Largo receives Bndes Board approval for Us$175 million debt facility

• Initial construction phase has begun
  
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  Symbol: LGO (TSX.V)
  www.largoresources.com

TORONTO, May 15, 2012 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") is pleased to announce that the Board of Directors of the Business Development Bank of Brazil ("BNDES") have provided their final approval for a Brazilian Reais R$333 million (approximately US$175 million equivalent) debt-facility (the "Facility") for the Maracas Vanadium Project in Bahia, Brazil (see press release dated October 31, 2012).

Highlights:

• Attractive blended interest rate (See "Terms of Facility" below)
• Eight year facility
• Two year grace period on principal
• First disbursement expected in June
• Contracts for equipment and construction are being finalized with full scale construction to start in May

Mark Brennan, Largo's President & Chief Executive Officer stated, "This is a seminal moment in Largo's history as it enables Largo's core asset to move into full scale project development. We look forward to completing construction which will enable Largo to generate significant cash flows over a sustained period and provide further returns to shareholders."

Terms of Facility:

The Facility is denominated in Brazilian Reais ("BRL") but approximately 52% (R$173 million) of the Facility is indexed to U.S. dollars ("U.S. dollar component"). The 48% of the Facility that is not indexed ("BRL component") currently bears a weighted average interest rate of 7.61%, while the US dollar component currently bears a weighted average interest rate of 5.85%. The interest rate on the US dollar component is based on the BNDES cost of borrowing a basket of foreign funds, plus a weighted average margin rate of 2.26% which will increase or decrease with BNDES's foreign borrowing costs. Approximately R$50.1 million of the BRL component is to be fixed at 7.3%, while the remaining R$111.2 million is based on the Taxa de Juros de Longo Prazo ("TJJP") index, currently at 6%, a long term interest rate that BNDES posts from time to time, plus a weighted average margin of 1.75%. The TJLP rate has been constant at 6% since 2009. The Facility is expected to have a two year grace period on principal, and then will amortize on a straight line basis over 72 months.

The primary condition precedent to the Facility is the provision by three Brazilian commercial banks of a loan guarantee. Largo is in the process of finalizing this guarantee and expects it will be available before the end of May. The expected cost of this guarantee is 3.3%.

The final Facility documents and related guarantee agreement are subject to review and approval by Largo's Management and Board and require the conversion of all outstanding subscription receipts and the related release of the approximate $74 million of funds held in escrow (see press release dated March 8, 2012 for related conditions). Assuming all conditions precedent are met by the end of May, the initial disbursement of funds by BNDES under the Facility is expected in June 2012.

In the interim, Largo continues to advance the development of the Maracas project and the initial phases of construction including, the ordering of long lead items and finalization of electrical transmission, water line and earth moving contracts. Largo expects to break ground at Maracas in early June, 2012.

About Largo

Largo is a Canadian-based mineral resource exploration and development company focused on creating a world leading strategic metals company.  Largo currently holds a 90% interest in the Maracás Vanadium Project, a 100% interest in the Currais Novos Tungsten Tailing Project, a 100% interest in the Campo Alegre de Lourdes Iron-Vanadium Project, all in Brazil, and a 100% interest in the Northern Dancer Tungsten-Molybdenum property located in the Yukon Territory, Canada.  The immediate goal of the Company is to develop the Maracás Vanadium Project by the end of Q3 2013 and continue to produce WO₃ concentrate from the reprocessing of tungsten tailings from Currais Novos.  Largo's skilled management team both in Canada and Brazil, are confident in their ability to advance these projects.

Largo is listed on the TSX Venture Exchange under the symbol "LGO".

For more information please refer to Largo's website: www.largoresources.com

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 private placement, Largo's development potential and timetable of the Maracas and Northern Dancer projects; Largo's ability to raise additional funds necessary; the future price of 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". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. 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. 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.

NEITHER THE TSX VENTURE EXCHANGE (NOR ITS REGULATORY SERVICE PROVIDER) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

SOURCE Largo Resources Ltd.

Image with caption: "Largo receives BNDES Board approval for US$175 million debt facility (CNW Group/Largo Resources Ltd.)". Image available at: http://photos.newswire.ca/images/download/20120515_C8004_PHOTO_EN_13778.jpg