TORONTO, ONTARIO--(Marketwire - Feb. 28, 2011) - Largo Resources Ltd. (News - Market indicators) ("Largo") is pleased to report the results of a NI 43-101 compliant Preliminary Economic Assessment (the "PEA") on the Northern Dancer Tungsten-Molybdenum Project ("Northern Dancer" or the "Project") located in the Yukon Territory, Canada. The corresponding technical report was completed by AMC Mining Consultants (Canada) Ltd ("AMC") and will be filed on SEDAR in due course. 

The results of the PEA conclude that the Northern Dancer Project has favourable economic potential for the low cost production of tungsten and molybdenum from an open pit operation. Largo intends to further advance the Project towards production and will proceed with the completion of a preliminary feasibility study immediately.

Mark Brennan, President and Chief Executive Officer of Largo, stated: "Largo is very excited by the tremendous potential of Northern Dancer. The PEA projects that Northern Dancer may be a robustly profitable endeavour for Largo and we are eager to move forward into the feasibility stage and move further toward production. With the projected low cash-cost production of tungsten concentrate from Northern Dancer, and the price of tungsten continuing to rise due to inconsistent supply from China, this study further solidifies our belief that Largo will be well positioned to be a leading player in the production of tungsten."

Projected Cashflows and Economic Results

Based on the project life of 49 years and initial pre-production capital of US$ 645 million, the PEA estimates that Northern Dancer has an unleveraged IRR of 20.00% on a pre-tax basis. The pre-tax NPV at an 8% discount rate is US$ 918 million. Cumulative cash flow is US$4.82 billion. This analysis is based on metal prices of US$275 per MTU for tungsten in the form of ammonium paratungstate ("APT") and US$17.50 for molybdenum. The economics of the project are sensitive to metal price variation, as summarised in the following table:

The financial projections associated with this PEA employ a mining rate for plant feed and waste of approximately 30 million tonnes per annum (tpa) for 23 years. The cash costs over this period are US$116 per MTU of WO₃ equivalent product. During this time there will be sufficient lower grade material stockpiled to run the process plant for another 26 years once mining has stopped. Overall recoveries during processing and milling provide for recoveries of 75% for tungsten and 72% for molybdenum based on metallurgical tests completed to date. The selected process route provides for the use of sorting using Dual Energy X-Ray Transmission (DE-XRT) that reduces the milling rate to 11.2M tpa. The PEA currently envisages the production of APT on site. Molybdenum processing costs include an 8% assessment for offsite costs and roasting to produce a saleable concentrate. Life of Mine operating costs including mill feed and waste are estimated to be US$ 2.00 ($C2.20/tonne), with beneficiation and APT production costs at US$ 5.96 ($C6.56/tonne) and G&A costs at US$ 1.46 ($C1.60/tonne).

The estimated pre-production capital costs are US$645 million which includes a 25% contingency. Sustaining costs are assessed to be US$225 million over the life of the mine.

This present PEA is based on a Mineral Resource estimate that was publicly disclosed in a press release dated March 12, 2009, and detailed in a report filed on SEDAR on June 17, 2009, by Snowden Mining Industry Consultants Inc. ("Snowden") The NI 43-101 Technical Reports published reflect statistical treatment of increasing amounts of assay data as drilling progressed on the property. The total mineable tonnes are estimated to be 545,236,000 tonnes at a grade of 0.076% WO₃ and 0.024% Mo.

The economic assessment is preliminary in nature. It includes inferred mineral resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the preliminary assessment will be realized.

Largo intends to look for opportunities to add value to Northern Dancer by:

• Conducting additional testwork with the objective of refining the Dual Energy X-Ray Transmission (DE-XRT) technique to improve sorting recoveries
• Conducting additional flotation testwork to produce a concentrate for the production of APT, and to endeavour to improve overall flotation recoveries
• Undertaking a detailed analysis of the production, costs and marketing of WO₃ and/or APT to maximise revenues over the long-term
• Formulate a strategy to reduce infrastructure costs particularly in respect of power supply.

Infill drilling, geotechnical work and environmental/community studies took place in 2008 and have continued since that time. There are no known environmental liabilities attached to the property and it does not lie within an area selected as First Nations Settlement Land.

The Northern Dancer process plant conceptualized in this study will treat 30,800 tpd of ROM feed materials through the crushing and sorting circuits. The resulting sorter concentrate, 65% of the ROM feed mass, will be processed through the grinding and molybdenum/tungsten recovery circuits at a rate 20,000 tpd. Medium grade flotation concentrate is converted to APT in-house. Overall metal recoveries into concentrates are estimated at 75% for tungsten and 72% for molybdenum. The predicted APT conversion recovery is at 95% of tungsten concentrate.

Estimated Mineral Resources

Largo has prepared three Mineral Resource estimates on the Project; in each of 2007, 2008 and 2009 in accordance with CIM (2005) Definition Standards. The Mineral Resource estimates were generated using the geological setting of the deposit developed by Largo and the various domains, style of mineralization, and the Mo and WO₃ assay data from 134 drill holes totalling 35,817 meters of drilling of which Largo completed 81 holes totalling 23,948 m from 2006-2008. 

The deposit was modeled and the resource estimate prepared using Gemcom mining software.

The Mineral Resource estimates were reviewed and validated by Dr. Warwick S. Board, MAusIMM, Pr.Sci.Nat., Senior Consultant with Snowden Dr. Board, a qualified person as defined under National Instrument 43-101, visited the site from July 5 to 7, 2008 and prepared the resource estimate. Dr Board has verified the scientific and technical information contained in these resource estimates.

