Mr. Mark Smith reports

LARGO RESOURCES REPORTS FIRST QUARTER NET INCOME OF $45.8 MILLION

Largo Resources Ltd. had net income of $45.8-million (nine cents per share) for the three-month period ended March 31, 2018, the highest quarterly net income recorded by the company to date.

Highlights:

• Net income of $45.8-million and earnings per share of nine cents;
• Revenues of $91-million in Q1 2018, a 210-per-cent increase over Q1 2017;
• Cash provided before non-cash working capital items of $61.9-million in Q1 2018, an increase of $56.8-million over Q1 2017;
• Total production of 2,214 tonnes of V2O5 (vanadium pentoxide) in Q1 2018, a 7-per-cent increase over Q1 2017;
• Average V2O5 price of approximately $13.60 (U.S.) per pound of V2O5 in Q1 2018;
• Cash balance at March 31, 2018, of $50.2-million and restricted cash of $4.4-million.

Mark Smith, president and chief executive officer for Largo, stated: "We are extremely pleased to report the highest net income recorded in the company's history for the first quarter of 2018. Operations at the Maracas Menchen mine continued to generate significant operating cash flows, and the company remains committed to delivering strong financial performance for the balance of the year."

He continued: "Production for the quarter was impacted by unexpected maintenance to the cooler refractory, which has since been resolved and operations exiting the quarter returned to normalized production levels. We remain laser focused on stable production and maintaining the lowest-possible unit costs at the Maracas Menchen mine. Our goal is to be the most profitable vanadium operation in any pricing environment."

Total production at the Maracas Menchen mine in Q1 2018 was 2,214 tonnes of V2O5, a 7-per-cent increase over Q1 2017 but 13 per cent lower than Q4 2017. Production in Q1 2018 was impacted by premature wearing of the cooler refractory, resulting in unexpected production downtime in January and February. The company resolved these issues during March and production returned to previous levels, exiting the quarter with production of 863 tonnes of V2O5.

Overall V2O5 recovery rates at the Maracas Menchen mine averaged 75 per cent in Q1 2018, a strong improvement from the 72 per cent achieved in Q1 2017 and consistent with the average for 2017. Recovery rates improved to 79 per cent in March primarily due to greater operational stability in the kiln and cooler. The company forecasts an overall recovery rate of 79 per cent for the remainder of 2018.

    CONSOLIDATED Q1 2018 FINANCIAL AND OPERATIONAL RESULTS 

                                             Three months ended
                                        March 31,      March 31,
                                            2018           2017 
Financial   
Revenues                                 $91,093        $29,425            
Direct mine and mill costs               (20,302)       (20,450)          
Operating costs                          (31,183)       (29,601)          
Net income (loss) before tax              49,524         (9,721)           
Net income (loss)                         45,844         (9,721)           
Basic earnings (loss) per share             0.09          (0.02)            
Diluted earnings (loss) per share           0.07          (0.02)            
Operational
Concentrate produced (tonnes)             77,222         87,347   
Grade of concentrate (% V2O5)               3.56           3.32     
Recovery of V2O5 (%)                          97             97       
Contained V2O5 (tonnes)                    2,747          2,904    
V2O5 flake produced (tonnes)               2,214          2,062    
V2O5 flake produced 
(equivalent pounds)                    4,881,029      4,545,926
Cash operating costs per pound      
CDN$                                       $5.20          $5.19    
US$                                        $4.11          $3.90    
R$                                        $13.34         $12.31 

The company recorded net income of $45.8-million in Q1 2018, compared with a net loss of $9.7-million in Q1 2017. This improvement was primarily due to an increase in revenues of $61.7-million from $29.4-million in Q1 2017 to $91-million in Q1 2018. This increase in revenue was partially offset by an increase in operating costs of $1.6-million from $29.6-million in Q1 2017 to $31.2-million in Q1 2018 and an increase in professional, consulting and management fees of $1.9-million from $2.1-million in Q1 2017 to $4-million in Q1 2018.

