Good day. My name is Joanna, and I will be your conference operator today. I would like today. I would like to welcome everyone to the Largo Resources Second Quarter 2020 Financial Results Conference Call. [Operator Instructions] Let me now turn the call over to Mr. Alex Guthrie, who will begin your conference. Please go ahead.

Thank you, operator, and welcome, everyone to Largo Resources Q2 2020 Financial Results Conference Call. Today's call is being recorded, and a replay will be available starting tomorrow within the Investor Relations section of our website at largoresources.com. Our Q2 2020 results press release, MD&A and financial statements are also all available on the company's website and on SEDAR. Some of the information you will hear during today's discussion will consist of forward-looking statements, including without limitation those regarding future business outlook. In addition, non-IFRS financial measures, such as cash operating costs and cash operating costs excluding royalties, total cash costs and revenues per pound sold will also be discussed during this call. Actual results could differ materially from those anticipated and risk factors that could affect results are detailed in the company's AIF and other public filings, which are available on SEDAR and on the company's website. Further information regarding Largo's use of non-IFRS measures is also available in our Q2 2020 results press release and in the company's latest MD&A, which are available on the company's website. Financial amounts presented today will be in U.S. dollars, except as noted otherwise. Market and dollars, except as noted otherwise. Market and industry data contained and incorporated by reference during this call concerning economic and industry trends is based upon good faith estimates of our management or derived from information provided by industry sources. Largo believes that such market and industry data is accurate and the sources from which has maintained are reliable. However, we cannot guarantee the accuracy of such information, and we have not independently verified the assumptions upon which projections of future trends are based. Speaking first will be Largo's; President and CEO, Paulo Misk, who will provide highlights from the second quarter 2020 results, followed by Largo's; CFO, Ernest Cleave, who will then provide some additional detail on the company's Q2 2020 financial performance. Following Ernest, Largo's Director of Sales & Trading, Mr. Paul Vollant will provide an update on our sales and trading progress, as well as the vanadium market. Finally, we'll open the call to questions. I will now turn the call I will now turn the call over to Paulo for opening remarks.

Thank you, Alex, and welcome everyone to our quarterly update conference call. I'd like to begin the call today by thanking all the frontline workers that help keep us all healthy and safe during the global COVID pandemic. We would also like to thank our entire workforce and all of our contractors whose commitment and tenancy help to continue our operations in a safe and responsible manner during this uncertainty time. Our thoughts continue to go out to all those affected by this virus. At Largo, we continue to prioritize the health and safety to our workers, understand our support to our local communities. In addition to our ongoing preventive measures, such as additional safe protocols, travel restrictions, helps screening and increased EGN measures. Largo has also assisted local business in producing over 230,000 masks to aide the fight against the spread of the COVID-19 in Maracás region. Going forward, we will continue do our part to help stop the spread of COVID-19 and help the effects caused by the virus. Operation at Maracás Menchen Mine continued during Q2 2020 and the company produced 2,562 tonnes of V2O5, representing an increase of 2% over Q2 2019. Operations performed exceptionally well in May and June with 1,062 tonnes and 1,032 tonnes of V2O5 produced, respectively. I am very encouraged by the support and dedication shown by our entire team during these challenging times, while at the same time, achieving above mining plate capacity operation targets. The Q2 2020 global recovery of 20.8% was higher than both Q2 2019 of 79.1% and the budget, with a strong recovery levels seen in both the kiln and leaching areas of the plant. This represents the second consecutive quarter of strong global recovery in 2020. In Q2 2020, we also announced the company's planned upgrades…

