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TORONTO - Vanadium producer Largo Inc. (TSX:LGO) (NASDAQ:LGO), currently trading at $1.50 with a market capitalization of $96 million, announced Wednesday it has received a binding term sheet from five Brazilian banks to defer $84.2 million in principal debt repayments for its subsidiary Largo Vanádio de Maracás S.A. InvestingPro data shows the company operates with a significant debt burden, with total debt of $95 million as of the latest quarter.
The agreement pushes principal repayments to March 18, 2026, with an automatic extension to September 18, 2026, provided Largo raises at least C$30 million by November 17, 2025. The company must also repay $2 million in principal, pay all accrued interest, and commit to quarterly interest payments going forward. According to InvestingPro analysis, the company’s current ratio stands at 0.51, indicating short-term obligations exceed liquid assets - a key consideration for investors tracking the company’s debt management capabilities.
As part of the arrangement, Largo’s subsidiary will provide a negative pledge over its mining rights and equipment, submit quarterly unaudited balance sheets to the lenders, renegotiate supplier debts, and allocate 80% of any capital raised above C$30 million toward principal repayment.
"With a deferral of principal payments, Largo would have a longer runway to restructure its bank debt," said Daniel Tellechea, Interim CEO of Largo, in the press release statement.
Largo operates the Maracás Menchen Mine in Brazil, supplying vanadium and ilmenite products to industries including steel, aerospace, defense, chemical, and energy storage. The company also holds a 50% stake in Storion Energy, a joint venture focused on vanadium flow battery technology for long-duration energy storage in the U.S. Despite its strategic positioning, InvestingPro analysis reveals the company faces profitability challenges, with negative gross profit margins and a return on assets of -11.23%. For deeper insights into Largo’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The debt restructuring comes as the company seeks to improve its financial position while maintaining operations at its Brazilian mining facility.
In other recent news, Largo Inc. reported third-quarter production figures, highlighting sustained levels amidst financial and operational challenges. The company achieved production of 931 tonnes of vanadium pentoxide in August and 856 tonnes in July, following an operational turnaround program. Additionally, Largo produced 4,141 tonnes of ilmenite concentrate in July and 3,298 tonnes in August. In the second quarter of 2025, Largo produced 2,256 tonnes of vanadium pentoxide, a 74% increase from the first quarter, though it fell short of the 2,689 tonnes produced in the same period last year.
The company also reported a global recovery rate of 84.9% for the second quarter, showing a 14% improvement over the same period in 2024. H.C. Wainwright has reiterated its Buy rating for Largo Resources stock, maintaining a price target of $3.70. This follows the company’s release of its second-quarter production results, which showed a 16% year-over-year decrease but a 74% increase quarter-over-quarter in vanadium equivalent production. Total ore mined in the second quarter reached 485,687 tonnes, marking a 32% increase compared to the previous year.
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