EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Largo Resources Ltd.: Exhibit 99.1 - Filed by newsfilecorp.com

Largo Resources Ltd.

 

Unaudited Condensed Interim Consolidated Financial Statements

 

For the Three Months Ended March 31, 2021 and 2020

 

(Expressed in thousands / 000's of U.S. dollars)

Table of Contents

Condensed Interim Consolidated Statements of Financial Position 1
   
Condensed Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) 2
   
Condensed Interim Consolidated Statements of Changes in Equity 3
   
Condensed Interim Consolidated Statements of Cash Flows 4
   
Notes to the Unaudited Condensed Interim Consolidated Financial Statements 5
   
1) Nature of operations 5
   
2) Statement of compliance 5
   
3) Change in functional and presentation currency 5
   
4) Basis of preparation, significant accounting policies, and future accounting changes 6
   
5) Amounts receivable 7
   
6) Inventory 7
   
7) Other intangible assets 7
   
8) Mine properties, plant and equipment 8
   
9) Leases 9
   
10) Accounts payable and accrued liabilities 9
   
11) Debt 10
   
12) Issued capital 10
   
13) Equity reserves 11
   
14) Earnings (loss) per share 13
   
15) Taxes 13
   
16) Related party transactions 13
   
17) Segmented disclosure 14
   
18) Commitments and contingencies 15
   
19) Financial instruments 16
   
20) Revenues 18
   
21) Expenses 19
   
22) Subsequent event 19

Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)

Condensed Interim Consolidated Statements of Financial Position

      As at  
      March 31,     December 31,  
  Notes   2021     2020  
Assets              
Current Assets              
Cash   $ 48,693   $ 79,145  
Restricted cash     146     -  
Amounts receivable 5   21,175     19,097  
Inventory 6   36,772     35,337  
Prepaid expenses     3,820     3,718  
Total Current Assets     110,606     137,297  
Non-current Assets              
Deferred income tax 15(b)   6,761     7,178  
Other intangible assets 7   4,257     4,366  
Mine properties, plant and equipment 8   139,394     148,965  
Total Non-current Assets     150,412     160,509  
Total Assets   $ 261,018   $ 297,806  
Liabilities              
Current Liabilities              
Accounts payable and accrued liabilities 10 $ 11,485   $ 15,968  
Deferred revenue     1,144     3,223  
Current portion of provisions     336     368  
Debt 11   -     24,788  
Total Current Liabilities     12,965     44,347  
Non-current Liabilities              
Provisions     5,440     6,295  
Total Non-current Liabilities     5,440     6,295  
Total Liabilities     18,405     50,642  
Equity              
Issued capital 12   414,692     406,214  
Equity reserves 13   15,640     21,291  
Accumulated and other comprehensive loss     18,405     50,642  
Accumulated other comprehensive loss     (119,965 )   (108,438 )
Deficit     (67,754 )   (71,903 )
Total Equity     242,613     247,164  
Total Liabilities and Equity   $ 261,018   $ 297,806  

Commitments and contingencies

8, 18

 

 

 

 

Subsequent event

22

 

 

 

 

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 1


--The accompanying notes form an integral part of the consolidated financial statements--

Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)

Condensed Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

      Three Months ended March 31,  
  Notes   2021     2020  
            Restated  
            (note 3)  
Revenues 20 $ 39,801   $ 41,909  
Other gains (losses)     -     (362 )
      39,801     41,547  
Expenses              
Operating costs 21   (28,172 )   (26,248 )
Professional, consulting and management fees     (3,629 )   (1,692 )
Foreign exchange loss     (1,756 )   (8,493 )
Other general and administrative expenses     (977 )   (872 )
Share-based payments 13   (372 )   (414 )
Finance costs 21   (291 )   (126 )
Interest income     54     660  
Exploration and evaluation costs     (211 )   (481 )
      (35,354 )   (37,666 )
Net income (loss) before tax   $ 4,447   $ 3,881  
Income tax (expense) 15(a)   (321 )   -  
Deferred income tax recovery 15(a)   18     462  
Net income (loss)   $ 4,144   $ 4,343  

             
Other comprehensive income (loss)              
Items that subsequently will be reclassified to operations:              
    Unrealized (loss) on foreign currency translation     (11,527 )   (44,699 )
Comprehensive (loss)   $ (7,383 ) $ (40,356 )
Basic earnings (loss) per Common Share 14 $ 0.07   $ 0.08  
Diluted earnings (loss) per Common Share 14 $ 0.07   $ 0.07  
Weighted Average Number of Shares Outstanding (in 000's)              
  - Basic 14   62,175     56,075  
  - Diluted 14   63,258     62,435  

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 2


--The accompanying notes form an integral part of the consolidated financial statements--

Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)

