• Operating cash flows before changes in non-cash working capital items increased to $11.0 million, from $5.2 million in Q1 2017 and negative $4.5 million in Q2 2016.
• V2O5 production increased to 2,182 tonnes in Q2 2017 from 2,062 tonnes in Q1 2017, but was below Q2 2016 at 2,311 tonnes, due to the planned kiln refractory relining refurbishment undertaken during March 2017 and completed by April 9, 2017.
• Revenues increased to $35.8 million in Q2 2017 from $29.4 million in Q1 2017 and from $18.9 million in Q2 2016, mainly driven by higher V2O5 prices.
• Overall metallurgical V2O5 recovery increased to 74.3% in Q2 2017, from 71.8% in Q1 2017. The Company expects higher recoveries due to recent operational improvements which led to a production of 807 tonnes in July 2017.
• Cash costs declined to US$3.56/lb of V2O5 from US$3.90 in Q1 2017 but increased from US$3.25 in Q2 2016, in part due to the kiln refractory relining impact on production and the impact of foreign exchange.
• Cash and restricted cash increased to $12.4 million and $8.3 million, respectively, in Q2 2017 versus $0.8 million and $2.1 million, respectively, at the end of 2016.

TORONTO, Aug. 14, 2017 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") today released highlights of its financial results for the quarter ended June 30, 2017, as filed in full on SEDAR at http://www.sedar.com and on the Company's website at http://www.largoresources.com. The reader is cautioned that the below excerpt should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2017 and 2016 as well as management's discussion and analysis for the three and six months ended June 30, 2017 ("MD&A"). Note references in this press release refer to the notes contained in Largo's unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2017 and 2016.

Q2 2017 financial highlights¹

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89% increase in Q2 revenues, driven mainly by higher V2O5 prices

Revenues for Q2 2017 represent an 89% increase over Q2 2016 and year-to-date revenues represent a 125% increase over the corresponding period last year.

Significant increase in cash generation

Revenues for Q2 2017 exceeded direct mine and mill costs by $15.7 million and cash provided before non-cash working capital items for Q2 2017 was $11.0 million, representing increases of $14.9 million and $15.5 million respectively over Q2 2016.

Mark Smith, President and Chief Executive Officer for Largo, stated: "Our Q2 2017 financial performance improved on the good results of the previous quarter and represents a significant improvement over the corresponding quarter last year. Vanadium prices have strengthened considerably recently and we anticipate that the increasing vanadium price, coupled with strong production and cost performance will drive further increases in cash flow from operations.�  Largo is very well poised to benefit from the higher V2O5 price environment and the stronger vanadium market fundamentals."

Maracás Menchen Mine operating results

During Q2 2017 the overall V2O5 recovery was 74.3%, compared to 71.8% in the first quarter 2017. The Company continues to improve its metal recovery as it actively works to reduce costs and increase operational efficiencies. Key components of the improved recovery level in Q2 2017 include the leaching recovery, which increased from 95% in the first quarter 2017 to 96% in Q2 2017 and the chemical plant recovery, which increased from 96% in the first quarter 2017 to 97% in Q2 2017. The lowest monthly production during Q2 2017 was in April, with an output of 645 tonnes of V2O5. The planned kiln shut-down and refurbishment in March 2017 was completed on April 9, 2017, which impacted production for those nine days and operating costs for Q2 2017.

The Company sold 82 tonnes of "high purity" V2O5 in Q2 2017. In addition, the Company is proceeding with the installation of the necessary equipment to handle and pack V2O5 powder. Both "high purity" V2O5 and V2O5 powder yields a price premium to the Company over and above what is received for V2O5 flake.

The cost per pound for Q2 2017 (refer to page 4 of the MD&A) was 7.5% lower than the first quarter 2017 primarily due to higher production (6%) and higher global metal recovery during Q2 2017. These results are due to the improvements implemented during the kiln refractory shutdown in March and April 2017. Partially offsetting these improvements was the higher than anticipated consumption of ammonium sulphate of 6%.

In Q3 2017 the Company expects to maintain the higher metal recovery levels achieved in Q2 2017 and to further improve the performance of the deammoniator to achieve the targeted production level of 840 tonnes of V2O5 per month. In addition, the Company has implemented improvement projects to address the consumption level of ammonium sulphate, to increase leaching recoveries to above 96% and to increase global recoveries to above 75%. The Company produced 807 tonnes of V2O5 in July 2017.

The Company's Maracás Menchen Mine produced 2,183 tonnes of V2O5 in Q2 2017, compared to 2,311 tonnes in the same prior year period, in part due to impact on production of the shutdown.

Financing highlights during Q2 2017

On April 12, 2017, the Company announced it had entered into a US$2.0 million six-month short term loan at an interest rate of 9% per annum. US$1.0 million was drawn down on April 12, 2017, with US$0.5 million drawn down on each of May 1, 2017 and June 1, 2017. Pursuant to the terms of the loan, the Company issued 0.4 million common share purchase warrants to the lender with each warrant being exercisable to acquire one common share of the Company at a price of $0.50 until December 31, 2020.

During the six months ended June 30, 2017, 13.3 million warrants were exercised, resulting in proceeds to the Company of $3.8 million (refer to note 10).

Summary of the Company's Q2 2017 financial results³

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Cash operating costs since the commencement of commercial production on October 1, 2015⁴

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2017 Production guidance

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Significant events and transactions subsequent to Q2 2017

On July 12, 2017, the Company announced that effective June 30, 2017, the syndicate of Brazilian commercial lenders under the Company's existing debt facilities have agreed to (i) terminate the US$5.0 million March 2017 capital injection requirement which has been the subject of a temporary waiver since March 15, 2017 and (ii) postpone the additional US$5.0 million June 2017 capitalization requirement until December 31, 2017.�  The March 2017 and June 2017 capitalization requirements had initially been required by the commercial lenders in connection with the 2017 Facility. The commercial lenders have further agreed that if the Company complies with the required payment obligations then on December 31, 2017, the June 2017 capitalization requirement will also be terminated.

On July 24, 2017, the Company announced that it, along with its operating subsidiary Vanádio de Maracás S.A. ("Vanádio"), have entered into a non-binding term sheet for the restructuring and conversion of the existing short term loan (refer to note 8(f)) and Swap Facility (refer to note 8(d)). Highlights of the proposed arrangement include: (i) conversion of the short-term loan into common shares of the Company to be issued within 60 days from the date of the definitive agreement and (ii) renegotiation of the repayment schedule for the Swap Facility and accrued interest and, upon fulfilment of certain payment milestones, the long-term restructuring of the Swap Facility and accrued interest. Refer to the Company's press release dated July 24, 2017 for further details.

About Largo

Largo Resources Ltd. is a growing strategic mineral company focused on the production of vanadium pentoxide at its Vanadio de Maracás Menchen Mine. 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. As trends in the steel industry now demand increasingly stronger and lighter products for advanced applications, the use of vanadium is expected to grow 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. For more information, please visit www.largoresources.com.

Cautionary Notes:

This press release contains forward-looking information under Canadian securities legislation.�  Forward-looking information includes, without limitation, statements with respect to completion of a listing on a U.S. stock exchange. 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.

Neither the Toronto Stock Exchange (nor its regulatory service provider) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Largo Resources Ltd.