largo corporate presentation - september 2014

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TSXV: LGO www.largoresources.com The Only ‘Pure-Play’ VANADIUM Producer Sept 2014 CORPORATE PRESENTATION

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Page 1: Largo Corporate Presentation - September 2014

TSXV: LGO

www.largoresources.com

The Only ‘Pure-Play’

VANADIUM Producer

Sept 2014CORPORATE PRESENTATION

Page 2: Largo Corporate Presentation - September 2014

TSXV: LGO

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 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

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.

2

Page 3: Largo Corporate Presentation - September 2014

TSXV: LGO 3

Ramping-Up Production.

Focused on Cash-Flow.

As at October 10, 2013

Project as at February 20, 2013

Page 4: Largo Corporate Presentation - September 2014

TSXV: LGO

Maracas Menchen Mine

4

Metals and Mining Deal of the Year

Best Mining Deal

Vanadium Project in Brazil

Highest grade/quality; lowest cost project

Vanadium demand growth 6.5% CAGR

Ramping up production

Glencore Off-take: 100% Take-or-Pay

Page 5: Largo Corporate Presentation - September 2014

TSXV: LGO

Maracas Milestones

5

First concentrate produced, Feb 2014

First Production, Aug 2014

First shipment under off-take Sept 2014

First production achieved Aug 2014

Final CAPEX within 2% of budget July 2014

Feed to plant commenced May 2014

Kiln warming May 2014

Construction completed April 2014

Recent Achievements:

Page 6: Largo Corporate Presentation - September 2014

TSXV: LGO

What is Vanadium?

Most used alloy to strengthen steel Significantly increases tensile strength Resistant to: seismic, corrosion, abrasion Proven process for separation

6

Steel’s Strongest Alloy

Makes steel stronger, lighter and tougher

Source: vanitec.org/Roskill, 2013

Page 7: Largo Corporate Presentation - September 2014

TSXV: LGO

Vanadium – Few Substitutes

7

2lbsV 1 Tonne of Steel

2XStrength

Highest strength to weight ratio of any alloy

Source: vanitec.org

Page 8: Largo Corporate Presentation - September 2014

TSXV: LGO

Uses of Vanadium

8Source: Roskill, 2013

Uses of Vanadium in Steels

Vanadium in Steel

High Strength Low Alloy Steels (HSLA) are the leading market for vanadium in the steel industry

Steel is the largest end-use for vanadium91%

48%

Page 9: Largo Corporate Presentation - September 2014

TSXV: LGO

Vanadium Demand Drivers

Increased use of steel Growth in applications containing V Higher quality steel standards in BRICs

9

Strong growth profile

Source: Roskill, 2013

Page 10: Largo Corporate Presentation - September 2014

TSXV: LGO

Steel Use is Growing

10

2005 2006 2007 2008 2009 2010 2011 2012 2013

Germany 27.2 31.9 32.2 33.0 22.2 29.8 32.8

United Kingdom 16.0 17.9 18.0 15.9 9.9 12.7 12.8

European Union 158.8 185.6 194.0 176.4 113.7 139.4 144.5

Other Europe 22.8 26.0 28.4 26.6 21.7 28.9 32.5

CIS 40.5 49.8 60.6 56.1 35.6 49.5 59.6

United States 125.8 140.0 127.1 111.3 68.9 91.2 101.6

NAFTA 160.8 178.9 164.2 148.8 96.9 127.2 138.3

South America 30.3 35.9 41.1 45.1 35.1 48.1 50.6

Africa and Middle East

47.0 49.6 60.2 65.6 58.7 63.9 68.1

China 321.7 342.6 375.5 399.7 515.7 537.4 576.6

Asia and Oceania 518.2 548.3 594.8 627.2 701.7 758.8 801.9

Total (1) 978.5 1074.2 1143.3 1145.7 1063.5 1215.9 1295.5 1500.0+(3) 1500.0+(4)

(1) The total comprises 64 countries, the most significant users of steel products worldwide(2) Ernst & Young Global Steel 2014 - Full data not available(3) Ibid.

Million tonnes, finished steel equivalent

Source: World Steel Association, World Steel in Figures 2013

Page 11: Largo Corporate Presentation - September 2014

TSXV: LGO

Applications for Steel Increasing

11NTD: Quantum: 2000 = 100Source: World Steel Association, World Steel in Figures 2013

Page 12: Largo Corporate Presentation - September 2014

TSXV: LGO 12

Rebar for construction

Buildings, bridges, tunnels

Automotive parts

Aviation and aerospace

Power lines and power pylons

Pipelines

Railway lines, railway cars, cargo containers

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

Missiles and defense

Vanadium is Everywhere

Source: Vanitec

Page 13: Largo Corporate Presentation - September 2014

TSXV: LGO

Growth Example: Automobiles

13

In 2013 VW announced plans to use new high-strength steel to make its cars lighter and also to comply with the strict emissions regulations.