Condensed Interim Consolidated Statements of Changes in Equity

    Shares     Issued Capital     Equity Reserves     Accumulated Other
Comprehensive Loss		     Deficit     Shareholders' Equity  
Balance at January 1, 2020   55,453   $ 396,026   $ 21,448   $ (66,501 ) $ (78,870 ) $ 272,103  
Grant of share options   -     -     286     -     -     286  
Grant of restricted share units   -     -     17     -     -     17  
Share-based payments   -     -     111     -     -     111  
Exercise of warrants   824     1,648     (351 )   -     -     1,297  
Exercise of restricted share units   20     465     (465 )   -     -     -  
Expiry of warrants   -     -     (159 )   -     159     -  
Expiry of share options   -     -     (47 )   -     47     -  
Currency translation adjustment   -     -     -     (44,699 )   -     (44,699 )
Net income for the period   -     -     -     -     4,343     4,343  
Balance at March 31, 2020   56,297   $ 398,139   $ 20,840   $ (111,200 ) $ (74,321 ) $ 233,458  
Grant of share options   -     -     457     -     -     457  
Grant of restricted share units   -     -     420     -     -     420  
Share-based payments   -     -     347     -     -     347  
Exercise of warrants   2,129     4,488     (1,969 )   -     -     2,519  
Exercise of share options   81     626     (209 )   -     -     417  
Exercise of restricted share units   20     718     (718 )   -     -     -  
Purchase consideration (note 7)   252     2,243     2,123     -     -     4,366  
Currency translation adjustment   -     -     -     2,762     -     2,762  
Net income for the period   -     -     -     -     2,418     2,418  
Balance at December 31, 2020   58,779   $ 406,214   $ 21,291   $ (108,438 ) $ (71,903 ) $ 247,164  
Grant of share options   -     -     158     -     -     158  
Grant of restricted share units   -     -     16     -     -     16  
Share-based payments   -     -     198     -     -     198  
Exercise of warrants   5,696     7,564     (5,199 )   -     -     2,365  
Exercise of share options   26     159     (64 )   -     -     95  
Exercise of restricted share units   60     755     (755 )   -     -     -  
Expiry of warrants   -     -     (5 )   -     5     -  
Currency translation adjustment   -     -     -     (11,527 )   -     (11,527 )
Net income for the period   -     -     -     -     4,144     4,144  
Balance at March 31, 2021   64,561   $ 414,692   $ 15,640   $ (119,965 ) $ (67,754 ) $ 242,613  

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 3


--The accompanying notes form an integral part of the consolidated financial statements--

Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)

Condensed Interim Consolidated Statements of Cash Flows

      Three Months ended
March 31,		  
  Notes   2021     2020  
            Restated  
Operating Activities           (note 3)  
Net income (loss) for the period   $ 4,144   $ 4,343  
Adjustment for Non-cash Items              
Other (gains) losses     -     362  
Depreciation     5,367     6,455  
Share-based payments 13   372     414  
Unrealized foreign exchange loss (gain)     2,308     (11,900 )
Finance costs 21   291     126  
Interest income     (54 )   (660 )
Income tax expense 15(a)   321     -  
Deferred income tax (recovery) 15(a)   (18 )   (462 )
               
Cash Provided (Used) Before Working Capital Items     12,731     (1,322 )
Change in amounts receivable     (3,149 )   (914 )
Change in inventory     (2,892 )   1,943  
Change in vanadium products     -     (871 )
Change in prepaid expenses     (303 )   (148 )
Change in accounts payable and accrued liabilities     (2,597 )   330  
Change in deferred revenue     (2,079 )   -  
Net Cash Provided by (Used in) Operating Activities     1,711     (982 )

             
Financing Activities              
Receipt of debt 11   -     24,788  
Repayment of debt 11   (24,788 )   -  
Interest received     54     579  
Change in restricted cash     (146 )   76  
Issuance of common shares 12   2,460     1,297  
Net Cash (Used in) Provided by Financing Activities     (22,420 )   26,740  

             
Investing Activities              
Mine properties, plant and equipment     (9,075 )   (3,380 )
Net Cash (Used in) Investing Activities     (9,075 )   (3,380 )
Effect of foreign exchange on cash     (668 )   (4,583 )
Net Change in Cash     (30,452 )   17,795  
Cash position - beginning of the period     79,145     127,499  
Cash Position - end of the period   $ 48,693   $ 145,294  

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 4


--The accompanying notes form an integral part of the consolidated financial statements--

Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
 
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

1) Nature of operations

The Company is a producer and supplier of high-quality vanadium products, which are sourced from one of the world's highest-grade vanadium deposits at the Company's Maracás Menchen Mine located in Brazil. Substantially all of the Company's efforts are devoted to operating the Maracás Menchen Mine and to the sales of vanadium. Largo is also focused on the advancement of renewable energy storage solutions through Largo Clean Energy and its vanadium redox flow battery technology. While the Company's Maracás Menchen Mine has reached commercial production, future changes in market conditions and feasibility estimates could result in the Company's mineral resources not being economically recoverable.

The Company is a corporation governed by the Business Corporations Act (Ontario) and domiciled in Canada whose shares are listed on the Toronto Stock Exchange ("TSX") and on the Nasdaq Stock Market ("Nasdaq"). The head office, principal address and records office of the Company are located at 55 University Avenue, Suite 1105, Toronto, Ontario, Canada M5J 2H7.

2) Statement of compliance

These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting.

The unaudited condensed interim consolidated financial statements were approved by the Board of Directors of the Company on May 12, 2021.

3) Change in functional and presentation currency

On May 1, 2020 the Company changed its presentation currency from the  Canadian dollar ("C$" or "CAD") to the U.S. dollar ("$" or "USD").  Prior period comparative information has been restated in U.S. dollars to reflect the change in presentation currency.

Also on May 1, 2020 the functional currency of Largo Resources Ltd., Largo Commodities Holding Ltd. and Largo Commodities Trading Ltd. changed prospectively to the U.S. dollar from the Canadian dollar, Euro and Euro, respectively. The Company reconsiders the functional currency of its operations if there is a change in events and conditions which determine the primary economic environment. In early 2020, the Company's off-take agreement with its former off-take partner expired, and the Company started generating U.S. dollar denominated revenues and incurring U.S. dollar denominated costs. This is a significant judgment considering the significance of the revenues and costs to the Company's activities, and the primary economic environments in which the Company and its subsidiaries operate.

The exchange rates used to translate assets and liabilities to reflect the change in functional currency on adoption is $1 equals C$1.3874 and $1 equals 0.9194 Euros ("EUR").

The financial statements of entities with a functional currency that is not the U.S. dollar have been translated into U.S. dollars in accordance with International Accounting Standards ("IAS") 21, The Effects of Changes in Foreign Exchange Rates, as follows:

  • Assets and liabilities have been translated into U.S. dollars using period-end exchange rates of:

– January 1, 2019: $1 equals C$1.3620 and $1 equals 3.8748 Brazilian reals ("BRL").

