Good morning, ladies and gentlemen, and welcome to the Largo Resources Third Quarter 2020 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Friday, November 13, 2020. I would now like to turn the conference over to Alex Guthrie. Please go ahead.

Thank you, operator. And welcome everyone to Largo's Q3 2020 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 Q3 2020 press release, MD&A, financial statements are all available on the company's website and on SEDAR. Some of the information you'll 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 and cash operating costs excluding royalties, total cash costs and revenues per pound sold will also be discussed during this conference call. Actual results discussed 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 the company's website. Further information regarding Largo's use of non-IFRS measures is also available in our Q3 20 results press release and in the company's latest MD&A, which are available on our website and on SEDAR. 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. Lastly, all financial amounts presented today will be in US dollars, except as noted otherwise. Speaking first will be Largo's, President and Chief Executive Officer, Paulo Misk; who will provide highlights from the company's third quarter 2020 results followed by Largo's, CFO, Ernest Cleave who will then provide some additional detail on the company's Q3 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 over to Paulo for opening remarks.

Thank you, Alex. And welcome everyone for our quarterly update conference call. The health and safety of our workforce continues to remain a top priority for Largo. And our focus on preventative measures are early on has enabled the company to continue operations in a safe manner since March 2020. We continue to thank all front line workers who have helped keep us safe and healthy during the global COVID-19 pandemic. We would also like to thank our entire workforce and our contractors who are healthy to continue Largo's operation in a safe and responsible manner during this from uncertain times. Going forward, we continue to do our part to help stop the spread of COVID-19 and help ease the effect caused by the virus. Q3 2020 was a great quarter for Largo as we continue to advance our independent sales strategy, while at the same time, delivering on the exceeding target step for the quarter. On Q3 2020 operations performed exceptionally well for the company achieved a new quarterly V2O5 production record of 3,092 tonnes which was 5% higher than Q3 2019 and 3% higher than the previous record for 3,011 tonnes set in Q4 2019. The company also achieved a new global recovery records in 8.2% in Q3 2020, representing a 8% increase over 78.1% achieved in Q3, 2019 and 4% increase over 80.8% achieved in Q2, 2020. This is primarily, due to the completion of continuous improvement projects in the plants that focused on recovery levels and is further highlighted by the performance of the kiln and leaching areas in Q3 2020, with record quarterly recovery levels of 92.5% and 99.7% being achieved respectively. I am very proud of the entire operation team, as they continue to demonstrate their ability to effectively meet the exceed operation targets,…

Thank you, Paulo. And thanks to everyone for joining the call today. As Paulo previously mentioned, we are very pleased to report a profitable quarter in Q3 2020 with continued low cash operating costs and record operational results. The company recognized revenues of $27.5 million from V2O5 equivalent sales of 2,320 tonnes in Q3, 2020 representing an increase of 14% in revenues over Q3, 2019. Revenues per pound sold increased by 34% to $5.37 in Q3, 2020 which compares to $4.02 per pound sold in Q3, 2019. We are very pleased to highlight the increase in revenues per pound sold which demonstrates both the strategic and economic benefits associated with Largo's transition to independent commercial sales. The company recorded net income of $2.6 million in Q3, 2020 following the recognition of the income tax expense of $0.4 million and deferred income tax expense of $0.4 million. This compares to a net loss of $6 million in Q3 2019 and was mainly due to an increase in revenues and a reduction in operating cost. On the cost front, operating cost decreased by 11% to $21 million in Q3 2020, which compares to $23.7 million in Q3, 2019. Q3 2020 operating costs include Direct mine and production costs of $11.4 million, which compares to $16.7 million in Q3 2019. The reduction in Direct mine and production costs is mainly attributable to the decrease in V2O5 equivalent sold in Q3 2020. The company continues to achieve low unit costs at the Maracas Menchen Mine and in Q3 2020 cash operating costs, excluding royalties were $3.14 per pound sold. Nine months 2020 cash operating costs, excluding royalties with $2.70 per pound sold. Additionally, the company's total cash costs were $3.69 per pound sold in Q3 2020 and the nine months 2020 total cash costs were $3.29. We very pleased to report that the company has lowered both its cash operating cost excluding royalties and total cash cost guidance for 2020 to reflect our positive year-to-date performance and the company's expectations for the balance of the year. We now expect to finish the year in the range of $2.60 to $2.80 per pound sold for cash operating costs, excluding royalties and $3.20 to $3.40 per pound sold for total cash cost. Despite having successfully completed a significant transition and commercial strategy and navigating the challenges presented by the global pandemic, Largo remains very well positioned and we expect to conclude the year with a strong financial position on the back of record operational results. We again would like to thank all frontline workers as well as our entire workforce, including our contractors and suppliers for their continued commitment and ensuring Largo continues normal business operations during unprecedented times. With that I will now turn the call over to Paul Vollant who will provide an update on the company's sales and trading progress as well as the vanadium market. Following Paul's update, we will open the call to questions.

