Largo Resources Ltd. (TSX VENTURE:LGO - News;
"Largo") is pleased to provide an update regarding the status of
its previously announced Letter of Intent ("LOI") (see press
release October 27, 2010) to enter into a joint venture agreement with Vinci
Capital Gestora de Recursos
Ltda. ("Vinci Capital") in order to provide Largo with US$120
million in equity funding primarily for furthering the development of its
Maracas Vanadium project in Brazil. Largo expects that a definitive agreement
will be signed by the end of January, 2011.
Vinci Capital is formed by one of
Brazil's most experienced private equity team with consistent investment
performance since 2001. Vinci Capital is the private equity division of Vinci
Partners Investmentos Ltda. ("Vinci
Partners") that has a capital base of $3 billion; $2.2 bilion of which is its Partners' capital. This Joint
Venture represents its first investment in Brazil's growing mining and
minerals sector.
"We have been working very
diligently with Vinci Capital in order to move towards closure of this
transaction." stated Mark Brennan, President & CEO of Largo. He
continued, "There has been a considerable amount of due diligence and
documentation preparation that has been required by both parties. Largo and
Vinci Capital remain committed to moving forward and closing the transaction
as quickly as possible."
Under the terms of the LOI, Vinci
Partners and its co-investors will provide US$120 million into a newly formed
Brazilian company for the purposes of (i) acquiring
the 20% minority interest in the Maracas Vanadium project that Largo does not
currently own, (ii) developing the Maracas mine, and (iii) progress other
projects in Brazil, including the Currais Novo and
Campo Allegre projects currently held by Largo.
"The due diligence process and the
negotiation of the agreements among the various parties are taking more time
than initially anticipated. Nonetheless, at this stage, the information
already analyzed gives us confidence that a definitive agreement may be
executed by the end of January," stated Jose Guilherme
Souza, a partner with Vinci Partners.
Under the terms of the LOI, Largo shall
contribute its Maracas, Currais Novos,
and Campo Allegre projects and its operating team
to the newly formed Brazilian Company in consideration for a minimum economic
interest of 40% of the newly formed Brazilian Company with additional
performance warrants that would enable Largo to increase its stake therein.
Attendant to the final investment and
shareholder agreements will be corporate governance controls that would
provide Largo with the right to nominate two of the five board members of the
new Brazilian Company, and also provide super majority vote or veto rights on
material issues such as acquisitions/dispositions, liquidity events and
dividend distributions.
Largo retains direct ownership of the
Northern Dancer property and will continue to look to acquire directly
additional mineral projects outside of Brazil.
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 Maracas Vanadium Project, 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 Maracas 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 a publicly listed company on
the TSX Venture Exchange under the symbol LGO. For more information please
refer to Largo's website: www.largoresources.com.
Mr. Tim Mann, an officer of the Company,
is the Qualified Person as defined under National Instrument 43-101
responsible for the scientific and technical disclosure in this press
release.
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 the proposed use of proceeds, receipt of regulatory approval;
completion of the transactions on the terms proposed; Largo's development
potential and timetable of its projects; Largo's ability to raise additional
funds necessary; the future price of ferrovanadium and vanadium pentoxide; 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 information 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 information is based on the opinions and estimates of
management as of the date such statements are made. Forward-looking information
is 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 information, including but not limited to risks
described in the annual information form of the Company. Although management
of Largo has attempted to identify important factors that could cause actual
results to differ materially from those contained in forward-looking
information, 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
information. Largo does not undertake to update any forward-looking
information, except in accordance with applicable securities laws.
NEITHER THE TSX VENTURE EXCHANGE (NOR
ITS REGULATORY SERVICE PROVIDER) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
|