Largo Inc.

Unaudited Condensed Interim Consolidated Financial Statements

For the Three Months Ended March 31, 2025 and 2024

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

Table of Contents

Largo Inc.

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

Unaudited Condensed Interim Consolidated Statements of Financial Position

Largo Inc.

Expressed in thousands / 000's of U.S. dollars and shares (except per share information)

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

Largo Inc.

Expressed in thousands / 000's of U.S. dollars and shares

Unaudited Condensed Interim Consolidated Statements of Changes in Equity

Largo Inc.

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

Unaudited Condensed Interim Consolidated Statements of Cash Flows

1) Nature of operations and going concern

Largo Inc. ("the Company") is a producer and supplier of high-quality vanadium products, which are sourced from one of the world's high-grade vanadium deposits at the Company's Maracás Menchen Mine located in Brazil. The Company is also focused on the ramp up of its ilmenite concentrate plant and the newly established joint venture, Storion Energy LLC ("Storion"). While the Company's Maracás Menchen Mine is producing vanadium products, 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 100 King Street West, Suite 1600, Toronto, Ontario, Canada M5X 1G5.

These unaudited condensed interim consolidated financial statements have been prepared on a going concern basis. The going concern basis of presentation assumes the Company will continue in operation for the foreseeable future and can realize its assets and discharge its liabilities in the normal course of business. In making the assessment that the Company is a going concern, management has taken into account all available information about the future, which is at least, but not limited to, 12 months from March 31, 2025.

The Company incurred a net loss of $9,205 for the three months ended March 31, 2025 (three months ended March 31, 2024 - $13,006) and had a working capital deficit (current assets less current liabilities) of $54,737 (December 31, 2024 - deficit of $20,972), which includes $78,365 in debt maturing within the next twelve months. The Company has experienced declining operating results and cash flows over the course of the last year as a result of declining vanadium prices and operational challenges. Since December 31, 2023, vanadium prices have declined by over 23%, which has a significant impact on the Company's cash flows. The Company has implemented changes to address underlying operating issues and announced an operational turnaround plan and additional cost optimization incentives at its Maracás Menchen Mine that the Company believes are required in order to generate positive cash flows from operating activities. There can be no assurance that these initiatives will be successful.

The Company will require additional sources of capital to repay its liabilities and fund operations. The Company is actively pursuing various alternatives to increase its liquidity and capital resources, including refinancing of its existing debt facilities and obtaining additional debt facilities, which could be provided by banks, private capital providers and/or institutional investors. There can be no assurance that the Company will be able to secure additional funding on terms acceptable to the Company, or at all, or be able to successfully implement strategic alternatives.

Due to material uncertainties surrounding future vanadium prices, the Company achieving positive cash flows from operating activities within the next twelve months if current vanadium prices persist or decline, and the Company's ability to raise additional financing to satisfy the repayment of debt maturing within the next twelve months, it is not possible to predict the success of the Company's efforts in this regard. These factors indicate the existence of material uncertainties that cast substantial doubt about the Company's ability to continue as a going concern.

These consolidated financial statements do not include the adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. These adjustments may be material.

2) Statement of compliance

These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting and should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2024. 

The unaudited condensed interim consolidated financial statements were approved by the Board of Directors of the Company on May 13, 2025.

3) Basis of preparation, material 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, 2024 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.

a) Critical judgements and estimation uncertainties

The preparation of unaudited condensed interim consolidated financial statements 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 3(d) of the Company's audited annual consolidated financial statements for the year ended December 31, 2024. There have been no significant changes to the areas of estimation and judgment during the three months ended March 31, 2025.

b) Material 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, 2024, with the exception of an additional accounting policy as included below.

Investment in associate

The Company's investment in an associate is accounted for using the equity method of accounting. An associate is an entity over which the Company has significant influence but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights.

Under the equity method, the investment is initially recognized at cost and adjusted thereafter to recognize the Company's share of the post-acquisition profits or losses of the investee in profit or loss, and its share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from the associate reduce the carrying amount of the investment.

When the Company's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses unless it has incurred obligations or made payments on behalf of the associate unless the Company is contractually required to fund these additional losses.

The carrying amount of the investment in associate is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, the carrying amount of the investment is written down to its recoverable amount.

