TORONTO, Dec. 17, 2015 /CNW/ - Largo Resources Ltd.
("Largo" or the "Company") is pleased to announce
that it has signed an indicative term sheet with its consortium of
existing commercial banks in Brazil (collectively, the "Lenders")
for a new debt facility (the "New Facility") and the
restructuring of its export credit facilities (the "Export
Facilities") for its Maracás Menchen Mine.
The terms of the New Facility include:
- Working capital facility of R$104,596,000 (Brazilian reais), disbursed in 12
monthly disbursements from January 12,
2016 (the "Disbursement Date").
- Working capital facility in an amount equivalent to the
mark-to-market value of the swap contract applicable to one of the
Company's Export Facilities.
- Margin equal to the Interbank rate ("CDI") + 5.70% per
annum.
- Two-year grace period on the payment of interest and principal,
measured from the Disbursement Date. Quarterly repayment (in
arrears) of the New Facility commences after the end of the grace
period.
- Final maturity 84 months after the Disbursement Date.
- Use of proceeds strictly to pay interest and principal falling
due under the Company's existing construction debt facility and to
pay the swap settlements pertaining to one of the Company's Export
Facilities.
The restructuring of the Export Facilities includes the
amendment to set forth that the principal and interest installments
due for the 12 months after the Disbursement Date shall be payable
on the same payment terms of the New Facility.
The New Facility and the restructuring of the Export Facilities
is conditional on the Company raising an additional US$20,000,000 for on-going working capital
requirements at the Maracás Menchen Mine.
If required by the Company and agreed by the Lenders, the
indicative term sheet also contemplates an additional working
capital facility of up to R$117,827,700 ("Additional Facility") with
a one-year grace period on the payment of principal and interest
under both the Export Facilities conditional upon, among other
things, the Company raising further working capital in an amount to
be agreed with the Lenders.
The indicative term sheet requires the Company to comply with
various financial and non-financial covenants during the term of
the grace periods under both the New Facility and Additional
Facility. At the completion of the grace periods, the Company
will continue to comply with the covenants set forth in the
existing debt facilities.
The signed indicative term sheet provided by Largo will now be
submitted for final approval from each of the Lenders' credit
committees and will be dependent on the fulfillment of certain
conditions precedent by the Company prior to closing. Largo
anticipates that the process will be concluded prior to the
Disbursement Date.
Mark Smith, President and Chief
Executive Officer for Largo, stated: "We are extremely pleased with
the commitment and willingness of our Lenders to provide the
Company with additional funding and to restructure the Company's
debt profile during a period of very low commodity prices and
general market weakness in the mining industry. This new
support underscores the belief our Lenders and stakeholders have in
the value and success of the Maracás Menchen Mine."
He continued: "We believe the Maracás Menchen Mine has now
proven its technical merit and will benefit greatly from any
increase in Vanadium prices from the current historic lows."
Largo also announces that its wholly owned subsidiary Vanadio de
Maracás has entered into a R$867,447
short-term bridge loan facility repayable on January 15, 2016 with a separate existing lender
and Largo as guarantor, in order to fund certain payment
obligations in respect of currency swap contracts with said
existing lender.
About Largo
Largo (TSX-V: LGO) is a growing strategic mineral company
focused on continuing 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 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
Join our mailing list:
www.largoresources.com/English/about-us/email-alerts/default.aspx
Disclaimer
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.
Continue to Follow, Like and Watch our
progress!
NEITHER THE TSX VENTURE EXCHANGE (NOR ITS REGULATORY SERVICE
PROVIDER) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF
THIS RELEASE
SOURCE Largo Resources Ltd.