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    Lgo corporate presentation   dec Lgo corporate presentation dec Presentation Transcript

    • 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 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 forwardlooking 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 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 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 or legally mineable. TSXV: LGO 2
    • Production in sight. TSXV: LGO As at October 10, 2013 3 Project as at November 19, 2013
    • Maracas Vanadium Project      Metals and Mining Deal of the Year TSXV: LGO Vanadium Project in Brazil Highest grade/quality; lowest cost project Funded and in construction Production to begin in Q1, 2014 Glencore Off-take: 100% Take-or-Pay Best Mining Deal 4
    • Vanadium – a Strategic Metal     Most used alloy to strengthen steel Significantly increases tensile strength Resistant to: seismic, corrosion, abrasion Proven process for separation Makes steel stronger, tougher and lighter TSXV: LGO Source: vanitec.org/Roskill, 2013 5
    • Vanadium – Few Substitutes 2lbsV 1 Tonne of Steel = 2X Strength Highest strength to weight ratio of any alloy TSXV: LGO Source: vanitec.org 6
    • Demand Drivers Growth Rate (CAGR)  Increased use in steel production  Growth in applications containing V  Higher quality steel standards in BRICs Strong growth profile TSXV: LGO Source: Roskill, 2013 7
    • Total Tonnes by Region (V2O5 Equiv.) Growth Example Projected Impact of China’s Increased Rebar Standards China Projected Impact of China’s 2013 Rebar Standards Europe Japan Actual Consumption 2010 % of Vanadium Used per Tonne of Steel by Region TSXV: LGO Source: Les Ford Vanadium and Steel presentation, PDAC 2010 Source: Roskill 2013 8
    • Vanadium is Everywhere • Rebar for construction • Buildings, bridges, tunnels • Automotive parts • Pipelines • Aviation and aerospace • Power lines and power pylons • Chemical plants, oil refineries, offshore-platforms • Various tools and dies • High strength steel structures • Construction machinery and equipment • Cast iron used for rolls in steel mills TSXV: LGO Source: Vanitec 9
    • Supply is Concentrated China South Africa 35,000 Tonnes (V2O5 Equiv) Russia 14,000 Tonnes (V2O5 Equiv) Total Supply 127,000 Tonnes (V2O5 Equiv) Total Demand Of global supply 70,000 Tonnes (V2O5 Equiv) 136,000 Tonnes (V2O5 Equiv) Brazil production provides stability of supply TSXV: LGO Source: Roskill, 2013 *Tonnage calculated in V2O5 Equivalent 10
    • Vanadium Historical Pricing Historical Vanadium Price $20.00 $15.00 $10.00 $5.00 $0.00 Largo Operating Costs Consistent floor at $5.00 per lb TSXV: LGO 11
    • Maracas – Ideal Location  Government and local support  Arid climate, ideal topography  Management with regional experience Best Mining Deal Metals and Mining Deal of the Year Safe, mining friendly jurisdiction TSXV: LGO 12
    • Maracas - Mineralization Long strike zone     Magnetite deposit Mineralization at surface Highest grade and quality ore Contains Platinum Group Metals Significant opportunity for future expansion TSXV: LGO 13
    • Concessions and Mineralization = Gulcari “A” Deposit (first 12 Years) Maracás concessions and strike length TSXV: LGO 14
    • Mineral Resources +2 Times Industry Average Grade Gulcari “A” Deposit 24.6 Million Tonnes 0.83% V2O5 30.4 Million Tonnes TSXV: LGO 15
    • Gulcari “A” Cross Section TSXV: LGO 16
    • Cost Advantage Highest Grade/Quality Vanadium Deposit in the World Higher head-grade and higher iron content Concentrate has much higher V2O5 Concentrate has fewer contaminants like silica Results in Higher Recoveries Less Energy Required = Lower reagent costs Ore V2O5% TSXV: LGO Concentrate V2O5% *Average grade comparisons compiled by Les Ford, presentation March 8, 2011 Concentrate SiO2% LOWEST COST PRODUCTION 17
