TSXV: LGO
Best Mining Deal
www.largoresources.com
Near Term VANADIUM Producer December, 2013
CORPORATE PRESENTATION
Metals and Mining Deal of the Year
CORPORATE PRESENTATION December, 2013 www.largoresources.com - - PowerPoint PPT Presentation
TSXV: LGO Near Term VANADIUM Producer Metals and Mining Deal of the Year Best Mining Deal CORPORATE PRESENTATION December, 2013 www.largoresources.com Forward Looking Statements The information presented contains forward-looking
TSXV: LGO
Best Mining Deal
www.largoresources.com
Near Term VANADIUM Producer December, 2013
Metals and Mining Deal of the Year
TSXV: LGO
The information presented contains “forward-looking statements,” within the meaning of the United States Private Securities Litigation Reform Act of 1995, and “forward-looking information” under similar Canadian legislation, concerning the business, operations and financial performance and condition of the Company. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to the estimation of mineral reserves and mineral resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; metal prices and demand for materials; capital expenditures; success of exploration and development activities; permitting time lines and permitting, mining or processing issues; government regulation of mining operations; environmental risks; and title disputes or claims. Generally, forward-looking statements and forward-looking information 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,”, “projects” or variations of such words and phrases or state that certain actions, events or results “may,” “could,” “would,” “might” or “will be taken,” “occur” or “be achieved.” Forward-looking statements and forward-looking information are based on the opinions and estimates of management as of the date such statements are made, and they 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 Company to be materially different from those expressed or implied by such forward- looking statements or forward-looking information, including, but not limited to, unexpected events during operations; variations in ore grade; risks inherent in the mining industry; delay or failure to receive board approvals; timing and availability of external financing on acceptable terms; risks relating to international operations; actual results of exploration activities; conclusions of economic valuations; changes in project parameters as plans continue to be refined; and fluctuating metal prices and currency exchange rates. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or
such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except in accordance with applicable securities laws. Investors are advised that National Instrument 43-101 of the Canadian Securities Administrators requires that each category of mineral reserves and mineral resources be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources The information presented uses the terms “measured,” “indicated” and “inferred” mineral resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically
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As at October 10, 2013
Project as at November 19, 2013
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Source: vanitec.org/Roskill, 2013
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Strength
Source: vanitec.org
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Source: Roskill, 2013
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Source: Les Ford Vanadium and Steel presentation, PDAC 2010 Source: Roskill 2013
% of Vanadium Used per Tonne of Steel by Region Total Tonnes by Region (V2O5 Equiv.) Projected Impact of China’s Increased Rebar Standards
Actual Consumption 2010 Projected Impact of China’s 2013 Rebar Standards
Japan Europe China
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Source: Vanitec
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Source: Roskill, 2013
China 70,000 Tonnes (V2O5 Equiv) South Africa 35,000 Tonnes (V2O5 Equiv) Russia 14,000 Tonnes (V2O5 Equiv) Total Supply 127,000 Tonnes (V2O5 Equiv) Total Demand 136,000 Tonnes (V2O5 Equiv)
*Tonnage calculated in V2O5 Equivalent
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$0.00 $5.00 $10.00 $15.00 $20.00
Historical Vanadium Price
Largo Operating Costs
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= Gulcari “A” Deposit (first 12 Years)
Maracás concessions and strike length 14
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30.4 Million Tonnes 24.6 Million Tonnes
Gulcari “A” Deposit
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*Average grade comparisons compiled by Les Ford, presentation March 8, 2011
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Ore V2O5% Concentrate SiO2% Concentrate V2O5% Higher head-grade and higher iron content Concentrate has much higher V2O5 Concentrate has fewer contaminants like silica
Higher Recoveries Less Energy Required Lower reagent costs
Results in
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*including iron ore byproduct credit – OPEX without credit is $3.18 (still lowest cost producer) **Average years 1-15
Net Present Value $554 million After tax IRR 26.3% Discount rate 8% Exchange rate (BRL:USD) 2:1 Average Production 11,400 t V2O5 equiv Mine life 29 Years Initial CAPEX 235 million OPEX $2.10* V2O5 price – 3 year avg $6.37 Average annual cashflow $89 million**
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*including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer)
