TORONTO (miningweekly.com) – Vanadium producer Largo Resources needs to secure about C$20-million through financing activities this year to complete optimisation initiatives at its Maracas Menchen mine, in Brazil, which is ramping up to commercial production.
TSX-V-listed Largo on Monday said Phase 1 nameplate capacity of 9 634 t/y was still expected to be achieved during the third quarter, noting that it had identified certain additional capital expenditures which would be required to be made over 2015.
These expenditures would include enhancing the availability and recoveries of the leaching system and would accommodate future expansion. Included in the capital requirements were certain payments required under its current debt facility, with one of these payments due on Sunday.
The expected capital requirements could change depending on vanadium prices and production results over 2015.
Largo also foresaw that it would require further financing over the course of 2016 of about C$30-million to fund its debt servicing requirements and certain other payments.
The company was currently negotiating a short-term debt facility with potential investors to fund project and debt-servicing requirements until May.
Without a bridge loan or other agreement with the lenders under the facility, Largo would have insufficient cash to meet its obligations.
Largo also announced that Mark Smith would become the president and CEO of Largo effective April 1, replacing Mark Brennan, who would be retiring as the company's president and CEO.
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.