Largo announces results of life-of-mine study for its Maracas Menchen mine and resulting significant increase in NPV

Largo Resources Ltd. is pleased to announce the results of an independent National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) technical report, containing a Life of Mine Plan (LOMP) for its Maracás Menchen vanadium mine in Bahia, Brazil, a Feasibility Study for Campbell Pit at the Maracás Menchen Mine and, a Preliminary Economic Assessment (PEA) for Gulçari A Norte, Gulçari B, Novo Amparo, Novo Amparo Norte, Campbell in pit resources and São José satellite deposits at the Maracás Menchen Mine (the “Satellite Deposits”).

Largo retained GE21 Consultoria Mineral Ltda. (“GE21”) to prepare the technical report and it will be filed on SEDAR within the required 45-day period.

Highlights of the Technical Report:

  • NPV(8%) post tax is US$ 542 million for the reserves at the Campbell Pit, representing an increase of approximately 195% over the NPV reported for Reserves in Largo’s Updated Mine Plan And Mineral Reserve Report filed on July 8, 20161.
  • NPV(8%) post tax is US$ 140 million for the mineral resources in the Satellite Deposits.
  • Life of operation for the reserves in the Campbell Pit is 11 years.
  • An additional mine life of 12 years was estimated, if the Inferred Resources in the Satellite Deposits come to be converted to Mineral Reserves.
  • The Technical Report is a “Vanadium Only” study. No value was given for any by-products at this time, including iron, ilmenite (“TiO2“) and PGMs.
  • The Technical Report used a long-term vanadium pentoxide (“V2O5“) price of US$ 6.34/lb for the life of mine except for the years 2018 and 2019, where vanadium pentoxide price of US$ 9.00/lb was used.
  • The LOMP results indicate an operating life of the Maracás Menchen Mine, including the Satellite Deposits, to be of 23 years.
  • The Technical Report contemplates two expansions to increase production at Campbell Pit as follows: in 2019-960 tonnes/month (11,520 tpa) and in 2020-1100 tonnes/month (13,200 tpa).

The reserves in the Campbell Pit were estimated as follows:

Maracás Vanadium Project Mineral Reserves – Campbell Pit

Block dimensions 5x5x5 (m)

Mine Recovery 100% – Dilution 5%

(Effective Date – May 02, 2017)

Reserve Category

Tonnage
(kt)

%V2O5
Head

%Magnetics

%V2O5
concentrate

Proven

17,570

1.14

29.66

3.21

Probable

1,440

1.26

33.89

3.20

Total in pit Reserve

19,010

1.13

29.30

3.22

The mineral resources, estimated under the PEA was as follows:

Satellites Deposits
Mine Recovery 100% – Dilution 5%

Target

ROM

Magnetic Concentrate

Tonnage

V2O5
Head

SiO2

Head

Mag*

Tonnage

V2O5

SiO2

 Kt

%

%

Kt

%

Gulçari A
Norte e
Gulçari B

7,851

0.67

26.82

25.7

2,014

2.63

2.97

Novo Amparo

1,171

0.71

14.18

38.9

456

1.58

1.44

Novo Amparo
Norte

9,473

0.81

23.66

28.6

2,714

2.60

2.79

São José

3,860

0.85

23.35

28.8

1,113

2.67

2.29

Campbell
inferred

1,736

1.03

28.88

28.2

489

3.06

3.96

Total

24,090

0.78

24.55

28.2

6,785

2.60

2.79

*Numbers are rounded to one decimal place.

Largo has completed construction, development and ramping up to name plate capacity (9,600 tonnes V2O5/year) at its Maracás Menchen Mine.

The Technical Report was prepared by GE21 and was designed to allow the company to more fully optimize operations in order to maximize the Maracás Menchen Mine’s NPV and is based on the production of V2O5 from the Maracás Menchen Mine’s mineral resources, as well as from its established mineral reserves. The PEA examines the incremental impact to the mine plan of mining the Satellite Deposits not previously considered.  The report does not provide any credit for by-products, however Largo will continue to evaluate the technical and economic viability of all potential by-products.

The Technical Report respects the definition of PEA as described in the CSA Staff Notice 43-307- Mining Technical Report – Preliminary Economic Assessments, issued by the Canadian Securities Administrators on August 16, 2012.

Mr. Smith, Largo’s CEO stated, “I am very pleased with the results of this study.  Both the increase in the net present value of our operations and the greatly increased mine life that could be achieved as a result of the Satellite Deposits speak to what I view as a very bright future for Largo.  This Technical Report further reinforces that Largo has a world class vanadium operation and I am confident that our team will continue to meet and exceed our operational expectations.”

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