Mr. Daniel Tellechea reports

LARGO ANNOUNCES RELIANCE ON FINANCIAL HARDSHIP EXEMPTION IN CONNECTION WITH REGISTERED DIRECT OFFERING AND PRIVATE PLACEMENT

Largo Inc. has released further details in connection with the binding term sheet entered into with the senior lenders to Largo's principal operating subsidiary, Largo Vanadio de Maracas S.A. (LVMSA), for the rollover of principal of all debts owed by LVMSA to March 18, 2026, with a further automatic rollover to Sept. 18, 2026. The proposed rollover agreement is subject to, among other conditions, the requirement for LVMSA to receive equity contributions totalling in the amount of $22-million (U.S.) by Nov. 17, 2025.

Largo announces a $23.4-million (U.S.) offering comprising: (i) a registered direct offering in the United States; and (ii) a concurrent private placement. The private placement comprises an offering of common shares in the capital of the company together with one common share purchase warrant at a combined purchase price of $1.22 (U.S.). Each warrant will be immediately exercisable and will entitle the owner to acquire one common share at a price of $1.22 (U.S.) per common share for a period of five years from the date of issuance. The offering price of the common shares and the exercise price of the warrants were determined by arm's-length negotiations among the company, H.C. Wainwright & Co. LLC and the institutional investors. The price was calculated based on the five-day VWAP (volume weighted average price) of the common shares on the Toronto Stock Exchange of $$2.6349 (Canadian) less a discount of 35 per cent (or $1.7127 (Canadian)) converted to U.S. dollars on the basis of $1 (Canadian) per 71.4 U.S. cents.

As of the date hereof, Largo has entered into binding commitments in respect of the entire $23.4-million (U.S.) offering. In connection with the registered direct offering, Largo has entered into securities purchase agreements with institutional and accredited investors for the purchase and sale of 14,262,309 common shares and 14,262,309 warrants, and, in connection with the private placement, Arias Resource Capital Fund III LP (ARC Fund III), an affiliate of the company's largest shareholder, has entered into a securities purchase agreement to acquire 4,918,033 common shares and 4,918,033 warrants.

A portion of the ARC commitment was advanced by way of a $5-million (U.S.) secured convertible bridge loan, which will reduce the ARC commitment by $5-million (U.S.). Subject to the approval of the financial hardship exemption (as defined below) by the Toronto Stock Exchange, the ARC bridge loan will automatically convert on the closing of the offering into units consisting of common shares and warrants on the same terms as the offering. Should the TSX not grant approval of the financial hardship exemption, the ARC bridge loan will remain non-convertible on its terms and mature in two years. The ARC bridge loan carries an interest rate of 12 per cent per annum, payable upon maturity or immediately upon default. The ARC bridge loan is secured against the common shares of Largo Resources (Yukon) Ltd., a wholly owned subsidiary of the company.

Proceeds from the ARC bridge loan will be used to sustain the company's working capital, and the use of proceeds of the offering and the remaining proceeds from the ARC commitment will be to make a payment to the company's Brazilian lenders, and payments to the mining contractor at the Maracas Menchen mine and other key suppliers, which is already starting to negatively impact rates of mine production due to liquidity constraints.

The aggregate number of common shares expected to be issued pursuant to the offering, assuming exercise of the warrants in full and on conversion of the ARC bridge loan at the offering price, is 39,359,045, being approximately 36 per cent of the total issued and outstanding common shares on a fully diluted basis post-transaction, and 61.4 per cent pretransaction on a non-diluted basis.

ARC Fund III will acquire 9,836,066 common shares under the private placement, including those issued upon conversion of the ARC bridge loan and assuming full exercise of the warrants, representing approximately 9 per cent of the fully diluted shares. As a result, the interests of Arias Resource Capital and entities controlled by Alberto Arias would change from 28,039,000 common shares, representing 43.7 per cent of the issued and outstanding pretransaction common shares to 32,957,033 common shares, representing 37.9 per cent of basic shares outstanding posttransaction and 37,875,66 common shares, representing 34.2 per cent assuming the full exercise of the warrants.

