Largo iron ore calcine buyer must pay by Feb. 20

Executive Summary

• Largo Inc. has notified its counterparty of a breach regarding the $56-million iron ore calcine sale agreement due to non-payment of the initial $2.9-million installment, which was deferred to the week of Feb. 9, 2026.
• The company has issued a final cure period until Feb. 20, 2026, for the receipt of the first payment; failure to pay will result in contract termination and potential legal action for damages.
• Simultaneously, Largo reported a significant divergence in ferrovanadium (FeV) markets, with U.S. prices rising approximately 30-40% year-to-date to ~$17-18/lb, creating a >50% premium over European prices due to structural supply constraints and tariffs.

Key Details

• Iron Ore Calcine Transaction Status:

  • Contract Value: $56 million for up to 4.5 million tonnes of iron ore calcine.
  • Payment Schedule:
    • First payment of $2.9 million was originally due Jan. 30, 2026, but deferred to the week of Feb. 9, 2026.
    • Second payment of $1.9 million is due Feb. 16, 2026.
  • Breach Notification: Largo notified the counterparty of non-compliance.
  • Cure Period: The counterparty has until Feb. 20, 2026, to remedy the outstanding payment obligation.
  • Consequences: If the first payment is not received by Feb. 20, 2026, the agreement will be terminated. Largo will review legal remedies for damages and evaluate alternative commercialization opportunities.
  • Current Status: No delivery of iron ore calcine material has been made under the agreement.
  • Financial Impact: Largo believes it has ample cash on hand to offset this potential near-term setback.

• U.S. Ferrovanadium (FeV) Market Update:

  • Price Movement (U.S.): FeV prices rose from the mid-$13/lb range to the mid-$17/lb range over the past month (~30% increase). Year-to-date, prices moved from $13.25/lb (Jan. 1) to $18–$18.50/lb (~36-40% increase).
  • Price Movement (Europe): FeV prices rose from ~$23.80/kg to ~$25.60–$25.83/kg (~7-8% increase).
  • Market Divergence: The U.S. market is trading at a premium of more than 50% to Europe (approx. $37-38/kg equivalent vs. $25.60/kg).
  • Supply Constraints:
    • Structural tightness in the U.S. market driven by limited conversion capacity.
    • Canadian conversion capacity is operating at or near capacity.
    • Access to alternative origins (China, South Africa, Russia) is restricted by anti-dumping rulings and sanctions.

• Tariff and Supply Chain Context:

  • Largo is subject to a 50% tariff on direct Brazilian imports of vanadium pentoxide and FeV into the United States.
  • Largo currently supplies the North American market primarily through its Canadian conversion partner to avoid these tariffs under the USMCA.
  • The company states that removal of tariff constraints would allow it to directly supply FeV into the U.S. market from Brazil, helping to address the widening supply gap.

Notable Quotes

• Francesco D'Alessio, Chief Commercial Officer: "Since the beginning of the year, we have seen a clear and accelerating divergence between the North American and European FeV markets. U.S. prices have risen approximately 36 to 40 per cent year to date... The U.S. market is trading at a premium of more than 50 per cent to Europe, reflecting continuing structural tightness, constrained conversion capacity and restricted access to alternative supply."
• Francesco D'Alessio, Chief Commercial Officer: "Largo is ready and fully capable of helping close this growing supply gap. However, the 50-per-cent tariff imposed on Brazilian-origin material continues to restrict direct supply of both FeV 80 to U.S. steel mills and high-purity vanadium products critical for defence applications."