Largo Inc (LGO)

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Largo Resources Restructures Debt

Largo Resources Ltd. announces execution of new Brazilian bank facility and restructuring of its existing facilities with its commercial lenders

December 28, 2016

TORONTO, Dec. 28, 2016 /CNW/ - Largo Resources Ltd. (TSX-V:LGO) ("Largo" or the "Company") is pleased to announce that, further to its press release of December 8, 2016, Largo and Vanadio de Maracás SA ("VMSA"), the Company's operating subsidiary, have entered into definitive agreements (the "Facility Documents") with each of its three existing commercial banks in Brazil (collectively, the "Lenders") for a new debt facility (collectively, the "2017 Facility") and the restructuring of its existing facilities with the Lenders related to its Maracás Menchen Mine.
The terms of the 2017 Facility, consistent with the previously announced binding term sheet with the Lenders, include:
Working capital facility of up to R$140,000,000 (Brazilian reais), granted by the Lenders
The 2017 Facility will be used for the payment of principal and interest falling due during 2017 on the existing loan from the Brazilian Development Bank ("the "BNDES Loan"), as well as principal and interest falling due during 2017 on existing debt facilities from certain banks within the group of Lenders.
The grace period for the amortization of principal of the 2017 Facility will be from the initial disbursement date thereof to March 29, 2018.
Principal and interest payments on the 2017 Facility becomes payable on a quarterly basis, in arrears, starting on March 30, 2018, over a period of 56 months.
The 2017 Facility has an applicable interest rate equivalent to the Brazilian interbank rate (the "CDI Rate") plus 5.7% per annum.
The final maturity date of the 2017 Facility will be 72 months after the initial disbursement date

The Facility Documents contain certain conditions precedent by the Company prior to funding, including, injecting an additional US$15,000,000 for on-going working capital requirements at the Maracás Menchen Mine prior to January 10, 2017 (extended from December 31, 2016). The Company is thereafter also obligated to inject an additional US$5,000,000, prior to June 30, 2017. Largo anticipates that the process will be concluded prior to the disbursement date (estimated to occur on or about January 12, 2017).
The Facility Documents require the Company and VMSA to comply with various financial and non-financial covenants during the term of the grace periods under both the 2017 Facilities and existing debt facilities with the Lenders.  At the completion of the grace period applicable to the 2017 Facility, the Company will continue to comply with the covenants set forth in the existing debt facilities with the Lenders.
Mark Smith, President and Chief Executive Officer for Largo, stated: "The ongoing support of our Lenders underscores the belief our stakeholders continue to have in the value and economic potential of the Maracás Menchen Mine. Now that the Maracás Menchen Mine has demonstrated stable and consistent operations, it is poised to benefit greatly from the production efficiencies it has gained, as well as substantial increases in Vanadium prices, which we anticipate will strengthen further during 2017."


http://www.largoresources.com/English/investors/news/news-release-details/2016/Largo-Resources-Ltd-announces-execution-of-new-Brazilian-bank-facility-and-restructuring-of-its-existing-facilities-with-its-commercial-lenders/default.aspx

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