Largo's Waste-to-Wealth Play: $56M Deal for Iron Ore Stockpile

TORONTO, ON – January 05, 2026

Largo Inc., the world's largest primary vanadium producer, has announced a landmark agreement that could turn over a decade of industrial byproduct into a significant financial windfall. The company's Brazilian subsidiary has secured a binding term sheet for the sale of 4.5 million tons of iron ore calcine, a material accumulated over 11 years at its Maracás Menchen mine in Bahia, Brazil.

The multi-year deal, if finalized, is expected to generate cash proceeds exceeding US$56 million. This strategic move highlights a growing trend in the mining sector to monetize previously overlooked assets, transforming potential environmental liabilities into valuable revenue streams.

A Crucial Financial Maneuver

The timing of the potential US$56 million cash infusion is critical for Largo. The company has navigated a challenging financial period, reporting a net loss of US$36.6 million in the third quarter of 2025. While a significant portion of that loss was due to a non-cash tax adjustment, recent financial reports indicated that the company was using its cash reserves quickly and that its short-term obligations exceeded its liquid assets. This pressure recently led Largo to secure a US$23.4 million equity raise and defer principal payments with its Brazilian lenders to manage working capital.

Against this backdrop, the proceeds from the calcine sale represent a vital enhancement to the company's liquidity and balance sheet. More than just a one-time cash injection, the deal is structured to reduce long-term operational costs. By selling the massive stockpile, Largo avoids future infrastructure and maintenance costs associated with its storage, as well as eventual disposal expenses.

In the company's official announcement, Co-CEOs Alberto Arias and Mr. Daniel Tellechea framed the deal as a core strategic objective. “This binding term sheet reflects external demand for materials generated as byproducts from our operations and highlights the strategic value of Largo’s byproduct inventory as a way to enhance further the cost-competitiveness of our vanadium business,” they stated. “We believe this approach provides a constructive path to realizing value from assets already on hand, while supporting our broader financial and operational objectives.”

The agreement is structured as an Ex Works (EXW) contract, meaning the buyer is responsible for collecting the material from the mine site. This arrangement further minimizes Largo's logistical and financial burden, allowing the company to maintain its sharp focus on its primary vanadium operations, which supply critical materials to the steel, aerospace, and energy storage industries.

Unlocking the Hidden Value in Byproducts

The material at the center of the deal, iron ore calcine, is a residue generated during the processing of vanadium ore. While not the company's main product, the sheer volume accumulated over 11 years represents a substantial untapped asset. The agreed-upon sale price averages out to approximately US$12.44 per ton.

This figure is a fraction of the price for high-grade iron ore, which has recently traded above US$100 per ton on the global market. However, the valuation reflects the calcine's status as a lower-grade, secondary feedstock. The significance lies not in its price-per-ton relative to premium ore, but in the existence of a robust market demand for such a large quantity of industrial byproduct.

This demand is fueled by several converging global trends. As easily accessible, high-grade mineral deposits become scarcer, steelmakers and other industrial consumers are increasingly seeking alternative, cost-effective raw materials. Concurrently, advancements in processing technology have made it more economically viable to extract value from materials that were once considered waste. Largo’s ability to secure a binding term sheet for 4.5 million tons validates the commercial potential of these secondary materials and demonstrates a savvy understanding of shifting commodity market dynamics.

Embracing a Circular Future for Mining

Beyond the financial implications, Largo's deal marks a significant step forward in environmental stewardship and sustainable mining practices. The removal of a massive 4.5-million-ton stockpile from the Maracás Menchen mine site carries substantial ecological benefits.

Large-scale mining residue stockpiles, often referred to as tailings or waste rock, can pose long-term environmental risks. They occupy vast tracts of land, and without proper management, can become sources of airborne dust pollution and water contamination through a process known as acid mine drainage or leachate. By selling the calcine for reuse, Largo is not only monetizing an asset but also mitigating a long-term environmental liability.

This "waste-to-value" approach is a cornerstone of the circular economy, a model that the global mining industry is increasingly pressured to adopt by investors, regulators, and the public. Instead of the traditional linear model of "take, make, dispose," circular principles encourage the reuse and valorization of all materials. Major industry players like Vale and Rio Tinto have already begun implementing strategies to find new life for their waste streams, from creating construction materials to recovering residual metals.

Largo’s transaction, should it proceed to completion, will serve as a powerful case study for how mining companies can align economic goals with Environmental, Social, and Governance (ESG) mandates. It demonstrates a proactive effort to reduce the industry's physical footprint and transform its relationship with waste.

From Agreement to Final Transaction

While the announcement is a significant milestone, both Largo and industry observers remain cautiously optimistic. The deal is currently a binding term sheet and is subject to the negotiation of final documentation, potential amendments, and other customary closing conditions. In its communications, Largo has been clear that there can be no absolute assurance that a final transaction will be completed on the terms currently outlined.

The company plans to provide updates as the process moves forward. In the meantime, its core focus remains on producing high-quality vanadium and ilmenite. Largo is also diversified through its 50% ownership of Storion Energy, a joint venture focused on vanadium flow batteries for long-duration energy storage, and its interests in tungsten and molybdenum properties in Canada and Brazil.

If finalized, this deal will not only strengthen Largo’s financial position but will also reinforce its reputation as an innovative leader in the mining sector—one that is actively finding ways to create value while simultaneously reducing its environmental impact. The successful monetization of this long-standing byproduct could pave the way for similar initiatives across the industry, signaling a definitive shift toward more sustainable and economically efficient resource management.