Largo Awarded a Five-Year U.S. Department of Defense Contract to Supply High-Purity Vanadium Pentoxide with Fixed-Price Delivery Orders to Support the U.S. National Defense Stockpile
Largo secured a U.S. Defense Department contract for high-purity vanadium with fixed-price premiums, providing financial relief to the indebted producer.
Largo Inc. (LGO) has secured a five-year Indefinite Delivery, Indefinite Quantity (IDIQ) contract from the U.S. Defense Logistics Agency. The agreement allows the company to supply up to 2,876 tonnes of high-purity vanadium pentoxide for the National Defense Stockpile, with a maximum contract value of US$125 million.
Pricing under the deal is firm-fixed-price at a premium above benchmark V2O5 indexes in 2026, escalating by 10% each year thereafter. Management expects this structure to improve realized prices and help offset depressed market prices and cost inflation. The contract validates Largo as a trusted supplier to the U.S. defense industrial base, with supply originating from its Maracás Menchen mine in Brazil. No additional capex is mentioned for fulfillment.
Largo Inc. (LGO) has secured a new Department of Defense contract, a development that was not previously anticipated. The agreement establishes a premium-priced revenue stream for up to approximately 575 tons per year, representing less than 5% of the company’s 2026 production guidance. This arrangement is expected to improve blended realizations and serves as strategic validation of Largo as a Western-aligned vanadium supplier, potentially opening doors to further government or aerospace demand.
The contract’s maximum total value is $125 million over five years, equating to approximately $25 million per year if fully utilized. This figure is modest relative to Largo’s annual revenue of approximately $110 million and its $108 million in debt maturing within 12 months. Consequently, the deal does not resolve the company’s going-concern risk or negative working capital. The market has already priced in severe distress, with the stock trading at $0.88, down from $3.52 in October 2025.
Largo Inc. is a Canadian-listed primary vanadium producer operating its flagship Maracás Menchen mine in Bahia, Brazil. The facility produces vanadium pentoxide (V2O5) and ilmenite as by-products. The company also owns 100% of two tungsten projects, Northern Dancer in Canada and Currais Novos in Brazil, and holds a 37.4% stake in Storion Energy, which develops vanadium flow battery electrolyte. Additionally, the company has been exploring the recovery of additional by-products, including copper, PGMs, nickel, and cobalt, from its vanadium ore.