Thanks Paulo and thanks to everyone for joining the call today. As Paulo previously mentioned, the company exited Q2 2020 with a strong financial position and softer balance sheet. The company's cash balance at June 30, 2020 was $78.2 such and it's total debt was $24.8 million. As expected, due to lower recognized sales during the quarter, the company generated revenues of $8.4 million from sales of 1,018 tonnes of V2O5 equivalent. This compares to revenues of $22 million in Q2 2019 from V2O5 sales of 2,480 tonnes. The expected low volume of sales in May and June was due to the company's sales now typically being recognized at the time of delivery, which could take a few months from the time of shipment from Brazil. The company recorded a net loss of $7 million in Q2 2020, following the recognition of a deferred income tax expense of $1.5 million. This compares to a net loss of $15.3 million in Q2 2019 and is primarily due to a decrease in operating and finance costs, but was partially offset by a decrease in revenues and interest income and an increase in foreign exchange loss. The company's trade payables balance with its former offtake partner at June 30, 2020 was $2.4 million. The decrease is primarily attributable to our goal the payment made of approximately $57.4 million during Q2 2020 and the balance of June 30, 2020 is attributable to the re-measurement of trade receivables or payables for V2O5 sold in the period to April 30, 2020. The company anticipates that the final re-measurement of trade receivables payables resulting from its recently terminated offtake agreement will negatively impact agreement will negatively impact future periods by an aggregate of approximately $0.3 million. On the cost front, operating costs for Q2 2020 were $9.6…

Thanks, Ernest, and thanks, everyone, for joining the call today. As Paulo previously mentioned, we are very pleased to report that the company's progress against its sales and trading strategy is in line with the company's expectations. We continue to maintain our sales guidance of 9,500 to 10,000 tonnes of V2O5 for 2020. The company has committed a majority of its production between July and December 2020. The balance is targeted towards the spot market, which we expect to be particularly active in the remainder of the year. We remain confident that our sales and trading division will continue to add significant long-term value for the company going forward. We completed our first independent vanadium shipment from Brazil on May 14, 2020, to a customer in the U.S. And since then, the company has delivered VPURE, VPURE+ as well as ferrovanadium powered by VPURE to customers in Brazil, North America, Europe and Asia. Our logistics operation have experienced some delays related to COVID-19, both inside and outside of Brazil. However, we’ve been able to fulfill all our commercial commitments, thanks to careful planning, swift responsiveness and close relationship with our customers. Although, we have seen impact from COVID-19 on the demand for vanadium from aerospace industry, the market has also been supported by strong demand from the Chinese crude sector, which currently accounts for approximately 50% of the global vanadium demand. During Q2 2020, the domestic Chinese V2O5 price increased by approximately 15% to an average of $6.95 per pound. On the demand side, Chinese crude steel production was up 3% year-over-year in the first half of 2020 and Chinese V2O5 consumption was up 4.5% over the same period. Chinese V2O5 imports were more than 2,000 tonnes in the first half of 2020, with export dropping off significant in June. The new flexibility associated with our commercial independence enable Largo to take advantage of such opportunities. In Europe, the average price decreased by 5%, ending Q2, 2020 at $5.3 per pound of V2O5, compared with approximately $5.58 at the end of Q1, 2020. More recently, the European ferrovanadium price climbed to an average of $24.25 per kilo V, it's higher price since June. We also anticipate that increased export to China have left vanadium inventory in Europe at very low levels and will support price appreciation. Looking ahead, our view in the medium and long-term regarding vanadium demand and price remained positive as infrastructure spending in China and other emerging market increase. We continue to prioritize increasing our customer portfolio, particularly following the completion of our vanadium trioxide plant next year. As the preferred producer and supplier of high purity vanadium, our focus remains on capturing high-value sales when demand returns to normalized level. With that, we will now open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Heiko Ihle from H.C. Wainwright. Please go ahead.

Hey, guys, thanks for taking my questions. It's nice to see the company performing with the overhang that we've had for a couple of years. Given all the issues that you see in regards to Brazil with COVID on the news, can you just clarify for us how many people are actually physically at site right now? And building on that, I assume getting PPE hasn't been an issue. But I mean, when you do your applying kiln upgrades and cooler maintenance in Q4, how many people do you think you lead aside at that given point in time? And do you guys think there might be any issues with that?