Unrealized gains and losses resulting from transactions between the Company and its associate are eliminated to the extent of the Company's interest in the associate.

The Company's share of its associate's post-acquisition results is shown on the face of the consolidated statement of income (loss) and other comprehensive income (loss), and its share of movements in reserves is recognized directly in equity.

4) Amounts receivable

5) Inventory

During the three months ended March 31, 2025, the Company recognized a net realizable value write-down of $11,216 for vanadium finished products (three months ended March 31, 2024 - $4,185), $375 for ilmenite finished products (three months ended March 31, 2024 - reversal of $71) and a write-down reversal of $11 for warehouse materials (three months ended March 31, 2024 - $34).

6) Investment in associate

On January 31, 2025 (the "Closing date"), the Company, through its Largo Clean Energy ("LCE") subsidiary, and affiliates of Stryten Energy LLC ("Stryten") successfully closed the transaction for the establishment of Storion Energy, LLC ("Storion"). Key terms of the transaction:

• Each of LCE and Stryten contributed certain of their vanadium flow battery-related assets and liabilities to Storion;

• Stryten paid $1,000 directly to LCE and will contribute a total of $6,000 over time to Storion for the purpose of funding Storion's operations;

• LCE and Stryten each hold a 50% equity interest in Storion, with customary pre-emption rights and certain other anti-dilution protections;

• Board representation of Storion is generally proportional to ownership, with Stryten holding one additional seat so long as LCE and Stryten hold similar ownership interests; and

• Largo and Storion entered into a separate supply agreement providing Storion a right of first offer, subject to certain terms and conditions, to purchase vanadium products from Largo.

Immediately prior to the Closing Date, the Company's assets and liabilities that were previously classified as held for sale in accordance with IFRS 5 were contributed to Storion, which was 100% owned by LCE at that time. Stryten acquired a 50% interest in Storion upon contribution of the vanadium flow-battery related assets and liabilities and payment of $1,000, which occurred on the Closing Date.

The Company assessed that it no longer had control of Storion as of the Closing Date but retained significant influence. The Company is accounting for the retained investment as an investment in associate in accordance with IAS 28, Investments in Associates and Joint Ventures. In accordance with IAS 28, the fair value of the retained investment is the deemed cost of the investment in associate as at the Closing Date. A gain has been recognized in the consolidated statement of income (loss) and comprehensive income (loss), which is calculated as the difference between the Closing Date fair value of the retained investment and consideration received, and the carrying amount of the former subsidiary's net assets. The completion of the initial fair value allocation is pending the finalization of the fair value for intangible assets.

From January 31, 2025 to March 31, 2025 the Company recognized its share of the associate's loss of $842 in the consolidated statement of income (loss) and comprehensive income (loss).

7) Other intangible assets

At March 31, 2025, the remaining estimated useful life of capitalized software costs was 2.75 years (December 31, 2024 - 3 years).

8) Mine properties, plant and equipment

At March 31, 2025 and December 31, 2024, 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, a third party receives a 2% NSR in the Maracás Menchen Mine.

Of the additions noted above, $8,661 related to the Mine Properties segment (year ended December 31, 2024 − $37,028) and $nil related to the Clean Energy segment (year ended December 31, 2024 − $34).

9) Accounts payable and accrued liabilities

10) Debt

Credit facilities

In October 2022, the Company secured a debt facility of $20,000 with a bank in Brazil. Following an amendment finalized in June 2023, the facility is for three years, with the principal due for repayment at maturity. In addition to a fee of 0.80%, accrued interest at a rate of 8.51% p.a. is to be paid every six months.

In January 2023, and amended in June 2023, the Company secured a three-year debt facility of $10,000, bearing interest at 8.51% p.a. and an initial fee of 0.80%. The principal is due for repayment at maturity, with interest payments due semi-annually.

In September 2023, the Company secured a new $15,000 debt facility with a bank in Brazil and repaid in full an existing $15,000 facility. This new facility is for three years, with four equal principal repayments due semi- annually after a grace period of 540 days. Accrued interest at a rate of 8.75% p.a. is to be paid every six months.

In October 2023, the Company secured a three-year debt facility of $20,000, bearing interest at 8.95% p.a. Interest payments are due quarterly with 50% of the principal to be repaid in October 2025 and 50% to be repaid in October 2026. This new facility was used to repay in full an existing $20,000 facility.

