TORONTO, Jan. 14, 2016 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") is pleased to announce that the Company has entered into a short term secured loan agreement with Mr. Mark Smith, Chief Executive Officer and a Director of Largo, pursuant to which Mr. Smith has advanced a US$1 million non-revolving term loan bearing an interest rate of 12% per annum (the "Bridge Loan "). The proceeds of the Bridge Loan will be used for ongoing working capital requirements at the Company's Maracás Menchen Mine for the period prior to the Company's restructuring of its existing credit facilities with its consortium of Brazilian lenders and the related equity injection as disclosed in its press release of December 17, 2015. The Bridge Loan will have a 30-day term, subject to acceleration in certain events. The Bridge Loan is secured by a general security agreement over the assets of the Company. As consideration for entering into the Bridge Loan, the Company will pay to Mr. Smith a loan establishment fee in the amount of US$40,000.
The entering into of the Bridge Loan was considered and approved by the board of directors of the Company. Mr. Smith declared a conflict and recused himself from voting on the Bridge Loan. The remaining directors voted unanimously to approve the Bridge Loan.
Pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), entering into the Bridge Loan with Mr. Smith will be a "related party transaction". The Company is exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the Bridge Loan in reliance on sections 5.5(a) and 5.7(a), respectively, of MI 61-101, as neither the fair market value of the subject matter of the Bridge Loan, nor the fair market value of the consideration for the Bridge Loan exceeds 25% of the Company's market capitalization as calculated in accordance with MI 61-101. The material change report in respect of the Bridge Loan is being filed less than 21 days before the closing of the Bridge Loan as the Company requires the financing it received under the Bridge Loan immediately to finance operating costs of the Company's Maracás Menchen Mine.
Largo (TSX-V: LGO) is a growing strategic mineral company focused on the production of vanadium pentoxide at its Vanadio de Maracás Menchen Mine. Largo's Maracás Menchen Mine boasts the highest grade vanadium deposit yet discovered and is expected to be a low cost producer. With an off-take in place with Glencore, Largo is well positioned to become a leading producer of vanadium globally and is expected to generate substantial cash-flows.
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. With consumption increasing at a compound annual growth rate of over 8% for the past several years (Roskill, 2015), vanadium is a bourgeoning commodity which lacks opportunities for investment in the wider market place. As trends in the steel industry now demand increasingly stronger and lighter products for advanced applications, the use of vanadium is expected to continue this growth 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.
Largo is listed on the TSX Venture Exchange under the symbol "LGO".
For more information please refer to Largo's website: www.largoresources.com
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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 any financings; Largo's development potential and timetable of its operating, development and exploration assets; Largo's ability to raise additional funds necessary; the future price of vanadium, 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". All information contained in this news release, other than statements of current and historical fact, is forward looking information. 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.
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. 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. Readers should also review the risks and uncertainties sections of Largo's annual and interim MD&As.
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SOURCE Largo Resources Ltd.
For further information: Alex Guthrie, Coordinator, Corporate Communications, 416.861.9797, [email protected]