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*including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer)
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$0.00 $5.00 $10.00 $15.00 $20.00
Historical Vanadium Price
Largo Operating Costs
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(10,000 Tonnes Capacity)
Initial Ramp Up, Implementing Expansion & FeV Plant
(15,000 Tonnes Capacity) Expanded Production rates & FeV
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Conservative Ramp-Up Projections with Opportunity to Improve
Year 1 Total: 5,511 Tonnes V2O5 Year 2 Total: 9,689 Tonnes V2O5 Plant Capacity: 10,000 Tonnes V2O5 100% % Capacity
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Mark Brennan President & CEO 20+ years experience in capital markets Michael Mutchler Chief Operating Officer 20+ years mining engineering experience
Les Ford Technical Director Vanadium expert. 40+ years experience building/designing vanadium plants Kurt Menchen Country Manager & Maracas Project Manager 30+ years mining engineering experience
Douglas Herbst Maracas Construction Manager 30+ years mining engineering experience building mines Andy Campbell VP Exploration 30+ years of mining exploration experience Ernest Cleave Chief Financial Officer 10+ years experience in financial management Andrew Hancharyk Chief Legal Officer 10+ years experience in corporate Law
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Engineering Procurement Services Civil Works Crushing System Erection Milling System Erection Kiln System Erection Sulphate Salt Recovery System Erection Deammoniator/ Furnace Erection Utilities System Erection Equipment Fabrication Eletrical Line Contract Water Pipeline Erection COMPLETE COMPLETE
Q1 Q2 Q3 Q4 Q4 Q3 Q2
COMPLETE COMPLETE
Q1 Q2
2012 2013 2014 COMPLETE COMPLETE
= Commissioning in Progress = Commissioned and Operational
COMPLETE
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Crushing Circuit successfully commissioned in October 2013
See appendix for more photos of recent milestones
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Installation of first kiln shells – December 2013
See appendix for more photos of recent milestones
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25 meters of
150 meters Magnetite (ore) Gabbro (waste)
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31 Gulcari “A” Open Pit Main Access Road Admin Facilities Roasting (kiln) Crushing
1 km
Milling Leaching Desilication Precipitation Final Product
Project as at December 11, 2013
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32 Stock symbol: LGO – TSX-V Share price (Dec 12, 2013): $0.21 Shares issued (Basic): 982 million Market Cap C$206 million 52-week High/Low: $0.275 / $0.155 Management & Institutions: 75% Warrants & Options (Basic): 253 million Institutional Shareholders Arias Resource Capital - 25.9% Mackenzie Investments - 14.3% Eton Park Capital Management - 11.1% Ashmore Investment Management - 11.4%
Shareholders & Project Partners
Project Finance Deal of the Year Awards - March 2013
Project Partners Glencore International
100% 6 yr take-or-pay off-take for Maracas
Business Development Bank of Brazil Bank Itau, Votorantim, Bradesco
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Project Jurisdiction Metal Stage Currais Novos Brazil Tungsten Development – care and
maintenance due to drought
Northern Dancer Yukon, Canada Tungsten PEA Complete Campo Alegre de Lourdes Brazil Iron, Titanium, Vanadium Exploration
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Project as at November 19, 2013
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LARGORESOURCES.COM
Business Development Manager dladd@largoresources.com 416-861-9406
President and CEO mbrennan@largoresources.com 416-861-9797
Largo Resources LargoResources1 Largo Resources largoresources
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Mark Brennan Director Largo Resources President & CEO Dirk Donath Director Managing director Eton Park Capital Management Alberto Arias Director Founder & President Arias Resource Capital Dan Ioschpe Director CEO of Lopche-Maxion David Brace Director CEO of Karmin Exploration. Formerly with Aur Resources Wayne Egan Director Partner at Weir Foulds LLP
Director Tungsten expert. Formerly with Osram Sylvania
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Main Ball Mill Placed on its Foundation – August 2013
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Evaporator Placed on into its Structure – September 2013
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AMV Filter Placed on its Structure – August 2013
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Kiln Assembly Commences – Sept 2013
Assembly of 90m Kiln Commences – September 2013
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Question: Equation:
Conversion of V2O5 to FeV Equivalent V2O5 x 0.5602 x 0.945 = V contained in FeV Or, 1 lb V205 = .1811 Kg Contained V in FeV Converting Tonnes V contained into V2O5 Equivalent Tonnes V x 1.7851 = V2O5 Equivalent Rough Equation to Calculate FeV (kg) price from V2O5 (lb) Equivalent V2o5 price x 4 + 2 = FeV
Vanadium is sold in two forms –Ferro Vanadium (FeV) and, Vanadium Pentoxide (V2O5). Largo will produce Vanadium Pentoxide only for the first three years of production. For the purposes of this presentation we have converted all tonnage of vanadium in Vanadium Pentoxide equivalent. Often, in other sources, Vanadium is reported in tonnes of FeV or in tonnes V contained in FeV Below are some helpful equations to convert tonnes of V2O5 into V equivalent.