In December 2023, the Company secured a two-year debt facility of $10,000, with the principal due for repayment at maturity. In addition to a fee of 0.85%, accrued interest at a rate of 10.45% p.a. is to be paid at maturity.

In May 2024, the Company secured a working capital debt facility with a bank in Brazil for a total limit of $8,000. Drawdowns on the facility were repayable in 90 days together with accrued interest at a rate of 8.25% p.a., with renewals subject to approval by the bank. On May 10, 2024, the Company received $7,813 from this facility and it was repaid in full in August 2024. In September 2024, the facility was amended to a total limit of R$50,000 with drawdowns repayable in 120 days together with accrued interest at a rate of 9.00% p.a.. On September 30, 2024, the Company received R$50,000 ($9,235) from this facility. In January 2025, the term was extended for a further 120 days with no change in the interest rate.

In May 2024, a further working capital debt facility with a term of 60 days was secured with another bank in Brazil for a total limit of $2,000 and an interest rate of 8.65% p.a. The Company received $1,914 from this facility in May 2024 and it was repaid in full in July 2024. In August 2024, the Company received $1,799 from this facility and it was repaid in full in October 2024.

On June 25, 2024, the Company signed an inventory financing agreement for up to $10,000. Under the terms of this facility, which has a term until December 31, 2025 for the receipt of funds and a further four months for the repayment of amounts received, the Company can use its vanadium finished products inventory to secure drawdowns of up to $10,000 for a maximum period of 100 days. Amounts repaid include a commission fee of 1%, interest at a rate of the one month U.S. Secured Overnight Financing Rate ("SOFR") plus 3.0% and other direct costs. The Company began drawing down on this facility in July 2024.

On July 5, 2024, the Company signed an additional inventory financing agreement for up to $10,000. Under the terms of this facility, which has a term until June 30, 2026, the Company can use its vanadium finished products inventory to secure drawdowns of up to $10,000 for a maximum period of 90 days. Amounts repaid include a commission fee of 1%, interest costs and other direct costs. The Company began drawing down on this facility in July 2024. 

The Company received cash proceeds of $13,893 and made repayments of $14,058 in relation to the two inventory financing agreements above during Q1 2025.

11) Issued capital

a) Authorized

Unlimited common shares without par value.

b) Issued

12) Equity reserves

During the three months ended March 31, 2025, the Company recognized a net share-based payment expense related to the vesting and forfeiture of stock options and RSUs granted to the Company's directors, officers, employees and consultants of $110 (three months ended March 31, 2024 - expense recovery of $290). The total share-based payment amount was charged to operations.

1. Value includes amounts relating to all outstanding grants.

a. Stock options

The remaining weighted average contractual life of options outstanding at March 31, 2025 was 3.8 years (December 31, 2024 - 3.8 years). 

During the three months ended March 31, 2025, the Company granted nil (year ended December 31, 2024 - 1,618) stock options.

b. Warrants

13) Earnings (loss) per share

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 2,170 for the three months ended March 31, 2025 (three months ended March 31, 2024 - 1,315).

14) Taxes

a) Tax recovery

b) Changes in deferred tax assets and liabilities

15) 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. Their remuneration was as follows:

Refer to note 17 for additional commitments with management.

16) Segmented disclosure

The Company has six operating segments: sales & trading, mine properties, corporate, exploration and evaluation properties ("E&E properties") (included as part of inter-segment transactions & other), clean energy and Largo Physical Vanadium. 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. 

1. Amounts relating to Largo Titânio Ltda. and Largo Tech Ltda., which are not part of an operating segment.

2. Amount relating to E&E properties.

3. Inter-segment transaction elimination of $10,991 partially offset by Largo Titânio Ltda. and Largo Tech Ltda. total assets of $5,396 and E&E properties total assets of $3.

4. Inter-segment transaction elimination of $13,038 partially offset by Largo Titânio Ltda. and Largo Tech Ltda. total liabilities of $106 and E&E properties total liabilities of $nil.

1. Amounts relating to Largo Titânio Ltda. and Largo Tech Ltda., which are not part of an operating segment.

2. Amount relating to E&E properties.

3. Inter-segment transaction elimination of $(17,222) partially offset by Largo Titânio Ltda. and Largo Tech Ltda. total assets of $5,007 and E&E properties total assets of $4.