Thanks, Ernest. And thanks everyone for joining the call today. Q3 2020 marked Largo's first full quarter of independent sales and the company delivered both VPURE and VPURE plus products as well as ferrovanadium powered by VPURE to customers globally. We are very pleased to report the company is progressing in line with its sales strategy for 2020. Highlighted by V2O5 equivalent sales of 1,062 tonnes in August and 1,060 tonnes in September. As Paulo mentioned from May to July, the company successfully built the necessary inventories to fill its sales pipeline and meet customer commitments as planned. The company's total V2O5 equivalent sales in Q3 2020 were 2,320 tonnes and in the first nine months of 2020 sales were 6,508 tonnes. As a result of Largo's new commercial independence and sales flexibility, the company increased its sales in China during Q3 2020, to take advantage of higher prices and greater overall demand. This further highlights the positive effect of the company's commercial strategy on its reputation, visibility and financial performance. In Q3 2020 some deliveries to Asia increased their time due to logistical constraints related to COVID-19 pandemic, and we continue to actively manage this process. Creating value through the control of our product from mine to end user, is a key priority for Largo and we are confident in delivering on our 2020 sales guidance of 9,500 to 10,000 tonnes of V2O5. For Q3 2020 the average price that pound of V2O5 in Europe was $5.33 compared to $7.16 in the Q3 of 2019. During Q3 2020 the average price per pound of V2O5 in Europe increased by 1%, ending the period with an average price of approximately $5.35, compared with approximately $5.30 at the end of Q2. In Q3, the average price per pound of V2O5 in…

Thank you. [Operator Instructions] Your first question comes from Heiko Ihle at H.C. Wainwright. Please go ahead.

Hey, good morning, and thank you for taking my questions. The increase that we've seen in Q3 2020 compared with Q3 2019, this is from your release is largely due to a decrease in produced pounds of V2O5, and the incurrence of distribution costs in Q3 2020. How much are you actually still incurring in distribution costs? And where do you see that trending in Q4, in next year?

Heiko, thank you very much for your question. I will forward this question to Ernest, forward it to you once.

Sure. So Heiko, the -- in terms of distribution costs year-to-date, we've been including them all in period of cross sell. You can take them for granted that it's been pretty even. But in a given quarter, we're looking at about just shy of $1 million in distribution costs. So you could use that as a based on the number of tonnes moved in that period, but that's roughly represent sort of what we're doing. It was $928,000 in the quarter.

Got it. Okay. And then just thinking ahead, a little bit, I mean you're focusing your 2020 drilling on Sao Jose and Novo Amparo and the depth extension drilling at the Campbell Pit. But can you just maybe provide us a little bit of color on what you plan to do in 2021, which it may have storage in a month on the half or 45 days especially since you now have more cash flow, I guess the monetary handcuff that you previously had has been removed, which is obviously a great thing.