Revenues increased by 210 per cent in the first quarter to $91-million compared with $29.4-million in Q1 2017, due to higher V2O5 prices. The average price per pound of V2O5 was approximately $13.60 (U.S.) for Q1 2018, compared with approximately $5.15 (U.S.) for Q1 2017.

Operating costs of $31.1-million in Q1 2018 increased slightly when compared with $29.6-million in Q1 2017, which includes direct mine and mill costs of $20.3-million ($20.4-million in Q1 2017), depreciation and amortization of $8.7-million ($7.8-million in Q1 2017), royalties of $2.2-million ($1-million in Q1 2017), and an inventory writedown of nil ($300,000 in Q1 2017). In Q1 2018, the company generated positive cash from operating activities, with net cash provided by operating activities of $24.9-million, a significant increase over the $4.2-million recorded in Q1 2017.

Cash operating cost for Q1 2018 was $5.20 per pound, consistent with $5.19 per pound for Q1 2017. The cost per pound for Q1 2018 was slightly higher when compared with Q4 2017, primarily due to the lower production level arising from issues encountered with the cooler refractory. The production stoppages early in the quarter resulted in higher specific consumption of HFO, diesel and sodium carbonate. In addition, the company experienced an increase in the cost of ammonium sulphate due to an underlying increase in the price of ammonia gas and sulphur. The company has recently executed a new agreement for the supply of ammonium sulphate and expects the cost increase seen in Q1 2018 to be reversed in Q2 2018.

On March 29, 2018, the company completed a restructuring and conversion of its existing swap facility with Banco Pine SA, including the payment to Banco Pine of $11.5-million in settlement of accrued interest. This restructuring, combined with an increase in the company's trade receivables, contributed to the significant improvement in the company's working capital position at March 31, 2018, of $22.9-million, which compares with negative $33.1-million at Dec. 31, 2017.

The company is planning a seven-day shutdown in July, 2018, to replace the refractory in the cooler and kiln. In addition, the company aims to increase sales of high-purity V2O5. In Q1 2018, 400 tonnes of high-purity V2O5 flake were sold, being an increase of 95 per cent over the 205 tonnes sold during fiscal 2017.

Exploration update

The company has planned a two-phased exploration program for 2018 at the Maracas Menchen mine. Phase I is a 2,000-metre in-pit drill program designed to further define the reserve block model for production in the next two to three years. This program began in the middle of April, 2018, and is anticipated to take two months to complete. The data will be modelled and used for mine planning and development purposes.

Phase II is a program that includes a ground magnetic survey, mapping and sampling of the concessions north of Novo Amparo Norte. This is approximately 12 kilometres of strike extension that has not previously been investigated. The goal of this work is to further evaluate the potential for along strike continuation of the magnetite mineralization and to maintain the company's concessions. In addition, phase II includes a 4,950-metre drilling program focused on upgrading and expanding the satellite deposits and along-strike high-priority targets.

The information provided within this release should be read in conjunction with Largo's unaudited condensed consolidated interim financial statements and management discussion and analysis for the three months ended March 31, 2018, which are available on the company's website and on SEDAR.

About Largo Resources Ltd.

Largo is a Toronto-based strategic mineral company focused on the production of vanadium flake, high-purity vanadium flake and high-purity vanadium powder at the Maracas Menchen mine located in Bahia state, Brazil. Largo remains one of the lowest-cost producers of vanadium in the world and is directly exposed to and is benefiting from the record increases in vanadium seen today. Largo is the only pure play producer of vanadium and also has interests in a portfolio of other projects, including a 100-per-cent interest in the Currais Novos tungsten tailings project in Brazil; a 100-per-cent interest in the Campo Alegre de Lourdes iron-vanadium project in Brazil; and a 100-per-cent interest in the Northern Dancer tungsten-molybdenum property in Yukon, Canada.

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