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TORONTO, Nov. 29, 2013 /CNW/ - Largo Resources Ltd. (TSXV:LGO) ("Largo" or the "Company") announced today a C$17 million non-brokered private placement of common shares (the "Offering") at a price of C$0.20 per common share resulting in the issuance of up to 85,000,000 common shares. Proceeds from the offering will be used for the Company's Maracás Vanadium Project and general corporate purposes.
The Company anticipates that approximately C$15 million of the Offering, or up to 75,000,000 common shares, will be purchased by funds managed by Arias Resource Capital Management LP (the "ARC Funds"). Largo anticipates that the remaining C$2 million of the Offering will be purchased by existing shareholders of the Company.
The ARC Funds are insiders of the Company by virtue of their current ownership of approximately 19.98% of the Company's common shares. Assuming the Offering is fully sold, it is expected that after completion of the Offering, the ARC Funds will own up to 25.89% of the Company's then issued and outstanding common shares (or 28.48% of the Company's then issued and outstanding common shares in the event that the ARC Funds exercise all of the convertible securities held by them). Accordingly, the ARC Funds will be a "Control Person" of the Company as defined in the TSX Venture Exchange Corporate Finance Manual. At the annual and special meeting of the shareholders of the Company held on June 27, 2013, the shareholders of the Company approved the creation of the ARC Funds as a Control Person of the Company, all as more fully set out in Largo's management information circular dated May 23, 2013 and filed on www.SEDAR.com.
The Offering is expected to close on or about December 11, 2013 and is subject to certain customary closing conditions, including but not limited to receipt of all required regulatory approvals, including the approval of the TSX Venture Exchange. All common shares of the Company issued in connection with the Offering will be subject to a hold period in Canada of four months and one day from the date of issuance.
The Offering was considered and approved by the board of directors of the Company. J. Alberto Arias, a director of Largo who is also the sole director of each of the general partners of the ARC Funds and indirectly controls Arias Resource Capital Management LP, declared a conflict and recused himself from voting on the Offering. There was no materially contrary view or abstention by any director approving the Offering.
Pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the proposed purchase by the ARC Funds 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 Offering in reliance on sections 5.5(a) and 5.7(a), respectively, of MI 61-101, as neither the fair market value of the securities received by the ARC Funds nor the proceeds for such securities received by the Company exceeds 25% of the Company's market capitalization as calculated in accordance with MI 61-101. The material change report is being filed less than 21 days before the closing of the Offering as the Company requires the consideration it will receive in connection with the Offering immediately for working capital purposes.
Largo is a growing strategic mineral company with projects in Brazil and Canada. The immediate goal of the Company is to complete the development of its Maracás Vanadium Project which is expected in the first quarter of 2014. Largo also has interests in a portfolio of other projects, including: a 100% interest in the Currais Novos Tungsten Tailings Project in Brazil, which the Company continues to develop; 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".
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.
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SOURCE: Largo Resources Ltd.
For further information:
please refer to Largo's website: www.largoresources.com