Heiko, we are focused on increasing our reserves and resources, mainly the reserves. And that's why we have been focused on the Novo Amparo Norte and Gulcari A Norte. We have the very good successful results on those deposits, and also we are reviewing the mining plan and the reserves on capital.

All right.

We don't see too much -- it's not a big expense for the over budget. None of the two new targets, as it's a continuous operation, just as deposits close very close to the surface. So we don't expect to have a high big expenses with this [indiscernible].

Fair enough. I appreciate it. And I'll get back in queue.

Thank you very much, Heiko.

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

Hi, good morning. So Largo's realized price looks to be basically about the same as the market benchmark prices. And I recall part of the plan for post Glencore was to get a lift on the price by as much $3 per pound. Obviously this year with the aerospace industry is struggling, that's had a negative impact, but aside from that what also is impacting the realized price? And when can we expect Largo to receive our premium that's closer to that $3 per pound or is that something that we, maybe it's changing going forward?

Thank you very much for your question. When we see the aerospace market this year, it has been hardly impacted by the COVID, and naturally the market have been weak each year and we expect to keeps to be weak next year as well. So we can see the premium that you're going to get the contracts, we didn't close yet, but we see that should have some reduction. So that's the way we see the market but we need to have in mind overall consumption of vanadium, mainly due to China it's increasing. The wholesale at 22% higher in Q -- in the first half of this year compared to the same period of last year. And the projects that we have from the -- export for in China in second half it should be 11% higher over first half. So the consumption of vanadium globally say is increasing and we expect to see that all the economic levels have come back in Europe and US. So overall situation of the vanadium consumption, it's very promising. I might expect a good thing for 2021, not for aerospace of course, but for all the industry including chemical and the also steel which is, it's grown, and have a very good future that we as expect. Any comment, Paul you would like to complement?

Yes. Thank you, Paulo. 100% in line with what you just said. I would just like to complement on the aerospace industry has been hit very hard. And we do not think that volumes will come back very soon, but on the, maybe in the medium term. However, we are very focused on growing our market share in that business, and regarding the units move today because the premium market has been more difficult. We've moved quite a bit of volume into the steel industry and we know that steel industry is actually buying product at a discount on the yearly basis. The achievement of Largo to be able to achieve final price in line with the market price really shows how Largo's product quality is valued in the market. So we are sitting higher than our competitors. And also, it shows the incremental value that our sales flexibility has brought to the company being able to tap into markets with higher demand and higher prices during the quarter.

Okay. So does that mean going forward we should expect Largo's price to be similar to the market price until aerospace recovers?

I think we are doing many actions to increase our market share in the aerospace, but also in other premium markets. So it is still our expectation to outperform the benchmark price.

Okay. And then, the price in China is close to $7 per pound, but as you said the CIF equivalent for Largo is $5.90. So that $1 per pound costs to get the product into China, is that a normal cost that we should expect going forward? Or was there any logistical constraints that you mentioned? And Largo's product, even the base product that Largo sells, if I remember correctly, it's a higher purity products and other vanadium products. So do you get a premium for that?

Andrew, on your last question, yes, we do get a premium and customer globally willing to are pay more to get Largo material. The cost to bring material into China, so the difference between the CIF price and the domestic price that you mentioned is actually not an absolute number of a $1. It is mainly driven by a 5% import tax and a 13% VAT tax in China. So total 18% of tax. There are a few additional cost that related to exchange of currency from Chinese renminbi to US dollar and some import costs, but these are quite minimal. So the main chunk of that cost is actually 18% total tax costs.

Okay, thank you. I'll go back in the queue.

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

Thank you very much. I think you've talked around this but I congratulate you guys. You have done a very good job in controlling costs and bringing your cost of operation down. So it seems to me the whole story revolves around the price of the commodity, where we had that spike up a couple of years ago to $30 a pound. We now are fluctuating around $5 a pound. Do you guys have any strong view, one way or another about the price outlook? Number one. Number two, I may have the wrong company, but didn't you guys talk a lot about titanium dioxide as a new product, and I don't see that mentioned at all in the release or on any comments on the call, but what's the story there? Two questions. Thank you very much.