– December 31, 2019: $1 equals C$1.3023, $1 equals 0.8902 EUR and $1 equals 4.0307 BRL.

  • Consolidated statements of income (loss) and other comprehensive income (loss) have been translated using average foreign exchange rates prevailing during Q1 2020 of $1 equals C$1.3200 and $1 equals 4.4657 BRL;

  •  Shareholder's equity balances have been translated using historical average foreign exchange rates for the periods in which the transactions occurred; and

  •  Resulting exchange differences have been recorded within the foreign currency translation reserve accounts.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 5
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

The impact of the change in presentation currency on the unaudited condensed interim consolidated financial statements is as follows:

Condensed interim consolidated statement of income (loss) and comprehensive income (loss) - three months ended March 31, 2020

    Previously
reported in CAD		     Restated
USD		  
Revenues C$ C$58,186   $ 41,909  
Other gains (losses)   (523 )   (362 )
    57,663     41,547  
             
Operating costs   (36,423 )   (26,248 )
Professional, consulting and management fees   (2,289 )   (1,692 )
Foreign exchange loss   (12,189 )   (8,493 )
Other general and administrative expenses   (1,175 )   (872 )
Share-based payments   (547 )   (414 )
Finance costs   (173 )   (126 )
Interest income   890     660  
Exploration and evaluation costs   (665 )   (481 )
    (52,571 )   (37,666 )
Net income (loss) before tax C$ C$5,092   $ 3,881  
Deferred income tax recovery   642     462  
Net income (loss) C$ C$5,734   $ 4,343  
             
Other comprehensive income (loss)            
Unrealized gain (loss) on foreign currency translation   (31,250 )   (44,699 )
Comprehensive income (loss) C$ C$(25,516 ) $ (40,356 )

Condensed interim consolidated statement of cash flows - three months ended March 31, 2020

    Previously reported in CAD     Restated
USD		  
Net Cash Provided by (Used in) Operating Activities C$ 11,622   $ (982 )
Net Cash Provided by Financing Activities   35,770     26,740  
Net Cash (Used in) Investing Activities   (4,424 )   (3,380 )
Effect of foreign exchange on cash   (2,908 )   (4,583 )
Net Change in Cash   40,060     17,795  
Cash position - beginning of the period   166,077     127,499  
Cash position - end of the period C$ 206,137   $ 145,294  

4) Basis of preparation, significant accounting policies, and future accounting changes

The basis of presentation, and accounting policies and methods of their application in these unaudited condensed interim consolidated financial statements, including comparatives, are consistent with those used in the Company's audited annual consolidated financial statements for the year ended December 31, 2020 and should be read in conjunction with those statements.

These unaudited condensed interim consolidated financial statements are presented in thousands of U.S. dollars, unless otherwise noted. References to the symbol "C$" or "CAD" mean the Canadian dollar, references to the symbol "EUR" mean the Euro and references to the symbol "R$" or "BRL" mean the Brazilian real, the official currency of Brazil.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 6
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

a) Critical judgements and estimation uncertainties

The preparation of unaudited condensed interim consolidated financial statements in conformity with IFRS requires the Company's management to make judgments, estimates and assumptions about the carrying amount of its assets and liabilities that are not readily apparent from other sources. These estimates and assumptions are disclosed in note 4(d) of the Company's audited annual consolidated financial statements for the year ended December 31, 2020. There have been no significant changes to the areas of estimation and judgment during the three months ended March 31, 2021.

COVID-19

The Company is conscious of the rapid expansion of the COVID-19 pandemic and the evolving global implications. To date, there have been no significant disruptions to the Company's operations, supply chain or on its shipment of products from the Maracás Menchen Mine. However, the Company cautions that the potential future impact of any restrictions on the Company's operations, supply chain, sales efforts and logistics is currently unknown but could be significant.

b) Significant accounting policies

These unaudited condensed interim consolidated financial statements, including comparatives, have been prepared following the same accounting policies and methods of computation as the audited annual consolidated financial statements for the year ended December 31, 2020.

5) Amounts receivable

              March 31,
                      2021		     December 31,
2020		  
Trade receivables $ 17,457   $ 13,749  
Current taxes recoverable - Brazil   3,609     5,214  
Current taxes recoverable - Other   77     92  
Other receivables   32     42  
Total $ 21,175   $ 19,097  

6) Inventory

              March 31,
                    2021		     December 31,
2020		  
Finished products $ 24,731   $ 25,087  
Work-in-process   2,768     775  
Stockpiles   1,594     997  
Warehouse materials   7,679     8,478  
Total $ 36,772   $ 35,337  

During the three months ended March 31, 2021, the Company recognized a net realizable value write-down of $2 for finished products (three months ended March 31, 2020 - $nil). At March 31, 2021, the net realizable value write-down was $2 for finished products and $nil for warehouse materials (note 21) (December 31, 2020 - $3 and $174). As inventory is sold, previously recorded net realizable value write-downs are reclassified from inventory write-down to direct mine and production costs or product acquisition costs as appropriate (note 21).

7) Other intangible assets

During the year ended December 31, 2020, the Company acquired certain patent families (the "intellectual property") out of an assignment for the benefit of creditors under Massachusetts, U.S.A., law. The acquisition was completed through an asset purchase agreement, with the Company issuing 252 common shares and 362 common share purchase warrants as consideration. The transaction closed on December 7, 2020, with the common shares valued at $2,243 (refer to note 12) and the common share purchase warrants valued at $2,123 (refer to note 13) for a total consideration of $4,366.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 7
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

At March 31, 2021, the remaining estimated useful life is 9.75 years (December 31, 2020 - 10 years).