4. Inter-segment transaction elimination of $(23,356) partially offset by Largo Titânio Ltda. and Largo Tech Ltda. total liabilities of $101.

17) Commitments and contingencies

At March 31, 2025, the Company was party to certain management and consulting contracts. Minimum commitments under the agreements are approximately $983 and all payable within one year. These contracts also require that additional payments of up to approximately $1,304 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. 

In 2021, the Company signed a 10-year exclusive off-take agreement with a third party for the purchase of all standard and high purity grade vanadium products the third party produces. The first delivery occurred in December 2023 and the Company is committed to the purchase of 454 tonnes of V2O5 the third party produces in 2025, with the Company having a right of first refusal over additional amounts.

The Company's Largo Clean Energy business is required to pay a royalty of $120 per kilowatt capacity of a licensed product until such time as the licensed patents expire or are abandoned, and $60 per kilowatt thereafter. Refer to note 8 for details of the royalties payable at the Maracás Menchen Mine.

The Company is committed to a minimum amount of rental payments under four leases of office space which expire between May 31, 2025 and May 1, 2027. Minimum rental commitments remaining under the leases are approximately $84, including $48 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, 2025 of $3,985. At Largo Clean Energy this is $63.

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. During the year ended December 31, 2022, the Company received a ruling regarding one such proceeding in Brazil. This relates to a supply agreement for the Maracás Menchen Mine which was filed with the courts in October 2014. The ruling requires the Company to pay amounts due, plus interest and legal fees. Following a further ruling in late 2024 from a higher court in Brazil regarding interest and other payment terms, at March 31, 2025, the Company recognized a provision of R$18,174 ($3,165) in the current portion of provisions (December 31, 2024 - $2,593). At March 31, 2025, the Company recognized a total provision of $3,653 for legal proceedings (December 31, 2024 - $3,060), including a provision of $488 (December 31, 2024 - $466) for labour matters.

The outcome of these proceedings remains dependent on the final judgment. 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.

18) Financial instruments

Financial assets and financial liabilities at March 31, 2025 and December 31, 2024 were as follows:

Restricted cash refers to cash amounts the Company was required to place on deposit. 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. 

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 trade receivables, amounts receivable and accounts payable and accrued liabilities in the unaudited condensed interim consolidated statements of financial position approximate fair values because of the limited term of these instruments. Cash and restricted cash are classified as FVTPL and included in level 1. The debt facilities, excluding the inventory financing facilities, are predominantly classified as current liabilities, were secured at interest rates consistent with the rates seen at March 31, 2025 and without any debt issuance costs and thus the carrying amount approximates fair value. Drawdowns on the inventory financing facilities are for a maximum of 100 days and therefore, their carrying amount approximates fair value because of this limited term.

There have been no changes in the classification of financial instruments in the fair value hierarchy since December 31, 2024. 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 maximum amount of credit risk is attributable to cash, restricted 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, the U.S. 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 $14,005, $1,648 relates to customers in Brazil, which are not covered by the Company's credit insurance policies. The ratings for these companies range from AA to AAA. 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, 2025, no amounts are past due and in the three months ended March 31, 2025, the Company has not experienced any credit losses. At March 31, 2025, the loss allowance for trade receivables was determined to be $nil (December 31, 2024 - $nil). 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, 2025 for its financial liabilities with agreed repayment periods.

The Company's principal sources of liquidity are its cash flows from operating activities and cash of $8,445 (December 31, 2024 - $22,106). Refer to note 17 for other commitments and contingencies and to note 1, nature of operations and going concern.

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, 2025, the Company's two inventory financing facilities were the only debt that is subject to floating interest rates. At March 31, 2025, the total outstanding balance on these two inventory financing facilities was $7,880, with interest rates at March 31, 2025 of 7.33% and 7.45% p.a. Drawdowns on these facilities are for a maximum period of 100 days and accordingly, any interest rate variations would not have a significant impact.

Foreign currency risk

At March 31, 2025, the Company's outstanding debt is 90% denominated in U.S. dollars and 10% denominated in Brazilian reals (December 31, 2024 - 90% denominated in U.S. dollars and 10% denominated in Brazilian reals).