Thank you very much, Lee Cooperman. Ernest would you like to answer the first question and I can answer the second one, please.

Well, from a price outlook is, it's no compression, Lee. We obviously on the business of being bullish on price, but we are hoping for something between 650 and 750 per pound for next year for standard grade vanadium, but I mean it's a very broad view of the market, but we do see it improving. You see the price has started improving this week already, but that's all I have on price.

What happened to your expert? I don't know if you have relationship anymore, but Terry Perles who is supposed to be the genius in this market, what is he saying?

I don't know what is, but we have our own genius. So we have Paul Vollant. I don't know Paul, if you have a view on next year?

Yes, just complement what Ernest just said. Our view is that prices will we recover from where we are today $6.5 to $7.5 is still, it's very much achievable. We are very optimistic about China. We mentioned the increase of 22%, if you compare the first half of this year compared to the first half of the previous year accounting for the COVID situation in the first half of this year. The spot market in Europe has been extremely active over the past week. So there is a clear sentiment in my mind that the market is close to a bottom now, and we hold foot for next year.

Again, before the second question is answered, let me just say again, you guys deserve a nice shout-out for what you've done to your cost structure and your operations. Excellent, you just got a bit of little prices.

Thanks, Lee. That's great.

So, the question I asked…

Yes. Regarding titanium project, Lee we are doing all the work internally that we planned. We together with all the exploration work, we are evaluating the titanium deposit at the titanium reserve in our deposit as well. So a lot of work has been done and we should issue a technical report in the -- by the end of the first quarter of next year. So, we're going to incorporate the titanium in our reserves, but in the same time, we have plants running at location process running at site continuously producing Ilmenite. It has been proven and a lot of information we got from that, that will help in generally that we are competing as well. And the same time we accept the Kimco pilot plant to produce pigment that the most challenge step of this project because it's not a commodity-only type titanium, a pigment it's a product that need to be tested in the customers and the [indiscernible] producers. And I'd say to [indiscernible] producers because that's the main market that we're going to focus in the first step. So we have already produced a pigment products. We are doing all the analysis and assessment. Also we start testing in some distributors and producers in Brazil. So we're going to have a full report, a full analysis of what the potential, what that with the market we're going to achieve, price volumes and then it will be essential for our sales strategy and how we approach this business when we disclosure all the details. So, we are working hard and we are very confident that these project will be one of the support for Largo results. So not misunderstanding that, not talking all the details, but we just are preparing a very conscious with this, everything is going to -- we're going to present and propose in the future for investors.

Good luck. Thank you very much.

Thank you.

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

Hey, everyone. Good morning. I wanted to ask a couple of questions about China. First, if you, is there a way to estimate what the longer delivery times to Asia might have -- how that might have impacted your sales for the quarter? And then on China specifically, can you comment on what are you seeing there in recent weeks? Paul mentioned, the encouraging year-over-year increase in the first half, but in light of it, some news about rebar quality there. Could there be a kind of like a resurgence of the vanadium specific demand? So curious if you're seeing anything on the ground there? Thanks.

Thank you, Serena. Just we will start answering with this small information and then I'll let Paul do some additional comments. What that the contract we have before with [indiscernible]; we sell ex-works have been allocate. We just delivered of our gate it's done, recognized stable. Now we are selling to the final customers and they have sell a lot of material to China in this period. So it takes about two and half months to reach material. And we recognize sales only when that reach our customers. So that's the reason we have this period to fulfill the pipeline due to the customers. And the third quarter it impact is July namely. July we thought, we got sales almost 200 tonnes only, was 198 tonnes, but we can see the August and September, we have produced more than our nameplate capacity. So they impact was limited to July, when you look at the Q3, but we are very confident and the results of the sales and everything we are doing, it's fantastic. I'm really happy with the sales team, and Paul Vollant and Francesco. Paul, would like to give further comments regarding this please?