Mr. Arias is director and chair of the board of directors of the company, and funds managed by Arias Resource Capital have been a significant investor of the company since 2010, and currently own approximately 43.7 per cent of the issued and outstanding common shares. As a result, ARC Fund III is an affiliate of an insider of the company and, as a result, is also an insider of the company. Because ARC Fund III will acquire more than 10 per cent of the common shares, which are outstanding, on a non-diluted basis, disinterested shareholder approval of such issuance would be required pursuant to Section 607(g)(i) of the TSX company manual. The private placement (including any common shares and warrants issued upon the conversion of the ARC bridge loan) will not result in a new control person.

The common shares and warrants issued to ARC Fund III pursuant to the private placement (including any common shares and warrants issued upon the conversion of the ARC bridge loan) will be subject to a four-month hold. The common shares (but not the unregistered warrants and the common shares underlying the warrants) in the U.S. registered direct offering described above are being offered by the company pursuant to an effective shelf registration statement on Form F-3 (file No. 333-290163) previously filed with the U.S. Securities and Exchange Commission (SEC), under the Securities Act of 1933, as amended, and declared effective by the SEC on Sept. 19, 2025. The offering of the common shares is being made by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. The warrants issued in connection with the registered direct offering and the underlying common shares, and any securities issued in the private placement to ARC Fund III, have not been registered under the securities act, or any applicable state securities laws, and will be issued in reliance on exemptions from such registration requirements. The warrants issued in the registered direct offering will also possess certain resale registration rights under the securities act.

Pursuant to an engagement letter dated Sept. 21, 2025, between the company and the placement agent, the company agreed to pay the placement agent a total cash fee equal to 7.0 per cent of the aggregate gross proceeds from the offering. The company also agreed to issue to the placement agent or its designees warrants to purchase 998,362 common shares representing 7.0 per cent of the aggregate number of common shares placed in the offering at a price equal to $1.53 (U.S.) per common share (or 125 per cent of the price per common share issued pursuant to the offering). However, the company will only be required to pay a 2-per-cent cash fee to the placement agent in respect of the ARC commitment and no broker warrants will be issued in respect of the ARC commitment. The company must also pay the placement agent up to $50,000 of legal counsel expenses and $15,950 for other out-of-pocket and clearing expenses. The securities purchase agreement contains customary representations, warranties and agreements by the company and customary conditions to closing. In addition, until 60 days after the closing date of the offering, the company has agreed not to offer, sell, contract to sell, hypothecate, pledge, otherwise dispose of, or enter into a transaction that might result in the issuance of common shares or securities convertible, exchangeable or exercisable into common shares, with certain exempt issuances permitted. The company has agreed to indemnify the placement agent against certain liabilities relating to or arising out of the placement agent's activities under the engagement letter and to contribute to payments that the placement agent may be required to make in respect of such liabilities.

The closing of the offering is expected to occur on or about Oct. 22, 2025, subject to the satisfaction of certain closing conditions and approval from the TSX, as further described below.

Hardship exemptions

TSX financial hardship exemption

The company has applied to the TSX for an exemption from the requirement to seek securityholder approval for the offering in reliance upon Section 604(e) of the TSX company manual on the basis that the company finds itself in a state of serious financial difficulty and that the offering is designed to improve the company's financial situation in a timely manner. As part of the financial hardship exemption application, the company is seeking an exemption from the requirement for shareholder approvals: (a) under subsections 604(a)(ii), 607(g)(i) and 607(g)(ii) of the TSX company manual due to the size the offering; (ii) under Section 607(e) of the TSX company manual due to discounted price of the securities being offered; (c) in respect of the automatic conversion feature of the ARC bridge loan; and (d) for certain warrant provision that are inconsistent with TSX guidance set out in TSX staff notice 2024-0008.

