ARC Funds Increase Position in Largo

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

TORONTO, Jan. 29, 2016 /CNW/ - Arias Resource Capital Fund II L.P. ("ARCF II") and Arias Resource Capital Fund II (Mexico) L.P. ("ARCF II Mexico", together with ARCF II, the "ARC Funds") announced today that they, collectively, acquired an additional 62,176,283 Units at a price of Cdn$0.175 per Unit for an aggregate subscription price of Cdn$10,880,849.53 pursuant to the first tranche (the "First Tranche") of Largo Resources Ltd.'s ("Largo") previously announced non-brokered private placement of USD$26.5 million (approximately CDN$39 million) of Units (the "Offering").  Each Unit consists of one common share in the capital of Largo ("Common Shares") and one-half of one Common Share purchase warrant.  Each whole warrant entitles the holder to acquire one further Common Share at a price of Cdn$0.29 per Common Share for a period of five years from the closing of the Offering.

Prior to the closing of the First Tranche, the ARC Funds, together with Arias Resource Capital Fund L.P. ("ARCF I"), owned an aggregate of 94,100,473 Common Shares and 38,063,389 Common Share purchase warrants ("Warrants").  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 198,000 Common Shares of Largo ("Options"), 148,000 of which are vested.  Giving effect to the acquisition of Units under the First Tranche and assuming the exercise in full of the Warrants 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 64.73% of the total outstanding Common Shares of Largo, on a partially-diluted basis, as summarized below:



Common Shares issuable
on exercise or conversion





Common
Shares
Owned

Warrant
Shares

Option
Shares

Partially
Diluted
Total

%
Ownership
of Common
Shares


% Change in
Ownership

J. Alberto Arias

---

---

148,000

148,000

0.04%

0.03%

ARCF I

25,553,777

7,486,727

---

33,040,504

9.48%

(4.21)%

ARCF II

123,704,344

58,353,965

---

182,058,309

52.24%

13.38%

ARCF II (Mexico)

7,018,635

3,310,838

---

10,329,473

2.96%

0.76%

TOTAL:

156,276,756

69,151,530

148,000

225,576,286

64.73%

9.96%









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.

The Units were acquired by the ARC Funds for investments purposes.  In respect of ARCF II Mexico, the Units were acquired under the accredited investor exemption under Section 2.3 of National Instrument 45-106 Prospectus Exemptions.  ARCF II Mexico is an accredited investor under category (m) of the definition of accredited investor. ARCF II is situated outside of Canada and the United States.

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, including under the next tranche of the Offering.

As one of the conditions to the ARC Funds' participation in the Offering, Largo and the ARC Funds amended and restated that certain director nomination agreement dated May 22, 2015 (the "Amended Nomination Agreement"). The Amended Nomination Agreement grants the ARC Funds the right to designate one additional person (for a total of four persons) to be nominated for election to Largo's board of directors, including at the next annual meeting of Largo shareholders, for so long as the ARC Funds, whether individually or together, own at least 50% of the issued and outstanding Common Shares.

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

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.

SOURCE Arias Resource Capital Fund II L.P.

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

Organization Profile

Arias Resource Capital Fund II L.P.

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Arias Resource Capital Fund II (Mexico) L.P.

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