Largo : FinancialPDF ,371 KB

Published: 2025-03-29 09:35:04 ET LGO.TO

Largo Inc.

Annual Consolidated Financial Statements

For the Years Ended December 31, 2024 and 2023

(Expressed in thousands / 000's of U.S. dollars)

Table of Contents

Annual Consolidated Statements of Financial Position ...................................................................... 1

Annual Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) ................... 2

Annual Consolidated Statements of Changes in Equity ...................................................................... 3

Annual Consolidated Statements of Cash Flows ................................................................................. 4 Notes to the Annual Consolidated Financial Statements

Nature of operations and liquidity ..........................................................................................

Statement of compliance ........................................................................................................

Basis of preparation, material accounting policies, and future accounting changes ..........

Amounts receivable .................................................................................................................

Inventory ..................................................................................................................................

Assets and liabilities held for sale ...........................................................................................

Other intangible assets ............................................................................................................

Mine properties, plant and equipment ...................................................................................

Leases .......................................................................................................................................

10)

Accounts payable and accrued liabilities ...............................................................................

11)

Debt ..........................................................................................................................................

12)

Provisions .................................................................................................................................

13)

Issued capital ...........................................................................................................................

14)

Equity reserves .........................................................................................................................

15)

Non-controlling interest ..........................................................................................................

16)

Earnings (loss) per share .........................................................................................................

17)

Taxes .........................................................................................................................................

18)

Related party transactions ......................................................................................................

19)

Segmented disclosure .............................................................................................................

20)

Commitments and contingencies ...........................................................................................

21)

Capital management ...............................................................................................................

22)

Financial instruments ..............................................................................................................

23)

Revenues ..................................................................................................................................

24)

Expenses ...................................................................................................................................

25)

Subsequent events ..................................................................................................................

Management's Responsibility for Financial Reporting

The accompanying consolidated financial statements of Largo Inc. (the "Company" or "Largo") for the years ended December 31, 2024 and 2023 have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Management is responsible for the preparation and presentation of the consolidated financial statements, including responsibility for significant accounting judgments and estimates and, where relevant, the choice of accounting principles.

In discharging its responsibility for the integrity and fairness of the consolidated financial statements, management designs and maintains the necessary accounting systems and an appropriate system of internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded and financial records are properly maintained.

The board of directors (the "Board" or "Board of Directors") and the Audit Committee are composed primarily of Directors who are neither management nor employees of the Company. The Board is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial information presented. The Board fulfills these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management and the independent auditors. The Audit Committee has the responsibility of meeting with management and the independent auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues. The Board is also responsible for recommending the appointment of the Company's external independent auditors.

The Company's independent auditors audit the consolidated financial statements annually on behalf of the Company's shareholders. The Company's independent auditors have full and free access to management and the Audit Committee.

/s/ "Daniel Tellechea"

/s/ "David Harris"

Daniel Tellechea

David Harris

Interim Chief Executive Officer

Chief Financial Officer

March 28, 2025

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Largo Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Largo Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income (loss) and comprehensive income (loss), changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and its financial performance and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net working capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

Chartered Professional Accountants, Licensed Public Accountants We have served as the Company's auditor since 2022.

Toronto, Canada

March 28, 2025

Expressed in thousands / 000's of U.S. dollars

Annual Consolidated Statements of Financial Position

December 31,

December 31, Notes

2024 2023

Assets Cash Restricted cash Amounts receivable Inventory

22,106 $ 42,714

530 712

4 5 6

9,741 25,598

47,538 61,565

Assets held for sale Prepaid expenses Total Current Assets Other intangible assets Inventory subject to return

7,613

5,759 6,534

93,287 137,123

2,255 6,153

12,804

Mine properties, plant and equipment Vanadium assets

170,756 212,176

17,491 18,674

Deferred income tax asset Total Non-current Assets Total Assets

17(b)