The impact of fluctuations in foreign currency on cash and debt relates primarily to fluctuations between the U.S. dollar, the Canadian dollar, the Brazilian real and the Euro. At March 31, 2025, 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, 2025 by approximately $19. 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 $14 and would affect the value of Brazilian real debt balances by approximately $440. A 5% change in the value of the Brazilian real relative to the U.S. dollar would affect the value of U.S. dollar denominated debt balances by $3,750.

Price risk

The Company does not have any financial instruments with significant exposure to price risk. 

19) Revenues

In the three months ended March 31, 2025, the Company's revenues were from transactions with multiple customers, including two customers who each represented more than 10% of revenues. Revenues with these customers in Q1 2025 were $4,193 and $3,547 (all included in the Sales & trading segment).

In the three months ended March 31, 2024, the Company's revenues include transactions with two customers who each represented more than 10% of revenues. Total revenues with each of these two customers were $12,360 (included in the Sales & trading segment) and $4,751 (included across both the Sales & trading and Mine properties segments) in the three months ended March 31, 2024.

At December 31, 2024, in connection with a sales contract that is accounted for as a sale with a right of return, the Company recognized a refund liability, revenues subject to refund, for $13,638 and a right to recover goods asset, inventory subject to return, of $12,804. The likelihood of the repurchase option (the right of return) being elected is dependent on the market price of V2O5, which is subject to market uncertainty outside of the Company's control. It was concluded that it was not highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. There has been no change to this assessment at March 31, 2025.

20) Expenses

21) Subsequent events

Debt

Subsequent to March 31, 2025, the Company extended the term of its R$50,000 working capital facility (note 10)for a further 120 days with no change in the interest rate. In addition, the Company extended the due date of the first principal payment on its September 2023 facility (note 10) from May until August 2025.

Receivables factoring

Subsequent to March 31, 2025, the Company signed a letter of intent for a revolving credit facility of up to $10,000 for the factoring of approved receivables. Under the terms of this agreement, the lender is entitled to a hold-back of $1,000, which can be settled through applying a hold-back equal to 10% of the factored invoices. In addition, the lender will receive a monthly custodial fee equal to 0.50% of the outstanding factored invoices. Subject to lender approval, the facility limit may increase based on performance and approved receivables. Any loan or other extension of credit granted is subject to the successful completion of due diligence procedures and definitive loan documents and the lender reserves the right to approve or deny the loan in its sole discretion

Management's Discussion and Analysis

For The Three Months Ended March 31, 2025

Table of contents

To Our Shareholders

The following Management's Discussion and Analysis ("MD&A") relates to the financial condition and results of operations of Largo Inc. ("we", "our", "us", "Largo", or the "Company") for the quarter ended March 31, 2025 ("Q1 2025") and should be read in conjunction with (i) the unaudited condensed interim consolidated financial statements and related notes for the same period, (ii) the audited annual consolidated financial statements and related notes for the year ended December 31, 2024 and (iii) the MD&A for the year ended December 31, 2024. Note references in the following discussion refer to the note disclosures contained in the Q1 2025 unaudited condensed interim consolidated financial statements. References in the following discussion to "Q1 2024" refer to the quarter ended March 31, 2024.

The unaudited condensed interim consolidated financial statements and related notes of Largo have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting. Certain non-GAAP measures are discussed in this MD&A, which are clearly disclosed as such. Additional information about the Company has been filed electronically through SEDAR+ and is available online under the Company's profile at www.sedarplus.ca and www.sec.gov.

This MD&A reports the Company's activities through May 13, 2025, unless otherwise indicated. References to "the date of this MD&A" mean May 13, 2025. Except as otherwise set out herein, all amounts expressed herein are in thousands of U.S. dollars, denominated by "$". The Company's shares, options, units and warrants are expressed in thousands. Prices are not expressed in thousands. References to the symbol "C$" mean the Canadian dollar and references to the symbol "R$" mean the Brazilian real.

Mr. Emerson Ricardo Re, MSc, MBA, MAusIMM (CP) (No. 305892), Registered Member (No. 0138) (Chilean Mining Commission), is a Qualified Person as defined under National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and has reviewed and approved the technical information in this MD&A.