    Intellectual
Property		     Total  
Cost            
Balance at December 31, 2019 $ -   $ -  
Additions   4,366     4,366  
Balance at December 31, 2020 $ 4,366   $ 4,366  
Additions   -     -  
Balance at March 31, 2021 $ 4,366   $ 4,366  
Accumulated Depreciation            
Balance at December 31, 2019 $ -   $ -  
Depreciation   -     -  
Balance at December 31, 2020 $ -   $ -  
Depreciation   109     109  
Balance at March 31, 2021 $ 109   $ 109  
Net Book Value            
At December 31, 2020 $ 4,366   $ 4,366  
At March 31, 2021 $ 4,257   $ 4,257  

8) Mine properties, plant and equipment

    Office and
Computer
Equipment		     Vehicles     Mine
Properties		     Machinery
and
Equipment		     Construction
In Progress		     Total  
Cost                                    
Balance at December 31, 2019 $ 980   $ 336   $ 100,860   $ 185,861   $ 9,096   $ 297,133  
Additions   115     -     9,049     2,421     8,174     19,759  
Reclassifications   -     -     -     8,323     (8,323 )   -  
Effects of changes in foreign exchange rates   (176 )   (75 )   (18,465 )   (42,862 )   (639 )   (62,217 )
Balance at December 31, 2020 $ 919   $ 261   $ 91,444   $ 153,743   $ 8,308   $ 254,675  
Additions   49     -     1,734     1,566     3,998     7,347  
Effects of changes in foreign exchange rates   (65 )   (23 )   (5,906 )   (13,565 )   (880 )   (20,439 )
Balance at March 31, 2021 $ 903   $ 238   $ 87,272   $ 141,744   $ 11,426   $ 241,583  

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 8
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

    Office and
Computer
Equipment		     Vehicles     Mine
Properties		     Machinery
and
Equipment		     Construction
In Progress		     Total  
Accumulated Depreciation                                    
Balance at December 31, 2019 $ 523   $ 336   $ 25,728   $ 80,052   $ -   $ 106,639  
Depreciation   89     -     5,939     16,136     -     22,164  
Effects of changes in foreign exchange rates   (89 )   (75 )   (4,727 )   (18,202 )   -     (23,093 )
Balance at December 31, 2020 $ 523   $ 261   $ 26,940   $ 77,986   $ -   $ 105,710  
Depreciation   28     -     1,450     3,822     -     5,300  
Effects of changes in foreign exchange rates   (38 )   (23 )   (1,764 )   (6,996 )   -     (8,821 )
Balance at March 31, 2021 $ 513   $ 238   $ 26,626   $ 74,812   $ -   $ 102,189  
Net Book Value                                    
At December 31, 2020 $ 396   $ -   $ 64,504   $ 75,757   $ 8,308   $ 148,965  
At March 31, 2021 $ 390   $ -   $ 60,646   $ 66,932   $ 11,426   $ 139,394  

At March 31, 2021 and December 31, 2020, the Company's economic interest in the Maracás Menchen Mine totaled 99.94%. The remaining 0.06% economic interest is held by Companhia Baiana de Pesquisa Mineral ("CBPM") owned by the state of Bahia. CBPM retains a 3% net smelter royalty ("NSR") in the Maracás Menchen Mine. The property is also subject to a royalty of 2% on certain operating costs under the Brazilian Mining Act. Under a separate agreement, Anglo Pacific Plc receives a 2% NSR in the Maracás Menchen Mine.

The net book value of the Company's mine properties, plant and equipment at March 31, 2021 by geographic location is: Brazil − $121,888 (December 31, 2020 − $131,240); Canada − $17,413 (December 31, 2020 − $17,725) and U.S. - $93 (December 31, 2020 - $nil).

9) Leases

At March 31, 2021, the Company did not have any right-of-use assets or lease liabilities.

    Three months ended  
    March 31,
2021		     March 31,
2020		  
Recognized in the consolidated statements of income (loss) and comprehensive income (loss):            
Expenses relating to short-term leases $ 2,879   $ 3,207  
             
Recognized in the consolidated statements of cash flows:            
Total cash outflow for leases $ 3,580   $ 2,973  

10) Accounts payable and accrued liabilities

              March 31,
        2021		     December 31,
2020		  
Accounts payable $ 8,084   $ 12,289  
Accrued liabilities   2,816     2,572  
Accrued financial costs   -     806  
Other taxes   585     301  
Total $ 11,485   $ 15,968  

 

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 9
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

11) Debt

              March 31,
    2021		     December 31,
2020		  
Total debt $ -   $ 24,788  

          Cash flows     Non-cash        
    December 31,
2020		     Repayment     Foreign
exchange
movement		      
March 31,
2021		  
Total debt $ 24,788    $ (24,788 ) $ -   $ -  
Total liabilities from financing activities $ 24,788    $ (24,788 ) $ -   $ -  

          Cash flows     Non-cash        
    December 31,
2019		     Proceeds     Foreign
exchange
movement		      
December 31,
2020		  
Total debt1 $ -    $ 24,788   $ -   $ 24,788   
Total liabilities from financing activities $ -    $ 24,788   $ -   $ 24,788   

1. The gross amount excludes unamortized deferred transaction costs.

Credit facilities

On March 18, 2020, the Company secured a $13,000 credit facility with a bank in Brazil. This facility was fully drawn down and proceeds of R$65,980 ($13,000) were received on March 20, 2020. This facility was due to be repaid as a lump sum payment on March 12, 2021, together with accrued interest at a rate of 3.35% per annum.

On March 24, 2020 the Company secured a $11,788 credit facility with a second bank in Brazil. This facility was fully drawn down and proceeds of R$60,000 ($11,788) were received on March 24, 2020. This facility was due to be repaid as a lump sum payment on March 18, 2021, together with accrued interest at a rate of 6.29% per annum.