VW chose to replace aluminum with light weight steel to improve fuel efficiency.

“VW…is giving up aluminum for the high tensile steel, which is up to six times stronger than conventional steel. The new material not only made the new Golf with about 100kg lighter, but also helped the company reduce costs.” (Reuters)

Volkswagen Lowering Costs and Increasing Efficiency

Ram’s 2013 3500 pickup 7,000 pounds additional towing capacity than previous version, all thanks to high-strength steel.

Ram Increasing Strength

In 2013 Ford announced that the F-150 pickup will soon be 250 to 750 pounds lighter. A recent study showed that the material is not only cheaper to use but also safer, the vehicles tested showing an outstanding crash performance.

Ford Reducing Weight

Source: www.autosteel.org

Page 14: Largo Corporate Presentation - September 2014

TSXV: LGO

Growth in Automotive

14Source: Roskill, 2013

Growth in Consumption of High-Strength Steels in Automobiles %

Page 15: Largo Corporate Presentation - September 2014

TSXV: LGO

Growth Example: China

15

“Vanadium-enhanced rebar provides buildings with the improved structural support necessary to better withstand the higher magnitude earthquakes so frequently seen in China,”

“It is extremely important that an earthquake-prone country like China is well informed about the overall benefits of vanadium-enhanced steel as it relates to the country’s seismic precautions moving forward.”

-- Robert Glodowski, Director of Technical Services at East Metals North America and a member of Vanitec.http://www.asminternational.org

The Chinese government implemented Code for Design and Concrete Structures in 2010 and an Update on the Code in 2011.

This policy seeks to restrict and gradually eliminate the use of lower strength bars by 2015 and implement an increase in Vanadium content in steel rebar.

(Global Steel 2013, Ernest&Younge)

Page 16: Largo Corporate Presentation - September 2014

TSXV: LGO

China’s Projected Impact on Supply

16Source: Les Ford Vanadium and Steel presentation, PDAC 2010Source: Roskill 2013

% of Vanadium Used per Tonne of Steel by Region

Tota

l To

nn

es

by

Re

gio

n (

V2O

5 E

qu

iv.)

Actual Consumption 2010

Projected Impact of China’s 2013 Rebar Standards

Japan

Europe

China

Page 17: Largo Corporate Presentation - September 2014

TSXV: LGO

Supply is Concentrated

17Source: Roskill, 2013 *Tonnage calculated in V2O5 Equivalent

Total Supply 127,000 Tonnes (V2O5 Equiv)

of Global Supply

Ton

ne

s V

2O5

Eq

uiv

Other8,000

Total Demand 136,000 Tonnes (V2O5 Equiv)

Page 18: Largo Corporate Presentation - September 2014

TSXV: LGO

Global Production by Method

18

$ Largo Cost of Production per Lb V2O5 Equiv

Global Production by Method & Cost

NTD: Prices calculated into V2O5 EquivSource: Roskill 2013; TTP Squared/Atlantic, Vanadium Market OutlookSource: Largo forecast based on company information & industry experts

% o

f Glo

bal P

rod

uctio

n$ C

ost

of

Pro

du

ctio

n

Page 19: Largo Corporate Presentation - September 2014

TSXV: LGO

Vanadium Historical Pricing

19

Consistent floor at $5.00 per lb

$ Largo Cost

$ Price V2O5

Page 20: Largo Corporate Presentation - September 2014

TSXV: LGO

Largo is the only Pure Play Producer of Vanadium

20

Page 21: Largo Corporate Presentation - September 2014

TSXV: LGO

Maracas – Ideal Location

21

Mining friendly jurisdiction

Government and local support Arid climate, ideal topography Management with regional experience Strong tax incentives Local familiarity with mining

Metals and Mining

Deal of the Year

Best Mining Deal

Page 22: Largo Corporate Presentation - September 2014

TSXV: LGO

Concessions and Mineralization

= Campbell Pit (first 12 Years)