Okay. Thank you very much, Heiko, for your questions, and thank you questions, and thank you for your support over these years. The COVID situation in Brazil, when you look at numbers of cases or death, it's really impressive. And it's -- all the media show those numbers with a very big nodes and everything. But in fact, when we look at the number per million of that population, Brazil is in the 11th position, much lower than U.S. or United Kingdom or Spain or Italy. So our situation in Brazil, it's not sold yet. We are in a different stage of the curve and -- but I could tell you that the situation in Brazil is not -- now tends to decrease. The situation tends to improve, and the number of cases tend to decrease. And Brazil is taking seriously all the protocols of safe and healthy. When I – when I look at the situation in by year, it by year one of the lowest deaths per million in Brazil. We have 27 states. It's ranking is 22nd. So it's not a critical issue. And we – all the measures and actions that we – that Largo has done in Maracás helped a lot to the community to behave with this. I mentioned that this 230,000 masks that we help them to produce. We donate all the materials and the ladies has stitched and get revenue for their production. So we just donate those masks to population to Maracás and its region. Just have in mind, Maracás has 22,000 people. We produce more than 10x the number of the population. So we could distribute in region as well. But beyond that, we also have distributed -- food basket. We provide the municipality hospital, ventilators. We donated the test for COVID more than 5 -- 16,500 tests for COVID. So we are supporting them as much as possible. When you look at our company, we have already 27 cases of COVID, just 5 is active. All other 22 was cured. And none of them have a severe situation. Just a light symptoms, and we are taking all the -- taking care of them, give all the systems necessary. So I'm very confident that situation is under control. We are doing everything it's possible to do. And just was that noticed only one case, the contamination occur inside our sites. Of course, with someone else that not employee that came with that contaminated already. But we are really taking care of our people because that's our priority. You talk about the kill. The kill will be necessary because we're going to do some other maintenance at the same time. It be about 200 people going to the sites. So...

200?

200, 200 among contractors and all the people that's going to work; of course, not for the kiln and cooler. But we use that time for do some other maintenance. And it was not convenient to bring that such high number of people into the site and get the risk of increase the contamination in our site in Maracás. So we are postponing for Q4 that we expect to have all the situation much more easy and under control.

Okay. Moving on to something completely different, looking at your recovery rates, you came in just below 81%, which was meaningfully above our model. What have you seen in Q3 thus far? And how much do you think we can model out these higher recovery rates in the longer term?

Heiko, it's -- this 80%, 8.1 -- 80.8%. It's a very sustainable way. We are improving.

It's very sustainable asset, you said?

Yes. Yes. We -- it's a main. You see -- we didn't stop the queue, and we are keep producing more than 1,000 tonnes. If you look at May, July -- June and July, July, we did a disclosure, but was the best of the three months as we are producing more than 1,000. And the main reason is because we improved the recovery mainly in the kiln and leaching. So we are doing all everything internally to get a better performance. And if you can model this number, at 8.8%, it's really feasible, and I believe that we can do even more.

Perfect. Thank you guys very much, and stay safe.

Thank you, Heiko.

Thank you. The next question is from Andrew Wong from RBC Capital Markets. Please go ahead.

Just -- I wanted to start with a couple of questions regarding the COVID situation. So in the quarter mined ore was down partly because of the reduce contractors. Can you quantify the impact on production versus what happened from like the impact from the rainy season? And then have those numbers returned to normal on the contractors, and if they will stay at reduced levels, what does that do for your production going forward? And just in relation to logistics, in the press release you say there's not much impact, or at least, you don't think there should be. I mean you maintain guidance for now, but there are some risks, can you quantify that like what the impact could be likely, very unlikely? And what would happen would you have to enter the market to meet delivery commitments, or logistical issues? Thank you.

Thank you, Andrew. Regarding the mining operation, and mainly the contractor, the mining markups, we need to adjust the shapes and the way we work. So in about two weeks, we had a reduction of this capacity of mining, but we have not just established this capacity, but we have already increase -- we have more excavators and more people to the mining area. And we increase the capacity of mine directly, because we are prepared already to reach 1,100 pounds per month of V2O5. Regarding logistic, we have very few gauges, not as raw material can meet, but with some difficulty of this ship to deliver V2O5, but it was very few cases, and I prefer that equivalent keep more details regarding this. Oh, please.

