Largo Provides Update on BNDES Debt Financing Facility

Symbol: LGO (TSX.V)

•     BNDES to provide US$ 180 million facility
•     Bank Itau and Bank Votorantin to provide $30 million Bridge Loan
•     Company to raise additional $14 million in Equity
•     Engages Runge Mining Ltd. to complete updated 43-101 technical report to detail economics of the project

TORONTO, March 8, 2012 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") is pleased to announce that the previously disclosed commitment for a debt financing facility with the Business Development Bank of Brazil ("BNDES") for its Maracas Project in Bahia, Brazil remains firmly in place and is targeted for completion by the end of the First Quarter 2012 (see press release dated October 31, 2011). The BNDES and a consortium of commercial banks, led by Banco Itau BBA S.A., acting as guarantors, are currently finalizing terms and requirements of the agreement.

In order to further development Largo's Vanadium project located in Maracas, Brazil (the "Maracas Project") in the interim, Largo has negotiated a short term secured bridge loan facility (the "Bridge Loan") from Banco Itau BBA S.A. and Banco Votorantim S.A. (collectively, the "Banks"), for a principal amount of USD$30 million (see details of the Bridge Loan below). In order to complete the BNDES financing and the Bridge Loan, and as a consequence of projected cost increases due mainly to inflation,  the strength of the Brazilian currency and the requirement for additional contingency funds, the Company additionally announces that it will raise supplementary equity funding through a proposed non-brokered private placement offering (the "Offering") of up to 63,636,363 units (each a "Unit") of the Company at a price of Cdn$0.22 per Unit for aggregate gross proceeds to the Company of up to Cdn$13,999,999.86 (see below for full details of the Offering).

Mark Brennan, President and Chief Executive Officer stated: "At each stage of the engineering and financing process, we are becoming increasingly more confident that we will bring the Maracas Project to fruition. We are confident that the BNDES debt facility will conclude shortly and believe that the Bridge Loan serves to indicate both Bank Itau and Bank Votorantim's commitment to its closure and the development of the Maracas Project. "

Mr. Brennan continued, "As we proceed through the engineering process leading to construction, some capital expenditures have increased as a result of general cost inflation and the strength of the Brazilian currency. That said, the merits and profitability of this project remain very strong. With Maracas in production Largo will be positioned to be a leader in the vanadium market and in turn, provide significant returns to our shareholders."

Additionally, Largo announces that it has engaged Runge Mining Ltd. to complete an updated NI 43-101 compliant Technical Report to outline the revised economics of the project. The findings of this report will be announced in a press release before the end of April 2012 with the corresponding Technical Report to be filed on SEDAR within 45 days of the release.

Bridge Loan

The Company has negotiated the Bridge Loan with the Banks for a principal amount of USD$30 million. The principal under the Bridge Loan shall incur interest at a rate of CDI+4.65% per year¹ and shall mature on June 30, 2012. The principal amount shall be drawn down by the Company in two tranches, the first tranche in the amount of US$12 million and the second tranche in the amount of US$18 million. It is anticipated that the first draw down will occur on or about March 9, 2012 and that the second draw down will occur no later than March 31, 2012. Pursuant to the terms of the Bridge Loan, Largo's subsidiaries, Companhia de Maracás ("CDM")  and Vanadio de Maracas S.A., the holder and operator of the Maracas Project, as the case may be, shall grant the Banks (a) a security interest over the  outstanding common shares of Vanadio de Maracas S.A. upon draw-down of the first tranche of the Bridge Loan, and (b) a first priority mortgage over the Maracas Project, a security interest over the mineral rights in the Maracas Project and certain other security upon draw-down of the second tranche of the Bridge Loan.

Conditions precedent for the closing of the Bridge Loan include receipt by the Company of a minimum additional equity investment of not less than US$11 Million (discussed below) and extension of the Expiry Date of the Subscription Receipts (each as defined below) of the Company to December 31, 2012.

Equity Financing

In order to facilitate the BNDES financing and the Bridge Loan, the Company also announces the Offering which is expected to close on or about March 12, 2012. Each Unit under the Offering will be comprised of one common share in the capital of the Company (each a "Common Share") and one Common Share purchase warrant (each, a "Warrant") where each Warrant will entitle the holder to acquire one further Common Share at a price of Cdn$0.30, exercisable up until that date which is 48 months from the date of issue.

