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TORONTO, March 3, 2016 /CNW/ - Largo Resources Ltd.
(TSX-V:LGO) ("Largo" or the "Company") is pleased to
announce today that it closed the second and final tranche (the
"Second Tranche") of its Unit offering (the
"Offering") previously announced in its news release of
January 19, 2016. The closing of the
Second Tranche resulted in gross proceeds to the Company of
Cdn$23,357,649 from the sale of
133,472,280 Units which, together with the first tranche of the
Offering (see the Company's news release of January 29, 2016), has resulted in aggregate
proceeds to the Company of approximately US$26.8 million (or Cdn$36,643,631) from the sale of an aggregate of
209,392,178 Units. The proceeds realized from the Second Tranche
will be used for ongoing working capital requirements at the
Company's Maracás Menchen Mine which is a condition of the
Company's restructuring of its existing credit and export
facilities with its consortium of Brazilian lenders (as previously
disclosed in the Company's press release of March 2, 2016) and for general corporate and
working capital purposes.
Mark Smith, President and Chief
Executive Officer to the Company, stated: "We are extremely pleased
to have concluded this private placement. I would like to sincerely
thank all who participated in this placement for their continued
support of the Maracas Menchen Mine Project and the Largo team,
and, to reiterate that we will continue to work hard to realize the
Company's full value."
Each Unit was sold at a price of CDN$0.175 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 issued pursuant to the Second
Tranche of the Offering will be exercisable into one Common Share
at a price of CDN$0.29 per share for
a period of five years from closing of the Second Tranche.
Funds managed by Arias Resource Capital Management LP (the
"ARC Funds") purchased an aggregate of 91,157,202 Units in
the Second Tranche for gross proceeds to the Company of
CDN$15,952,510.35. The ARC Funds are
a "Control Person" of the Company (as defined in the TSX Venture
Exchange Corporate Finance Manual). Prior to the closing of
the Second Tranche, the ARC Funds owned approximately 55.98% of the
Company's issued and outstanding Common Shares and, following
closing of the Second Tranche, the ARC Funds own approximately
59.96% of the Company's then issued and outstanding Common Shares
(or approximately 68.68% of the Company's 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.
As a condition precedent to ARC Funds' participation in the
Offering , Largo and the ARC Funds amended and restated that
certain director nomination agreement dated May 22, 2015
pursuant to which the ARC Funds have the right to, as a group,
designate one additional person to be nominated for election to
Largo's board of directors by Largo shareholders, including at the
next annual meeting of Largo shareholders, for so long as the ARC
Funds, whether individually or together, own at least 50% of the
issued and outstanding Common Shares. These nomination rights
are in addition to the ARC Funds' existing nomination rights more
fully set out in the Company's press release issued on May 22, 2015 and, accordingly, assuming the ARC
Funds ownership remains equal to or above 50% of the issued and
outstanding Common Shares, the ARC Funds will designate four of the
seven persons to be nominated for election as directors at the next
annual meeting of Largo's shareholders.
In addition, Mr. Mark Smith,
President and Chief Executive Officer and a director of Largo,
subscribed for 1,718,000 Units in the Second Tranche.
The Offering was considered and approved by the board of
directors of the Company. 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, Sam Abraham, a director of Largo and an employee
of Arias Resource Capital Management LP, and Mark Smith, President, Chief Executive Officer
and a director of Largo, each declared a conflict and recused
themselves from voting on 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 on
section 5.5(g) of MI 61-101, as the Company is in serious financial
difficulty and the Company's board of directors, acting in good
faith, have all determined that (i) the Company in serious
financial difficulty,(ii) the Offering is designed to improve the
financial position of the Company, and (iii) the terms of the
Offering are reasonable in the circumstances of the Company. In
addition, the Company is currently not subject to any court
approval under bankruptcy or insolvency law or section 191 of the
Canada Business Corporations Act or any equivalent
legislation of another jurisdiction and the Company has one or more
independent directors in respect of the Offering. 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 (TSX-V: LGO) is a growing strategic mineral company
focused on continuing production at its Vanadio de Maracás Menchen
Mine. 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.
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 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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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.
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SOURCE Largo Resources Ltd.