Largo Resources (CVE:LGO) said on Wednesday that its operating subsidiary Vanadio de Maracas has agreed terms of a new Brazilian bank facility and the restructuring of its export credit arrangements at Maracas Menchen mine.
Agreed with its consortium of existing banks, the facility offers working capital of up to 104,596,000 reais, disbursed in 11 monthly payments over 2016, and working capital in an amount equivalent to the mark-to-market value of the swap contract applicable to one of the company's export facilities.
The margin is equal to the interbank rate plus 5.70% per annum.
The agreement also covers a two-year grace period on the payment of interest and principal, measured from the disbursement date, quarterly repayment (in arrears) of the new facility commencing after the end of the grace period, and final maturity 84 months after the disbursement date.
The restructuring of the export facilities includes an amendment confirming that the principal and interest instalments due for the 12 months after the disbursement date will be payable on the same payment terms of the new facility, including the addition of a grace period.
Financing under the new facility and the implementation of amendments to the export facilities remain contingent on Largo and VMSA securing an additional $15mln in equity financing and the filing of the definitive documents with certain registries in Brazil. In order to meet this financial condition, Largo expects to the close the second and final tranche of its previously announced equity financing imminently.
Concurrently with the new facility, Largo has agreed to new commercial terms for a loan facility of up to $4mln with Banco Pine to roll over its existing facility on roughly the same terms as the new facility and VMSA has also agreed to commercial terms with Banco Pine for a new facility of up to 80mln reais to close out its existing swap contracts with Banco Pine.
"Largo has been able to successfully restructure its debt and is now in a position to close the final tranche of its current financing imminently," said Mark Smith, Largo president and chief executive officer.
"With the changes occurring in the worldwide vanadium market, including bankruptcy proceedings for several South African producers, similar troubles in Russia and fundamental changes in the Chinese vanadium industry, Largo is now well positioned for success as the world faces a potentially significant reduction in vanadium supply," he added.