Largo is pleased to announce that each of Ashmore Cayman SPC No. 2 Limited on behalf of and for the account of Largo Resources Segregated Portfolio ("Ashmore"), Eton Park Capital Management, L.P. on behalf of one or more funds managed by it (the "Eton Park Funds"), Arias Resource Capital Management L.P. on behalf of one or more funds managed by it (the "ARC Funds") and Mackenzie Investments on behalf of one or more funds managed by it ("Mackenzie") (each of Ashmore, the Eton Park Funds, the ARC Funds and Mackenzie being a "Lead Investor", and collectively, the "Lead Investors") have agreed to take-up all Units issued in connection with the Offering.

The securities issued pursuant to the Offering will all be subject to a 4 month regulatory hold period commencing on the date of closing.  The Offering remains subject to TSX Venture Exchange acceptance of requisite regulatory filings.

Amendment of Existing Subscription Receipts

In addition to the Offering and as a condition precedent to the Bridge Loan, Largo has agreed with the overwhelming majority of holders (the "Amending Holders") of subscription receipts (each a "Subscription Receipt") of the Company, including the Lead Investors, to amend (the "Amendments") the terms of 210,524,901 Subscription Receipts (the "Amended Subscription Receipts") as further described below.

An aggregate of 242,718,844 Subscription Receipts and 85,714,286 units (the "April Offering Units") were issued and sold by Largo, for aggregate gross proceeds to the Company of Cdn$114,951,595.50 pursuant to the Company's non-brokered private placement (the "April Offering") previously announced by Largo on April 11, 2011. The Lead Investors participated as the lead orders in the April Offering and acquired a significant proportion of the April Offering Units and Subscription Receipts issued in the April Offering.  Each April Offering Unit and Subscription Receipt was originally offered at a price of Cdn$0.35 per April Offering Unit or Subscription Receipt. Each Subscription Receipt was convertible into one unit (each a "Subscription Receipt Unit") of the Company until April 8, 2012 (the "Expiry Date"), with each Subscription Receipt Unit comprised of one Common Share and one-third (1/3) of one common share purchase warrant (each a "Subscription Receipt Warrant"). Each Subscription Receipt Warrant entitled the holder to acquire one further Common Share at a price of Cdn$0.50 for a period of 48 months from the date of issuance.

An aggregate of Cdn$84,951,595.40 (the "Escrowed Funds"), being the gross proceeds from the issuance of the Subscription Receipts under the April Offering, was placed into escrow pending the conversion of the Subscription Receipts upon the satisfaction by the Company of certain escrow release conditions (the "Escrow Release Conditions").

As previously announced by Largo on December 9, 2011, certain holders of Subscription Receipts subsequently agreed with the Company to exercise an aggregate of 31,428,571 Subscription Receipts in advance of the satisfaction by the Company of the Escrow Release Conditions. This partial release resulted in the release from escrow of an aggregate of Cdn$10,999,999.85 (plus interest earned thereon). Accordingly, as of the date hereof an aggregate of 211,290,273 Subscription Receipts remain issued and outstanding, with Escrowed Funds remaining in the amount of Cdn$73,951,595.55.

Pursuant to the Amendments: (a) the Expiry Date will be extended to December 31, 2012; (b) certain Escrow Release Conditions will be revised to add certain additional terms (see Schedule "A" for complete revised Escrow Release Conditions) to provide further certainty in the Escrow Release Conditions and to remove certain rights previously provided to the Lead Investors; (c) effective on the date of the Amendments, the number of Subscription Receipts held by each Amending Holder shall increase by a factor of 7/6, or an aggregate of 35,087,483 Subscription Receipts, resulting in an aggregate of 246,377,756 Subscription Receipts being issued and outstanding upon completion of the Amendments and resulting in an effective price of Cdn$0.30 per Subscription Receipt Unit issuable upon conversion of the Amended Subscription Receipts; (d) also effective on the date of the Amendments, the exercise price of the Subscription Receipt Warrants shall be decreased from Cdn$0.50 to Cdn$0.40; (e) in the event the Escrow Release Conditions have not been met on or before April 8, 2012, the number of Subscription Receipt Units into which the Amended Subscription Receipts convert shall be increased by a factor of 1.2, resulting in an aggregate of 294,734,862 Subscription Receipt Units being issuable on conversion of the Amended Subscription Receipts on and after such date and resulting in an effective price of Cdn$0.25 per Subscription Receipt Unit; and (f) also in the event the Escrow Release Conditions have not been met on or before April 8, 2012, the exercise price of the Subscription Receipt Warrants shall be further decreased from Cdn$0.40 to Cdn$0.35.