Sure. Hello, Serena. On your first question of longer delivery time impact for Largo certainly COVID had some impact, some delays. I think we've been able, through very close relationship and continuous information to our customers to manage this impact. It has been a worry from time to time, but I'm happy to say that all of our commitments have been fulfilled in the third quarter regarding shipment time. And regarding your second question, recent weeks, it's hard to speculate and I know there has been an issue in China with a bridge that collapsed in the north of China, and I think some people, were looking at potentially the issue coming from the quality of sales. So we don't want to speculate too much, especially on the bad news, but it could certainly revive some discussion on rebar and quality of steel. But my vision is that higher quality steel is something, it's a long-term trend in China and also in other countries in the world. For, it's more efficient. It's the carbon footprint is much lower with high quality steel. And you know countries like China, have done tremendous headways towards increasing their consumption of vanadium, but if you look at the statistics. China is just a little bit above half of what for example, the US consume in terms of tonnes of vanadium per ton of steel. So it's still quite a long way to go for China, and you have lot of opportunities countries like India, again, about half of what China consumes. So I think higher quality steel is a big trend globally and there is still a lot of room for growth in the developing markets. So I think demand for vanadium instead is going to continue to increase tremendously around the world.

All right. That's great. Thanks, everyone.

Thank you, Serena.

Thank you. The next question comes from Jim Young at West Family Investment. Please go ahead.

Yes, hi, couple of questions here for you. Number one in China where we would have been talking about the sales, Can you give us a sense as to what percentage of sales in the third quarter were into China? And given the lag, it sounds like there is a delay of the revenue recognition. So we actually have month so, what percentage of sales are you expecting in the fourth quarter? And then lastly the sales fully in China, are you also having opportunity to sell into Japan, Korea and other parts in Asia? That's the first question. Thank you.

Thank you, Jim. Please hold. I think you are the good, Jim, please.

Hi, Jim. Percentage of sales to China in Q3 was roughly 40%. It's probably higher than what we expect long term, and again, we were able to profit from an opportunity of much higher demand and higher prices during that quarter. So I believe we took full advantage of that the public records of imports into China in September showed that China imported a total of 1,300 tonnes of vanadium products out of which 580 came from Brazil, so from us. So I think Largo has really been able to profit from this opportunity. But again, I think it's going to be less than that in the long run and you mentioned Japan and Korea. They are both important market for us. Korea especially we sell more than 15% of our production into Korea. I think it's a reasonable number to expect going forward. Japan is a smaller market for Largo and the consumption of steel has been quite impacted over the last few months. So I think that Japan long-term would be around 5% and 10% of our sales.

Okay. And Paul, you mentioned that Canon had a, was imported 1300 tonnes of which 580 from Brazil. But as I look on page 25 of your corporate presentation, it appears that their exports are less than the imports that is for China, and that as I recall that when you've seen the Chinese be a net importer that has historically signaled a --and you've actually realize a significant increase in prices for vanadium over the next, like, say, three to six months. So, is that, what I'm kind of wondering is that, do you think that this is something that is going to continue to occur again in this cycle? Or how does this cycle a little bit maybe different than it has been in prior years?

Jim, I think I agree with you, I think that the supply deficit in China is structural more than a short-term thing. So I think that China will continue to import vanadium products for the medium to long run. Is this going to spark a big price rise? It's difficult to say, but definitely the scale of consumption in China currently consuming about 60% of the vanadium units globally definitely has the potential to move the needle on a global basis. So let's see what comes, but definitely we have great hopes about Chinese consumption.