22,075 7,495

225,381 244,498

318,668 $ 381,621

Liabilities

Current portion of lease liability Liabilities held for sale

Accounts payable and accrued liabilities Deferred revenue

Debt

6 $ 6 10 11 12

- $ 962

600 -

31,270 31,439

3,889 3,553

74,780

Current portion of provisions Total Current Liabilities Lease liability

3,358 6,863

114,259 42,455

6 - 925

Non-current accounts payable and accrued liabilities Long term debt

10 - 724

Provisions

11 12 23

17,500 75,000

2,043 6,718

Revenues subject to refund Total Non-current Liabilities Total Liabilities

13,638

33,181 83,367

147,440 125,822

Equity

Issued capital Equity reserves

Accumulated other comprehensive loss Deficit

13 14

412,988 412,295

11,853 12,200

(133,527) (98,200)

(126,496) (77,643)

Equity attributable to owners of the Company Non-controlling Interest

164,818 248,652

6,410 7,147

Total Equity

171,228 255,799

Total Liabilities and Equity

318,668 $ 381,621

Nature of operations and going concern Commitments and contingencies Subsequent events

Approved on behalf of the Board of Directors, /s/ "Alberto Arias"

Alberto Arias, Chairman

1 8, 20 25

/s/ "David Brace" David Brace, Director

Expressed in thousands / 000's of U.S. dollars and shares (except per share information)

Annual Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

Years ended December 31,

Notes

2024

Revenues Expenses

$ 124,920 $

2023 198,684

Operating costs

(145,818) (174,758)

Professional, consulting and management fees Foreign exchange loss

(16,304) (23,068)

(12,517)

(183)

Other general and administrative expenses Share-based payments

Finance costs

24 14 24

(5,429)

(11,792)

(1,321)

362

(9,460)

(9,630)

Interest income Technology start-up costs Write-down of vanadium assets Exploration and evaluation costs

1,523

2,018

5 15

(3,392) (6,122)

(1,119) (4,862)

(2,328) (5,705)

(196,165) (233,740)

Net loss before tax

$ (71,245) $ (35,056)

Income tax recovery (expense) Deferred income tax recovery Net loss

17(a) 17(a)

2,813 17,867 (50,565) $

(88) 2,786

(32,358)

Other comprehensive income (loss)

Items that subsequently will be reclassified to operations:

Unrealized (loss) gain on foreign currency translation Comprehensive loss

(35,327)

13,965

(85,892) $ (18,393)

Net loss attributable to: Owners of the Company Non-controlling interests

$ (49,828) $ (30,343)

(737) $ (2,015)

$ (50,565) $ (32,358)

Comprehensive loss attributable to: Owners of the Company Non-controlling interests

$ (85,155) $ (16,378)

(737) $ (2,015)

$ (85,892) $ (18,393)

Basic loss per Common Share Diluted loss per Common Share

Weighted Average Number of Shares Outstanding (in 000's)

- Basic

- Diluted

16 16 16 16

$ $

(0.78) $ (0.51)

64,088 64,038

Largo Inc.

Expressed in thousands / 000's of U.S. dollars and shares

Annual Consolidated Statements of Changes in Equity

Attributable to owners of the Company

Issued

Capital

Balance at December 31, 2022

64,006

411,646

Share-based payments

Exercise of restricted share units

649

Expiry of warrants

Expiry of stock options

Currency translation adjustment

Net loss for the year

Balance at December 31, 2023

64,051

412,295

Balance at December 31, 2023

64,051

412,295

Share-based payments

Exercise of restricted share units

693

Expiry of stock options

Currency translation adjustment

Net loss for the year

Balance at December 31, 2024

64,112

Deficit

14,138 $

(112,165) $

(48,227) $

274,554

(846)

484

(362)

(649)

(78)

(365)

365

13,965

(30,343)

(32,358)

12,200 $

(98,200) $

(77,643) $

7,147 $

255,799

12,200 $

(98,200) $

(77,643) $

7,147 $

255,799

890

431

1,321

(693)

(544)

544

(35,327)

