Vanadium One ($VONE) announced a support and offtake agreement with Glencore last week.
Wondering how a 30 cent TSXV junior gets a major vanadium/iron ore project into production?
Perhaps they just do what they did the last time.
Largo resources was a seemingly unfocused 24 cent junior penny stock with projects in Ecuador and the Yukon when, in 2006, CEO Mark Brennan announced the acquisition of the Macaras vanadium project in Brazil. Fast forward to 2019 and Largo produced $104mm in cashflow from operations and was able to repay $93mm in project debt.
Mark retired in March of 2015 but most of the heavy lifting had already been done. Along with raising the hundreds of millions of equity and debt, Mark skillfully managed the 2008 financial crisis, the end of the alleged China “super cycle” and the five-year bear market in mining equities from 2011 to 2016.
When considering the financial conditions the industry experienced in the years prior August of 2014 – first production - the Largo financial statements give evidence of some very impressive deal-making. Equity raises for $151mm, debt raises totalling $215mm and from permits to production in just 3 years. Let’s also remember that this was Brazil in the era of “Lava Jato” – an extremely difficult business environment for a foreign company.
Largo announced their Glencore offtake in 2008 and the company was in production 6 years later. There is every reason to believe given the advanced state of Mont Sorcier, existing infrastructure and the supportive investment climate in Quebec that it could happen sooner for this project.