Okay. And Paul, maybe you could address this question here about, my understanding that the contractual terms for 2021 are generally set around this time of the year when historically been the conference is better done virtually this time. So my question is how are the contractual negotiations going for 2021? And any insight that you can share is to how the customers are thinking about the prices and volumes in 2021, would to be very helpful? Thank you

Yes, Jim, you pointed out right now is the most important time of the year for the steel industry with regards to vanadium, where we are in direct discussion with all the large steel mills in Europe, in the US, in Brazil, negotiating long-term contract for 2021. I think it's too early to speak about a general trend or the outcome because really 90% of the contract are still under negotiation. But generally the consumption is expected to be close to 2020 levels. There is probably a bit of lack of visibility right now with the COVID situation. So we are seeing buyers asking for more flexibility, but in general, we are seeing volumes in Europe, in the US, fairly similar. Brazil, by the way is a bit of an outlier. Brazil is doing extremely well, and we think that the consumption of vanadium products in the country will go up, significantly next year.

Okay. And Paul, can you give us the senses to when do you think that these contracts will be finalized? Are you looking at by early December, late December, or so, or can you just give us a sense there?

In terms of timing, each region as a bit of a different timing. The US I think we will have a very clear picture, let's say, by the end of next week. Europe would probably take until the end of November and Asia typically comes to market a bit later. So I would think Korea would probably be by the end of this month. And Japan, maybe December at some point. So, let's say in the next four weeks, we will have a better picture.

Okay, great. Thank you very much. My last question is pertaining a little more of a strategic question, but still a lot of discussion in the markets about the vanadium redox flow battery and the like. The question is here is, do you think it makes sense or company of maybe like yourselves had a vertical integration at this point in time, given where we are in the cycle and the opportunities that are ahead themselves for the renewable energy?

Paulo, you want me to take that?

Yes, I thought Paul is going to take that answer. We can see the, all the green energy and storage energy it's being more relevant each time. I can see many companies doing a lot of commitments regarding carbon emission reduction. Countries are aiming to have a better impact regarding environmental and when you talk about environmental our sustainability the VRFB it's unbeatable in terms of storage. We -- when we compare, for example, which has been largely used VRFB can last for more than 25 years. And by the end the electrolyte you can't recycle it and re-use it. Later after 6, 7 years become a scrap. You need to dispose in some place, which is not sustainable at all. So when the world realize that the VRFB much safer and in certain publication such as many cycles per day or long duration, VRFB is the most competitive battery for degree. So, we are -- our intention when you talk about the vanadium being applied in the VRFB is not to replace the lithium. Lithium is a great battery that have an important role in the world. But some niche, VRFB it's more competitive. And that's just a matter of time. And we believe that the companies are changing the way they are approaching this sector. We having about a lot of start-ups with a little bit weak financial support, no supply guarantee and the marketing that they have been doing I think need a little bit more strategy. So that's our belief. We are excited with this sector. It doesn't mean that it's going to be great and big amount in short-term but I can see a very good future for VRFB, be compete to be more sustainable. And Largo will support that initiative because they're are in line with our values and the way we do business.

Okay, thank you very much. I will, it's the end of my questions for now.

Thank you very much, Jim.

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

Hello, good morning, everyone. Ore mined in the quarter was relatively high. Is that a run rate you expect to maintain in the coming quarters?

Ernest, could you take that please?

So Paulo, I think -- you can talk about all mines. I'm not really sure that I'm the best person for that question.

Yes, I didn't understand the question. Let me know what exactly? Sorry.

So, nearly 290,000 tonnes of ore was mined this quarter versus 250,000 in the previous and 200,000 in Q1. I mean obviously COVID is an impact on that. But comparing numbers to last year, it looks like you're getting the run rate back up. So is this something we can expect to be maintained in the coming quarters?

Impacting. Sorry, I didn't understand the question. But that let me answer right now. Now I understood. Our mine operation is running steadily and the performance is well have. One thing that -- it's amazing how is no surprise at all with the deposit and the mining operation. We expect to increase our mining production as we are increasing our production. In January 2021 we will upgrade the queue and improve the cooler efficiency, which would allow us, I'm saying that's going to increase our nameplate capacity to 1,100 tonnes a month which we are already reducing. So we will be able to even more improve our production, and of course the required more, or but it's all the operations at mine is in line. All the grade and the quality of the ore is amazing good, amazingly good. I'm easy to say that the best deposit in operation in the world. So we will be -- we are prepared to increase the volume there.