(49,828)

(737)

(50,565)

412,988 $

11,853 $

(133,527) $

(126,496) $

6,410 $

171,228

9,162 $ - - - - - (2,015)

Equity

Accumulated Other

Non-controlling Shareholders'

Reserves

Comprehensive Loss

interest Equity

Expressed in thousands / 000's of U.S. dollars

Annual Consolidated Statements of Cash Flows

Notes

Operating Activities

Net loss for the year Depreciation Share-based payments

Unrealized foreign exchange loss (gain) Loss on sale of vanadium assets Finance costs

Interest income Write-down of inventory

Derecognition of property, plant and equipment Write-down of vanadium assets

Revenues subject to refund Inventory subject to return Income tax (recovery) expense Deferred income tax recovery Income tax refund (paid)

Cash Provided Before Working Capital Items Change in amounts receivable

Change in inventory

Change in prepaid expenses

Changes in accounts payable and provisions Change in deferred revenue

Net Cash Provided by Operating Activities

Financing Activities

Receipt of debt Repayment of debt Interest paid Interest received Lease payments

Change in restricted cash

Net Cash Provided by Financing Activities

Investing Activities

Intangible assets

Mine properties, plant and equipment

Years ended December 31, 2024

2023

$ (50,565) $ (32,358)

28,675 29,250

1,321 (362)

12,112 (509)

- 156

24 5

9,460 9,630

17(a)

(12,804)

18,475

13,638

(1,523)

(2,813)

1,092

1,119

(2,018) 4,068 - 4,862 - - 88

17(a)

(17,867) (2,786)

2,914 (686)

3,234 9,335

14,095 (3,861)

(5,845) 1,293

(278) 7,961

(383) 4,614

336 1,855

11,159 21,197

11 11

44,355 70,000

(27,075) (35,000)

(6,301) (7,065)

1,483 2,014

(600) (580)

182 (242)

12,044 29,127

- (157)

(42,226) (53,546)

Purchase of vanadium assets - (10,115) Sale of vanadium assets

Net Cash Used in Investing Activities Effect of foreign exchange on cash Net Change in Cash

Cash position - beginning of the year Cash Position - end of the year

22,106 $ 42,714

Expressed in thousands / 000's of U.S. dollars and shares (except per share information)

Notes to the Annual Consolidated Financial Statements

1) Nature of operations and going concern

Largo Inc. ("the Company") is a producer and supplier of high-quality vanadium products, which are sourced from one of the world's high-grade vanadium deposits at the Company's Maracás Menchen Mine located in Brazil. The Company is also focused on the ramp up of its ilmenite concentrate plant and has signed binding agreements to complete a transaction for its U.S.-based clean energy business, including its vanadium flow battery technology. Refer to note 6. While the Company's Maracás Menchen Mine is producing vanadium products, future changes in market conditions and feasibility estimates could result in the Company's mineral resources not being economically recoverable.

The Company is a corporation governed by the Business Corporations Act (Ontario) and domiciled in Canada whose shares are listed on the Toronto Stock Exchange ("TSX") and on the Nasdaq Stock Market ("Nasdaq"). The head office, principal address and records office of the Company are located at 100 King Street West, Suite 1600, Toronto, Ontario, Canada M5X 1G5.

These consolidated financial statements have been prepared on a going concern basis. The going concern basis of presentation assumes the Company will continue in operation for the foreseeable future and can realize its assets and discharge its liabilities in the normal course of business. In making the assessment that the Company is a going concern, management has taken into account all available information about the future, which is at least, but not limited to, 12 months from December 31, 2024.

