TORONTO, May 15, 2012 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") is pleased to announce that the Board of Directors of the Business
Development Bank of Brazil ("BNDES") have provided their final approval for a Brazilian Reais R$333
million (approximately US$175 million equivalent) debt-facility (the "Facility") for the Maracas Vanadium Project in Bahia, Brazil (see press release
dated October 31, 2012).
Highlights:
-
Attractive blended interest rate (See "Terms of Facility" below)
-
Eight year facility
-
Two year grace period on principal
-
First disbursement expected in June
-
Contracts for equipment and construction are being finalized with full
scale construction to start in May
Mark Brennan, Largo's President & Chief Executive Officer stated, "This
is a seminal moment in Largo's history as it enables Largo's core asset
to move into full scale project development. We look forward to
completing construction which will enable Largo to generate significant
cash flows over a sustained period and provide further returns to
shareholders."
Terms of Facility:
The Facility is denominated in Brazilian Reais ("BRL") but approximately
52% (R$173 million) of the Facility is indexed to U.S. dollars ("U.S. dollar component"). The 48% of the Facility that is not indexed ("BRL component") currently bears a weighted average interest rate of 7.61%, while the
US dollar component currently bears a weighted average interest rate of
5.85%. The interest rate on the US dollar component is based on the
BNDES cost of borrowing a basket of foreign funds, plus a weighted
average margin rate of 2.26% which will increase or decrease with
BNDES's foreign borrowing costs. Approximately R$50.1 million of the
BRL component is to be fixed at 7.3%, while the remaining R$111.2
million is based on the Taxa de Juros de Longo Prazo ("TJJP") index, currently at 6%, a long term interest rate that BNDES posts
from time to time, plus a weighted average margin of 1.75%. The TJLP
rate has been constant at 6% since 2009. The Facility is expected to
have a two year grace period on principal, and then will amortize on a
straight line basis over 72 months.
The primary condition precedent to the Facility is the provision by
three Brazilian commercial banks of a loan guarantee. Largo is in the
process of finalizing this guarantee and expects it will be available
before the end of May. The expected cost of this guarantee is 3.3%.
The final Facility documents and related guarantee agreement are subject
to review and approval by Largo's Management and Board and require the
conversion of all outstanding subscription receipts and the related
release of the approximate $74 million of funds held in escrow (see
press release dated March 8, 2012 for related conditions). Assuming all
conditions precedent are met by the end of May, the initial
disbursement of funds by BNDES under the Facility is expected in June
2012.
In the interim, Largo continues to advance the development of the
Maracas project and the initial phases of construction including, the
ordering of long lead items and finalization of electrical
transmission, water line and earth moving contracts. Largo expects to
break ground at Maracas in early June, 2012.
About Largo
Largo is a Canadian-based mineral resource exploration and development
company focused on creating a world leading strategic metals company.
Largo currently holds a 90% interest in the Maracás Vanadium Project, a
100% interest in the Currais Novos Tungsten Tailing Project, a 100%
interest in the Campo Alegre de Lourdes Iron-Vanadium Project, all in
Brazil, and a 100% interest in the Northern Dancer Tungsten-Molybdenum
property located in the Yukon Territory, Canada. The immediate goal of
the Company is to develop the Maracás Vanadium Project by the end of Q3
2013 and continue to produce WO3 concentrate from the reprocessing of tungsten tailings from Currais
Novos. Largo's skilled management team both in Canada and Brazil, are
confident in their ability to advance these projects.
Largo is listed on the TSX Venture Exchange under the symbol "LGO".
For more information please refer to Largo's website: www.largoresources.com
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 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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