Rupert Resources

Largo Resources Announces Termination and Waiver of March and June 2017 Capitalization Requirements, Respectively, by Brazilian Banks

TORONTO, July 12, 2017 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") (TSX: LGO) (OTCQB: LGORF) is pleased to announce that, further to its release of March 15, 2017, effective June 30, 2017 the syndicate of Brazilian commercial lenders (the "Lenders") under the Company's existing debt facilities have agreed to (i) terminate the US$5 million March 2017 capital injection requirement which has been the subject of a temporary waiver since March 15, 2017 (See Company's press release of same date), and (ii) postpone the additional US$5 million June 2017 capitalization requirement until December 31, 2017.  The March 2017 and June 2017 capitalization requirements had initially been required by the Lenders in connection with the entering into of the 2017 Facilities in January (see the Company's press release of January 9, 2017).  The Lenders have further agreed that if the Company complies with the Payment Obligation (as defined below) then on December 31, 2017, the June 2017 capitalization requirement will also be terminated.

In consideration for the termination of the March 2017 capitalization requirement and the postponement (and possible subsequent termination) of the June 2017 capitalization requirement, the parties have agreed as follows:

  • Vanádio de Maracás S.A. (the "VMSA"), the Company's operating subsidiary, will pay, out of cash flow from operations, an aggregate of approximately CDN$13 million in amounts owing to the Lenders over the course of 2017, payment of which amounts had previously been postponed (the "Payment Obligation");
  • Disbursements by the Lenders under the 2017 Facilities will be reduced if the price of vanadium pentoxide exceeds certain thresholds over a 12 week trailing period as follows:
    • US$5.49/lb or less – no change to disbursement;
    • between US$5.50/lb and US$5.99/lb – 10% reduction in disbursement;
    • between US$6.00/lb and US$6.49/lb – 20% reduction in disbursement;
    • between US$6.50/lb and US$6.99/lb – 40% reduction in disbursement;
    • between US$7.00/lb and US$7.49/lb – 60% reduction in disbursement;
    • between US$7.50/lb and US$7.99/lb – 80% reduction in disbursement; and
    • US$8.00/lb or greater – no disbursement.
  • The previously semi-annual cash sweep payment obligation will now become assessable on a quarterly basis.

Mark Smith, President and Chief Executive Officer for Largo, stated: "As a result of our continued success with operations, our partners now agree that for so long as we meet the payment obligations, additional cash injections into VMSA are no longer required.  In addition, VMSA has now started to pay down some of the obligations owing to the Lenders. This is a great result for Largo and we look forward to continuing to work with the Lenders to ensure the success of the Company."

About Largo

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

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Largo Resources

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Market Cap: C$1.310B
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