transition input factor needed to enable the planet's transition to renewable energy. The new use cases being developed for vanadium will be a source of growing demand, which should imply higher future prices. Largo recently announced its plan to significantly expand its vanadium production operations. Of strategic importance, vanadium production is expected to increase by approximately 20% commencing in 2023, and mine life has been extended to 20 years. And secondly, the company is expecting to generate enhanced profitability from the sale of titanium dioxide, a coproduct derived from the same ore stream currently being processed for our vanadium production. The cash flows and the sale of this coproduct will lower the net production cost for vanadium going forward. And we're hopeful that both of these factors are seen as contributing significant accretion to the value of our legacy mineral production business. The second separate but related value proposition comprising the Largo investment thesis is our emerging energy storage business. I'm sure it doesn't surprise you that market demand for long-duration electrical energy storage is growing exponentially as the transition to renewable energy progresses. Vanadium is being recognized as a high-value new economy mineral given its role in enabling the long-term duration energy storage required for greater integration of renewable energy into the supply mix. The Long-Duration Energy Storage Council, which was announced last week at the COP26, has united to provide guidance to governments and grid operators and will publish a strategic report on long-duration energy storage technologies with the aim of enabling the global deployment of up to 140,000 gigawatt hours of long-duration energy storage by 2040. As a result of these secular factors, over the coming five years, the long-duration energy storage market is forecast to grow at a compounded average growth rate of around 30%. reaching 50 gigawatt hours annually. And to put our energy storage business aspirations into context, capturing just 3% of this market would represent full utilization of our current production capacity of vanadium in battery systems. We have begun marketing our V-charge, as we call it, energy storage battery system, to utility and industrial energy storage customers have created a sales pipeline representing some 6 000 megawatt hours of storage a typical v charge system for these larger size opportunities might consist of a 10 megawatt hour battery with a capacity to operate for 10 hours of duration the sale of each such fee charge battery system would potentially bring three benefits to largo firstly We'd earn margins from the production of the approximately 2 million pounds of vanadium contained in the electrolyte needed for such a battery. Secondly, an additive to the value of our vanadium production, we'd earn operating margins on the manufacture of our proprietary hardware comprising the battery system. And lastly and importantly, under the Largo energy storage business model, we would invest in, retain Title II, and ultimately monetize the vanadium employed in this battery. so let's contrast the two business models present within our organization consistent with the conventional mining business model Largo generates operating margins which are equal to our revenues less operating costs from producing selling and delivering vanadium to its current customers in contrast for the energy storage business the model is slightly different in three ways firstly The operating margins generated by the sale of a V-charge system are expected to be materially higher than the model of simply producing and selling the associated vanadium. And to help contextualize, based on the current vanadium market and assuming our V-charge systems are priced competitively against battery storage alternatives, these operating margins would be approximately 80% higher. Secondly, we plan to invest in and retain Title II each pound of vanadium used for energy storage, and this vanadium would remain on the Largo balance sheet and will be monetized when it makes sense. And thirdly and lastly, we're proud of and believe that the market will recognize the ESG implications of committing vanadium for use in a battery system, which enables the planet to capture more renewable energy rather than the conventional use cases of vanadium. Our energy storage business employs and gathers a sustainable competitive advantage from its unique access to vanadium, and this is something which is denied to all other producers of vanadium-based batteries today. Before I close out, I'd like to ensure that our two-pronged shareholder value creation strategy is both crisp and clear. Firstly, we will deliver shareholder value from our legacy vanadium production business, value which is expected to be enhanced from higher profitability on our expansion plans. And secondly, we're committed to augmenting shareholder value through higher operating margins forecast to be earned in connection with the use of our growing access to vanadium in the energy storage business. Overall, we're hopeful that this strategic repositioning of the company will deliver a capital markets re-rating of Largo as it becomes recognized as a new economy participant. In some respects, Largo represents the perfect sum of the parts investment opportunity. The sustainability alignment of the why of our business really forms the foundation of our vision. We're truly focused on utilizing our strengths and competitive advantages to enable the planet's transition to 100% renewable energy. I'll say this is something that inspires me personally and we remain confident that this shift is paving our path to long-term shareholder value at Largo. With that, I'll turn things over to Paolo for an update on the company's expansion execution plan and operations and sales progress for the past quarter. Paolo?