TORONTO (miningweekly.com) – Vanadium producer Largo Resources has received a nonbinding indicative term sheet from its consortium of lenders to defer its debt amortisation schedule and extend the maturities for its construction debt facility and its export credit facilities for its Maracas Menchen mine, in Brazil.

The TSX-V-listed company on Monday said the current term sheet allowed for a one-year deferral of the amortisation repayment schedules of all the debt facilities and a two-year extension in the maturity for the export credit facilities, and a three-year extension for the main construction facility.

The term sheet remained subject to approval from each of the lenders credit committees and some other conditions precedent before closing. Largo anticipated that the process would be concluded before the start of the amortisation period on its existing facilities.

"Although not yet finalised, we believe this indicative term sheet demonstrates our lenders’ support of the project and their willingness to engage in productive negotiations. We, at this time, remain confident that a suitable conclusion will be reached in the near term,” president and CEO Mark Brennan advised.

He added that while the company had experienced a deterioration in commodity prices that had impacted near-term cash flow generation, the Maracas Menchen mine had improved markedly on an operational basis from a year earlier and remained extremely viable, particularly once the current ramp-up had been achieved.

Vanadium pricing had decreased significantly since January last year, when it was trading at about $6/lb, and it currently remained at a five-year low, trading at between $4.85/lb and $5.15/lb.

Production at Maracas Menchen, which was currently regarded as the richest, highest-grade vanadium deposit in the world, started in August last year, but mechanical issues had hampered the ramp-up.

Largo expected output to reach a rate of 9 600 t/y of vanadium pentoxide, at cash costs of between $5.50/kg and $6/kg. The second phase of the project would see output rise to 14 400 t/y within the next three years, potentially giving the company the ability to supply up to 10% of global demand.

For 2015, the company expected to hit output of 7 850 t.

The company’s TSX-V-listed stock on Thursday gained 13.33%, increasing to C$0.14 apiece.