Between January 29, 2021 and February 3, 2021, the Company completed the settlement of the outstanding credit facilities through the repayment in full of the outstanding principal amounts of $13,000 and $11,788.

Refer to note 22 for details of a working capital financing facility secured subsequent to March 31, 2021.

12) Issued capital

a) Authorized 

Unlimited common shares without par value.

b) Issued

    Three months ended
March 31, 2021		     Year ended
December 31, 2020		  
    Number of
Shares		     Stated
Value		     Number of
Shares		     Stated
Value		  
Balance, beginning of the period   58,779   $ 406,214     55,453   $ 396,026  
Exercise of warrants (note 13)   5,696     7,564     2,953     6,136  
Exercise of share options (note 13)   26     159     81     626  
Exercise of restricted share units (note 13)   60     755     40     1,183  
Purchase consideration (note 7)   -     -     252     2,243  
Balance, end of the period   64,561   $ 414,692     58,779   $ 406,214  

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 10
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

On March 4, 2021, the Company completed the consolidation of its issued and outstanding common shares on the basis of one post-consolidation common share for every 10 pre-consolidation common shares. Any quantity relating to common shares, RSUs, stock options and warrants or any per unit price such as exercise prices disclosed throughout the unaudited condensed interim consolidated financial statements have been retrospectively adjusted for the share consolidation, including the weighted average number of shares outstanding and the basic and diluted earnings (loss) per share for the periods presented.

13) Equity reserves

Under the Company's incentive share compensation plan, the Company has issued options and restricted share units ("RSUs") approximating 1.35% of its issued and outstanding capital at March 31, 2021.

 

RSUs

Options

Warrants

 

 

 

Number

 

  Value

Number

Weighted
average
exercise
price

 

  Value

Number

Weighted
average
exercise
price

 

    Value

 

Total value

December 31, 2019

81

$

    1,617

315

C$

9.56

$

  2,720

10,810

C$

4.24

$

  17,111

$

21,448

Share-based payments

-

 

        458

-

 

-

 

          -

-

 

-

 

            -

 

      458

Granted

191

 

      441

383

 

6.70

 

      774

362

 

13.00

 

    2,123

 

  3,338

Exercised

(40)

 

(1,183)

(81)

 

(7.00)

 

  (209)

(2,679)

 

(3.33)

 

  (2,320)

 

(3,712)

Expired

-

 

            -

(20)

 

(4.55)

 

    (47)

(127)

 

(6.50)

 

      (159)

 

    (206)

Forfeited

(6)

 

          (4)

(9)

 

(6.70)

 

    (31)

-

 

-

 

              -

 

      (35)

December 31, 2020

226

$

  1,329

588

C$

8.27

$

  3,207

8,366

C$

4.88

$

  16,755

$

21,291

Share-based payments

-

 

        202

-

 

-

 

        11

-

 

-

 

            -

 

      213

Granted

65

 

        16

97

 

18.10

 

    158

-

 

-

 

    -

 

      174

Exercised

(73)

 

  (755)

(26)

 

(4.61)

 

    (64)

(6,500)

 

(2.90)

 

  (5,199)

 

(6,018)

Expired

-

 

            -

-

 

-

 

    -

(7)

 

(2.90)

 

        (5)

 

        (5)

Forfeited

(2)

 

          (7)

(2)

 

(6.70)

 

        (8)

-

 

-

 

              -

 

      (15)

March 31, 2021

216

$

  785

657

C$

9.87

$

3,304

1,859

C$

11.79

$

  11,551

$

15,640

During the three months ended March 31, 2021, the Company recognized a share-based payment expense related to the grant and vesting of share options and RSUs of $372 (three months ended March 31, 2020 - $414) for share options and RSUs granted to the Company's directors, officers, employees and consultants. The total share-based payment expense was charged to operations.

During the three months ended March 31, 2021, 5,696 warrants were exercised resulting in proceeds to the Company of $2,365, with a further 804 warrants surrendered as part of cashless exercises. In addition, 26 share options were exercised resulting in proceeds to the Company of $95.

During the year ended December 31, 2020, 2,400 warrants were exercised resulting in proceeds to the Company of $3,816, with a further 279 warrants surrendered as part of cashless exercises. 553 shares were issued in connection with a warrant exercise in 2019. In addition, 81 share options were exercised resulting in proceeds to the Company of $417.

The Company applies the fair value method of accounting for share-based payment awards. The Company estimated the expected volatility using historical volatilities from the Company's traded common shares when estimating the fair value of stock options granted, as it believes that this methodology best reflects the expected future volatility of its stock.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 11
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

a) RSUs

During the three months ended March 31, 2021, the Company granted 65 RSUs to officers and employees of the Company and 2 RSUs were forfeited. These RSUs vest over time, with one-third vesting during each of the three month periods ending March 31, 2022, March 31, 2023 and March 31, 2024. The value of the vested RSUs includes the Company's expected forfeiture rate of 0%. Upon vesting, the RSUs provide the holders with common shares of the Company.