    • Maracas Project Economics 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** Includes taxes, royalties, and sustaining capex TSXV: LGO *including iron ore byproduct credit – OPEX without credit is $3.18 (still lowest cost producer) **Average years 1-15 18
    • Low Cost Environment OPEX costs*      Open pit mining At surface deposit Highly magnetic ore Few contaminants Water leaching process Ore provides better recoveries and reduces input costs TSXV: LGO *including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer) 19
    • Low Cost with Potential to Improve Potential reductions in operating costs OPEX costs* TSXV: LGO *including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer)     Lower mining costs Lower power costs In-house crushing Depreciation of the Real 20
    • Vanadium Historical Pricing Historical Vanadium Price $20.00 $15.00 $10.00 $5.00 $0.00 Largo Operating Costs Profitable at historic lows TSXV: LGO 21
    • Process Flow Sheet Proven, industry tested process TSXV: LGO 22
    • Production Profile Phase 1 Phase 2 (10,000 Tonnes Capacity) Initial Ramp Up, Implementing Expansion & FeV Plant TSXV: LGO (15,000 Tonnes Capacity) Expanded Production rates & FeV 23
    • Year 1 Ramp-up Projections 100% % Capacity Conservative Ramp-Up Projections with Opportunity to Improve Plant Capacity: 10,000 Tonnes V2O5 TSXV: LGO Year 1 Total: 5,511 Tonnes V2O5 Year 2 Total: 9,689 Tonnes V2O5 24
    • Strong Partners Glencore International Plc.  Largest trader of Vanadium  Take-or-pay agreement  100% of all material produced Off-take agreement De-risked product sale TSXV: LGO 25
    • Strong Management Mark Brennan President & CEO 20+ years experience in capital markets Michael Mutchler Chief Operating Officer 20+ years mining engineering experience operating and managing mines 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 operating mines in Brazil 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 TSXV: LGO 26
    • Maracas Project Schedule 2013 2012 Q2 Q3 Q4 Q1 Engineering Q1 Q2 COMPLETE Civil Works Q4 COMPLETE Equipment Fabrication Q3 COMPLETE Procurement Services Q2 2014 COMPLETE COMPLETE Crushing System Erection Milling System Erection Kiln System Erection Sulphate Salt Recovery System Erection Deammoniator/ Furnace Erection Utilities System Erection Eletrical Line Contract COMPLETE Water Pipeline Erection COMPLETE TSXV: LGO = Commissioning in Progress = Commissioned and Operational 27
    • Recent Construction Milestone Crushing Circuit successfully commissioned in October 2013 TSXV: LGO See appendix for more photos of recent milestones 28
    • Recent Construction Milestone Installation of first kiln shells – December 2013 TSXV: LGO See appendix for more photos of recent milestones 29
    • Maracas Deposit Outcrop 150 meters Magnetite (ore) 25 meters of ore at surface Dips at 65 ◦ Gabbro (waste) TSXV: LGO 30
    • Maracas Environment Leaching Roasting (kiln) Milling Admin Facilities Crushing Main Access Road Desilication Precipitation Final Product 1 km Gulcari “A” Open Pit TSXV: LGO Project as at December 11, 2013 31
    • Corporate Structure 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 Project Finance Deal of the Year Awards - March 2013 Shareholders & Project Partners Institutional Shareholders Arias Resource Capital - 25.9% Project Partners Glencore International Mackenzie Investments - 14.3% 100% 6 yr take-or-pay off-take for Maracas Eton Park Capital Management - 11.1% Business Development Bank of Brazil Ashmore Investment Management - 11.4% Bank Itau, Votorantim, Bradesco TSXV: LGO 32
    • Secondary Projects Project Jurisdiction Metal Stage Currais Novos Brazil Tungsten Development – care and Northern Dancer Yukon, Canada Tungsten PEA Complete Campo Alegre de Lourdes Brazil Exploration Iron, Titanium, Vanadium maintenance due to drought Blue sky potential to add value TSXV: LGO 33
