Largo Resources Ltd. closes second tranche of its financing for aggregate proceeds of approximately Cdn$74.2 million

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TORONTO, May 22, 2015 /CNW/ - Largo Resources Ltd. (TSX-V:LGO) ("Largo" or the "Company") is pleased to announce today that it closed the second tranche (the "SecondTranche") of its Cdn$75 million Unit offering (the "Offering") previously announced in its news release of May 13, 2015.  The closing of the Second Tranche resulted in proceeds to the Company of Cdn$55,962,114 from the sale of 69,952,639 Units which together with the first tranche, which closed on May 14, 2015 (see the Company's news release of May 15, 2015), has resulted in aggregate proceeds to the Company to date of Cdn$74,184,039 from the sale of 92,730,045 Units.  Proceeds realized from the Second Tranche will be used for the development of the Vanadio de Maracás Menchen Mine ("Maracas" or the "Project") and related corporate purposes, including, without limitation, meeting certain conditions precedent set out by the Company's lenders in their firm commitment letters for the restructuring of the Company's debt as more fully set out in Largo's May 7, 2015 press release.  It is expected that a third and final non-brokered tranche of the Offering will close on or about May 26, 2015 for approximately an additional Cdn$1,015,960 worth of Units, bringing the final aggregate amount raised to approximately Cdn $75.3 million.

Mark Smith, President and Chief Executive Officer to the Company, stated: "We are extremely pleased to have concluded this private placement that we increased a couple of times due to strong demand.  It represents a major milestone for the Company's ongoing ramp-up. This will not only allow us to aggressively continue our optimization efforts for our ongoing ramp-up process at Maracas, but also enables us to initiate expansion plans at the facility."

"Further, we are greatly encouraged by the overwhelming demand we received to participate in this private placement, which we believe should send a strong signal to the market of the enormous potential of the Maracas Menchen Mine."

"I would like to sincerely thank all who participated in this placement for their continued support of the Project and the Largo team, and, to reiterate that we will continue to work hard to realize the Company's full value."

Mackie Research Capital Corporation ("Mackie") acted as agent for the Company on a "best efforts" basis with respect to the sale of 2,210,000 Units of the Second Tranche for gross proceeds of Cdn$1,768,000.  Mackie, as agent for the brokered portion of the Second Tranche of the Offering, is entitled to a commission of Cdn$114,920 and a compensation option exercisable at any time up to 12 months following closing to purchase up to 176,800 Units, being an amount equal to 8% of the Units sold by Mackie in the brokered portion of the Second Tranche.  Other than the 2,210,000 Units sold through Mackie, the Units issued under the Offering were sold on a non-brokered basis.  Approximately Cdn$350,379.34 in finder fees are payable by the Company in respect of a portion of the non-brokered Offering.

Each Unit was sold at a price of Cdn$0.80 and was comprised of one common share (a "Common Share") and one half of one Common Share purchase warrant (each whole a "Warrant").  Each Warrant entitles the holder to acquire one further Common Share at a price of $1.50 per Common Share for a period of one year from the date of issuance. 

Funds managed by Arias Resource Capital Management LP (the "ARC Funds") purchased an aggregate of 48,000,000 Units in the Second Tranche for gross proceeds to the Company of Cdn$38,400,000. These Units were in addition to the 15,312,498 Units issued to the ARC Funds upon closing of the first tranche.  The ARC Funds are a "Control Person" of the Company (as defined in the TSX Venture Exchange Corporate Finance Manual) by virtue of their ownership prior to the closing of the Offering of approximately 28.2% of the Company's issued and outstanding Common Shares.  At closing of the Second Tranche, the ARC Funds owned 46.5% of the Company's then issued and outstanding Common Shares (or approximately 55.0% of the Company's then issued and outstanding Common Shares in the event that the ARC Funds exercised all of the convertible securities held by them).  The ARC Funds' participation in the Offering was conditional upon the several conditions, including the execution and delivery of a director nomination agreement with Largo permitting the ARC Funds to designate (a) two additional persons to be nominated for election to Largo's board of directors for election 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 40% of the issued and outstanding Common Shares and (b) to designate one additional person to be nominated for election to Largo's board of directors for election by Largo shareholders, for so long as the ARC Funds, whether individually or together, own less than 40% but not less than 20% of the issued and outstanding Common Shares.  These nomination rights are in addition to the ARC Funds' existing right to nominate one director to the Company's board of directors under the existing governance agreement and, accordingly, the ARC Funds will designate three directors for election at the next annual meeting of shareholders.

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.

In addition, Mr. Mark Smith, President and Chief Executive Officer and a director of Largo, and another employee of Largo, subscribed for an aggregate of 770,125 Units under the Offering.

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, and Mark Smith, a director and officer of the Company, each declared a conflict and recused himself from voting on the Offering due to their participation in 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 and by any director or officer of the Company was a "related party transaction".  In the case of the ARC Funds and other related parties, the Company was 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, the Offering is designed to improve the financial position of the Company, 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, the Company has one or more independent directors in respect of the Offering, the Company's board of directors, acting in good faith, have all determined that subparagraphs (i) and (ii) of section 5.5(g) apply and the terms of the Offering are reasonable in the circumstances of the Company.

About Largo

Largo is a growing strategic mineral company with projects in Brazil and Canada. The immediate goal of the Company is to continue 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 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 Menchen Mine 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.

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SOURCE Largo Resources Ltd.