High demand prompts Largo Resources to lift C$50m financing by C$20m

13th May 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America


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TORONTO ( – Vanadium producer Largo Resources has increased the C$50-million financing announced earlier this month by a further C$20-million on the back of strong demand from its existing shareholders.

The company expected that funds managed by Arias Resource Capital Management would buy up to C$50.65-million, or about 63.3-million units on a nonbrokered basis, in addition to other investors for a total of C$68.6-million.

The brokered offering with Mackie Research Capital would now be for up to C$1.4-million on a best-efforts-agency basis.

At C$0.80 a unit, each unit included one common share and one-half of one common share purchase warrant. Holders of warrants would be able to exercise them for C$1.50 for a period of 12 months following the close of the deal.

The deal was conditional upon the company raising at least $35-million in equity as part of a restructuring of its debt facilities for the Maracas Menchen mine, in Brazil, with its commercial consortium of lenders.

Largo will use the net proceeds from the deal, which is expected to close during the week of May 15, 2015, to continue development of the Maracas Menchen mine and for general corporate purposes.

TSX-V-listed Largo last week reported that it had received confirmation from its lenders consortium for the restructuring of debt facilities for the Maracas Menchen mine.

At the end of last month, the company said it had signed a term sheet with lenders to defer its debt amortisation schedule in a restructuring package that had also extended the maturities of its construction debt and export credit facilities for its flagship asset.

Under the terms of the restructuring, Largo would now have a further one-year grace period on the amortisation repayment schedules for the facilities, a two-year extension of maturity for its export credit facilities and a three-year extension of maturity for the BNDES Loan for the US dollar component.

The lenders had also agreed to extend the deferral of the beginning of the amortisation of the export credit facilities from April 2016 to October of that year.

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.

In March, Largo closed a C$12-million convertible bridge loan as a stopgap after announcing that it would need to raise more equity capital to address additional capital expenses this year, including the improvement of recoveries of the leaching system at Maracas Menchen.

The Toronto-based miner was expecting full-year 2015 output of about 17-million pounds of vanadium pentoxide at costs in the lowest quartile for the vanadium industry. The company was expecting to complete its Phase 1 ramp-up to 9 600 t/y by the third quarter.

Largo would require at least C$50-million over the course of 2015/16 to expand the facilities beyond the 9 634 t/y nameplate capacity to reach 11 700 t/y at full capacity.

Edited by Tracy Hancock
Creamer Media Contributing Editor


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