Largo article by A. Brunohttps://www.proactiveinvestors.com.au/companies/news/62093/largo-resources-to-defer-debt-amortization-schedule-in-restructuring-package-with-lenders-62093.html
Largo Resources to defer debt amortization schedule in restructuring package with lendersFriday, May 01, 2015 by
Alessandro Bruno
() (OTCMKTS:LGORF) has signed a term sheet with lenders to defer its debt amortization schedule in a restructuring package that has will also extend the maturities of its construction debt and export credit facilities for its Maracas Menchen Mine.
The restructuring, upon closing, will allow for an additional one-year grace period on the amortization repayment schedules for the Facilities, a two-year extension of maturity for its export credit facilities and a three-year extension of maturity for the BNDES Loan for the US dollar component.
There are no changes to the Brazilian reais (R$) component of the BNDES Loan, which is denominated in reais (R$) even while some 63% or CDN$111,497 (R$257,676) of the facility is indexed to the U.S. dollar while the remaining 37% is not indexed.
"We are extremely pleased with the significant advancements we have made in discussions with our Lenders and believe that the signing of the term sheet by Largo is a strong indication that the terms set forth are largely as anticipated and are agreeable to the Company. We remain confident that a finalized agreement will be reached in the very near term," said Largo’s President and Chief Executive Officer, Mark Smith.
Last March, Largo closed a C$12 million convertible bridge loan as the vanadium miner said it would have to raise more equity capital to address additional capital expenses for 2015, including the improvement of recoveries of the leaching system at Maracas Menchen.
The successful effort to restructure debt and increase available resources add to the encouraging performance at the Mine, which Largo is aiming to develop to phase 1 capacity by the third quarter.
The mine started production last August. The Toronto-based miner is expecting 2015 production to come in at 17 million pounds of vanadium pentoxide at very competitive costs.
Largo has already achieved vanadium pentoxide production costs for $3.91/lb., placing the company in the lowest cost quartile of all primary vanadium production in the world. Largo is targeting a drop to US$3.21 per pound by the end of this year.
Looking out to 2016, the company has the option to complete a $32 million expansion, which would raise capacity by some 50 percent and make Maracas the largest and lowest cost vanadium mine in production.
Separately, after retaining Mark A. Smith, the former CEO of and the current executive chairman of , as its new president and chief executive last March, Largo announced Smith’s appointment to its Board of Directors.
Largo started production of vanadium ore in March of 2014 and shipments began in early September. It is the first vanadium project in the Americas and its target is to reach 11,700 tons at full capacity.
The Maracas Menchen Mine is the highest grade vanadium deposit in the world with grades of 1.3% - twice as high as the majority of known vanadium deposits.