Maracás concessions

and strike length

22

Page 23: Largo Corporate Presentation - September 2014

TSXV: LGO

Mineral Resources

23

+2 Times Industry Average Grade

30.4 Million Tonnes

24.6 Million Tonnes

Gulcari “A” Deposit

Satellite Deposits

Contained within

Page 24: Largo Corporate Presentation - September 2014

TSXV: LGO

Cost Advantage

*Average grade comparisons compiled by Les Ford, presentation March 8, 2011 24

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

Lowest Cost Production

Page 25: Largo Corporate Presentation - September 2014

TSXV: LGO

Gulcari “A” Cross Section

25

Page 26: Largo Corporate Presentation - September 2014

TSXV: LGO

Maracas Project Economics

26NTD: As outlined in 2013 Preliminary Economic Assessment [1] including iron ore byproduct credit – OPEX without credit is $3.18 (still lowest cost producer)[2] 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[1]

V2O5 price – 3 year avg $6.37

Average annual cash flow $89 million[2]

Reported after taxes, royalties, SG&A & sustaining capex

Strong Economics

Near-Term Cash Flow

Page 27: Largo Corporate Presentation - September 2014

TSXV: LGO

Low Cost with Potential to Improve

Lower mining costs Lower power costs In-house crushing Depreciation of BRL

27

Contracted reductions in operating costs since PEA

*including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer)

$2.10/lbOPEX costs*

Page 28: Largo Corporate Presentation - September 2014

TSXV: LGO

Vanadium Historical Pricing

28

Profitable at historic lows

$ Largo Cost

$ Price V2O5

Page 29: Largo Corporate Presentation - September 2014

TSXV: LGO

Process Flow Sheet

29

Proven, industry tested process

Page 30: Largo Corporate Presentation - September 2014

TSXV: LGO

Year 1 Ramp-up Projections

30

0

10

20

30

40

50

60

70

80

90

100

110

1 2 3 4 5 6 7 8 9 10 11 12 Year 2

Year 1 Total: 5,511 Tonnes V2O5

Year 2 Total: 9,689 Tonnes V2O5

Plant Capacity: 10,000 Tonnes V2O5

% P

lan

t C

apac

ity

(tim

e o

pe

rati

ng

)

100%

Month

We are Here

Page 31: Largo Corporate Presentation - September 2014

TSXV: LGO

Production Profile

31

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

$0

$20

$40

$60

$80

$100

$120

$140

Year 1 Year 2 Year 3 Year 4 Year 5

Pro

du

ctio

n

Cas

h-f

low

(MIL

LIO

NS

)

Free Cashflow ($M) Operating Cashflow ($M) Tonnes V2O5 Equiv.

Phase 1(10,000 Tonnes Capacity)

Initial Ramp Up

Phase 2(15,000 Tonnes Capacity)

Expanded Production rates & FeV

*As outlined in 2013 Preliminary Economic Assessment – Includes all taxes, royalties, and SG&A**Does not include debt repayment

Page 32: Largo Corporate Presentation - September 2014

TSXV: LGO

Strong Partners

Largest trader of Vanadium Take-or-pay agreement 100% of all material produced

32

De-risked product sale

Page 33: Largo Corporate Presentation - September 2014

TSXV: LGO

Strong Management

33

Mark Brennan President & CEO 25+ years experience in capital markets

Michael Mutchler Chief Operating Officer 20+ years mining engineering experience operating and managing mines

Les Ford SVP & Technical Director,Brazil

Vanadium expert. 40+ years experience building/operating vanadium facilities globally

Kurt Menchen President of Operations, Brazil

30+ years mining engineering experience operating mines in Brazil

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 20+ years experience in corporate Law

Casper Groenewald Deputy Technical Director

20+ years metallurgical engineering experience including 5+ in vanadium processing

Significant Experience Building and Operating Mining Facilities

Page 34: Largo Corporate Presentation - September 2014

TSXV: LGO

Maracas Environment

34

Project as at December 11, 2013

Page 35: Largo Corporate Presentation - September 2014

TSXV: LGO

Simple, Low Cost Mining

35

25 meters of ore at surface

150 meters

Magnetite(ore)

Gabbro (waste)

