Largo lenders to provide new debt facility

TORONTO (miningweekly.com) – Vanadium producer Largo Resources has signed an indicative term sheet with its consortium of existing commercial banks in Brazil for a new debt facility, that would allow a restructuring of its export credit facilities for its Maracas Menchen mine, in Brazil.

Under the terms of the new facility the miner would have a working capital facility of 104.6-million Brazilians reais, which would be disbursed in 12 monthly instalments, starting on January 12, 2016.

The facility would have a two-year grace period on the payment of interest and the principal of the loan, after which quarterly payments, in arrears, would start.

The loan facility would mature 84 months after the first disbursement date.

Largo on Thursday advised that the proceeds would be used “strictly” to pay interest and principal falling due under the company's existing construction debt facility, and to pay the swap settlements pertaining to one of the company's export facilities.

The restructuring of the export facilities included an amendment to set forth that the principal and interest instalments due for the 12 months after the disbursement date shall be payable on the same payment terms of the new facility.

The new facility and the restructuring of the export facilities were conditional on the company raising a further $20-million for continuing working capital requirements at the Maracas Menchen mine.

There was also the possibility of the lender making an additional working capital facility of up to 117.8-million reais available, conditional upon, among other things, the company raising further working capital in an amount to be agreed with the lenders.

"We are extremely pleased with the commitment and willingness of our lenders to provide the company with additional funding, and to restructure the company's debt profile during a period of very low commodity prices and general market weakness in the mining industry. This new support underscores the belief our lenders and stakeholders have in the value and success of the Maracas Menchen mine,” Largo president and CEO Mark Smith stated.

“We believe the Maracas Menchen mine has now proven its technical merit and will benefit greatly from any increase in vanadium prices from the current historic lows," Smith added.

Meanwhile, Largo's wholly owned subsidiary, Vanadio de Maracas, had entered into a 867 447 Brazilian-real short-term bridge loan facility, repayable on January 15, 2016, with a separate existing lender and with Largo as guarantor, in order to finance certain payment obligations regarding currency swap contracts with the lender.

The news sent Largo’s TSX-V-listed stock up 18% on Friday, to C$0.30 apiece.