Okay, thank you. Back to sales strategy. It sounds like there was a lot of a spot sales to take advantage of the premium pricing in China. Did you talk about the duration of your sales contracts in terms of like longer term contracted sales versus spot sales?

I will if only would like to do some additional, but basically the prime contract for steel industry is one-year contract. We renew every year. And in the spot sales that's the beauty to have all independent sales, because we can get the opportunity to sell our product where the price is higher, like China in Q3. It's what the -- situation. So the spot market there is no contract period. It sells lot by lot. And that's the way the steel industry that works. Aerospace industry a little bit longer depend of gate by gate, and chemical industry as well. So that's the overview. Have any information Paul?

Thanks, Paulo. Just to complement here. I think that for our first year of commercial independence we were really in a position to deliver product to the steel industry around June or July this year that impacted our ability to conclude too many long term contracts in 2020 and actually it was a blessing in disguise because it meant that we had more material available for spot and that enabled us to capture more opportunities in China. Going forward, I think contractual volumes will probably be higher than in 2020. But I feel I think it's very important for Largo to keep a decent portion of our volumes available for spots precisely to capture these opportunities from time-to-time

Yes, it's a strategy that works well in uranium industry and others. So I was just curious what your thoughts on that. Then one more if I may. Your tax rates have been relatively low. Are you expecting tax rates increase in the coming quarters or years?

No, we've got beneficial tax rates locked in for the long term. So we're not seeing anything there in terms of changes

Okay. Okay, thank you. That's it for me.

Thank you.

Thank you, Gordon.

Thank you. And the next question comes from Andrew Wong at RBC Capital Markets. Please go ahead.

Hi, thanks for taking my follow-ups. So now that Largo has built up the pipeline on sales after the Glencore contract expiration, what are your expectations for market purchases and product acquisition costs going forward?

Paul, could you take that, please?

Sure. Hi, Andrew. As you rightly mentioned, our pipeline is filled now. Our previous purchases in the market, were really here to help us bridge this gap at the start of our commercial independence. I do not think that's a purchasing material in the market is an ongoing regular strategy for Largo. I guess we will keep an eye on opportunities, but I do not think that it is something Largo will engage on the regular basis on the strategic basis. So, it's probably be more opportunistic and from time to time.

Okay, that's great. And then just one last one for me, probably also for on the market. So, as still production going up a lot in China, are you seeing a pickup in slag vanadium production?

Thanks, Andrew. Very good question. There has been some increase in slag production. I think the general increase in steel production is one of the factor. The bigger factor actually is the current iron ore prices. Most of the slag producers are in China in Central regions in China that when prices of iron ore are high, have an opportunities to buy from high-cost producers in Central China that have high vanadium bearing in the iron ore. That is what is happening today. If prices of iron ore, international prices go down, iron ore from imports from Brazil, Australia will become more competitive and we using this iron ore still slag producers will reduce the output of a vanadium naturally. My last point on this one is that supply from slag producers is very in-elastic. The vanadium economics is tiny compared to the steel economics for this particular producers. So there is no incentive for them to produce more steel in order to get vanadium. So I think we are close to full capacity right now with higher iron ore prices and high steel production. And we could expect some lower production from them when these two trends changes.

Okay. Sorry, did you just say that they were at capacity for the slag production like? Is there a maximum capacity that they reach then they just can't produce anymore? How does that work?

I'm looking at capacity from the point of view that they are using almost exclusively local domestic iron ore with high vanadium bearing.

Okay. And then, so there is some sort of limit on that, I'm assuming?

Yes, that is the steel production, basically.

Yes. Okay.

Ladies and gentlemen, that concludes today's question-and-answer session. I will now turn the call back over to Alex Guthrie for closing comments.

Thank you, operator. And thanks to everyone for joining us today. As I noted earlier Largo's Q3 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. Stay safe and healthy, and 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.

Okay, thank you very much.

Thank you.