TORONTO, May 15, 2017 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") today released highlights of its financial results for the quarter ended March 31, 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 months ended March 31, 2017 and 2016 as well as the management's discussion and analysis for the three months ended March 31, 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 months ended March 31, 2017 and 2016.

Q1 2017 financial highlights¹

Mark Smith, President and Chief Executive Officer for Largo, stated: "Our Q1 2017 financial performance continued the strong results achieved during recent quarters. Revenues for Q1 2017 exceeded direct mine and mill costs by $8,975 and cash provided before non-cash working capital items for Q1 2017 was $5,146. We are extremely proud of these achievements and of our operational team at the Maracás Menchen Mine."

He continued: "Our belief is that our production record, cash operating costs and vanadium prices will continue to strengthen and enable Largo to deliver improved financial performance during fiscal 2017."

Maracás Menchen Mine operating results

During Q1 2017 the overall V2O5 recovery was 71.8%, compared to 62.6% in the fourth quarter 2016 and 58.9% in the third quarter 2016. 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 Q1 2017 include the leaching recovery, which increased from 90% in the fourth quarter 2016 to 95% in Q1 2017 and the magnetic concentration plant recovery, which increased from 90% in the fourth quarter 2016 to 97% in Q1 2017. The lowest monthly production during Q1 2017 was in February, with an output of 639 tonnes of V2O5. This was primarily due to low availability in the fusion area.

The planned shutdown initiated in March has been completed and enabled the Company to implement improvements in a number of areas, including the replacement of the primary crusher to improve utilization, the installation of a new kiln feed system to improve plant stability and the installation of a dust cyclone in the de-ammoniator exhaust system to improve availability. The fusion furnace and flaking wheel were also replaced in order to avoid future production losses, as occurred in February 2017.

The Company sold 23 tonnes of "high purity" V2O5 in February 2017 and sold a further 80 tonnes in April. In addition, the Company is proceeding with the installation of the necessary equipment to handle and pack V2O5 powder. The Company's "high purity" V2O5 yields a price premium to the Company over and above what is received for V2O5 flake and the Company anticipates that its V2O5 powder will also yield a price premium.

The cost per pound for Q1 2017 (refer to page 3 of the MD&A) was higher than both the fourth quarter 2016 and the third quarter 2016 primarily due to the shutdown in Q1 2017 for the kiln refractory replacement, which resulted in lower production for the period.

In Q2 2017 the Company expects to realize improvements in the metal recovery levels and plant availability following the implementation of the projects noted above. Following the installation of the new kiln feeding system and kiln refractory, the Company expects to reduce its specific consumption of sodium carbonate, a key consumable for the plant. In addition, the Company is working to reduce the temperature of the clean concentrate solution in the chemical plant, which is expected to reduce the specific consumption of ammonium sulphate, another key consumable. The revised production target will be 27 tonnes of V2O5 per day, for an expected monthly output of 840 tonnes of V2O5 from May 2017 onwards.

Q1 2017 corporate highlights

The Company's Maracás Menchen Mine produced 2,062 tonnes of V2O5 in Q1 2017, compared to 1,169 tonnes in the same prior year period.

On January 9, 2017 and January 24, 2017, the Company announced the closing of the first and second tranches of a non-brokered offering of units. The Company received gross proceeds of $16,083 from the sale of 35,740 units of the Company.  Each unit was sold at a price of $0.45 and consisted of one common share of the Company and one common share purchase warrant. Each whole warrant will be exercisable into one common share at a price of $0.65 per share for a period of three years from closing of the offering. Funds managed by the ARC Funds purchased an aggregate of 14,396 units for consideration of $6,478. Prior to the offering, the ARC Funds owned approximately 59.86% of the Company's issued and outstanding common shares and following the closing of the offering, the ARC Funds owned approximately 58.62% of the Company's then issued and outstanding common shares. In addition, an entity controlled by Mr. Alberto Beeck, a director of the Company, subscribed for an aggregate of 10,450 units for consideration of $4,703.  Refer to note 9(b) for further details.

On February 24, 2017, the Company agreed to a new schedule of payments for its short term loan. Consequently, the Company received waivers, which included the payment of principal and interest on February 28, 2017, to allow the revised loan documents to be duly executed. In return for receiving the waivers, the Company was required to pay a restructuring fee of US$100 through the delivery of common shares of the Company by April 24, 2017. This condition was satisfied in March 2017. The revised loan documents were duly executed on March 24, 2017. The new schedule of payments for the short term loan is as disclosed in note 8(f).

On February 27, 2017, the Company announced that its vanadium pentoxide has been qualified for use by a major North American producer of master alloys for the aerospace industry, with further qualification trials underway at master alloy producers in Europe and Russia.

On March 15, 2017, the Company announced that the consortium of three commercial banks in Brazil had agreed to temporarily waive the requirement that the Company inject a further US$5,000 in working capital into Vanadio by the same date, a term which the three commercial banks had required in connection with the 2017 Facility (see note 8(c)). In connection with the granting of this temporary waiver, the three commercial banks and the Company agreed that the Company will fund certain payment obligations to the three commercial banks which had previously been delayed.

Summary of the Company's Q1 2017 financial results³

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

2017 Production guidance

Significant events and transactions subsequent to Q1 2017

On April 12, 2017, the Company announced it had entered into a US$2,000 six-month short term loan at an interest rate of 9% per annum. US$1,000 was drawn down on April 12, 2017, with US$500 to be drawn down on each of May 1, 2017 and June 1, 2017. Pursuant to the terms of the loan, the Company issued 400 common share purchase warrants to the lenders with each warrant being exercisable to acquire one common share of the Company at a price of $0.50 until December 31, 2020.

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.

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