The Company

Largo is a Canadian based company that is one of the world's leading high-quality vanadium suppliers with its VPURE® and VPURE+® products, which are sourced from the Company's Maracás Menchen Mine in Brazil. As one of the world's largest primary vanadium producers, Largo produces critical materials that empower global industries, including steel, aerospace, defence, chemical and energy storage sectors. Largo is also strategically invested in the long-duration energy storage sector through its 50% ownership of Storion Energy, a venture with Stryten Energy that is initially focused on scalable domestic electrolyte production for utility-scale vanadium flow battery long-duration energy storage solutions in the U.S.

The Company is organized and exists under the Business Corporations Act (Ontario) and its common shares are listed on the Toronto Stock Exchange under the symbol "LGO" and on the Nasdaq Stock Market under the symbol "LGO".

Q1 2025 Highlights

• The Company recorded a net loss before tax of $11,821 for Q1 2025 (Q1 2024 - $18,313) and a net loss of $9,205 (Q1 2024 - $13,006).

• The Company's Maracás Menchen Mine produced 1,297 tonnes of vanadium pentoxide ("V2O5") equivalent in Q1 2025. The Company had sales of 2,066 tonnes of V2O5 equivalent (including 158 tonnes of purchased products).

• In Q1 2025, the Company extended the term of its R$50,000 facility for a further 120 days with no change in the interest rate.

• On January 31, 2025 (the "Closing Date"), the Company and affiliates of Stryten Energy LLC ("Stryten") closed the previously disclosed transaction to establish Storion Energy LLC ("Storion").

Significant Events and Transactions Subsequent to Q1 2025

• In May 2025, the Company extended the term of its R$50,000 working capital facility (note 10) for a further 120 days with no change in the interest rate. In addition, the Company extended the due date of the first principal payment on its September 2023 facility (note 10) from May until August 2025.

• Subsequent to March 31, 2025, the Company signed a letter of intent for a revolving credit facility of up to $10,000 for the factoring of approved receivables. Under the terms of this agreement, the lender is entitled to a hold-back of $1,000, which can be settled through applying a hold-back equal to 10% of the factored invoices. In addition, the lender will receive a monthly custodial fee equal to 0.50% of the outstanding factored invoices. Subject to lender approval, the facility limit may increase based on performance and approved receivables. Any loan or other extension of credit granted is subject to the successful completion of due diligence procedures and definitive loan documents and the lender reserves the right to approve or deny the loan in its sole discretion.

Q1 2025 Summary

Financial

1. Adjusted EBITDA and Mining Operations Adjusted EBITDA are each a non-GAAP financial measure with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-GAAP Measures" section of this MD&A.

The movements in the discussion below refer to those shown in the previous table. 

• The Company recorded a net loss of $9,205 in Q1 2025, compared with a net loss of $13,006 in Q1 2024. This movement was primarily due to the gain on disposal of interest in subsidiary of $5,179, a 736% increase in foreign exchange gain, a 15% decrease in operating costs, an 18% decrease in professional, consulting and management fees and an 82% decrease in technology start-up costs, partially offset by a 33% decrease in revenues and a 19% increase in finance costs and the share of net loss from investment in associate of $842 .

Commercial

• In Q1 2025, the Company sold 2,066 tonnes of V2O5 equivalent (Q1 2024 - 2,765 tonnes), including 158 tonnes of purchased products (Q1 2024 - 156 tonnes). Produced V2O5 equivalent pounds sold decreased, with 4,206 (000s lb) sold in Q1 2025, as compared with 5,753 (000s lb) in Q1 2024.

• In Q1 2025, the Company also sold 8,647 tonnes of ilmenite (Q1 2024 - 513 tonnes).

• The Company delivered both standard grade and high purity V2O5, as well as vanadium trioxide ("V2O3") and ferrovanadium ("FeV") to customers globally.

• The average benchmark prices per lb of V2O5 in Europe and the average benchmark prices per kg of FeV in Europe were as follows:

• U.S. FeV pricing has experienced recent improvements, with prices rising 9% since the start of 2025, primarily driven by buying interest amid recent geopolitical developments and policy shifts impacting supply dynamics.