During the year ended December 31, 2020, the Company granted 191 RSUs to officers and employees of the Company and 6 RSUs were forfeited. These RSUs vest over time, with one-third of a grant of 180 RSUs vesting during each of the three month periods ending March 31, 2021, March 31, 2022 and March 31, 2023, and one-third of a grant of 11 RSUs vesting during each of the three month periods ending September 30, 2021, September 30, 2022 and September 30, 2023. The value of the vested RSUs includes the Company's expected forfeiture rate of 0%. Upon vesting, the RSUs provide the holders with common shares of the Company.

b) Stock options

Range of prices

 

 

 

No. outstanding

 

No. exercisable

 

Weighted
average
remaining
life (years)

 

Weighted
average
exercise

price

 

Weighted
average
grant date

share price

C$    4.55 - 6.70

 

500

 

302

 

3.1

 

C$    6.15

 

C$    6.15

18.10

 

97

 

-

 

5.0

 

18.10

 

18.10

24.00

 

28

 

28

 

2.4

 

24.00

 

24.00

30.40

 

32

 

32

 

2.8

 

30.40

 

30.40

 

 

657

 

362

 

 

 

C$    9.87

 

 

During the three months ended March 31, 2021, the Company granted 97 (year ended December 31, 2020 - 383) share options to its directors, officers, employees and consultants with a weighted average exercise price of C$18.10. The options vest over time, with one-third vesting during each of the three month periods ending March 31, 2022, March 31, 2023 and March 31, 2024. The estimated weighted average grant date fair value of the share options was C$11.92 per stock option, as determined using the Black-Scholes valuation model and the following assumptions: risk free interest rate - 0.92%, expected life in years - 5, expected volatility - 83.7%, expected dividends - 0% and expected forfeiture rate - 0%.

During the year ended December 31, 2020, the Company granted 383 share options to its directors, officers, employees and consultants with a weighted average exercise price of C$6.70. 75 of the share options vested immediately and are exercisable for a period of 5 years from the date of grant. The remainder vest over time, with one-third vesting during each of the three month periods ending March 31, 2021, March 31, 2022 and March 31, 2023. The estimated weighted average grant date fair value of the share options was C$4.80 per stock option, as determined using the Black-Scholes valuation model and the following assumptions: risk free interest rate - 0.74%, expected life in years - 5, expected volatility - 93.7%, expected dividends - 0% and expected forfeiture rate - 0%.

The remaining weighted average contractual life of options outstanding at March 31, 2021 was 3.3 years (December 31, 2020 - 3.2 years).

c) Warrants and broker warrants

No.
outstanding		   No.
exercisable		   Grant
Date		   Expiry
Date		   Exercise
price		   Expected
volatility		 Expected
life (years)		 Expected
dividend
yield		   Risk-free
Interest
rate
        349           349   1-Dec-17   1-Dec-22 C$     11.50   93%   5.00 0%   1.63%
      1,148         1,148   13-Dec-17   13-Dec-22 C$     11.50   93%   5.00 0%   1.65%
        362           362   7-Dec-20   8-Dec-25 C$     13.00   88%   5.00 0%   0.48%
1,859   1,859         C$     11.79              

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 12
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

14) Earnings (loss) per share

The weighted average number of basic and diluted shares outstanding for all periods presented in the consolidated statements of income (loss) and comprehensive income (loss) have been adjusted in order to reflect the effect of the share consolidation that was completed on March 4, 2021.

The total number of shares issuable from options, warrants and RSUs that are excluded from the computation of diluted earnings (loss) per share because their effect would be anti-dilutive was 157 for the three months ended March 31, 2021 (three months ended March 31, 2020 - 61).

15) Taxes

a) Tax (expense) recovery

    Three months ended  
    March 31,
2021		     March 31,
2020		  
Income tax (expense) $ (321 ) $ -  
Deferred income tax recovery   18     462  
Total $ (303 ) $ 462  

b) Changes in deferred tax assets and liabilities

    Three months ended
March 31, 2021		     Year ended
December 31, 2020		  
Net deferred income tax asset, beginning of the period $ 7,178   $ 10,571  
Deferred income tax recovery (expense)   18     (823 )
Effect of foreign exchange   (435 )   (2,570 )
Net deferred income tax asset, end of the period $ 6,761   $ 7,178  

16) Related party transactions

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

During the three months ended March 31, 2021, 4,650 shares were issued to funds managed by Arias Resource Capital Management LP (the "ARC Funds") in connection with the exercise of warrants (refer to note 13).

The remuneration of directors and other members of key management personnel during the period was as follows:

    Three months ended  
    March 31,
2021		     March 31,
2020		  
Short-term benefits $ 1,484   $ 1,175  
Share-based payments   258     366  
Total $ 1,742   $ 1,541  

Refer to note 18 for additional commitments with management.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 13
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

17) Segmented disclosure

The Company has four operating segments: sales & trading, mine properties, corporate and exploration and evaluation properties ("E&E properties"). Corporate includes the corporate team that provides administrative, technical, financial and other support to all of the Company's business units, as well as being part of the Company's sales structure.

    Sales &
trading		     Mine
properties		     Corporate      
E&E
properties		     Inter-segment
transactions &
other activities		     Total  
Three months ended March 31, 2021                                    
Revenues $ 35,000   $ 24,484   $ 21,005   $ -   $ (40,688)1   $ 39,801  
                                     
Operating costs   (29,992 )   (20,495 )   (19,941 )   -     42,2561     (28,172 )
Professional, consulting and management fees   (366 )   (1,030 )   (1,414 )   -     (819)2     (3,629 )
Foreign exchange gain (loss)   (23 )   (1,911 )   179     -     (1)2     (1,756 )
Other general and administrative expenses   (73 )   (223 )   (398 )   -     (283)2     (977 )
Share-based payments   -     -     (372 )   -     -     (372 )
Finance costs   (6 )   (282 )   (3 )   -     -     (291 )
Interest income   -     24     30     -     -     54  
Exploration and evaluation costs   -     (209 )   -     (2 )   -     (211 )
    (30,460 )   (24,126 )   (21,919 )   (2 )   41,153     (35,354 )
Net income (loss) before tax   4,540     358     (914 )   (2 )   465     4,447  
Income tax (expense)   -     (321 )   -     -     -     (321 )
Deferred income tax recovery (expense)   -     253     (235 )   -     -     18  
Net income (loss) $ 4,540   $ 290   $ (1,149 ) $ (2 ) $ 465   $ 4,144  
At March 31, 2021                                    
Total non-current assets $ 7   $ 126,549   $ 19,507   $ -   $ 4,3492   $ 150,412  
Total assets $ 43,832   $ 172,044   $ 81,686   $ 18   $ (36,562)3   $ 261,018  
Total liabilities $ 32,250   $ 15,137   $ 11,410   $ -   $ (40,392) 1   $ 18,405  