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surface continues to depth
Unit Mining Cost Total OPEX Revenue Tonne of ore $14.29 $61.50 $129.97 Per lb V2O5 /equiv.** $0.82 $2.10 $6.09
*See press release dated Jan 18, 2013 **Includes all royalties less credit Iron Ore byproduct
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Tungsten is unique in its extreme qualities and difficult to replace
Source: Roskill, 2011 Source: Minor Metals Trade Association
Cemented Carbide Usage
Very Hard
Very Heat Resistant
uranium
Very Dense
Tungsten is….
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Source: British Geological Survey’s Risk List, 2011 Source: US Gelological Survey
Source: Roskill, 2011/Europacific Canada, April 12, 2012
Production
17% Tungsten Scored 4th Most at Risk out of 52 Elements 67,000 Tonnes (2011) 95,000 Tonnes (2015)
Growing at 7% per year
Consumption
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Historical production district Significant production from 1940s to 1970s (approx 8% of global supply) Numerous potential acquisitions in immediate vicinity – both underground and tailings Provides significant expansion potential Preliminary exploration underway with goal
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Production Commenced December 2011
90 tonnes of concentrate shipped Initially commissioned without mill due to importation delay at port Mill commissioned in February
Plant optimization proceeded to adjust milling circuit 3 additional screens were added in order to increase yields
Screens commissioned in Q3 Modifications to plant are ongoing
Production temporarily suspended due to severe regional drought
Currais Novos Site Visit – August 2012
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223.4 MT grading 0.102% WO3 and 0.029% Mo (M&I) Higher-grade tungsten and molybdenum zone: 60.3 MT of 0.14% WO3 and 0.045% Mo (M&I) 201.2 MT grading 0.09% WO3 and 0.024% Mo (I)
PEA complete Environmental permitting under way Discussions with off-take partners and JV partner
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Tungsten
(US$ per MTU)
Moly
(US$ per lb)
IRR (%) NPV @ 8%
(US$ millions) $275 $17.50 20.0 918 $300 $17.50 22.2 1,110 $325 $17.50 24.4 1,302 $350 $17.50 26.5 1,494 $365 $17.50 27.8 1,769
* The PEA is preliminary in nature, and includes inferred resources that are too speculative geologically to have economic considerations applied to them. There is no certainty that the PEA will be realized.
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Low cash cost producer: US$116 per MTU 49 year mine life Pre-production capital costs: $645 million Cumulative cash flow US$4.8 billion Average annual production of 833,000 MTU tungsten (18.3 million pounds) and 5,959,000 pounds molybdenum over initial 23 years Current trading price of US$300 MTU Attractive economics at current tungsten prices Strategic asset for long term supply of tungsten
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100% owned iron, titanium, and vanadium deposit - seven concessions covering 9,274.66 hectares Purchased in 2009 for USD $250,000.00 from Bahia State Mining Development Agency (CBPM) Preliminary metallurgical testwork completed in 2011 suggested potential for titanium dioxide (TiO2) project Further metallurgical testing underway in 2012
* Historical resource provided by CBPM (Bahia State Mining Development Agency)