The Company incurred a net loss of $50,565 for the year ended December 31, 2024 (year ended December 31, 2023 - $32,358) and had a working capital deficit (current assets less current liabilities) of $20,972 (December 31, 2023 - surplus of $94,668), which includes $74,780 in debt maturing within the next twelve months. The Company has experienced declining operating results and cash flows over the course of the last year as a result of declining vanadium prices and increased costs. Since December 31, 2023, vanadium prices have declined by over 15%, which has a significant impact on the Company's cashflows. The Company has implemented changes to address underlying operating issues and during 2024, announced a number of initiatives at its Maracás Menchen Mine that the Company believes will reduce its operating costs and are required in order to generate positive cash flows from operating activities. There can be no assurance that these initiatives will be successful.

The Company will require additional sources of capital to repay its liabilities and fund operations. The Company is actively pursuing various alternatives to increase its liquidity and capital resources, including refinancing of its existing debt facilities and obtaining additional debt facilities, which could be provided by banks, private capital providers and/or institutional investors. There can be no assurance that the Company will be able to secure additional funding on terms acceptable to the Company, or at all, or be able to successfully implement strategic alternatives.

Due to material uncertainties surrounding future vanadium prices, the Company achieving positive cash flows from operating activities within the next twelve months if current vanadium prices persist or decline, and the Company's ability to raise additional financing to satisfy the repayment of debt maturing within the next twelve months, it is not possible to predict the success of the Company's efforts in this regard. These factors indicate the existence of material uncertainties that cast substantial doubt about the Company's ability to continue as a going concern.

These consolidated financial statements do not include the adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. These adjustments may be material.

2) Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to a going concern. The material accounting policies applied in these consolidated financial statements are presented in note 3 and are based on IFRS effective as at December 31, 2024.

Expressed in thousands / 000's of U.S. dollars and shares (except per share information)

Notes to the Annual Consolidated Financial Statements

The consolidated financial statements were approved by the Board of Directors of the Company on March 28, 2025.

3) Basis of preparation, material accounting policies, and future accounting changes

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at fair value and certain inventory balances carried at net realizable value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.

These consolidated financial statements are presented in thousands of U.S. dollars, unless otherwise noted. References to the symbol "C$" or "CAD" mean the Canadian dollar, references to the symbol "EUR" mean the Euro and references to the symbol "R$" or "BRL" mean the Brazilian real, the official currency of Brazil.

The Company adopted the following IFRS amendments in 2024, which did not have a material effect on these consolidated financial statements.

• Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current, clarifying the classification requirements in the standard for liabilities as current or non-current;

• Amendments to IAS 1 Presentation of Financial Statements - Non-current Liabilities with Covenants, clarifying the classification, presentation and disclosure requirements in the standard for non-current liabilities with covenants;

• Amendments to IFRS 16 Leases - Lease Liability in a Sale and Leaseback, clarifying subsequent measurement requirements for sale and leaseback transactions for seller-lessees; and

• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures - Supplier Finance Arrangements, adding disclosure requirements that require entities to provide qualitative and quantitative information about supplier finance arrangements.

a) Basis of consolidation

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Subsidiaries are consolidated from the date control is transferred to the Company and are de-consolidated from the date control ceases. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating inter-entity balances and transactions. The consolidated financial statements include the financial condition and results of operations of the Company and its subsidiaries as outlined below.

December 31,

Property

Name

(Country)

Maracás Menchen

Largo Vanádio de Maracás S.A.

Mine (Brazil)

Largo Titânio Ltda.

N/A (Brazil) 100% 100%

Largo Commodities Trading Ltd. Largo Resources USA Inc.

N/A (Ireland) 100% 100%

N/A (USA) 100% 100%

Largo Clean Energy Corp. Largo Physical Vanadium Corp.

N/A (USA) 100% 100%

N/A (Canada)

99.94% 99.94%

Accounting

Method

Subsidiary

Consolidation

Subsidiary

Consolidation

Subsidiary

Consolidation

Subsidiary

Consolidation

Subsidiary

Consolidation

65.70% 65.70%

Subsidiary

Consolidation

2024 2023 Arrangement

Disclaimer

Largo Inc. published this content on March 29, 2025, and is solely responsible for the information contained herein. Distributed via , unedited and unaltered, on March 29, 2025 at 13:34 UTC.