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April 26, 2010
LARGO RESOURCES ANNOUNCES CONDITIONAL APPROVAL FOR DEBT FINANCING FOR THE DEVELOPMENT OF THE MARACAS VANADIUM PROJECT, BAHIA, BRAZIL
- Total capex estimated at approximately US$250 million
- Company reviewing debt term sheets of approximately US$150 million with its financial advisors at Itau BBA
- Alternatives being analyzed for the equity portion of the project
07:31 EDT Monday, April 26, 2010
TORONTO, ONTARIO--(Marketwire - April 26, 2010) -
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES
Largo Resources Ltd. (TSX VENTURE:LGO) ("Largo or the "Company") is pleased to announce that it has received a conditional approval and a non-binding term sheet for structuring an approximate US$150 million debt financing from Banco Itau BBA S.A. ("Itau BBA"), a subsidiary of Itau Unibanco Group and one of Brazil's leading investment banks, for the development of its Maracas Vanadium Project in Bahia State, Brazil.
Largo estimates that the Maracas Vanadium project needs approximately US$215 million in capital costs and approximately US$35 million in working capital for a total investment of US$250 million to develop the project.
The strategy for project finance is a combination of debt and equity. The debt component consists of a single credit facility of approximately US$150 million to be provided by a consortium of financial institutions led by Itau BBA. Largo is also reviewing a debt term sheet received for the same approximate amount from a leading international bank with strong experience in the mining sector.
The Company is currently working with its advisors on how it might best structure the equity component of the capex. The objective of the Company is to maximize Largo's ownership position in the Maracas project and minimize dilution to existing shareholders.
Mark Brennan, President & CEO of Largo Resources stated "We are very pleased and extremely excited to be working with Itau BBA for the development of our Maracas project." He continued, "The realistic expectation of securing the debt component of the overall project financing represents a major milestone for the Maracas project." He continued, "Maracas remains a jewel in the Vanadium business due to its high grade and low costs. The project would be extremely profitable at current vanadium prices."
Maracas is the highest grade vanadium deposit in the world. Largo has an estimated NI 43-101 compliant measured and indicated mineral resource of 22.5 million tonnes grading 1.26% V2O5, which is two to three times higher grade than any other producer and/or project (for details see press release dated August 13, 2008). Within this resource is a very significant high-grade zone consisting of 8.7 million tonnes grading 1.94% V2O5 that will be produced during the first eight years of operations.
Largo completed a very positive Definitive Feasibility Study (DFS) (see press release dated August 12, 2008) outlining a NI 43-101 proven and probable mineral reserve estimated at 13.1 million tonnes grading 1.34% V2O5 , based upon which, production of 155 million lbs of vanadium contained in FeV is projected over a 23 year project plan.
Largo believes that there is good potential to expand the mineral resource significantly with drilling along strike and at depth. The existing resource occupies a small foot print to the overall property and Largo has done additional work including drilling outside of the resource area on the property that has identified a number of other targets that can be upgraded through drilling. Only 10% of the potential 8 kilometres of strike length has been tested to date and four other target areas have been identified that need further drilling to upgrade them to a resource category.
About Largo
Largo Resources Ltd. is a Canadian natural resource development and exploration company with two advanced stage projects: the Maracas Vanadium-PGM deposit in Brazil and the Northern Dancer Tungsten-Molybdenum deposit in the Yukon. The Company also owns the Campo Alegre de Lourdes Vanadium exploration project in Brazil. The company is listed on the TSX Venture Exchange under the symbol LGO.
For more information please refer to Largo's website: www.largoresources.com
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