1. Elimination of inter-segment transactions.

2. Amounts relating to Largo Clean Energy Corp., which is not an operating segment.

3. Inter-segment transaction elimination of $44,324 partially offset by Largo Clean Energy Corp. total assets of $7,762.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 14
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

    Sales &
trading		     Mine
properties		     Corporate      
E&E
properties		     Inter-segment
transactions &
other activities		     Total  
Three months ended March 31, 2020                                    
Revenues $ -   $ 41,909   $ -   $ -   $ -   $ 41,909  
Other gains (losses)   -     -     (362 )   -     -     (362 )
    -     41,909     (362 )   -     -     41,547  
Operating costs   -     (26,248 )   -     -     -     (26,248 )
Professional, consulting and management fees   -     (835 )   (857 )   -     -     (1,692 )
Foreign exchange (loss) gain   -     (15,921 )   7,428     -     -     (8,493 )
Other general and administrative expenses   -     (237 )   (635 )   -     -     (872 )
Share-based payments   -     -     (414 )   -     -     (414 )
Finance costs   -     (118 )   (8 )   -     -     (126 )
Interest income   -     274     386     -     -     660  
Exploration and evaluation costs   -     (422 )   -     (59 )   -     (481 )
    -     (43,507 )   5,900     (59 )   -     (37,666 )
Net income (loss) before tax   -     (1,598 )   5,538     (59 )   -     3,881  
Income tax expense   -     -     -     -     -     -  
Deferred income tax recovery   -     462     -     -     -     462  
Net income (loss) $ -   $ (1,136 ) $ 5,538   $ (59 ) $ -   $ 4,343  
At December 31, 2020                                    
Total non-current assets $ 9   $ 136,082   $ 20,052   $ -   $ 4,3662   $ 160,509  
Total assets $ 49,010   $ 213,619   $ 106,779   $ 25   $ (71,627)3   $ 297,806  
Total liabilities $ 41,968   $ 45,320   $ 34,352   $ -   $ (70,998) 1   $ 50,642  

1. Elimination of inter-segment transactions.

2. Amounts relating to Largo Clean Energy Corp., which is not an operating segment.

3. Inter-segment transaction elimination of $76,498 partially offset by Largo Clean Energy Corp. total assets of $4,871.

The Company recognized revenues from customers of $39,801 in the three months ended March 31, 2021 (three months ended March 31, 2020 - $41,909). Of the total revenues from customers, $34,761 is related to the Sales & trading segment (three months ended March 31, 2020 -$nil), $4,790 is related to the Mine properties segment (three months ended March 31, 2020 -$41,909) and $250 is related to the Corporate segment (three months ended March 31, 2020 -$nil) (after the elimination of inter-segment transactions). In the three months ended March 31, 2021, the Company's revenues are from transactions with multiple customers, including two customers who each represented more than 10% of revenues during that period. In the three months ended March 31, 2020, all of the Company's revenues are from transactions with a single customer.

18) Commitments and contingencies

At March 31, 2021, the Company was party to certain management and consulting contracts. Minimum commitments under the agreements are approximately $2,575 and all payable within one year. These contracts also require that additional payments of up to approximately $3,863 be made upon the occurrence of certain events such as change of control. As the triggering event has not occurred, the contingent payments have not been reflected in these consolidated financial statements.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 15
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

In 2008, Largo agreed to sell 100% of its vanadium production under an off-take agreement which, following the election by the Company, expired at the end of April 2020. The Company has entered into a number of contracts with third party customers to deliver monthly quantities of the Company's vanadium products. A significant proportion of the Company's monthly vanadium production in 2021 has been committed.

The Company's mining and exploration activities are subject to various federal, provincial and international laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company has made payments to comply with such laws and regulations.

The Company indemnifies its directors and officers against any and all claims or losses reasonably incurred in the performance of their service to the Company to the extent permitted by law. The Company has acquired and maintains liability insurance for its directors and officers.

The Company is committed to a minimum amount of rental payments under five leases of office space which expire between October 31, 2021 and December 31, 2023. Minimum rental commitments remaining under the leases are approximately $525, including $264 due within one year. In addition, minimum rental commitments remaining under other short-term leases are approximately $9, all due within one year.

At the Company's Maracás Menchen Mine, the Company has entered into purchase order contracts with remaining amounts due related to goods not received or services not rendered as of March 31, 2021 of $8,454.

The Company, through its subsidiaries, is party to legal proceedings in the ordinary course of its operations related to legally binding agreements with various third parties under supply contracts and consulting agreements. At March 31, 2021 two such proceedings were ongoing, each in Brazil. The first relates to a supply agreement for the Maracás Menchen Mine which was filed with the courts in October 2014. The amount claimed totals R$9,900 ($1,738), with a counterclaim filed by Vanádio for R$10,700 ($1,878). A provision of R$1,281 ($225) has been recognized at March 31, 2021 for the probable loss (December 31, 2020 - R$1,281 ($247)). The second proceeding relates to a consulting agreement dispute for which R$3,900 ($685) (December 31, 2020 - R$3,900 ($750)) has been claimed against two of the Company's subsidiaries. No provision has been recognized for this proceeding. The Company and its subsidiaries are also party to legal proceedings regarding labour matters. A provision was recorded at December 31, 2020 for such proceedings in an amount of R$3,538 ($681). At March 31, 2021, the provision recognized was R$3,629 ($637). The outcome of these proceedings remains dependent on the final judgment, which the Company does not expect to be delivered within the next 12 months. Management does not expect the outcome of any of the remaining proceedings to have a materially adverse effect on the results of the Company's financial position or results of operations. Should any losses result from the resolution of these claims and disputes, they will be charged to operations in the period that they are determined.

