TORONTO, Sept. 7, 2016 /CNW/ - Largo Resources Ltd. (TSX:
LGO) (OTCQB: LGORF) ("Largo" or the "Company") is pleased to announce today that it has closed a first
tranche (the "First Tranche") of a non-brokered private placement offering (the "Offering") of Units (as defined
below).
President and Chief Executive Officer for Largo, Mark Smith, stated: "We sincerely appreciate the
support of our existing shareholders, who all remain committed to the on-going success of Largo and its Maracás Menchen Mine."
The closing of the First Tranche resulted in gross proceeds to the Company of CDN$3,359,499.75
from the sale of 7,465,555 units of the Company (the "Units"). The proceeds realized from the First Tranche will be used for
ongoing working capital requirements at the Company's Maracás Menchen Mine, and for general corporate and working capital purposes.
Largo expects to close a second smaller tranche of approximately $825,000 on or about September 7, 2016 (the "Second Tranche") which would bring the aggregate proceeds to approximately
$4.18M.
Each Unit was sold at a price of CDN$0.45 and consists of one common share of the Company (each, a
"Common Shares"), and one-half of one common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant
will be exercisable into one Common Share at a price of CDN$0.65 per share for a period of three
years from closing of the Offering. All securities issued in the Offering will be subject to a four-month hold from the date of
issuance.
Funds managed by Arias Resource Capital Management LP (the "ARC Funds") purchased an aggregate of 5,800,000 Units in the
First Tranche for gross proceeds to the Company of CDN$2,610,000. The ARC Funds are a "Control
Person" of the Company (as defined in the TSX Venture Exchange Corporate Finance Manual) by virtue of their ownership prior to the
closing of the Offering of approximately 59.96% of the Company's issued and outstanding Common Shares. Following closing of the
First Tranche, the ARC Funds own 60.28% of the Company's then issued and outstanding Common Shares (or approximately 66.97% of the
Company's then issued and outstanding Common Shares in the event that the ARC Funds exercised all of the convertible securities
held by them). The shareholders of the Company approved the creation of the ARC Funds as a Control Person of the Company at the
annual and special meeting of the shareholders of the Company held on June 27, 2013.
In addition, Mr. Mark Smith, president and chief executive officer and a director of Largo,
subscribed for an aggregate of 555,555 Units under the Offering.
The Offering was considered and approved by the board of directors of the Company. Mark Smith,
president, chief executive officer and a director of Largo declared a conflict and recused himself from voting on the Offering.
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 and Sam
Abraham, a director of Largo and an employee of Arias Resource Capital Management LP, also declared a conflict and recused
themselves from voting on the Offering due to the ARC Funds participation in the Offering. The remaining directors voted
unanimously to approve the Offering.
Pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI
61-101"), the purchase by the ARC Funds of the Units under the Offering is 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 of
sections 5.5(a) and 5.7(a), respectively, of MI 61-101, as the fair market value of the Units being sold under the Offering to the
ARC Funds does not exceed 25% of the Corporation's market capitalization. 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.
About Largo
Largo Resources Ltd. is a growing strategic mineral company focused on the production of vanadium pentoxide at its Vanadio de
Maracás Menchen Mine. 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. For more information, please visit
www.largoresources.com.
Cautionary Notes:
This press release contains forward-looking information under Canadian securities legislation. Forward-looking information
includes, but is not limited to, negotiation of the Definitive Agreement and completion of the transactions contemplated in the
MOU, 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.
Neither the Toronto Stock Exchange (nor its regulatory service provider) accepts responsibility for the adequacy
or accuracy of this release
SOURCE Largo Resources Ltd.