ARC Funds Advance CDN$3 Million under Largo CDN$12 Million Convertible Bridge Loan Facility

/THE DISSEMINATION OF THIS RELEASE IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICE MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS./

/FOR DISSEMINATION IN CANADA AND OVER CANADIAN NEWS SERVICES ONLY/

TORONTO, March 16, 2015 /CNW/ - Arias Resource Capital Fund L.P. ("ARCF I"), Arias Resource Capital Fund II L.P. ("ARCF II") and Arias Resource Capital Fund II (Mexico) L.P. ("ARCF II Mexico", together with ARCF I and ARCF II, the "ARC Funds") previously announced on March 13, 2015 that they advanced an aggregate of Cdn$3,000,000.01 (the "Advance") under the Cdn$12 million non-revolving, convertible term loan facility (the "Bridge Loan") with Largo Resources Ltd. ("Largo")(TSXV:LGO).

The Bridge Loan bears an interest rate of 20% per annum.  The Bridge Loan has a 6-month term and is expected to be drawn down by Largo over approximately 8 weeks on a bi-weekly basis.  The Bridge Loan is convertible at the option of the ARC Funds, in whole or in part, into common shares of Largo ("Common Shares") at a conversion price of CDN$1.01 per Common Share (the "Conversion Price").

The ARC Funds currently own an aggregate of 30,787,975 Common Shares and 8,924,124 Common Share purchase warrants ("Warrants"), each Warrant exercisable for one Common Share at an average exercise price of Cdn$3.57 per Common Share.  J. Alberto Arias, the sole director of each of the general partners of the ARC Funds and a director on the board of Largo, currently holds options to purchase 100,000 Common Shares of Largo ("Options") at an exercise price of Cdn$2.80 per Common Share.  These options, awarded for service on the board of Largo, are exercisable according to an annual vesting schedule and to date, 25,000 of such Options have vested.  The value of any securities acquired by Mr. Arias on the exercise of such Options would be held for the benefit of the ARC Funds on a pro rata basis according to their respective governing agreements.

Accordingly, assuming of the exercise in full of the Warrants, the conversion in full of the Advance under the Bridge Loan and the exercise in full of the vested Options, the Common Shares held by J. Alberto Arias and the ARC Funds, collectively, would represent approximately 35.24% of the total outstanding Common Shares of Largo, on a partially-diluted basis (after giving effect to the 10:1 consolidation of Common Shares effective October 17, 2014), as summarized below:



Number of Common Shares that could be
acquired upon exercise or conversion



Common
Shares Owned

Warrant
Shares

Bridge Loan
Shares

Option Shares


TOTAL

J. Alberto Arias

---

---

---

25,000

25,000

ARCF I

10,580,323

1,783,419

1,020,745

---

13,384,487

ARCF II

19,122,685

6,757,317

1,844,877

---

27,724,879

ARCF II (Mexico)

1,084,967

383,388

104,673

---

1,573,028

TOTAL:

30,787,975

8,924,124

2,970,295

25,000

42,707,394

 

Pursuant to the Bridge Loan documents, the ARC Funds have been granted a participation option to subscribe for up to an aggregate of Cdn$40 million of securities under any proposed offering of Common Shares or securities exchangeable or convertible into Common Shares on or after the date of the Bridge Loan agreement (the "Participation Right"). Under the Participation Right, in respect of any proposed equity offering, the ARC Funds, collectively, may subscribe for that number of securities having an aggregate purchase price equal to the lesser of (a) the aggregate purchase price of all such securities; (b) Cdn$40 million; and (c) Cdn$40 million less the aggregate purchase price of all securities previously acquired by the ARC Funds pursuant to the Participation Right.  The Participation Right is subject to the participation rights of parties other than the ARC Funds under the investor nomination rights and governance agreement among Largo, the ARC Funds and certain other parties (the "Governance Agreement").  The Participation Right supersedes and is not limited by the ARC Funds' pre-emptive rights to maintain their pro rata ownership interest in Largo under the Governance Agreement. 

The ARC Funds are managed by Arias Resource Capital Management LP (the "Manager").  The respective general partner of each of the ARC Funds retains the power to make investment and voting decisions in respect of the Largo securities beneficially owned by the ARC Funds.  J. Alberto Arias is the sole director of each of the general partners of the ARC Funds and indirectly controls the Manager.  As such, Mr. Arias may be deemed to share voting and dispositive power with respect to the Largo securities beneficially owned by the ARC Funds, but he disclaims any beneficial ownership of any such securities, except to the extent of his pecuniary interest therein.  Mr. Arias declared a conflict and recused himself from voting on the Bridge Loan.

The ARC Funds may, from time to time, subject to all necessary regulatory approvals, acquire additional securities of Largo and/or dispose of such securities as they may deem appropriate.

This news release has been disseminated in accordance with the early warning requirements of Canadian provincial securities laws.

SOURCE ARIAS RESOURCE CAPITAL FUND L.P.

For further information: please contact: Alberto Arias, Director, phone: (212) 266-8600, e-mail: info@arc-fund.com.


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