Ramp up is expected to take 12 months, with the company's focus this year on achieving nameplate annual capacity of 9,634 tonnes of vanadium pentoxide by the third quarter.
The company is projecting in the range of 16.2 to 18.4 million pounds of annual vanadium production this year, moving up to as much as 27.3 million pounds in 2016. Largo said production numbers for 2016 assume the completion of an expansion of its existing facilities by June of that year, resulting in increased production capacity.
Operating costs are expected to average $4.15 per pound during 2015, reaching as low as $3.21 per pound by December. The company anticipates operating costs will continue to decline throughout this year and next, stabilizing around $2.60 per pound by the end of 2016.
Vanadium, which is used for renewable energy purposes and the production of steel, has seen its prices decline significantly since January last year, when it traded at about $6.00 per pound and is now sitting at a five-year low of $5.00 per pound.
In response, Largo has adjusted its current pricing to $5.00 per pound, representing a $1.37 decrease in the price of vanadium since its 2013 technical report. It has also revised its medium term planning to exclude the sale of iron ore by-product from the Maracas mine's 2015 and 2016 estimates due to weak iron ore prices.
The iron ore material, which is a natural by-product of vanadium and requires no additional cost, will be stockpiled and could potentially be sold at a later date, Largo said.
The company also announced that it is in discussions to restructure or extend its debt facilities, so as to better match its current expectations for production and cash flow. The hope is to delay repayment until production is closer to "full and sustainable capacity", the vanadium miner said.
It highlighted that it continues to meet all interest payments.
Should Largo choose to move forward with its planned expansion next year, and assuming it restructures or extends its loans, it will need another C$18.2 million in capex during 2015 to 2016. The 9,634 tonnes per year phase 1 goal is expected to make up 7 percent of the global vanadium market.
Largo's Maracas Menchen mine boasts the highest grade vanadium deposit yet discovered.