Largo Resources announces C$30 million non-brokered private placement financing

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TORONTO, Sept. 29, 2014 /CNW/ - Largo Resources Ltd. (TSX-V:LGO) ("Largo" or the "Company") announced today a C$30 million non-brokered private placement (the "Offering") of up to 107,142,858 units (the "Units") of the Company at a price of C$0.28 per Unit. Largo intends to use the net proceeds of the Offering for the Company's Vanadio de Maracás Menchen Mine and for general corporate purposes.

Each Unit 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"). Each Warrant will entitle the holder to acquire one further Common Share at a price of $0.35 per Common Share for a period of three years from the date of issuance.

Contingent on the Company raising C$15 million from other investors, the Company anticipates that approximately C$15 million of the Offering, or up to 53,571,429 Units, will be purchased by funds managed by Arias Resource Capital Management LP (the "ARC Funds"). The Company anticipates that approximately C$1.6 million of the Offering, or up to 5,714,286 Units, will be purchased by funds managed by Mackenzie Investments ("Mackenzie").

The ARC Funds are a "Control Person" of the Company (as defined in the TSX Venture Exchange Corporate Finance Manual) by virtue of their current ownership of approximately 25.81% of the Company's issued and outstanding common shares.  Assuming the Offering is fully sold, it is expected that after completion of the Offering, the ARC Funds will own up to 28.18% of the Company's then issued and outstanding common shares (or approximately 33.60% of the Company's then issued and outstanding common shares in the event that the ARC Funds exercise 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. 

Mackenzie is an insider of the Company by virtue of their current ownership of approximately 15.46% of the Company's issued and outstanding common shares.  Assuming the Offering is fully sold, it is expected that after completion of the Offering, Mackenzie will own up to 14.46% of the Company's then issued and outstanding common shares (or approximately 17.73% of the Company's then issued and outstanding common shares in the event that Mackenzie exercises all of the convertible securities held by them).

In addition, certain other directors and officers may subscribe for up to 145,000 Units.

The Offering is expected to close on or about October 3, 2014, and is subject to certain customary closing conditions, including but not limited to receipt of all required regulatory approvals, including the approval of the TSX Venture Exchange. All Common Shares and Warrants issued in connection with the Offering will be subject to a hold period in Canada of four months and one day from the date of issuance.

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, declared a conflict and recused himself 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 proposed purchase by any of the ARC Funds, Mackenzie or those certain directors and officers will be 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 sections 5.5(a) and 5.7(a), respectively, of MI 61-101, as neither the fair market value of the securities received by such parties 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 as the Company requires the consideration it will receive in connection with the Offering immediately for working capital purposes.

About Largo

Largo is a growing strategic mineral company with projects in Brazil and Canada. The immediate goal of the Company is to ramp-up production at its Vanadio de Maracás Menchen Mine.

Largo's Maracás Menchen Mine boasts the highest grade vanadium deposit yet discovered and is expected to be a low cost producer. With an off-take in place with commodities giant Glencore, Largo is well positioned to become a leading producer of vanadium globally and is expected to generate substantial cash-flows.

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 a compound annual growth rate of over 6% for the past several years (Roskill, 2013), 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 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.

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

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

SOURCE: Largo Resources Ltd.

please refer to Largo's website: www.largoresources.com OR Please contact: Darcie Ladd, Business Development Manager, Phone: [phone], Fax: [phone], e-mail: [email protected]; Web Site: www.largoresources.com