Largo shares surge 15% as it adds copper, PGMs to Brazil mine

Shares in Largo (TSX, Nasdaq: LGO) jumped almost 15% on Monday after the miner started producing copper and platinum group metals (PGMs) as by-products at its Maracás Menchen vanadium mine in Bahia, Brazil.

The stock was trading at 80¢ in New York at 10:40 a.m. local time, giving Largo a market capitalization of almost $108 million. The move followed Brazil’s National Mining Agency approving the company’s request to produce and sell copper, PGMs, nickel and cobalt as by-products from the mine. Maracás Menchen is about 815 km northeast of the national capital Brasilia. 

The approval allows Largo to move from successful industrial-scale testing toward ramping up and commercializing a copper-PGM concentrate using its existing vanadium processing plant and ilmenite flotation infrastructure.

The new product stream could help Largo extract more value from ore it already mines while diversifying beyond vanadium and ilmenite. The company expects copper-PGM concentrate to generate higher margins than ilmenite concentrate if it successfully ramps up production and establishes commercial sales.

Existing infrastructure

The company said it has completed successful industrial-scale test work and can use its existing ilmenite flotation infrastructure to produce the copper-PGM concentrate alongside its core vanadium operations.

The approach could strengthen the long-term revenue contribution from Maracás Menchen by adding exposure to copper and precious metals while improving margins at the company’s main Bahia operation.

The regulatory approval also covers nickel and cobalt, potentially giving Largo opportunities to recover and sell additional critical metals from ore already processed at the operation.

Margin potential

Largo expects copper-PGM concentrate production to generate higher profit margins than its ilmenite concentrate business if the company can successfully ramp up and commercialize the new product.

Using existing processing infrastructure could help Largo capture additional value from its mineral resource base without developing a separate mine or processing operation for the by-products.

The company, however, did not provide production targets, expected sales volumes or revenue forecasts for copper and PGMs. The economic contribution will therefore depend on Largo’s ability to move from successful test work to sustained commercial production.

The new product stream would also broaden Largo’s exposure beyond vanadium at a time when miners are increasingly looking to extract more value from existing deposits and processing facilities.