• Vanadium prices continued to face downward pressure in European and Chinese markets, primarily driven by reduced demand from the steel and infrastructure sectors and persistent oversupply from Chinese and Russian producers. The aerospace sector is projected to see increased demand, particularly in the second half of 2025.

• In 2021, the Company signed a 10-year exclusive off-take agreement with a third party for the purchase of all standard and high purity grade vanadium products they produce. The Company is committed to the purchase of 454 tonnes of V2O5 they produce in 2025.

• In connection with the closing of the Storion transaction, the Company amended its Safekeeping and Supply Agreements with Largo Physical Vanadium Corp. ("LPV") and assigned its Safekeeping Agreement to Storion; the Company and Storion have also entered into a separate supply agreement, granting Storion a right of first offer for vanadium products.

• Subsequent to Q1 2025, sales in April 2025 were 608 tonnes of V2O5 equivalent and 1,914 tonnes of ilmenite.

• During Q1 2025, the Company recognized revenues from vanadium sales of $27,497 (Q1 2024 - $42,118) from sales of 2,066 tonnes of V2O5 equivalent (Q1 2024 - 2,765 tonnes) and revenues from ilmenite sales of $738 (Q1 2024 - $69). Of the total revenues, $23,516 is related to the Sales & trading segment, $3,898 is related to the Mine properties segment and $821 is related to the Corporate segment (after the elimination of inter-segment transactions).

1. V2O5 revenues per pound of V2O5 sold, V2O3 revenues per pound of V2O3 sold, FeV revenues per kg of FeV sold and revenues per pound sold are non-GAAP ratios with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non- GAAP Measures" section of this MD&A.

2. Calculated based on the quantity sold during the stated period.

Costs

• Operating costs of $42,477 in Q1 2025 (Q1 2024 - $49,707) include direct mine and production costs of $15,593 (Q1 2024 - $29,939), conversion costs of $2,991 (Q1 2024 - $2,023), product acquisition costs of $2,357 (Q1 2024 - $2,050), royalties of $1,072 (Q1 2024 - $1,673), distribution costs of $1,577 (Q1 2024 - $1,818), vanadium materials write-down of $11,216 (Q1 2024 - $4,185)and warehouse materials write-down reversal of $11 (Q1 2024 - $34), depreciation and amortization of $5,462 (Q1 2024 - $8,077), ilmenite costs and write-down of $2,220 (Q1 2024 - $47).

• The decrease seen in direct mine and production costs in Q1 2025 as compared with Q1 2024 reflects the 25% decrease in vanadium sold, as well as the impact of the Company's previously announced initiatives to reduce production costs and improve productivity and the impact of inventory write-downs in the current and prior periods. The inventory write-down in Q1 2025 includes a write-down of produced vanadium finished products of $11,206 and a write-down reversal of warehouse materials of $11. Of the total operating costs, $21,555 is related to the Sales & trading segment, $19,899 is related to the Mine properties segment and $1,023 is related to the Corporate segment (after the elimination of inter-segment transactions).

• Vanadium unit costs:

1. Cash operating costs per pound, cash operating costs excluding royalties per pound and adjusted cash operating costs excluding royalties per pound are non-GAAP ratios with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-GAAP Measures" section of this MD&A.

• Cash operating costs excluding royalties per pound1 were $6.54 per lb in Q1 2025, compared with $6.12 for Q1 2024. The increase seen in Q1 2025 compared with Q1 2024 is largely due to lower sales volumes in Q1 2025 and a write-down of produced vanadium products of $11,206 (Q1 2024 - $4,526). Mining in lower grade ore zones also impacted the financial performance. Additionally, lower ore mined resulted in stoppages at the kiln and plant which also contributed to increased costs in Q1 2025. The Company has implemented a number of initiatives as part of its operational turnaround plan with the goal of reducing production costs and improving productivity. This includes prioritizing critical mine stripping activities and pushbacks at the Maracás Menchen Mine, these are essential steps for accessing higher-grade ore zones required for steady production in the second half of the year. Produced V2O5 equivalent sold decreased as compared with Q1 2024, with 4,206 (000s lb) sold in Q1 2025, as compared with 5,753 (000s lb) sold in Q1 2024.

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1 The cash operating costs per pound and cash operating costs excluding royalties per pound reported are on a non-GAAP basis. Refer to the "Non-GAAP Measures" section of this MDA.

