Largo Resources Provides Guidance on Second Quarter 2018 Revenue and Announces
Receipt of Consent to Repayment from BNDES
Canada NewsWire
TORONTO, July 17, 2018
TORONTO, July 17, 2018 /CNW/ - Largo Resources Ltd. (" Largo " or the "
Company ") (TSX: LGO) (OTCQX: LGORF) is pleased to provide guidance on its
expected revenue for the three month period ending June 30, 2018 anticipating
revenue of between CDN$99 million and CDN$107 million, a new quarterly revenue
record for the Company.
Our anticipated Q2 2018 revenue would represent an increase of between
approximately 176.6% and 198.9% over Q2 2017, if realized. The increase to
revenue is expected to be driven largely by the upward movement in vanadium
pentoxide (" V2O5 ") pricing and increased production when compared to Q2
2017. The price range of V2O5 for the last week of Q2 2018, as reported by
the European Metal Bulletin, was US$17.00/lb V2O5 to US$17.50/lb V2O5 as
compared to US$5.35/lb V2O5 to US$6.00/lb V2O5 for the last week of Q2 2017.
Management anticipates that the overall benefit of the increased revenues will
be tempered by increases in corresponding royalty expenses and certain largely
non-cash foreign exchange adjustments anticipated to be required as a result
of the weakening of the Brazilian Real against the USD given that certain of
the Company's debts in Brazil are denominated in USD. The Company expects the
foreign exchange loss in Q2 2018 to exceed the loss recorded in Q2 2017.
In addition, as a result of, among other things, the improvement in the
vanadium pricing over the first half of 2018, the Company is also assessing
its deferred tax position as at June 30, 2018, and work performed to date
suggests that a significant net deferred tax asset might need to be recognized
in the condensed interim consolidated statement of financial position at June
30, 2018, with a corresponding deferred tax recovery recognized in the
condensed interim consolidated statements of income (loss) and comprehensive
(loss) for the three and six month periods ended June 30 2018. Although any
gain would be a non-cash item, we anticipate that it could have a material
positive impact on net income and earnings per share.
Credit Facility Repayment Consent
On July 13, 2018, the Brazilian National Economic and Social Development Bank
(" BNDES ") provided its consent for the early repayment of the Company's
credit facility with them. The receipt of this consent is a condition to the
release from escrow of the first tranche of the net proceeds from the
Company's recently completed offering of senior secured notes (the " Note
Offering ") of approximately US$143 million which have, to date, been held in
escrow (the " Escrowed Funds ").
The Company anticipates making a payment using the released portion of the
Escrowed Funds of USD$84,138,367 to BNDES on or about July 23, 2018
representing payment in full of amounts owing to BNDES. Once repayment in
full of the BNDES has occurred, the remaining Escrowed Funds will be released
from escrow and used to repay the Company's remaining credit facilities held
with a syndicate of commercial lenders (being Itaú Unibanco S.A., Banco
Votorantim S.A. and Banco Bradesco S.A.) on or about July 31, 2018. For
additional information in respect of the Company's Note Offering please see
the Company's press release dated May 22, 2018.
Mr. Mark Smith, Largo's President and Chief Executive Officer, commented "We
are pleased that we now have the BNDES approval in-hand and we look forward to
repaying in full amounts owing to both the BNDES and our syndicate of
commercial banks in Brazil. The repayment will allow us to realize the
anticipated benefits of our recently completed note offering through the
improvement in our capital structure, reduction in interest costs and the
simplification of our reporting obligations. The restructuring of our debts
along with the most recent posted price range of V2O5 for the week ended July
13, 2018 of US$18.90/lb V2O5 to US$19.85/lb V2O5 (as reported by the European
Metal Bulletin) presents an exciting opportunity for our Company."