Thanks. Hi, Andrew. Regarding logistics, we, as discussed before experienced some delays inside and outside of Brazil. All these delays, were managed by the company and we were -- big thanks to our careful planning and responsiveness, we've been able to deliver all of the products according to plan to customers. And the good news is that over the past two weeks, we had not a single delay. So it seems that so far the situation are slightly improved and we do not expect that we should revise guidance on the -- on sale due to logistics issues. So it is -- t wasn't an affect but it seems that the situation is improving.

Okay. And for those few cases that there were some issues, did you have to go to the market to buy product? And how does that work and how does that show up on the cost side?

No, we did not have to go to the market and buy product. In all these instances, we've been able to closely communicate with our customers who've understood and accepted small delays.

Okay. That's great. And then just on the upgrade and nameplate capacity, I'm just kind of curious also the Q4 upgrade, nameplate is supposed to be around 1100 tons per month or about 13,000 tons annually, if that was all nameplate. But obviously there's, you know, being some months where you're above nameplate, there are some months where you have extended maintenance downtime, the recoveries have been really good. So there's the pluses and minuses. So I'm kind of curious, like what's a normalized kind of annual production that we should expect?

Andrew, we -- the production catering according to our guidance is 12,000 tons. That's our target. Very confident that's going to achieve that number. And of course, for next year, we expect 1100 per month which is 13,200 a year. And as usual, we have been producing more than nameplate capacity, but what -- we're not going to compromise with those numbers. So 13.2 is a good number for 2021.

But that's nameplate, right? And there are some months where you might have downtime. Sometimes you have to do maintenance on the account that kind of stuff but, is that – is it reasonable to assume that everything operates at or above nameplate every month?

For December, we don't expect you have any reduction production, because you have material on the pipeline. I mean, as a -- fragment solution enough to keep producing B205. When you talk to one drop expect to have any refractory replacement, because we are going to do in 2020, and we can consider one shutdown for 15 days each two years. So for 2022, you can deduct 15 days in that forecast.

Okay, great. Thank you.

Thank you, Andrew.

Thank you. The next question comes from Lee Cooperman from Omega Family Office. Please go ahead.

Thank you. First, let me congratulate you and your performance in a difficult environment. Very nice to see, and I wish that as many employees as possible stay healthy and safe and for everybody and management as well. I have two questions basically, if you take the guidance you provide for production, sales and costs, would you expect to generate cash over the balance of the year next six months, with the 78.2 million go up in cash? Question number one.

Paulo let me take that?

Yes, please, Ernest. And thank you, Lee for your question.

Lee and yes, thanks for the sentiments and appreciate it. In terms of delivering cash let me split it into two components, so on the, on the margin or operating side, you know just extrapolating out at $5.50 which we're sort of using fairly conservatively for the second half of the year, we generate a margin of about $20 million. However, the remaining CapEx to go between sustaining CapEx to the V2O3 plants, carryover CapEx and the capitalized stripping is negative $20 million. So we're looking to, essentially, from a cash perspective, be flat for the second half of the year.

But you have more capacity at the end of the year than you have now after the...

Yes. Yes.

Okay. Second – this is a difficult question, but most cyclical businesses have peak earnings, trough earnings and average earnings over a cycle. Do you fellows have a view of your normalized earnings as an enterprise? And the reason I asked that, I go back, I think the current market cap is US$489 million, minus the US$53 million of net cash. We have an enterprise value of US$436 million. I believe you guys have repeatedly said in the past that the Glencore contract costs you US$200 million. So that should be added back over time to normalized earnings minus what, of course, you have of taking the contract internally. So which seem that – well, let me guess answer to the question as you have normalized in a typical year, what do you think you guys would earn in a typical year?