19) Financial instruments

Financial assets and financial liabilities at March 31, 2021 and December 31, 2020 were as follows:

              March 31,
2021		     December 31,
2020		  
Cash $ 48,693   $ 79,145  
Restricted cash   146     -  
Trade and other receivables   17,489     13,791  
Accounts payable and accrued liabilities   11,485     15,968  
Debt   -     24,788  

Refer to the liquidity risk discussion below regarding liabilities.

The Company's risk exposures and the impact on the Company's financial instruments are summarized below. There have been no changes in the risks, objectives, policies and procedures from the previous year.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 16
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

a) Fair value

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made based on relevant market information and information about the financial instrument.

These estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

The fair value hierarchy categorizes into three levels the inputs to valuation techniques used to measure fair value.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

  • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

  •  Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly such as those derived from prices.

  •  Level 3 inputs are unobservable inputs for the asset or liability.

The carrying amounts for cash, restricted cash, other trade receivables and amounts receivable, accounts payable and accrued liabilities and debt in the consolidated statements of financial position approximate fair values because of the limited term of these instruments.

There have been no changes in the classification of financial instruments in the fair value hierarchy since December 31, 2020. The Company does not have any financial instruments measured using Level 3 inputs. The Company does not offset financial assets with financial liabilities and there were no transfers between Level 1 and Level 2 input financial instruments.

b) Credit risk

The Company's credit risk is primarily attributable to cash and amounts receivable.

The Company minimizes its credit risk with respect to cash by placing its funds on deposit with the highest rated banks in Canada, Ireland and Brazil. Financial instruments included in amounts receivable consist primarily of receivables from unrelated companies. Sales to customers outside of Brazil are protected either by the Company's credit insurance policies, which establishes credit limits for each customer, or by the Company requiring letters of credit or up-front payment prior to delivery occurring.

Of the total trade receivables balance of $17,457, $7,047 relates to customers in Brazil, which are not covered by the Company's credit insurance policies. These customers are AAA rated companies in Brazil. The Company applies the IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade receivables.

To measure expected credit losses, trade receivables are grouped based on risk characteristics and due dates. At March 31, 2021, no amounts are past due and in the three months ended March 31, 2021, the Company has not experienced any credit losses. At March 31, 2021, the loss allowance for trade receivables was determined to be $50 (December 31, 2020 - $51) and the movement is recognized as a component of finance costs (note 21). There have been no write offs of trade receivables.

c) Liquidity risk

The following table details the Company's expected remaining contractual cash flow requirements at March 31, 2021 for its financial liabilities with agreed repayment periods.

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 17
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

    Less than
6 months 		    6 months
to 1 year		     1 to 3 years     Over 3 years  
Accounts payable and accrued liabilities (note 10) $ 11,485   $ -   $ -   $ -  
  $ 11,485   $ -   $ -   $ -  

The Company's principal sources of liquidity are its cash flow from operating activities and cash of $48,693 (December 31, 2020 - $79,145).

d) Market risk

Interest rate risk

The Company's interest rate exposure is limited to that portion of its debt that is subject to floating interest rates. At March 31, 2021, the Company had no debt and does not have any exposure to floating interest rates.

Foreign currency risk

At March 31, 2021, the Company had no outstanding debt (December 31, 2020 - 100% U.S. dollar denominated). 

The impact of fluctuations in foreign currency on cash balances and debt relates primarily to fluctuations between the U.S. dollar, the Canadian dollar, the Brazilian real and the Euro. At March 31, 2021 the Company's U.S. dollar functional currency entities had cash denominated in Canadian dollars and Euros and the Company's Brazilian real functional currency entities had cash and debt denominated in U.S. dollars.

A 5% change in the value of the Canadian dollar and the Euro relative to the U.S. dollar would affect the value of these cash balances at March 31, 2021 by approximately $896. A 5% change in the value of the Brazilian real relative to the U.S. dollar would affect the value of Brazilian real cash balances by approximately $230.

Price risk

The Company does not have any financial instruments with significant exposure to price risk. Following the recognition of trade receivables on the recognition of revenue, there is no significant remeasurement related to price risk. Previously, the Company's only financial instrument that was susceptible to price risk was its trade receivables /  payables with its former off-take partner, which could vary with the market price of vanadium for products sold that had not yet had the final selling price determined in accordance with the off-take agreement in force at the time of sale. At March 31, 2021 all amounts had the final selling price determined.

20) Revenues

    Three months ended  
    March 31,
2021		     March 31,
2020		  
Vanadium sales from contracts with customers $ 39,801   $ 40,197  
Re-measurement of trade receivables / payables   -     1,712  
Total $ 39,801   $ 41,909  

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 18
Largo Resources Ltd.
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)
Notes to the Unaudited Condensed Interim Consolidated Financial Statements

21) Expenses

    Three months ended  
    March 31,
2021		     March 31,
2020		  
Operating costs:            
Direct mine and production costs $ 15,544   $ 17,494  
Conversion costs   2,229     -  
Product acquisition costs   2,508     -  
Royalties   1,470     2,307  
Distribution costs   1,169     -  
Inventory write-down   2     -  
Depreciation and amortization   5,250     6,447  
  $ 28,172   $ 26,248  
Finance costs:            
Interest expense $ 260   $ 86  
Accretion   32     40  
Loss allowance for trade receivables   (1 )   -  
  $ 291   $ 126  

22) Subsequent event

On May 11, 2021, the Company secured and drew down a $15,000 working capital financing facility with a bank in Brazil. This facility is due to be repaid as a lump sum in one year together with accrued interest at a rate of 2.28% per annum.   

Unaudited Condensed Interim Consolidated Financial Statements For The Three Months Ended March 31, 2021 and 2020 19