Largo Resources Ltd. announces a non-binding term sheet in respect of the restructuring and conversion of existing debt facilities with Banco Pine

TORONTO, July 24, 2017 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") (TSX: LGO) (OTCQB: LGORF) is pleased to announce that it, along with its operating subsidiary, Van??dio de Marac??s S.A. ("Van??dio"), have entered into a non-binding term sheet for the restructuring and conversion of their existing debt facilities with Banco Pine S.A (the "Lender").

Highlights of the Proposed Arrangement:

• Conversion of an existing USD $4,425,475 credit facility between the Company and the Lender (the "USD Facility") into common shares of Largo to be issued within 60 days from the date of a definitive agreement (the "Agreement"); and
• Renegotiation of the repayment schedule for an existing BRL $89,127,631 credit facility (including accrued interest) between Van??dio and the Lender and guaranteed by Largo (the BRL Facility") and, upon fulfilment of certain payment milestones, the long-term restructuring of the BRL Facility.

Details of the Debt-to-Equity Conversion

The Company and the Lender anticipate the Agreement to provide for the conversion of the full outstanding amount under the USD Facility into common shares of Largo. The converted common shares would be issuable within 60 days from the date of the Agreement. Until the Agreement has been finalized and the conversion has occurred, interest shall accrue on the outstanding amount of the USD Facility in accordance with the underlying loan agreement. The Lender will also receive a restructuring fee that may be payable in common shares. Any debt-to-equity conversion contemplated by the Agreement will be subject to receipt of all required approvals.

It is expected that, upon conversion of the debt to common shares, the Lender will enter into a lock-up agreement under which it will not sell, assign, encumber or otherwise dispose of the converted common shares for six months from the execution of the Agreement.

Details of the BRL Facility Restructuring

It is anticipated that, under the terms of the Agreement, the payment schedule for the BRL Facility will be amended to allow Van??dio up to 290 days from the execution of the Agreement to pay USD $8,500,000 (approximately BRL $26,800,000) towards the outstanding amount of the BRL Facility (the "Initial Payment"). If, following the Initial Payment, the outstanding amount of the BRL Facility is higher than BRL $69,000,000, Van??dio must make an additional payment to reduce the outstanding amount of the BRL Facility to this amount.

Upon fulfilment of the Initial Payment, it is expected that the remaining amount outstanding under the BRL Facility will be refinanced through a new loan agreement, the terms of which are likely to include:

1. a maturity date 7 years from the date of execution;
2. a floating interest rate equal to IPCA ("??ndice Nacional de Pre??os ao Consumidor Amplo"; the Broad Consumer Price Index, currently 3.0%), with a cap of 12% per annum;
3. any interest accruing during the first 12 months from the Initial Payment shall be paid at the end of the first year. Thereafter interest shall be paid on a semi-annual basis until December 2021. From January 2022 until the maturity date interest shall be paid monthly;
4. no outstanding principal shall be repayable until 2021. At which time, 1% of the principal shall be repaid in 2021; 5% of the principal shall be repaid in 2022; 15% of the principal shall be repaid in 2023; and the balance of the principal shall be repaid in monthly instalments until maturity; and
5. Van??dio shall have the right to prepay the outstanding amount under the restructured facility at any time.

Mark Smith, President and Chief Executive Officer for Largo, stated: "We believe that the proposed restructuring of these facilities will result in a debt profile that enables the Company to more accurately match its future cash flows with its debt servicing obligations. We are very pleased with the strong support shown by Banco Pine in working with the Company to find a solution that benefits both parties.This outcome would not have been possible without all of the hard work of the Largo team that has enabled us to provide stable production at a low unit cost. This foundation along with our world class resource will ensure the future success of Largo as vanadium prices continue to rise."

About Largo

Largo Resources Ltd. is a growing strategic mineral company focused on the production of vanadium pentoxide at its Vanadio de Marac??s 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.

Forward Looking Information

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 completion of the loan restructuring and conversion of existing debt and the definitive terms thereon; Largo's development potential and timetable of its operating, development and exploration assets; Largo's ability to raise additional funds necessary; the future price of vanadium, 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". 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 forwardlooking 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.

SOURCELargo Resources Ltd.

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