Right. So from an EBITDA or from a margin perspective, looking at, let's call it, 18,200 tonnes sold. And using a historic price of 6.5 for vanadium. You're going to be in the range of about $75 million and depending on how well we do in the high-purity market, a little bit higher than that. So between US$75 million and US$85 million.

Got you. And hopefully, one day, we'll get back to that $30 a pound price. All right. Thank you and good luck, stay safe and healthy.

Thank you.

Thank you, Lee

Thank you. The next question comes from James Young from West Family Investments. Please go ahead.

Hi. A couple of questions for you. Number one is that, Paul, you mentioned that your sales were into like Brazil, North America, Europe and Asia. Can you give us a breakdown like on a percentage basis in the June quarter? And how you expect that to change over the next couple of quarters into those end markets in those geographic areas?

Paul, go ahead.

Yes, Jim, thanks for the questions. Over Q2, our sales were pretty much spread 40% in Asia, 30% – 40% in Europe and about 20% in the U.S. and Brazil together. We believe that there will be a rebalancing of the sales towards North America in the long run. But I think the current setup that we have and being independent in ourselves also enables us to profit from pockets of opportunities from time to time. So we want to remain flexible and nimble to enjoy these opportunities. So long run, we expect roughly a-third, a-third, a-third of the three big region of vanadium consumption but we will adapt our strategy depending on market dynamics.

Okay. Secondly, then, you're at 20% into North America, 40% Europe, 40% Asia in the quarter. Are the prices that you’re receiving for your sales, are they based -- the European sales did a 40%, is that based primarily off of the metal posted price in Rotterdam for metal Bolton? And as the Asian sales, are they effectively reflective of the spot market in China? Or what's the pricing that you're receiving? What's that based upon?

Sure. So the main price benchmark on a global basis is a Metal Bulletin in Europe. This is our main benchmark for European sales, sales in Brazil and for about 50% of our sales in Asia. In the U.S., the main benchmark is CRU. And in Asia, quite a few of our contractor also had a fixed price.

Okay. And then as you think about -- you mentioned that the sales you got are contracted between now and through the December 20. I'm sorry, between December of 2020, and the remainder will be in spot. What percentage do you currently have under contract between now and the end of this year? And what percent will be into the spot market sales?

We have -- it's a moving target also. In our long-term contracts, we have optionalities that might or might not get called off. But the vast majority of our volumes are already committed on the contract and the remainder is spot sale.

So our spot sales like 10%, 20%, 30%? Can you give us a sense as to the magnitude, please?

Between -- spot sales will be between 30% and -- yes, 20% and 30%.

Okay. And then, as you look out into the next year, in 2021, it's my understanding that a lot of these new contracts are starting into discussions fairly soon to kind of get wrapped up by October, November-ish time frame, how are you thinking about the contract versus spot sales in 2021?

I think, we'll remain in line with what we have currently. The long-term contract discussion up and around the two main conferences in the U.S. and Europe in October and November. And -- yes, so we will start and conclude most of our negotiations in Q3 -- sorry, in Q4.

Okay. And have you seen any change at all? I mean, the titanium end markets for the aerospace have been quite weak, of course, have you seen any change at all at the margin with respect to these larger customers?

No significant change there in the margin there. There's been some reduction in volumes, but our contracts have been negotiated and completed at different levels that are still being respected today. So, the main impact was on the volume, but not on the price.

Okay. And then a couple of questions for Ernest. Ernest, could you just help us understand from your titanium dioxide that you're finalizing here, what is the total effective cost of the CapEx to get this up and running?

I'm going to have to defer to Paulo. The last number I heard on it was $124 million to take it to the full TOT label, but I stand to be corrected. Paulo?

Yes, that's the range. We didn't finalize all the credit yet. But yes, it's a good gap.

Okay. So what kind of -- if you're going? When is -- when are you expected to start this the titanium dioxide plant? And when is it expected to be completed? And what kind of an IRR or ROE, are you expected to generate off of this $124 million investment?

