Largo Resources Ltd. closes final tranche of private placement for aggregate proceeds of US$26.8 million

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TORONTO, March 3, 2016 /CNW/ - Largo Resources Ltd. (TSX-V:LGO) ("Largo" or the "Company") is pleased to announce today that it closed the second and final tranche (the "Second Tranche") of its Unit offering (the "Offering") previously announced in its news release of January 19, 2016. The closing of the Second Tranche resulted in gross proceeds to the Company of Cdn$23,357,649 from the sale of 133,472,280 Units which, together with the first tranche of the Offering (see the Company's news release of January 29, 2016), has resulted in aggregate proceeds to the Company of approximately US$26.8 million (or Cdn$36,643,631) from the sale of an aggregate of 209,392,178 Units. The proceeds realized from the Second Tranche will be used for ongoing working capital requirements at the Company's Maracás Menchen Mine which is a condition of the Company's restructuring of its existing credit and export facilities with its consortium of Brazilian lenders (as previously disclosed in the Company's press release of March 2, 2016) and for general corporate and working capital purposes.

Mark Smith, President and Chief Executive Officer to the Company, stated: "We are extremely pleased to have concluded this private placement. I would like to sincerely thank all who participated in this placement for their continued support of the Maracas Menchen Mine Project and the Largo team, and, to reiterate that we will continue to work hard to realize the Company's full value."

Each Unit was sold at a price of CDN$0.175 and consists of one common share of the Company (each, a "Common Shares"), and one-half of one common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant issued pursuant to the Second Tranche of the Offering will be exercisable into one Common Share at a price of CDN$0.29 per share for a period of five years from closing of the Second Tranche.

Funds managed by Arias Resource Capital Management LP (the "ARC Funds") purchased an aggregate of 91,157,202 Units in the Second Tranche for gross proceeds to the Company of CDN$15,952,510.35. The ARC Funds are a "Control Person" of the Company (as defined in the TSX Venture Exchange Corporate Finance Manual).  Prior to the closing of the Second Tranche, the ARC Funds owned approximately 55.98% of the Company's issued and outstanding Common Shares and, following closing of the Second Tranche, the ARC Funds own approximately 59.96% of the Company's then issued and outstanding Common Shares (or approximately 68.68% of the Company's issued and outstanding Common Shares in the event that the ARC Funds exercised 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. 

As a condition precedent to ARC Funds' participation in the Offering , Largo and the ARC Funds amended and restated that certain director nomination agreement dated  May 22, 2015 pursuant to which the ARC Funds have the right to, as a group, designate one additional person to be nominated for election to Largo's board of directors by Largo shareholders, including at the next annual meeting of Largo shareholders, for so long as the ARC Funds, whether individually or together, own at least 50% of the issued and outstanding Common Shares.  These nomination rights are in addition to the ARC Funds' existing nomination rights more fully set out in the Company's press release issued on May 22, 2015 and, accordingly, assuming the ARC Funds ownership remains equal to or above 50% of the issued and outstanding Common Shares, the ARC Funds will designate four of the seven persons to be nominated for election as directors at the next annual meeting of Largo's shareholders.

In addition, Mr. Mark Smith, President and Chief Executive Officer and a director of Largo, subscribed for 1,718,000 Units in the Second Tranche.

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, Sam Abraham, a director of Largo and an employee of Arias Resource Capital Management LP, and Mark Smith, President, Chief Executive Officer and a director of Largo, each declared a conflict and recused themselves 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 purchase by the ARC Funds of the Units under the Offering is 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 section 5.5(g) of MI 61-101, as the Company is in serious financial difficulty and the Company's board of directors, acting in good faith, have all determined that (i) the Company in serious financial difficulty,(ii) the Offering is designed to improve the financial position of the Company, and (iii) the terms of the Offering are reasonable in the circumstances of the Company. In addition, the Company is currently not subject to any court approval under bankruptcy or insolvency law or section 191 of the Canada Business Corporations Act or any equivalent legislation of another jurisdiction and the Company has one or more independent directors in respect of the Offering. 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 (TSX-V: LGO) is a growing strategic mineral company focused on continuing production at its Vanadio de Maracás Menchen Mine. 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.

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 consumption increasing at a compound annual growth rate of over 8% for the past several years (Roskill, 2015), 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 is listed on the TSX Venture Exchange under the symbol "LGO".

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

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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 any financings; Largo's development potential and timetable of its operating, development and exploration assets; Largo's ability to raise additional funds necessary; the future price of vanadium, 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". All information contained in this news release, other than statements of current and historical fact, is forward looking information. 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.

Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. 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. Readers should also review the risks and uncertainties sections of Largo's annual and interim MD&As.

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SOURCE Largo Resources Ltd.

Alex Guthrie, Coordinator, Corporate Communications, 416.861.9797, [email protected]