TORONTO, March 9, 2015 /CNW/ - Largo Resources Ltd. (TSX-V:LGO) ("Largo" or the "Company") provides a corporate update in respect of its Maracás Menchen Mine project (the "Project") and announces the appointment of Mr. Mark A. Smith as its new Chief Executive Officer.
Largo continues to optimize operations at the Project as part of its ramp-up to commercial production. The Company continues to expect to achieve Phase 1 nameplate capacity of 9,634 tonnes per annum during the Third Quarter of 2015.
In connection with this process, Largo has identified certain additional capital expenditures which will be required to be made over 2015. These expenditures will include the enhancement of the availability and recoveries of the leaching system and will accommodate future expansion.
As a result of these additional expenditures and existing working capital requirements from the current ramp-up, Largo anticipates that it will require additional funds from financing activities of approximately CDN $20.0 Million in 2015. The expected capital requirements could change depending on vanadium prices and production results over this period. Included in the expected 2015 capital requirements are certain payments required to be made under its current debt facility (the "Facility"), one of which is required to be made on March 15, 2015.
The Company anticipates that it will also require additional financing over the course of 2016 of approximately CDN $30.0 million to fund its debt servicing requirements (after restructuring the existing Facility) and certain other payments.
The Company is currently negotiating a short term debt facility (the "Bridge Loan") with potential investors to fund Project and debt servicing requirements under the Facility until May 2015. In the absence of the Bridge Loan or other agreement with the lenders under the Facility, the Company would have insufficient cash to meet its obligations.
The Company will require additional capital by May 2015. The Company anticipates that it will be seeking additional financing to coincide with amendments to the Facility that are currently being negotiated (see press release dated February 23, 2015). It is anticipated that the lenders under the Facility will require additional equity capital as a condition to the contemplated amendment of the Facility.
Mark. A. Smith Appointed President and Chief Executive Officer
Largo is pleased to announce that Mr. Mark A. Smith will become the President and Chief Executive Officer of Largo effective April 1, 2015. Mr. Smith will succeed Mr. Mark Brennan who will be retiring as the Company's President and Chief Executive Officer effective the same date. Following his retirement, Mr. Brennan will continue to be engaged by the Company as a consultant for a period of a year to provide assistance with the transition and in order to help conclude the amendments to the Facility. Mr. Brennan met with the board of directors last fall to discuss the next stage of the Company's development and indicated his desire to explore new career possibilities. The board appreciates Mr. Brennan's flexibility and cooperation in leading the Company over the past several months while they worked to find suitable replacement.
Mr. Alberto Arias, on behalf of the Company's board of directors, said, "The Board of Directors would like to thank Mr. Brennan for his service as President and CEO and for his many contributions to Largo. It was his inspiration and sheer determination that led to the Company's financing and construction of the Maracás Menchen Mine in Brazil. Under his supervision, the Company has grown from a junior exploration company to a new vanadium producer with over 250 employees in Canada and Brazil." Mr. Arias further stated "The Board of Directors is also very excited to welcome Mr. Smith to lead the Largo team moving forward. Mr. Smith has extensive experience in the mining industry and brings with him a wealth of knowledge and know-how that will be invaluable to Largo as it continues to ramp up production at the Maracás Menchen Mine".
Over the last 30 months, Largo has built the Maracás Menchen Mine and related processing and management facilities in Maracás, Brazil. Largo's focus is now on continuing to ramp-up production and to meet its short term financing needs. To that end, Mr. Brennan is committed to continuing to provide assistance to Largo, so that it is able to meet its short term financing needs and complete the amendment to the Facility.
Mark Brennan stated: "I am very pleased to have been a part of a talented and dedicated team at Largo that has taken the Maracás Menchen Mine from its roots as an exploration property to a fledgling producing mine. There is still a lot of work to be done to guarantee Largo's future success and Mr. Smith's strong history of operational excellence and corporate leadership will be a tremendous asset to achieving that success." He continued, "My retirement will afford me the opportunity to stay involved as an investor and a keen observer of the business, in addition to having more time to focus my efforts on building new and exciting opportunities in the junior mining scene."
"Largo and Mark Brennan have put together a great team and I look forward to working with them to meet the challenges that face all resource companies in the current market environment. I believe that Largo is uniquely positioned to meet these challenges and with the support of its very qualified board of directors will, I am confident, continue to succeed." commented Mark Smith.
Mr. Smith is currently Executive Chairman of NioCorp and from 2008-2012, Mr. Smith was the President and CEO of Molycorp, Inc., which he developed into the largest rare earth company in the world, outside of China. Prior to his time with Molycorp, Mr. Smith held various engineering, legal and executive positions for Chevron and Unocal. Mr. Smith received his engineering degree from Colorado State University and his Juris Doctor from Western State University. He is a registered professional engineer and an active member of the State Bars of California and Colorado.
Largo is a growing strategic mineral company with projects in Brazil and Canada. The immediate goal of the Company is to ramp-up production 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.
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 a compound annual growth rate of over 6% for the past several years (Roskill, 2013), 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
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. The material factors or assumptions that could potentially impact Largo in drawing conclusions or making forecasts or projections set out in the forward looking information include, but are not limited to:
- the approval of the amendment to the Facility to among other things, decrease the debt service account requirement to 3 months (currently 6 months), extend the amortization period for 3 years, and extend the grace period on principal payments for an additional 12 months
- the success of Largo's mining, processing, exploration and development activities;
- the accuracy of geological, mining and metallurgical estimates;
- the costs of production;
- the supply and demand for vanadium;
- no significant and continuing adverse changes in financial markets, including commodity prices and foreign exchange rates;
- the supply and availability of concentrate for Largo's processing facilities;
- the supply and availability of reagents for Largo's concentrators;
- the supply and availability of all forms of required energy and fuels at reasonable prices;
- no significant unanticipated operational or technical difficulties;
- the availability of financing for Largo's exploration and development projects and activities;
- market instability affecting Largo's ability to borrow in the capital debt markets at acceptable rates;
- maintaining an optimal debt to cash flow ratio;
- the ability to complete project targets on time and on budget and other events that may affect Largo's ability to develop its projects;
- the availability of personnel for Largo's exploration, development and operational projects and ongoing employee relations;
- maintaining good relations with the communities in which Largo operates, including the communities surrounding the company's Maracas Mine;
- no significant unanticipated events relating to regulatory, environmental, health and safety matters;
- legislative, political or economic developments in Brazil;
- certain tax matters, including, but not limited to current tax laws and regulations and the refund of certain value added taxes from the Canadian and Brazilian governments; and
- no significant and continuing adverse changes in general economic conditions or conditions in the financial markets.
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.
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, Corporate Development, Phone: 416-861-9406, Fax: 416-861-9747, e-mail: [email protected], Web Site: www.largoresources.com