Jim, it's -- we are concluding the Kimco pilot plant test work. We are starting -- we have produced already the pigment at lab, but I'd like to confirm in a pilot plant, exactly to have enough material to send to the market. The pigment is not a commodity product. Pigment is a very specific -- it's a special product, which we need the test in the customer -- in the market, how they accept our material. So, we are doing that step. We do all these studies and characterization in our product, to be sure exactly what we have in terms of revenue and everything. And we haven't done this yet. Another step of this project, which is -- we are still doing is as I'm getting the titanium reserve and resource, the numbers we have from Kimco is really, very, very encouraging. We have the same situation in other ore bodies, but we need to measure it. And we are doing all the exploration work and we're doing all the mining plan considering the titanium. So, it's a huge work. It's going to create a very strong and robust operation in Brazil, having two revenue streams. So, I cannot give you the IRR at this time. But I'm sure that you're going to be happy when you see the final numbers by Q1 next year.

Okay. And then a related question would be for the V2O3 plant. Similarly, what's the expected total CapEx in here that you're expected to have to invest to develop this business?

The CapEx for V2O3 is $9 million. It's ongoing. All the implementation is in progress. We're going to start in the first quarter of next year and fully production in Q3. So, we have -- but of course, we have already some material by the end of Q2 to deliver to our customers for the certification.

Okay. And then what -- and likewise here, what types of opportunities do you see from a sales perspective for the V2O3 plant?

Jim, it's -- all the aerospace industry they -- in their production for the titanium alloy, they need V2O3 and V2O5 in a range of one-third of the V2O3 and two-thirds of V2O5. Today, we just supply them V2O5. And it's amazing how they requested us to produce V2O3 as well because they like all production lines with our material. So, just by producing the V2O3, we're going to increase our high purchase V2O5 on the aerospace market by 50% just for that to have this available. So, we are very -- it's very encouraging and very robust project.

Okay, very well. That's all my questions for now. So, thanks very much.

Thank you very much.

Thank you. The next question comes from Serena Rocha from Morgan Stanley. Please go ahead.

Hey everyone. This is Serena here on for Carlos. I had a couple of questions, maybe starting with the purchase products that was included in V2O5 sold. Can you give us a little bit more detail in terms of what the strategy is there going forward? How much can that add-on an annual basis and whether that's included in your V2O5 -- in your vanadium sales guidance for the year?

Thank you very much for your questions. Paul, could you give more details about it, please?

Yes, hi Serena. Just to clarify, the product we purchased in the market is a short-term strategy for Largo. It was really to fill gaps that we had in our commercial strategy, only being able to supply customers from the second half of 2020 following the end of our off-take agreement with Glencore, when some of our customers requested one-year contract or a contract that started before, we could actually supply full quantities from our products. We also purchased some extra material in order to make sure that we have some safety stock to -- at the start of our independent -- commercial independence. So, I think we should really view that as a temporary to start our commercial independence.

Sounds good. Thank you. And then could we talk a little bit about the distribution costs? And what are the puts and takes to consider for that going forward? What are the drivers? And how much fixed versus variable costs on that bucket?

Ernest, do you want to take that or--?

Yes. Let me have it. I don't have a breakdown between fixed and variable. But, obviously, we're expensing this through our financials. The only things that are going through cost of sales are transformation costs and some warehousing cost. So everything else going through our income statement. We’re going to be lower than 2% of sales overall on the sales and distribution costs, and that's inclusive of all the personnel costs, storage, et cetera. So I don't have a breakdown of fix and variable, but we can work with you guys separately to look into that, but definitely lower than 2% of sales.

Great. That’s very helpful. Thank you. That’s all I had for now.

Thank you.

Thank you, Serena.

Thank you. Your next question comes from Gordon Lawson at Paradigm Capital. Please go ahead.

Thanks for taking my call. Can you elaborate on the cost accounting this quarter? It looks like you're pro rating for pounds sold. So can we expect some of this quarter's expenses from production to be realized in Q3 and Q4? And do you expect us to reduce volatility in cash cost reporting?

Yes. Yes, please, Ernest.

Thanks, Paulo.