The offering will be dilutive and will result in the issuance of common shares to insiders of the company in a number greater than 10 per cent of the common shares outstanding and greater than 25 per cent of the common shares outstanding, which would exceed the private placement thresholds, requiring the company to obtain disinterested securityholder approval of such issuances pursuant to subsections 604(a)(ii), 607(g)(i) and 607(g)(ii) of the TSX company manual.

Section 607(e) of the TSX company manual states that shareholder approval is required if the price per share is lower than the market price (as defined by TSX) less the applicable discount. Under the offering, the price of the common shares and the warrant exercise price, and the broker warrant exercise prices are below the applicable discounts in Section 607(e) of the TSX company manual.

Because the ARC bridge loan is not convertible prior to TSX approval of the financial hardship exemption, the TSX has approved the ARC bridge loan under Part 5 of the TSX company manual and the TSX has advised the company that the ARC bridge loan is also being considered as part of the application for financial hardship exemption, and if the TSX approves the financial hardship exemption, the ARC bridge loan will be convertible on those terms. If the TSX does not approve the financial hardship exemption, the ARC bridge loan will remain non-convertible on its current terms.

The terms of the warrants contain provisions pertaining to the cashless exercise of warrants and certain adjustment provisions for: (i) subsequent rights offerings; (ii) pro rata distributions; and (iii) fundamental transactions that are inconsistent with TSX guidance set out in TSX staff notice 2024-0008 and the cashless exercise formula in Section 608(b) of the TSX company manual setting out cashless exercise and anti-dilution provisions for convertible securities (including the warrants) acceptable to the TSX. The adjustment provision for fundamental transactions provide that in the event of a fundamental transaction, such as a merger of the company, a disposition of all or substantially all of the assets of the company, a successful tender or exchange offer to holders of more than 50 per cent of the company's common shares, a reorganization resulting in the company's common shares being exchanged for other securities, cash or property, or a share purchase or business combination with another person, the holders of the warrants will be entitled to receive the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of common shares in such fundamental transaction, in an amount equal to the Black-Scholes value of the unexercised portion of the warrant on the date of consummation of such fundamental transaction. The company has requested the TSX exempt the company from the guidance in TSX staff notice 2024-0008 and to approve these provisions as part of the financial hardship exemption.

As ARC Fund III is controlled by Mr. Arias, Mr. Arias and entities controlled by him are not considered disinterested shareholders for the purposes of securities laws and would not be entitled to vote their currently owned common shares, representing approximately 43.7 per cent of the issued and outstanding common shares, in respect of the required approvals.

The company, having sought the guidance of its legal counsel and management, considered whether it would be feasible to proceed to obtain the required securityholder approvals by way of shareholders meeting out of concern as to how announcement of financial hardship may be perceived by customers and counterparties. However, as further described below, the company's existing financial circumstances, together with a lack of improvement in the working capital situation, and concerns around timing, cost and uncertainty of securityholder approval, as well as restrictions under U.S. securities laws in connection with the direct registered offering (described above) that generally prohibit offers to sell securities before a registration statement is filed, led the company to determine that proceeding by way of shareholders meeting is not a tenable solution.

There is no assurance that the TSX will approve the request for the financial hardship exemption. In connection with reliance on the financial hardship exemption from the TSX's securityholder approval requirements, it is expected that the TSX will place Largo under a remedial delisting review, which is customary when a listed issuer seeks to rely on this exemption.

Exemption from formal valuation and minority approval requirements under MI 61-101

The company has determined that the ARC commitment and the ARC bridge loan are exempt from the formal valuation and minority approval requirements applicable to related party transactions required under Part 6 and Part 8 of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, in reliance on the financial hardship exemptions under sections 5.5(g) and 5.7(1)(e). Generally, under MI 61-101, the company would be required to obtain minority securityholder approval and a formal valuation as a result of the ARC commitment and the ARC bridge loan, since ARC Fund III is a related party of the company within the meaning of MI 61-101, and, as a result, each such transaction is a related party transaction under MI 61-101. However, should the financial hardship exemption be approved by the TSX, the company can rely on sections 5.5(g) and 5.7(1)(e) of MI 61-101 to be exempted from obtaining minority securityholder approval and a formal valuation.