Following the completion of the Amendments, an aggregate of Cdn$73,951,595.55 shall continue to remain in escrow pursuant to and in accordance with the terms of (i) the Subscription Receipts, as amended, and (ii) the related escrow agreement between Equity Financial Trust Company and the Company, among others, which agreement shall be amended and restated concurrently in order to, among other things, implement the Amendments.  As a condition of the TSX Venture Exchange's approval of the Amendments, the Governance Agreement (previously announced and further described by Largo in its April 11, 2011 press release) will also be amended and restated to reduce certain voting requirements for any resolutions relating to the Escrow Release Conditions to regular board approval as opposed to the approval of six of Largo's seven directors as had been provided under the Governance Agreement.

The Amended Subscription Receipts and the Common Shares and Subscription Receipt Warrants underlying the Amended Subscription Receipts shall be subject to a 4 month regulatory hold period commencing from the date of the Amendments.  The Amendments remain subject to TSX Venture Exchange acceptance of requisite regulatory filings.

The Bridge Loan, the Offering and the Amendments were considered and approved by the board of directors of the Company. Dirk Donath, a director of Largo and Senior Managing Director and Partner at Eton Park Capital Management, L.P., the investment manager of the Eton Park Funds and J. Alberto Arias, a director of Largo and President of Arias Resource Capital Management L.P., the general partner of the ARC Funds, declared their respective conflicts and recused themselves from voting on the Offering and Amendments. There was no materially contrary view or abstention by any director approving the Bridge Loan, the Offering or the Amendments.

Upon closing of the Offering and the Amendments, the ARC Funds will own an aggregate of 85,725,393 Common Shares of Largo, representing approximately 16.23% of the issued and outstanding Common Shares of the Company. Upon closing of the Offering and the Amendments, the Eton Park Funds will own an aggregate of 47,289,744 Common Shares of Largo, representing approximately 8.95% of the issued and outstanding Common Shares of the Company. Upon closing of the Offering and the Amendments, Ashmore will own an aggregate of 47,289,744 Common Shares of Largo, representing approximately 8.95% of the issued and outstanding Common Shares of the Company.  Upon closing of the Offering and the Amendments, Mackenzie will own an aggregate of 76,272,267 Common Shares of Largo, representing approximately 14.44% of the issued and outstanding Common Shares of the Company.

The Company is exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the Offering and the Amendments in reliance on sections 5.5(a) and 5.7(a), respectively, of Multilateral Instrument  61-101 ("MI 61-101"), as neither the fair market value of the securities received by the ARC Funds and Mackenzie nor the proceeds for such securities received by the Company exceeds 25% of the Company's market capitalization as calculated in accordance with MI 61-101. The material change report is being filed less than 21 days before the closing of the Offering and the Amendments as the Company requires the consideration it receives in connection with the Offering and the Amendments immediately to facilitate and secure the Bridge Loan for working capital purposes.  The Company had been considering various sources of funding.  Given time constraints, the Company elected to proceed with the Bridge Loan, the Offering and the Amendments upon agreement with the Amending Holders.

^{________________________________________
1} Where (i) the CDI percentage shall be computed based on the annual average rate (considering a year of 252 days) relating to transactions with Interbank Deposit Certificates ("CDI") with a term equal to one (1) business day (over), as determined and published by the Clearing House for the Custody and Financial Settlement of Securities (CETIP), with the daily factor rounded to the eighth decimal place; and (ii) the fixed rate, whenever a fixed rate is defined, shall also be computed on an accrual basis, but based on a year of three hundred and sixty (360) days. Whenever the CDI percentage is zero, the Interest shall be deemed fixed.