• Professional, consulting and management fees in Q1 2025 decreased from Q1 2024 by 18%. The decrease is primarily due to reduced activity and headcount at LCE and lower insurance costs at Corporate. Of the total professional, consulting and management fee expense in Q1 2025, $544 related to the Sales & trading segment (Q1 2024 - $420), $535 related to the Mine properties segment (Q1 2024 -$462), $1,405 related to Corporate (Q1 2024 - $1,862), $735 related to Largo Clean Energy (Q1 2024 - $1,322) and $257 related to Largo Physical Vanadium (Q1 2024 - $146).

• Other general and administrative expenses in Q1 2025 decreased from Q1 2024 by 37%. The decrease is primarily attributable to the reduced headcount and activity at LCE. Of the total other general and administrative expenses in Q1 2025, $86 related to the Sales & trading segment (Q1 2024 - $177), $526 related to the Mine properties segment (Q1 2024 - $770), $829 related to Corporate (Q1 2024 -$619), $79 related to Largo Clean Energy (Q1 2024 - $859) and $42 related to Largo Physical Vanadium (Q1 2024 - $45).

• Share-based payments in Q1 2025 decreased by 62% from Q1 2024. The decrease was attributable to the Q1 2024 reversal of share-based payment expenditures on forfeited unvested stock options and restricted share units. The total in Q1 2025 was related to the Corporate segment (Q1 2024 - $290).

• Finance costs in Q1 2025 increased from Q1 2024 by 19% (or $339), which is primarily attributable to the increased level of borrowings in Q1 2025 as compared with Q1 2024.

• Technology start-up costs in Q1 2025 decreased from Q1 2024 by 82%. This is primarily attributable to a decrease in activities at LCE in Q1 2025 as the installation of its battery project nears conclusion.

• Share of net loss from investment in associate in Q1 2025 was $842. This is attributable to LCE's investment in Storion following the closing of the transaction.

• Comprehensive loss for Q1 2025 decreased from Q1 2024 by 95% after a decrease in the unrealized gain on foreign currency translation of 244%. The unrealized gain on foreign currency translation in Q1 2025 is primarily due to a weakening of the Brazilian real against the U.S. dollar by approximately 15% since March 31, 2024.

Non-recurring Items

• During Q1 2025, the Company recognized a net realizable value write-down of $11,216 for vanadium finished products (Q1 2024 - $4,185), a net realizable value write-down of $375 for ilmenite finished products (Q1 2024 - write-down reversal of $71) a net realizable value write-down reversal of $11 for warehouse materials (Q1 2024 - write-down reversal of $34). The total inventory write-down of $11,580 (Q1 2024 - $4,080) is included in operating costs (note 20).

• During Q1 2025, the Company recognized a write-down of vanadium assets of $267 (Q1 2024 - write-down reversal of $114).

• During Q1 2025, the Company recognized an increase in provisions in other general and administrative expenses of $347 (Q1 2024 - $491).

• During Q1 2025, the Company recognized a gain on disposal of interest in subsidiary of $5,179. Refer to note 6.

Cash Flows

• In Q1 2025, cash used in operating activities was $5,612, compared with cash provided by operating activities of $14,826 in Q1 2024. This movement is primarily due to a net decrease in working capital items of $19,214 and an increase in cash provided before working capital items of $1,224. The net movement in working capital items is largely driven by movements in amounts receivable and inventory.

• Cash used in financing activities in Q1 2025 was $1,330, compared with cash used in financing activities in Q1 2024 of $1,375. 

• Cash used in investing activities in Q1 2025 of $7,685 is a decrease from the $10,196 seen in Q1 2024. This is primarily due to cash proceeds received in connection with the closing of the Storion transaction in Q1 2025 (refer to note 6) and a decrease in capital expenditure at the Maracás Menchen Mine.

• The net change in cash in Q1 2025 was a decrease of $13,661, compared with an increase of $2,942 in Q1 2024.

Net income reconciliation

1. Conversion of tonnes to pounds, 1 tonne = 2,204.62 pounds or lbs.

2. Revenues per pound sold is a non-GAAP ratio with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-GAAP Measures" section of this MD&A.

3. Cash operating costs per pound is a non-GAAP ratio with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-GAAP Measures" section of this MD&A.