Largo secures $17.4 million through direct offering of common shares

TORONTO - Vanadium and ilmenite supplier Largo Inc. (TSX:LGO) (NASDAQ:LGO), currently trading at $1.14 per share after declining over 32% in the past year, has closed a previously announced registered direct offering of 14,262,309 common shares at $1.22 per share, raising gross proceeds of $17.4 million.

The company also issued unregistered warrants to purchase an equal number of common shares at the same price in a concurrent private placement. The warrants are immediately exercisable and will expire in five years.

Additionally, Arias Resource Capital Fund III L.P., an affiliate of Largo’s largest shareholder, provided $6 million in financing through the acquisition of 4,918,033 common shares and an equal number of warrants on the same terms. Part of this commitment was advanced through a $5 million secured convertible bridge loan.

H.C. Wainwright & Co. acted as the sole placement agent for the transactions.

Largo plans to use the net proceeds to provide working capital for its principal operating subsidiary, Largo Vanádio de Maracás S.A., until 2026. The funds will also facilitate payments to Brazilian lenders, mining contractors at the Maracás Menchen Mine, and other key suppliers. The company noted that liquidity constraints have already begun to negatively impact mine production rates.

The Toronto Stock Exchange granted Largo a Financial Hardship Exemption from certain requirements regarding the offering, acknowledging the company’s "serious financial difficulty" and approving the transactions designed to improve its financial situation. According to InvestingPro data, the company faces significant challenges with a weak Financial Health Score of 1.67 and a concerning current ratio of 0.51, indicating short-term obligations exceed liquid assets. InvestingPro subscribers have access to 12 additional key insights about Largo’s financial position.

The common shares in the registered offering were issued under an effective shelf registration statement, while the private placement of warrants and the Arias Resource Capital transaction were conducted under exemptions from registration requirements.

Largo sources its vanadium and ilmenite products from its Maracás Menchen Mine in Brazil. The company generated revenues of $108.53 million in the last twelve months, though it currently appears undervalued according to InvestingPro Fair Value analysis. For detailed insights and comprehensive analysis, including the company’s Pro Research Report covering what really matters for investors, visit InvestingPro. This article is based on information from a company press release.

In other recent news, Largo Inc. announced it has secured binding commitments for a $23.4 million offering, aiming to address its working capital deficiency and meet equity requirements for a debt rollover agreement with senior lenders. The offering includes a registered direct offering and a concurrent private placement, consisting of common shares and warrants priced at $1.22 per unit. Additionally, Largo has entered into agreements to defer $84.2 million in principal debt repayments with five Brazilian banks, extending the deadline to March 2026, with a possible extension to September 2026. This deferral is contingent upon Largo raising at least C$30 million by November 2025.

Amid these financial maneuvers, Largo is also facing production challenges, reporting sustained production levels despite financial and operational difficulties. The company produced 931 tonnes of vanadium pentoxide in August and 856 tonnes in July, reflecting improvements from its operational turnaround program. Largo also reported the production of 4,141 tonnes of ilmenite concentrate in July and 3,298 tonnes in August. These developments come as the company deals with tariffs and liquidity issues.

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