    • Investment Summary   Advancing towards production in Q1, 2014  High grade, low cost production project  Significant cash-flow potential in near-term  Exposure to commodity with strong growth profile  Experienced management  Under-Valued Near-Term Producer Project funded, permitted and in construction Pipeline of projects in place for growth Substantially de-risked flagship project with near term cash flow TSXV: LGO 34 Project as at November 19, 2013
    • Darcie Ladd Business Development Manager dladd@largoresources.com 416-861-9406 LARGORESOURCES.COM Mark Brennan President and CEO mbrennan@largoresources.com 416-861-9797 Largo Resources LargoResources1 largoresources Largo Resources TSXV: LGO 35
    • Appendix  Board of Directors  Photos: Recent Construction Milestones  Useful equations for Vanadium  Maracas Mining Process  Tungsten  Currais Novos  Northern Dancer  Campo Alegre de Lourdes TSXV: LGO 36
    • Appendix: Strong Board 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 Dr. Alan Alper Director Tungsten expert. Formerly with Osram Sylvania TSXV: LGO 37
    • Recent Construction Milestones Main Ball Mill Placed on its Foundation – August 2013 TSXV: LGO 38
    • Recent Construction Milestones Evaporator Placed on into its Structure – September 2013 TSXV: LGO 39
    • Recent Construction Milestones AMV Filter Placed on its Structure – August 2013 TSXV: LGO 40
    • Recent Construction Milestones Assembly of 90m Kiln Commences – September 2013 Kiln Assembly Commences – Sept 2013 TSXV: LGO 41
    • Useful Equations for Vanadium 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. 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 TSXV: LGO 42
    • Appendix: Maracas Mining Process* 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 Simple, Cost-Effective Open Pit Mining Process • Deposit outcrops at surface • Less than 1 meter pre-stripping • High grade material from surface continues to depth *See press release dated Jan 18, 2013 **Includes TSXV: LGOall royalties less credit Iron Ore byproduct 43
    • Appendix: Tungsten Tungsten [W74] Tungsten is unique in its extreme qualities and difficult to replace Tungsten is…. Very Hard • Only diamonds are harder • 100X harder than steel Very Heat Resistant • Highest melting point • Lowest expansion Very Dense TSXV: LGO Cemented Carbide Usage • Greater than lead or uranium Source: Roskill, 2011 Source: Minor Metals Trade Association 44
    • Appendix: Tungsten Supply Supply Demand 95,000 Tonnes (2015) Tungsten Scored 4th Most at Risk out of 52 Elements 67,000 Tonnes (2011) Production Consumption 17% TSXV: LGO Source: British Geological Survey’s Risk List, 2011 Source: US Gelological Survey Growing at 7% per year Source: Roskill, 2011/Europacific Canada, April 12, 2012 45
    • Appendix: Currais Novos 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 of defining additional resources TSXV: LGO 46
    • Appendix: Currais Novos 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 TSXV: LGO 47
    • Appendix: Northern Dancer Project Northern Dancer Resource Estimate 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) Development Milestones PEA complete Environmental permitting under way Discussions with off-take partners and JV partner TSXV: LGO 48
    • Appendix: Northern Dancer PEA Highlights Low cash cost producer: US$116 per MTU 49 year mine life Pre-production capital costs: $645 million Strategic asset for long term supply of tungsten 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$300 MTU Tungsten Moly (US$ per MTU) (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 Attractive economics at current tungsten prices 1,769 TSXV: LGO * 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. 49
    • Appendix: Campo Alegre Project Non NI 43-101 Resource: 133 Million Tonnes Grading 50% Fe, 21% TiO2, 0.75% V2O5* 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 TSXV: LGO * Historical resource provided by CBPM (Bahia State Mining Development Agency) 50