Largo announces closing of the first tranche of its current private placement offering for aggregate gross proceeds of CDN$15.09M
January 9, 2017 (Source) — Largo Resources Ltd. (“Largo” or the “Company“) (TSX: LGO) (OTCQB: LGORF) is pleased to announce today that it has closed the first tranche (the “First Tranche“) of its non-brokered private placement offering (the “Offering“) of Units (as defined below) as previously disclosed in Largo’s press release dated December 28, 2016.
The closing of the First Tranche resulted in gross proceeds to the Company of CDN$15,085,803.15 from the sale of 33,524,007 units of the Company (the “Units“). The proceeds realized from the First Tranche will be used for ongoing working capital requirements at the Company’s Maracás Menchen Mine (see below), and for general corporate and working capital purposes.
Each Unit was sold at a price of CDN$0.45 and consists of one common share of the Company (each, a “Common Share“) and one common share purchase warrant (each whole warrant, a “Warrant“). Each Warrant issued in the First Tranche will be exercisable into one Common Share at a price of CDN$0.65 per share for a period of three years from closing of the First Tranche. All securities issued in the Offering will be subject to a four-month hold from the date of issuance.
As set out in the Company’s press release of November 16, 2016, the syndicate of Brazilian commercial lenders (the “Lenders“) under the Company’s existing debt facilities required an injection of working capital (the “Working Capital Injection Condition“) into the Company’s operating subsidiary of not less than US$15 million prior to December 31, 2016 as a condition of granting a new debt facility to the Company (the “2017 Facilities“) which would have the effect of pushing back principal and interest payments on the Company’s existing debt facilities for an additional calendar year. Absent the 2017 Facilities, the Company would be required to begin making principal and interest payments effective January 15, 2017. Subsequently, as disclosed in the Company’s press release of December 28, 2016, the Lenders agreed to extend the December 31, 2016 date to January 10, 2017.
The Lenders subsequently agreed to amend the payment terms of the Working Capital Injection Condition to provide for an injection into the Company’s operating subsidiary of not less than US$10 million prior to January 10, 2017, with the remaining US$5 million being required by March 15, 2017. Of the gross proceeds from the First Tranche, US$10 million will be used to satisfy the initial payment under the Working Capital Injection Condition.
Funds managed by Arias Resource Capital Management LP (the “ARC Funds“) purchased an aggregate of 14,395,675 Units in the First Tranche for gross proceeds to the Company of CDN$6,478,053.75. Prior to the closing of the First Tranche the ARC Funds owned 59.86% of the Company’s then issued and outstanding Common Shares and following closing of the First Tranche, the ARC Funds will own 58.62% (or 66.04% in the event that the ARC Funds and its affiliates exercised all of the convertible securities held by them) of the Company’s issued and outstanding Common Shares. The shareholders of the Company approved the creation of the ARC Funds as a control person of the Company at the annual and special meeting of the shareholders of the Company held on June 27, 2013.
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An entity managed by Mr. Alberto Beeck, a director of Largo, subscribed for an aggregate of 10,450,000 Units under the First Tranche for gross proceeds to the Company of CDN$4,702,500. Prior to the closing of the First Tranche the entities managed or advised by Mr. Beeck owned 8.74% of the Company’s then issued and outstanding Common Shares and following closing of the First Tranche, these entities will own 10.38% (or 14.72% in the event that Mr. Beeck and these entities exercised all of the convertible securities held by them) of the Company’s issued and outstanding Common Shares.
The sale of Units to any of the ARC Funds and the entity managed by Mr. Beeck under the Offering is a “related party transaction” as defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). The Company is exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the Offering in reliance on sections 5.5(a) and 5.7(a), respectively, of MI 61-101, as the fair market value of the Units issued to the ARC Funds or the entity managed by Mr. Beeck does not exceed 25% of the Company’s market capitalization calculated in accordance with MI 61-101. The material change report is being filed less than 21 days before the closing of the Offering as the Company requires the consideration it will receive in connection with the Offering immediately for working capital purposes.
Largo Resources Ltd. is a growing strategic mineral company focused on the production of vanadium pentoxide at its Vanadio de Maracás Menchen Mine. Vanadium is primarily used as an alloy to strengthen steel and reduce its weight. Vanadium enhanced steels are used in a vast and growing range of products that are used and encountered every day; including, rebar, automobiles, transport infrastructure etc. As trends in the steel industry now demand increasingly stronger and lighter products for advanced applications, the use of vanadium is expected to grow over the medium and long term. Largo also has interests in a portfolio of other projects, including: a 100% interest in the Currais Novos Tungsten Tailings Project in Brazil; a 100% interest in the Campo Alegre de Lourdes Iron-Vanadium Project in Brazil; and a 100% interest in the Northern Dancer Tungsten-Molybdenum property in the Yukon Territory, Canada. For more information, please visit www.largoresources.com.
This press release contains forward-looking information under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to completion of any financings; Largo’s development potential and timetable of its operating, development and exploration assets; Largo’s ability to raise additional funds necessary; the future price of vanadium, tungsten and molybdenum; the estimation of mineral reserves and mineral resources; conclusions of economic evaluation; the realization of mineral reserve estimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capital and operating expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. All information contained in this news release, other than statements of current and historical fact, is forward looking information. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Largo to be materially different from those expressed or implied by such forward-looking statements, including but not limited to those risks described in the annual information form of Largo and in its public documents filed on SEDAR from time to time.
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Although management of Largo has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Largo does not undertake to update any forward-looking statements, except in accordance with applicable securities laws. Readers should also review the risks and uncertainties sections of Largo’s annual and interim MD&As.
NEITHER THE TORONTO STOCK EXCHANGE (NOR ITS REGULATORY SERVICE PROVIDER) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
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