EDITOR: | May 13th, 2015

Largo Resources Ltd. announces an increase of approximately Cdn$20 million in the previously announced financing

| May 13, 2015 | No Comments
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Largo-Resources-200x125-1May 13, 2015 (Source: CNW) — NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION IN THE UNITED STATES

Largo Resources Ltd. (TSX-V:LGO) (“Largo” or the “Company“) is pleased to announce today that as a result of significant demand from its existing shareholders, the Cdn$50 million financing announced May 7, 2015 will be increased by approximately Cdn$20 million for an aggregate financing of approximately Cdn$70 million.

The Company anticipates that up to Cdn$50,650,000 or approximately 63,312,500 Units, will be purchased by funds managed by Arias Resource Capital Management LP (the “ARC Funds“) on a non-brokered basis.  In addition to the participation from the ARC Funds, the total raise on a non-brokered basis will be Cdn$68.6 million.  The brokered offering with Mackie Research Capital Corporation will now be for up to Cdn$1.4 million on a best efforts agency basis.  As set out in the May 7, 2015 press release, each Unit will be comprised of one common share in the capital of the Company (each a “Common Share“) and one half of one common share purchase warrant (each a “Warrant“), with each whole Warrant entitling the holder to acquire one further Common Share at a price of $1.50 per Common Share for a period of one year from the date of issuance.

Together, the Non-Brokered Placement and the Brokered Placement are expected to raise approximately Cdn$70 million for the Company through the issuance of the approximately 87.5 million Units.

The ARC Funds are a “Control Person” of the Company (as defined in the TSX Venture Exchange Corporate Finance Manual) by virtue of their current ownership of approximately 28.2% of the Company’s issued and outstanding Common Shares.  Assuming the Offering is fully sold, it is expected that after completion of the Offering, the ARC Funds will own up to 47.8% of the Company’s then issued and outstanding Common Shares (or approximately 56.3% of the Company’s then issued and outstanding Common Shares in the event that the ARC Funds exercise all of the convertible securities held by them excluding the Cdn$12 million convertible note facility, which will be repaid from the proceeds of the Offering).  In addition to the repayment of principal and interest under the Cdn$12 million convertible note facility, the last Cdn$2 million of which was fully drawn down by the Company on May 8, 2015, proceeds of the Offering resulting from ARC Fund subscriptions are to be used for general corporate purposes relating to the Maracas Menchen Mine.  The ARC Funds’ participation in the Offering is conditional upon several conditions, including the execution and delivery of a director nomination agreement permitting the ARC Funds to nominate two new directors to the Company’s board of directors.  This nomination right is in addition to the ARC Funds’ existing right to nominate one director to the Company’s board of directors under the existing governance agreement.

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.

In addition, Mr. Mark Smith, President and Chief Executive Officer and a director of Largo, as well as certain other employees, may subscribe for up to 770,125 Units.

The Offering is expected to close in one or more tranches with the first tranche expected to close on or about May 14, 2015, and is subject to certain customary closing conditions, including but not limited to receipt of all required regulatory approvals, including the approval of the TSX Venture Exchange. All Common Shares and Warrants issued in connection with the Offering will be subject to a hold period in Canada of four months and one day from the date of issuance.

A minimum equity raise of US$35 million is one of the conditions precedent to the Company’s restructuring of its debt facilities for its Maracás Menchen Mine with its commercial consortium of lenders. The net proceeds from the Offering will be used by the Company for the continued development of the Maracás Menchen Mine, and for general corporate purposes.  Definitive documentation for the restructuring is expected to be excuted on or before May 31, 2015.

The Offering was considered and approved by the board of directors of the Company. J. Alberto Arias, a director of Largo who is also the sole director of each of the general partners of the ARC Funds and indirectly controls Arias Resource Capital Management LP, and Mark Smith, a director and officer of the Company, each declared a conflict and recused himself from voting on the Offering due to their participation in the Offering. The remaining directors voted unanimously to approve the Offering.

Pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“), the proposed purchase by the ARC Funds or those certain directors and officers will be a “related party transaction”. In the case of the ARC Funds and other related parties, the Company is exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the Offering in reliance on section 5.5(g) of MI 61-101, as the Company is in serious financial difficulty and the Company’s board of directors, acting in good faith, have all determined that (i) the Company in serious financial difficulty,(ii) the Offering is designed to improve the financial position of the Company, and (iii) the terms of the Offering are reasonable in the circumstances of the Company. In addition, the Company is currently not subject to any court approval under bankruptcy or insolvency law or section 191 of the Canada Business Corporations Act or any equivalent legislation of another jurisdiction and the Company has one or more independent directors in respect of the Offering.  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.

About Largo

Largo is a growing strategic mineral company with projects in Brazil and Canada. The immediate goal of the Company is to continue to ramp-up production at its Vanadio de Maracás Menchen Mine.

Largo’s Maracás Menchen Mine boasts the highest grade vanadium deposit yet discovered and is expected to be a low cost producer. With an off-take in place with commodities giant Glencore, Largo is well positioned to become a leading producer of vanadium globally and is expected to generate substantial cash-flows.

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. With a compound annual growth rate of over 6% for the past several years (Roskill, 2013), vanadium is a bourgeoning commodity which lacks opportunities for investment in the wider market place. As trends in the steel industry now demand increasingly stronger and lighter products for advanced applications, the use of vanadium is expected to continue this growth over the medium and long term.

Largo is listed on the TSX Venture Exchange under the symbol “LGO”.

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 the private placement, Largo’s development potential and timetable of the Maracas Menchen Mine and Northern Dancer projects; Largo’s ability to raise additional funds necessary; the future price of 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”. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. 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. 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.

NEITHER THE TSX VENTURE EXCHANGE (NOR ITS REGULATORY SERVICE PROVIDER) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE


Raj Shah

Editor:

Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>


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