Published: March 8, 2016 |

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Largo Resources Ltd. has secured funding and is restructuring its export credit facilities for its Maracás Menchen Mine.

The terms of the new facility, consistent with the previously announced binding term sheet with the lenders, include:

•  Working capital facility of up to R$104,596,000 (Brazilian reais), disbursed in 11 monthly payments over 2016.

•  Working capital facility in an amount equivalent to the mark-to-market value of the swap contract applicable to one of the company’s export facilities.

•  Margin equal to the Interbank rate (CDI) + 5.70 percent per annum.

•  Two-year grace period on the payment of interest and principal, measured from the disbursement date. Quarterly repayment (in arrears) of the new facility commencing after the end of the grace period.

•  Final maturity 84 months after the disbursement date.

•  Use of proceeds strictly to pay interest and principal falling due under the company’s existing construction debt facility and to pay the swap settlements pertaining to one of the company’s export facilities.

The restructuring of the export facilities includes an amendment confirming that the principal and interest installments due for the 12 months after the disbursement date will be payable on the same payment terms of the new facility, including, the addition of a grace period.

“With a world class vanadium resource, well established metallurgy, low unit production costs and a high performance team, Largo has been able to successfully restructure its debt and is now in a position to close the final tranche of its current financing imminently. With the changes occurring in the world-wide vanadium market, including, bankruptcy proceedings for several South African vanadium producers, similar troubles in Russia and fundamental changes in the Chinese vanadium industry, including the cessation of operations at several older vanadium slag producing steel mills and the increased importation of seaborne iron ore that does not contain vanadium, Largo is now well positioned for success as the world faces a potentially significant reduction in vanadium supply,” said Mark Smith, president and chief executive officer at Largo.

Funding under the new facility and the implementation of amendments to the export facilities remain contingent on Largo and VMSA securing an additional US$15 million in equity funding and the filing of the definitive documents with certain registries in Brazil. In order to meet this financial condition, Largo expects to the close the second and final tranche of its previously announced equity financing imminently.

Concurrently with the new facility, Largo has agreed to new commercial terms for an up to US$4,000,000 loan facility with Banco Pine to roll over its existing facility on roughly the same terms as the new facility and VMSA has also agreed to commercial terms with Banco Pine for a new up to R$80,000,000 facility to close out its existing swap contracts with Banco Pine.

About Largo
Largo is a growing strategic mineral company focused on continuing production at its Vanadio de Maracás Menchen Mine. Largo also has interests in a portfolio of other projects, including: a 100 percent interest in the Currais Novos Tungsten Tailings Project in Brazil; a 100 percent interest in the Campo Alegre de Lourdes Iron-Vanadium Project in Brazil; and a 100 percent interest in the Northern Dancer Tungsten-Molybdenum property in the Yukon Territory, Canada.

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