Yes. Please, yes.

Yes. So following on from what Paulo was saying. The purchase product was very much a temporary strategy to help us fulfill sales contracts and enable us to fulfill contracts that required fulfillment over a one-year period. So we're unlikely to do much, if any, by way of purchases on the open market. So you will see, over time, our unit costs become much more stable. So there's a little bit of contamination in this particular quarter both because of the volume, the low volume of servers. And then the inclusion of some of these purchased products. But going forward, our costs are going to be in and around the guided level.

Okay. But, I mean, you had 2,500 tonnes of production and costs were significantly lower-than-expected by probably most people out here. So where are those costs going? Where are we going to find those costs?

Yes. So there was a one-time reduction in the cost, because we essentially sold ICMS tax credits in the open market to the tune of $2.2 million. So that really reduced it. If you took out those costs, the costs come back on an operating cost basis to just over $3, so $3.04. So the big impact that you're seeing in the quarter is we had 2,562 tonnes produced. We ignoring the purchase product, we essentially sold 860 tonnes of our produced product, which means that 1,702 tonnes went into our working capital load. So there's a little bit more to go on that basis, but not much because we're essentially guiding that working capital burden in 2020 to be 2,230 tonnes, because we guided 12,000 tonnes of production as a midpoint level and sales of 9,750 tonnes.

Okay. That’s it for me. Thanks.

Thank you. The next question comes from Robert Neal from Skellig. Please go ahead.

Hi. Thank you, gentlemen. Just a couple of really working capital type questions. I was curious, given the investment you made in the past couple of months just to build the internal sales machine, sales effort and the accompanying inventory that you have to carry. Do you -- is it possible to characterize? Do you think that cash investment is largely complete at this point? I mean, given -- assuming sales stay roughly equal? Or do you think there's more cash that will be used for that in the coming quarter or two? And then a related question -- well, if you could answer that, I have one follow-on question.

Paulo, let me have a go at it.

Yes. Yes. Go.

So if you -- it's a good question, Neal, thank you. If you look at the whole, essentially in this particular quarter and just going back to the previous caller, we essentially built up working capital inventory of just over 1,700 tonnes. We were guiding a 2,250. So we got 500 to 550 tonnes to go additionally over the second half of the year, but we are largely done, because the bulk of that impact happens and has happened in the Q2 period. As we've seen product overseas, just getting it across the Atlantic on a seaborne basis, excluding the trucking time, just that time alone is 33 days, plus, of course, there needs time to send to conversion, et cetera. So you're looking at a good tool, which is what we expected and what we've seen in practice. But most of it has been the bulk of it is baked in now.

Yeah. I mean, my thought was mostly an upfront slug, which is largely behind you. So -- and then just one related question to that, and as you -- given the new world ex your off-take agreement. How are you looking at your cash balance on the balance sheet? Is there -- I assume there's some, sort of, minimum capital -- or excuse me, minimum cash requirement you're going to require just to run the business, which is probably a little bit higher than it was before. Is there -- can you give us any insights as to how you're looking at that?

Sure. That level for us is between -- and it has been for some time, we would be uncomfortable going below between $20 million and $25 million in cash.

All right. It make sense. Okay, great. Thank you very much for the clarifications.

Thanks, Neal.

The next question comes from Andrew Wong from RBC Capital Markets. Please go ahead.

Hi, thanks for the follow-ups. What's the latest in the ferrovanadium project?

Ferrovanadium project -- thank you, Andrew, for your question. Ferrovanadium project, we postponed, supposed to be implemented based in the same time as the V2O3. But considering that the -- it's not as much strategic as V2O3. We give priority to V2O3 and postponed it to conclude by the end of 2021. And it's in line with this reschedule.

Okay. That's great. And then just one other one on the marketing side. Now that you're out of the off-take contract previously, have there been any surprises that come up since taking over the process, the sales process completely? And/or is there anything that you could say, or do differently now that you're out of the contract?

