EDITOR: | December 13th, 2017

Largo Resources announces closing of second and final tranche of private placement for aggregate proceeds of $35.5 million

| December 13, 2017 | No Comments

December 13, 2017 (Source) — Largo Resources Ltd. (TSX – LGO) (the “Corporation“) is pleased to announce the closing of the second tranche (“Second Tranche“) of its previously announced non-brokered private placement of Units (as defined below) at a price of $0.82 per Unit (the “Offering Price“), for aggregate gross proceeds of approximately $35.5 million (the “Offering“). In order to accommodate demand, Largo has also increased the size of the Offering by an additional $500,000 since its press release of December 7, 2017 announcing the initial increase from $25M to $35M.

The Corporation raised gross proceeds of $21,416,544.30 in the Second Tranche through the issuance of 26,117,737 Units and also settled long-term debt of $5,991,686.51 (the “Debt Settlement“) through the issuance of an additional 7,306,934 Units to an arm’s length lender (see below), for an aggregate issuance under this Second Tranche of 33,424,671 Units. Combined with the gross proceeds raised in the First Tranche of $8,091,769.84 through the issuance of 9,868,012 Units and including the Debt Settlement, the Offering has resulted in effective proceeds to the Corporation of approximately $35.5 million. No finders’ fees were paid and no finders’ warrants were issued in connection with the Offering. The Corporation intends to use the proceeds for working capital.

Each Unit consists of one common share in the capital of the Corporation and one half of one common share purchase warrant, with each whole warrant exercisable into one common share at a price of $1.15 for five years from the closing (each a “Unit“).

As contemplated by the press release dated December 1, 2017 issued in connection with the closing of the First Tranche, the Corporation entered into an agreement with Banco Pine S.A. (“Pine“) to effect the Debt Settlement resulting in the conversion of all of the debt outstanding to Pine in Canada, being $5,991,687.51 (the “Debt“). As set out above, Pine will receive 7,306,934 Units in full and final satisfaction of the Debt as part of the Second Tranche closing.

Mark Smith, President and Chief Executive Officer for Largo, stated: “The tremendous results of this non-brokered financing give us the working capital we need at corporate to focus our resources and time on operations and debt restructuring in Brazil. The Debt Settlement represents the first step in our efforts to improve our capital structure and drive better results for Largo moving forward.  We believe that 2018 will be a strong year for vanadium and with closing of our Offering, we are now in an ideal position to benefit from this.

Arias Resource Capital Fund II L.P. (“ARCF II“) and Arias Resource Capital Fund II (Mexico) L.P. (“ARCF Mexico“) purchased an aggregate of 9,844,857 Units in the Second Tranche for gross proceeds to the Corporation of $8,072,782.74. Prior to the closing of the Second Tranche ARCF II and ARCF Mexico, together with Arias Resource Capital Fund L.P. (collectively the “ARC Funds“) owned 57.3% of the Corporations then issued and outstanding Common Shares and following closing of the Second Tranche, the ARC Funds will own 55.5% (or 62.1% in the event that the ARC Funds and its affiliates exercised all of the convertible securities held by them) of the Corporation’s issued and outstanding Common Shares. The shareholders of the Corporation approved the creation of the ARC Funds as a control person of the Corporation at the annual and special meeting of the shareholders of the Corporation held on June 27, 2013.

The sale of Units to ARCF II and ARCF Mexico constitutes a “related party transaction” as defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). The Corporation is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101, as neither the fair market value of securities being issued to insiders nor the consideration being paid by insiders exceeded 25% of the Corporation’s market capitalization. None of the Corporation’s directors expressed any contrary views or disagreements with respect to the foregoing. The Corporation did not file a material change report 21 days prior to the closing of the Offering as the details of the participation of the insiders of the Corporation had not been confirmed at that time.

The securities issued in the Offering are subject to a hold period.

About Largo Resources Ltd.

Largo Resources Ltd. is a 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.

Forward-Looking Statements

This news release contains “forward-looking information” within the meaning of applicable Canadian securities laws, including statements regarding the anticipated use of proceeds. Forward-looking information is not a guarantee of future performance or results, since it involves risks and uncertainties. There is no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in forward-looking statements. Some of the factors on which the forward-looking statements are premised include (but are not limited to) the lack of material changes to general economic, market and business conditions. Forward-looking information is subject to the risk that those factors will not materialize, and to other risks, including the price of vanadium in 2018. Except as required by law, the Corporation does not assume and expressly renounces any obligation to update any forward-looking information, which is only applicable on the date on which it is given.



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