◦Dips at 65

Note: This photo was taken prior to mining operations commenced in 2013

Page 36: Largo Corporate Presentation - September 2014

TSXV: LGO

The Ford Facility at Maracas

36

Project as at February 20, 2013

Page 37: Largo Corporate Presentation - September 2014

TSXV: LGO

Recent Milestones

37

Production Achieved

Above: First delivery September, 2014

Page 38: Largo Corporate Presentation - September 2014

TSXV: LGO

Recent Photos

38

Crushing Circuit

Crushed ore stockpile approx. 20,000 tonnes

Page 39: Largo Corporate Presentation - September 2014

TSXV: LGO

Recent Photos

39

Milling and beneficiation system

Above: 15,000+ tonnes of concentrate stockpiled

Page 40: Largo Corporate Presentation - September 2014

TSXV: LGO

Recent Photos

40

Kiln and Cooler System

Page 41: Largo Corporate Presentation - September 2014

TSXV: LGO

Recent Photos

41

Page 42: Largo Corporate Presentation - September 2014

TSXV: LGO

Corporate Structure

42

Stock symbol: LGO – TSX-V

Share price (Sept 2, 2014): $0.31

Shares issued (Basic): 984 million

Market Cap C$305 million

52-week High/Low: $0.36 / $0.185

Management & Institutions: 75%

Warrants & Options (Basic): 252 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

Page 43: Largo Corporate Presentation - September 2014

TSXV: LGO

Secondary Projects

43

Blue sky potential to add value

Currais Novos

Region: Brazil

Metal: Tungsten

Stage: Care & Maintenance

Campo Alegre

Region: Brazil

Metal: V, Ti, Fe

Stage: Exploration

Northern Dancer

Region: Yukon, Canada

Metal: Tungsten

Stage: PEA Complete

Page 44: Largo Corporate Presentation - September 2014

TSXV: LGO

Investment Summary

Ramping up production

Commercial shipments commenced

High grade, low cost production project

Significant cash-flow potential in near-term

Only ‘pure-play’ exposure to vanadium

Commodity with strong growth profile

Management that delivers

44

Substantially de-risked flagship project with near term cash flow

Undervalued

Early Stage Producer

With Strong Upside

Potential

Project as at November 19, 2013Project as at December 26, 2013Project as at February 20, 2013

Page 45: Largo Corporate Presentation - September 2014

TSXV: LGO 4545

Darcie LaddCorporate Development

Manager

[email protected]

416-861-9406

Mark BrennanPresident and CEO

[email protected]

416-861-9797

LARGORESOURCES.COM

Largo Resources

LargoResources1

Largo Resources

largoresources

Page 46: Largo Corporate Presentation - September 2014

TSXV: LGO

Appendix

Board of Directors

Vanadium – additional growth profiles

Maracas Mining Process

Currais Novos

Northern Dancer

Campo Alegre de Lourdes

46

Page 47: Largo Corporate Presentation - September 2014

TSXV: LGO

Appendix: Strong Board

47

Mark Brennan Director Largo Resources President & CEO

Dirk Donath Director Managing director Aimaira 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 AurResources

Wayne Egan Director Partner at Weir Foulds LLP

Alex Monteiro Director Partner at CALT Ltd.

Page 48: Largo Corporate Presentation - September 2014

TSXV: LGO

Growth Example: Aircraft

48

Aircraft usages presently accounts for approx. 7% of vanadium market and is growing rapidly

Demand projected to double by 2016

Aircraft manufacturers using increasing amounts of titanium-vanadium alloy

Boeing's new 787 Dreamliner and the Airbus 380 each contain more than 100 tonnes of vanadium alloys, more than double that in a Boeing 747

Source: Largo Source: www.asiaminer.com Source: TTP Squared

Page 49: Largo Corporate Presentation - September 2014

TSXV: LGO

Projected Growth in Aircraft

49Source: Roskill, 2013 Source: Airline Monitor

Page 50: Largo Corporate Presentation - September 2014

TSXV: LGO

Appendix: Maracas Mining Process*

50

Deposit outcrops at surface

Less than 1 meter pre-stripping

High grade material from 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

*As outlined in 2013 Preliminary Economic Assessment**Includes all royalties less credit Iron Ore byproduct

Simple, Cost-Effective Open Pit Mining Process

Page 51: Largo Corporate Presentation - September 2014

TSXV: LGO

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

Production Commenced December 2011

Plant optimization continued through 2012

Production temporarily suspended due to severe regional drought in 2013

51

Operational History:

Page 52: Largo Corporate Presentation - September 2014

TSXV: LGO 52

Appendix: Campo Alegre Project

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

* Historical resource provided by CBPM (Bahia State Mining Development Agency)

Mineral Resources (non-NI 43-101)

Development Milestones

Page 53: Largo Corporate Presentation - September 2014

TSXV: LGO 53

Appendix: Northern Dancer Project

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

Development Milestones

Mineral Resources

Page 54: Largo Corporate Presentation - September 2014

TSXV: LGO

Appendix: Northern Dancer PEA

Tungsten

(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.54

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$370 MTU

Attractive economics at current tungsten prices

Strategic asset for long term supply of tungsten