Northern Dancer hosts widespread tungsten-molybdenum porphyry style mineralization, the core of which has been partially delineated by 134 Diamond drill holes and 496 metres of underground workings. This work was done by AMAX Minerals Exploration from 1977 to 1980, including 51 holes, and by Largo, which completed 17 holes in 2006, 26 holes in 2007 and 38 holes in 2008. On March 12, 2009 (see press release March 12, 2009) Largo announced an updated NI 43-101 compliant resource estimate.

This resource consists of: Measured resources of 30.8 million tonnes grading 0.114% WO₃ and 0.030% Mo, and Indicated resources of 192.6 million tonnes grading 0.100% WO₃ and 0.029% Mo. The Measured and Indicated mineral resource estimate contains 223.4 k tonnes of WO₃ and 143.9 million pounds of Mo (65.2 k tonnes). Inferred resources were estimated to be 201.2 million tonnes grading 0.089% WO₃ and 0.024% Mo containing 178.3 k tonnes WO₃ and 48.9 k tonnes of Mo.

Tungsten and molybdenum mineralization at the Northern Dancer deposit are concentrated in two zones which partially overlap. The mineralization is hosted in fractures, veinlets and veins associated with a northeast-trending sheeted vein structure hosted in calc-silicate (skarn) rocks and spatially related to a felsic intrusion (quartz-feldspar porphyry). The quartz feldspar intrusive complex appears to be a branch emanating from the northern flank of a Cretaceous-aged quartz monzonite stock. The deposit, which has been tested by drilling for 1.2 kilometres along strike, 500 metres vertically and 600 metres in width, remains open along strike to both the northeast and southwest as well as at depth. In the core of the deposit, there is a higher grade molybdenum zone where molybdenite occurs within and adjacent to the felsic intrusion. Surrounding and partially overlapping the molybdenum zone is a much more extensive tungsten zone where scheelite occurs in the northeast-trending sheeted quartz veins structure. Minerals of economic interest include scheelite, molybdenite, and molyscheelite (powellite), which are mainly distributed in a stockwork of fractures and veins in the metasedimentary rocks and quartz-feldspar porphyry.

Environmental work for the project has continued this year with the focus being on the clarification of the permitting processes and the implementation of year-round water testing programs.

Project Description

Northern Dancer is one of the world's largest known tungsten-molybdenum deposits and is hosted by a coarse-grained, felsic intrusive complex and surrounding skarn that straddles the border between the Yukon and the northern portion of British Columbia in Canada. The deposit has been defined through the drilling of 134 drill holes totalling 35,813 meters on the property. It has had a previous historic (Sept. 1983) prefeasibility study performed by Canamax Resources Inc. on it and Largo believes it to be amenable to open pit mining.

The deposit is located approximately 260 km to the southeast of the city of Whitehorse in Yukon. The closest community is the town of Teslin, approximately 65 kilometres to the east of the property. The property is approximately 13 kilometres to the north of the Alaska Highway and is accessible by a combination of good quality paved roads and a short section of dirt road. Proximal sites with potential for hydro development to provide power to the project have been identified by Largo. Water is readily available at the site and there is highway access to tidewater at the port of Skagway in southeast Alaska.

Currently there are 23 contiguous mineral claims in the Yukon and three tenures in British Columbia that cover the Northern Dancer Project, with a total area of 1,500 ha.

The PEA has been prepared for Largo by AMC with the input and cooperation of the following consultants:

• Matt Bolu P.Eng. of Bolu Consulting Engineering Inc. provided estimates of metallurgical recoveries, process plant and APT plant opex and off-site transport and treatment costs.
• Peter Smith P.Eng. of Axxent Engineering Ltd provided Capital cost estimate for process and APT plants, camp and other major infrastructure, EPCM and contingency estimates.
• John Lemieux P.Eng. of AMEC Earth and Environmental provided capital and operating cost estimates for the tailings management facility.
• Dennis E. Netherton P.Eng. of Almarah Technical Services Inc. provided the capital cost estimate for hydroelectric power generation.
• Erik Nyland P. Eng. provided capital cost estimate for all weather access roads.

The open pit mining capex and opex estimates were prepared by Gregory Hollett, P.Eng. of AMC. Largo provided the owner's cost estimates. All of the persons identified above are independent Qualified Persons as defined by NI 43-101.

Mr. Tim Mann, P.Eng. is the Qualified Person as defined under National Instrument 43-101 responsible for the scientific and technical work on the program.

About Largo

Largo is a Canadian-based mineral resource exploration and development company focused on creating a world leading strategic metals company. The Company currently holds an 80% interest in the Maracás Vanadium Project, a 100% interest in the Currais Novos Tungsten Tailing Project, a 100% interest in the Campo Alegre de Lourdes Iron-Vanadium Project, all in Brazil, and a 70% interest in the Northern Dancer Tungsten-Molybdenum property located in the Yukon Territory, Canada. The immediate goal of the Company is to develop the Maracás Vanadium Project by Q1 2013 and begin production of WO₃ concentrate from the reprocessing of tungsten tailings from Currais Novos by June, 2011. Largo has a very skilled management team both in Canada and Brazil with the ability to advance these projects.

Largo is listed on the TSX Venture Exchange under the symbol "LGO".

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

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 Largo's development potential and timetable of the Maracas 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.