Approval of the board of directors

The board and the board's independent directors separately considered and reviewed the circumstances currently surrounding the company, the offering, the ARC commitment and the ARC bridge loan, including, among other factors: the company's current financial difficulties and immediate capital requirements; management's efforts over the past 12 to 18 months, exploring various alternatives to improve the financial situation; and the lack of alternative financing arrangements available and the fact that the offering (with the ARC commitment) is the only viable financing option. After consideration, the board, acting in good faith, and all of the independent directors, acting in good faith, determined that: (i) the company is in serious financial difficulty; (ii) the offering and ARC commitment are designed to improve the company's financial position; and (iii) the offering, the ARC commitment and the ARC bridge loan are reasonable in the circumstances.

Background to offering

The company has experienced lower realized pricing across its vanadium products due to depressed vanadium prices, resulting in significant margin erosion. The global vanadium market has experienced significant volatility, with prices declining sharply in 2025, due to oversupply from major producers in China and Russia, and weaker-than-expected demand in key end-markets, such as steel and construction. This has resulted in lower realized prices for both standard and high-purity vanadium products, compressing margins and reducing operating cash flow. The company's exposure to these market dynamics has been exacerbated by its reliance on export markets and the premium segment, where pricing has also come under pressure. These factors have increased the risk of covenant pressure and delayed payables.

Recognizing the impacts of lower vanadium prices, beginning in Q2 (second quarter) 2024, the company announced that it was focusing on diversifying revenue streams and aimed to address logistical challenges. This was followed by a continued focus on reducing costs in the company's vanadium operation in Brazil. However, the company was also impacted by certain non-recurring items, which included writedowns of finished vanadium product inventories due to the declining price environment. During this time, the company actively sought out financing partners and considered multiple strategies to source the requisite equity capital to finance its obligations. This included signing mandate letters and submitting applications for debt financing with lenders, calls with investment banking teams, and negotiating multiple term sheets with a view to securing financing.

The company also continued to combat a challenging vanadium market and by Q1 (first quarter) 2025, increased its focus on operational improvements, cost reductions and productivity enhancements, as part of its operational turnaround strategy. This also included implementing a number of critical initiatives to further enhance productivity and strengthen cost controls.

On July 30, 2025, Executive Order 14323 increased tariffs on imports from Brazil to the U.S. from 10 per cent to 50 per cent, effective Aug. 6, 2025. This tariff increase did not affect Largo's ferrovanadium sales in the United States but is impacting Largo's high-purity vanadium sales contracts in the U.S. These tariffs, combined with the company's the short-term liquidity issues, resulted in delayed shipments and some defaults to U.S. customers, further weakening the company's financial condition and operating capacity.

During this period, the discussions with private equity parties and investment banks resulted in the company successfully securing a $10-million (U.S.) factoring facility, as well as a $6-million (U.S.) secured loan to support its working capital. However, the company has been unable to fully address its working capital deficiency.

About Largo Inc.

Largo is a globally recognized supplier of high-quality vanadium and ilmenite products, sourced from its world-class Maracas Menchen mine in Brazil. As one of the world's largest primary vanadium producers, Largo produces critical materials that empower global industries, including steel, aerospace, defence, chemical and energy storage sectors. The company is committed to operational excellence and sustainability, leveraging its vertical integration to ensure reliable supply and quality for its customers.

Largo is also strategically invested in the long-duration energy storage sector through its 50-per-cent ownership of Storion Energy, a joint venture with Stryten Energy focused on scalable domestic electrolyte production for utility-scale vanadium flow battery long-duration energy storage solutions in the U.S.

Largo's common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol LGO.

We seek Safe Harbor.