We basically are doing according to our plans to switch the way we do contract and sales they’re not the big surprise. Of course, COVID did some change in the market behavior. I look at the aerospace industry, it's not as excited as before. And Europe and U.S. it's lower than before as well. But when you look at the China, China is fantastic, how it's producing and consuming the NAD and producing serum. So it's just an adjustment necessary for all the COVID situation to look in the world. It's nothing that we could not adapt and keep following the plan. Would you like to complement, thanks, Paul?

Thanks, Paulo. I'm fully in line with what Paulo just said, no major surprise. Just continuous work Paulo through to adaptive to the market and on your second part of the question, I think, what is really important for Largo and for Largo's investors that we are we are now much more flexible and reactive in our commercial strategy. We are able and we are today capturing value and opportunity that come from time to time that we were not able to capture before. So we are moving into high-priced region and high-priced markets much easier than before.

Okay. That's great. And then just one last one. On the mine plan, the last time there was a technical report releases back in 2017 and there's been a lot of changes and upgrades any thoughts on completing an updated mine plan? Or is that going to have tag after the TiO2 study? Thanks.

The mining plan, we are following what has been planned before. It's not a big change. And we will -- remodeling the resources and reserves and we do a new binding plan with titanium included. So it's not a big change for a while. We're just following what we have planned. We're not having any different news about this.

Okay. Thanks.

Thank you.

The next question comes from Lee Cooperman at Omega Family office. Please go ahead.

I wanted to go back to this titanium dioxide expansion of plan. The $120 million, that's almost 30% of the enterprise value of the company. My impression is that titanium oxide is not nearly as an attractive commodity as vanadium. What next – what was the reason to get into that titanium oxide business? It's pain pigment, right? And what was our natural edge? Why did we decide to spend $120 million and go into that business versus some other business or just feeding our own business? Can you discuss the decision of what the natural hedge we have, if any?

Thank you, Cooperman. We have titanium in our mind. When we mined the vanadium ore, which is inside the magnetite, we have titanium patches, it comes together. So in our – in the beneficiation plan we produce the magnetic concentrate to feed the kiln, the nonmagnetic has about 13% of TiO2. It's a huge amount. And all this titanium is there, minus gyration. We just need to set our flotation plans to produce the Ilmenite concentrate. We have about 43% of V2.

So the bottom line is a byproduct of what we're producing in vanadium, we should be able to produce at a very low-cost or lower the cost of producing vanadium, right? If we're getting another product...

We can produce the very low-cost titanium concentrate. And just to produce pigment is a way to upgrade and incorporate value to this product. Because when you sell one of them for $100 per tonne, you'll sell another one for between $2,500 to $3,000 per tonne. So we're going to improve the value creation and we get the benefit of having titanium just for free in our plans.

I understand the answer is very clear. And so the way I would look at it, the revenues from the titanium sales will further reduce your cost of producing vanadium.

The revenue is for titanium, selling titanium, and we're going to have a very high-margin considering we have a very low-cost because just a frequent expense.

Very good. You didn't offer a response, but you just said the $120 million will be a very profitable investment?

Yes, it will be. And titanium is more stable than vanadium. So I think – in a simple way, I talked to my team is better to be stand with two lags instead of just one.

No question about it. Good luck. Thank you. Appreciate your response

Thank you, Lee.

Thank you. The next question is from James Young of West Family Investments. Please go ahead.

Yes, hi. I just wanted to put the bed this whole Glencore situation. So just to clarify, in the quarter, you paid down $57.4 million payment to Glencore, of which you got a $2.4 million balance. The remaining amount of money that’s due is $300,000. Now is there anything else out there that could lead to a remeasurement and a change to the amount of money you expect to owe to Glencore?

No. I think of bed.

James wanted to put it to bed. So I figured that would do it.

Thank you. There are no further questions. I will now turn it over for closing comments.

Thank you, operator, and thanks, everyone, for joining us today. As we noted earlier, Largo's Q2 2020 results press release, financial statements and MD&A can be found within the Investor Relations section of our website at largoresources.com. That concludes our call. Have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Thank you, everyone.