About Largo

Largo is a Canadian-based mineral resource exploration and development company focused on creating a world leading strategic metals company.  Largo currently holds a 90% interest in the Maracás Vanadium Project, a 100% interest in the Currais Novos Tungsten Tailing Project, a 100% interest in the Campo Alegre de Lourdes Iron-Vanadium Project, all in Brazil, and a 100% interest in the Northern Dancer Tungsten-Molybdenum property located in the Yukon Territory, Canada.  The immediate goal of the Company is to develop the Maracás Vanadium Project by Q2 2013 and produce WO₃ concentrate from the reprocessing of tungsten tailings from Currais Novos.  Largo's skilled management team both in Canada and Brazil, are confident in their ability to advance these projects.

Largo is listed on the TSX Venture Exchange under the symbol "LGO".

For more information please refer to Largo's website: www.largoresources.com

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 the private placement, Largo's development potential and timetable of the Maracas and Northern Dancer projects; Largo's ability to raise additional funds necessary; the future price of 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". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. 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. 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.

NEITHER THE TSX VENTURE EXCHANGE (NOR ITS REGULATORY SERVICE PROVIDER) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

Schedule "A"
Revised Escrow Release Conditions

Upon closing of the documentation relating to the Amendments, the Escrow Release Conditions shall be as follows:

(i)	the April Offering shall have closed;
(ii)	the Company shall have received a financing commitment from the senior lenders of the Company's Maracás Project (as defined below) which provides as follows:
	(A)	facility to be provided by the Brazilian Development Bank ("BNDES") as sole lender of record and to be not less than US$162 million and not more than US$180 million (or the equivalent in Reais) (the "BNDES Facility");
	(B)	the BNDES Facility to be provided to Vanádio de Maracás S.A. ("Vanadio"), a Brazilian corporation indirectly controlled by the Company and other Brazilian companies, without recourse to assets of the Company (other than as set out in the item below);
	(C)	security provided for BNDES Facility to be limited to Company's vanadium assets in Brazil (including, real property, mining rights, equipment and other personal property) and those shares in the capital of Vanadio held by the Company;
	(D)	the BNDES Facility to have a term of not less than 8 years and a grace period for principal payments only of at least 6 months from the date of first commercial operation;
	(E)	the BNDES Facility to contain standard representations, warranties, covenants and events of default as would be customary for a facility of this nature;
	(F)	total projected budget for the Maracás Project, including contingency costs, not to exceed US$280 million (or the equivalent in Reais);
	(G)	minimum first drawdown under the BNDES Facility of US$40 Million (or the equivalent in Reais) has been completed;
	(H)	Maracás Project debt to equity ratio not less than 60% debt to 40% equity;
	(I)	engineering, procurement and construction management and offtake agreements to be in a form acceptable to the Company, BNDES and counterparties to the agreements; and
	(J)	no more than the Escrowed Funds plus an additional Cdn$14 million being required by BNDES to be contributed by the Company;
(iii)	Vanádio shall have gained unrestricted access to all real properties owned by third parties, including but not limited to real properties currently owned by Banco Econômico S.A., a Brazilian financial institution under liquidation, required for the regular and full exploitation of the mine of the Maracás Project, either upon settlement or easement agreements in writing with the relevant owners, or upon judicial decisions issued against the relevant owners on a definitive basis (i.e., not subject to review under court appeals of any nature);
(iv)	the Company (directly or indirectly through Vanádio or any other subsidiary) shall have received the environmental Installation Licence for the Maracás Project, to be issued by the environmental authority of the State of Bahia, Brazil (Instituto do Meio Ambiente);
(v)	the Company shall have received all necessary regulatory and shareholder approvals to complete the April Offering and the issuance of Subscription Receipt Units on conversion of the Subscription Receipts; and
(vi)	delivery to the Equity Financial Trust Company, the escrow agent holding the Escrowed Funds, of a certificate  (the "Release Notice") in the form attached as a schedule to the certificate representing the Amended Subscription Receipts, attesting to the matters set out in (i) through (v), above.

The Maracas Project is defined as the Company's mining project located mainly in the City of Maracás, State of Bahia, Brazil, through Vanádio, which holds title to the relevant mining rights, registered with the Brazilian mining authority (Departamento Nacional de Produção Mineral) under n. 870.134/1982 and 870.135/1982, as more particularly described in the Company's public disclosure documents.

Darcie Ladd
Manager Business Development
416-861-9406
[email protected]