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From the Current Skillings Mining Review
Excerpts From The Interview With Mark Brennan, President and Chief Executive Officer, Largo Resources

SMR: Maracas is about to go into production of vanadium, most commonly used to alloy with steel but also an important material in a type of battery that some hope will be a breakthrough development in energy storage. From your view, what is the market's appetite for vanadium and who buys it?

MB: The main driver for vanadium is currently the steel industry. Over 90% of vanadium is currently consumed in steel, and this is growing. Over the past several years we have seen substantial growth in vanadium of around 6% per year and this is entirely driven by steel. The main argument for vanadium is simple, a small amount of vanadium added to steel makes steel significantly stronger and lighter. In certain applications vanadium also imparts resistance to seismic events, corrosion and/or abrasion.


Steel producers and ultimately the manufacturers of end-products containing steel, are always looking to improve the performance of their products, to provide, better, value-added products to their customers. Industry is increasingly demanding lighter, stronger, higher-quality steel products – and this has been the key driver in the market’s appetite for vanadium.  

SMR: If steel makes up 90 percent of the vanadium demand, what is the other 10 percent?

MB: About 5% of the remaining demand is in titanium-vanadium-aluminum alloys which are currently used almost exclusively in the aviation and aerospace industries – and this is another area where we are anticipating strong growth for vanadium. Vanadium for these applications require a very high-purity vanadium pentoxide and we are fortunate that our deposit is the highest quality deposit out there, so we anticipate that we will eventually be the main supplier for this market.


Another 4% of this goes into chemical catalysts which are used in a variety of products. It is important to note that currently less than 1% of vanadium is used in batteries – so this is still a very nascent market for vanadium.

SMR: Largo has stressed on the high quality of the mineral to be mined at Maracas. Can you explain what makes quality vanadium?

MB: Our deposit is not only the highest grade deposit in the world, but also has less deleterious elements than anyone else out there – which makes it the highest quality. Unlike traditional mining operations, the processing of vanadium from ore to final product is largely a chemical process where the most expensive part of the process is actually removing these deleterious elements – like silica, which is the main one. This not only gives us a major cost advantage but should enable us to move into highly specialized markets, like aviation and batteries, should that technology ever come to fruition.

SMR: Maracas is the first but not the only vanadium mine being developed in the Americas. What are the main concrete benefits America's vanadium consumers should see from having a supply closer to home?

MB: The US, Canada and South America currently import almost all of their vanadium, so a producing project in a friendly jurisdiction should be deemed strategic.

SMR: You have four projects and three of them are in Brazil. What's the best thing about working in Brazil?

MB: Brazil is a resource rich country and therefore is extremely familiar with mining. We have a tremendously strong team, the vast majority of which are Brazilian, and this is a huge advantage to be able to find talent and expertise locally. Also, this has been extremely helpful for us in terms of financing – when the markets were extremely tough in North America, we were able to finance using Brazilian banks and received BNDES (Brazilian Business Development Bank) funding to develop the project.


Since our early days in Brazil, we have received tremendous support from our local communities and all levels of the government and that is something that has certainly been integral to the success of Largo as a whole.


SMR: You were brought in to Largo in 2005 to ‘turn the company around.’ What attracted you to the task and how did you approach it?

MB: I was brought into Largo Resources in 2005 to help turn the Company around. At the time, we had a copper-gold project in Ecuador known as the Macuchi Project. The asset had a reasonably sized resource, and looked interesting, but it just didn’t have the scope it would need to be economical. It was a tough environment for mining companies at the time, and the company had been diluting itself to keep on drilling it, so, when I joined, we decided to launch one final drill program to see if we could “hit the mother-load,” so to speak, and following that, the Company would make a decision on which direction to move forward – either continue with Macuchi, or find another asset.


Needless to say, we shortly set out to look for a new asset to bring into Largo. We never set out looking for a vanadium project, but were determined to look only at “best of breed” projects – or in other words, assets that were the top of their asset and where we could get the greatest return on capital.


SMR: How did the San Conrado reserve become part of the project?

MB: We have always been committed to ensuring that we are responsible to the community and the environment. The San Conrado reserve was established during the development process and makes up over 2 thousand hectares of land on our property which will remain native-forest area. Any wild-life that is found on the project site is captured and replaced back on the reserve.

SMR: With Maracas in production, which project will be in development next for Largo?

MB: With the financial markets for mining companies still in the doldrums, we will continue to keep our focus on assets where we can see the greatest return on capital. And so, for the meantime anyway, Largo’s focus will continue to be Maracas – we are fortunate in that we have such a great asset, and I really think we have just scratched the surface of its potential here.


For example, we already have an expansion planned for year 3 where we will expect to expend approximately US$35 million dollars (which we project will be funded by cash flow) where we anticipate generating approximately US40 million dollars per year in additional cash flow. There just aren’t many other opportunities out there where you can receive that sort of return on capital! So I think that after what we call “Phase 2” you will see a “Phase 3,” “Phase 4” etc… I believe the growth potential here is just so great.


Also, we believe that there is potential to add a couple of other revenue streams at Maracas through additional by-products – this is still in a very preliminary investigative stage right now, but we believe that there may be potential to produce both a PGM and a titanium by-product, neither of which are considered in any of our economics currently.



That said, we do believe we have some great assets in our portfolio, and certainly have every intention of moving them forward when the time is right. And once we have achieved stable and growing cash flow from Maracas, I believe we will be in a great position to do so.

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