Largo Closes BNDES Debt Financing Facility and Converts Subscription Receipts

Symbol: LGO (TSX.V)
www.largoresources.com

  • BNDES agrees to provide approximately US$166 million equivalent facility
  • Conversion of all outstanding subscription receipts and concurrent release from escrow of approximately Cdn$74.4 million to Largo

TORONTO, July 3, 2012 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") is pleased to announce that it has entered into a definitive agreement with the Business Development Bank of Brazil ("BNDES") for a Brazilian Reais R$333 million (approximately US$166million equivalent) debt financing facility (the "Facility") for its Maracas Project in Bahia, Brazil, as previously disclosed in its press releases dated October 31, 2011, March 8, 2012 and May 15, 2012. As a condition precedent to the Facility, the Company has also entered into a guarantee agreement (the "Guarantee") with a consortium of commercial banks in Brazil, led by Banco Itau BBA S.A. and including Banco Votorantim S.A. and Banco Bradesco S.A., (collectively the "Banks"), to secure the Facility.

The first disbursement by BNDES of approximately R$57 million of the Facility to Largo is expected to occur on or around July 16, 2012.

Mark Brennan, President and Chief Executive Officer stated: "We are enormously excited to announce the closure of the BNDES debt-facility for Maracas. Coupled with the funds from the equity issuance last year, the completion of the BNDES facility concludes the funding process for the project." He continued, "This is perhaps the most significant milestone to date in the development of the project, and although it has been a long time in progress, we continue to believe that the terms of this facility ultimately add significantly to the value of returns for the project and our shareholders."

Mr. Brennan continued, "Maracas is our cornerstone asset, and with the project financing complete, and construction underway, we hope that both our shareholders and the investment community will recognize that the Maracas Project is positioned to be the premier, and most profitable, primary producer of Vanadium in the world. We hope that the announcement of this crucial event will mark a fundamental shift in the market's perception of Largo as a whole as we now advance this project into a cash-flow generating mine."

Conversion of Subscription Receipts and Escrow Release

Largo is also pleased to announce that the 246,258,986 outstanding subscription receipts (the "Subscription Receipts") of the Company have converted (the "Conversion") into 295,510,782 units (the "Units") and that, concurrently, an aggregate of Cdn$74,428,161 (the "Escrowed Funds"), being the gross proceeds remaining in escrow from the issuance of the Subscription Receipts pursuant to the Company's non-brokered private placement previously announced on April 11, 2011 plus interest accrued thereon, has been released from escrow (the "Escrow Release") to the Company.

Upon or prior to entering into the definitive Facility agreement, each of the conditions precedent (the "Conditions") to the Conversion and the Escrow Release previously disclosed in a press release dated March 9, 2012 (the "March 2012 Release") were met or satisfied, with the exception of Condition (ii)(G) as set out in the March 2012 Release. Each of Ashmore Cayman SPC No. 2 Limited on behalf of and for the account of Largo Resources Segregated Portfolio ("Ashmore"), Eton Park Capital Management, L.P. on behalf of one or more funds managed by it (the "Eton Park Funds"), Arias Resource Capital Management L.P. on behalf of one or more funds managed by it (the "ARC Funds") and Mackenzie Investments on behalf of one or more funds managed by it ("Mackenzie") (each of Ashmore, the Eton Park Funds, the ARC Funds and Mackenzie being a "Lead Investor", and collectively, the "Lead Investors"), on their own behalf and on behalf of all holders of Subscription Receipts in accordance with the terms thereof, has waived condition (ii)(G). Accordingly, each of the Conditions has been satisfied or waived, resulting in the Conversion and the Escrow Release.

On Conversion, each Subscription Receipt converted into 1.2 Units, with each one (1) Unit being comprised of one common share (each, a "Common Share") in the capital of the Company and one-third (1/3) of one common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant entitles the holder to acquire one further Common Share at a price of Cdn$0.35 expiring on April 8, 2015. The Common Shares and Warrants, and any Common Shares issued upon exercise of the Warrants, remain subject to the 4 month statutory hold period which commenced the date of the amendment of the Subscription Receipts previously announced in the March 2012 Release. The Company issued an aggregate of 295,510,782 Common Shares and 98,503,593 Warrants pursuant to the Conversion, resulting in an aggregate of 823,688,345 issued and outstanding Common Shares.

As a result of the Conversion, the ARC Funds hold an aggregate of 138,310,327 Common Shares of Largo, representing approximately 16.79% of the issued and outstanding Common Shares of the Company; the Eton Park Funds hold an aggregate of 109,417,826 Common Shares of Largo, representing approximately 13.28% of the issued and outstanding Common Shares of the Company; Ashmore holds an aggregate of 109,417,826 Common Shares of Largo, representing approximately 13.28% of the issued and outstanding Common Shares of the Company; and Mackenzie holds an aggregate of 130,919,098, representing approximately 15.89%

About Largo

Largo is a Canadian-based mineral resource exploration and development company focused on creating a world leading strategic metals company.  Largo currently holds a 90% interest in the Maracás Vanadium Project, a 100% interest in the Currais Novos Tungsten Tailing Project, a 100% interest in the Campo Alegre de Lourdes Iron-Vanadium Project, all in Brazil, and a 100% interest in the Northern Dancer Tungsten-Molybdenum property located in the Yukon Territory, Canada.  The immediate goal of the Company is to develop the Maracás Vanadium Project by Q2 2013 and produce WO3 concentrate from the reprocessing of tungsten tailings from Currais Novos.  Largo's skilled management team both in Canada and Brazil, are confident in their ability to advance these projects.

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

For more information please refer to Largo's website: www.largoresources.com

Disclaimer

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 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

SOURCE Largo Resources Ltd.

For further information:

Darcie Ladd
Manager Business Development
416-861-9406
dladd@largoresources.com


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