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TSX.V:LGO
www.largoresources.com
An Emerging Market Leader for Vanadium
and Tungsten Production
4th Quarter, 2011
Corporate Presentation
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”, 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.
Company Overview
Positioned to be a leading player in the primary production of vanadium: Top undeveloped vanadium deposit in the world
Potential lowest cost producer of vanadium
Near term producer; Est. $100+ million cash flow per annum
Significant expansion potential
Potential to be a leading non Chinese producer of tungsten Two potential low cost deposits
Largest undeveloped tungsten-moly deposit in the world
Near term production; $12+ million cash flow per annum
Surging commodity price
3
Focused Portfolio of Strategic Mineral Assets:
Company Overview
Estimated Production Profile:
Target Production Date Estimated Approx. Cash Flow
July 2011: Currais Novos $12+ million per annum
(Funded)
March 2013: Maracas $100+ million per annum
(Equity funded; debt in process)
March 2017: Northern Dancer $150+ million per annum
$262+ million per annum
4
Capital Structure
5
Stock symbol: LGO – TSX.V
Share price (October 7, 2011): $0.27
Shares issued (Basic): 403 million
Management & Institutions: 75%
52-week High/Low: $0.58 / $0.22
Market cap (Basic): C$108 million
Options: 2 million
Warrants: 40 million
Debt: 4 million
Shareholders and Partners
6
Institutional Shareholders
Mackenzie Investments 14% Arias Resource Capital 10%
Eton Park Capital Management 10% Ashmore Investment Management 10%
Project Partners
Glencore International 100% Take-or-Pay off-take agreement for Maracas Vanadium Project
Major Tungsten End User
100% off-take agreement for Currais Novos Tungsten Project
Experienced Management Team
7
Mark Brennan, President & CEO Founding member of Desert Sun Mining with over 20 years financing experience in North America & Europe. Founder and principal of Linear Capital, Brasoil Corporation, Castle Resources, James Bay Resources, Morumbi Oil & Gas and former President, CEO and Chairman of Admiral Bay Resources. Tim Mann, P. Eng., Chief Operating Officer Mining Engineer with extensive international operations and management experience in mine engineering, development and mine operations with SNC Lavalin, Placer Dome and Goldcorp. Andy Campbell, M.Sc., P.Geo. , Vice President Exploration, Over 33 years experience in mining and exploration, including LAC Minerals and Noranda. Kurt Menchen, General Manager, Brazil Former Jacobina Mine Manager, Brazil. Mining Engineer with over 30 years experience including Anglo Gold and
Desert Sun Mining. Les Ford, Technical Director of Brazilian Operations With over 40 years of experience constructing, developing and producing vanadium projects, Mr. Ford is arguably one of the world’s foremost experts in vanadium. Previously Assistant General Manager of Highveld Steel and a member of the Highveld Executive committee and Managing Director of Rand Mines Vansa.
Rodrigo Costa, Operations Director Most recently Metallurgy Manager with a major mining company in Brazil. His previous experience includes commissioning and constructing mines as well as acting as General Manager with one of Brazil's largest private mining companies. Kevin Brewer, P. Geo., General Manager – Northern Dancer Project Geologist with over 20 years of mining and exploration experience combined with extensive knowledge of regulatory and environmental assessment processes.
Deborah Battiston, C.G.A., Chief Financial Officer Over 20 years of accounting and financial management experience.
8 8 8
Tim Mann, P. Eng. Chief Operating Officer
Mark Brennan President & CEO
Robert Campbell, P. Geo. VP Exploration
Yukon
Kevin Brewer General Manager, Yukon
Mauro Silva Electrical Engineer
Mauricio Coletti Mining Engineer
Rodrigo Costa Director of Operations
Israel Nonato Senior Exploration Geologist
Kurt Menchen General Manager,
Carlos Lorenzo Environmental Geologist
Les Ford Technical Director
Eldes Bittencourt Geologist
Brazil
8
Toronto
Main Office Location
Management Breakdown
Mike Henderson Geologist
Strong Board of Directors
9
Stan Bharti, P.Eng., Chairman Over 25 years experience in operations, public markets and finance. Has raised over $500 million in the last decade. Former founder and Chairman of Desert Sun Mining.
Mark Brennan, President/CEO and Director Founding member of Desert Sun Mining with over 20 years financing experience in North America & Europe. Founder and principal of Linear Capital, Brasoil Corporation, James Bay Resources, and Morumbi Oil & Gas.
Dirk Donath, Director Senior Managing Director and Partner at Eton Park Capital Management, responsible for Eton Park’s private equity and
direct investment activities in Emerging Markets. Eton Park is a global, multi-disciplinary investment fund with a capital base of over US$ 14 billion.
Santiago Pardo Mr. Pardo, Portfolio Manager, joined Ashmore Investment Management Limited in 2006 from Deutsche Bank where he was based in New York and was responsible for strategy, business generation and transaction execution for clients in energy, utilities and chemicals. Mr. Pardo has also worked in M&A roles for both Goldman Sachs & Co and for Salomon
Brothers Inc in New York.
Alberto Arias, Director Founder and President of Arias Resource Capital Management LP. He worked for Goldman, Sachs & Co and was ranked for five consecutive years as the #1 equity research analyst for the metals and mining industry in Latin America. Prior to Goldman Sachs, he worked at UBS as Executive Director and Analyst covering the Latin American mining sector.
Mike Hoffman, P.Eng., Director Professional mining engineer with over 25 years experience; former VP at Yamana Gold and Desert Sun Mining
William Clarke, Director Former Ambassador to Brazil and Sweden. Former Advisor to Desert Sun Mining.
Vanadium
Strategic Metal with the highest strength to weight ratio
World production totals only 70,000 tons per year and demand
continues to grow at 8% per annum (estimated)
Main Commercial use: steel industry Small amount doubles the strength of steel alloy and increases corrosion and
abrasion resistance
Airplanes, automobiles, earthquake resistant construction, shipping and cargo crates, railway lines,
10
Vanadium Uses: Steel Drives Demand
Steel industry: 90% ferro-vanadium end use
Carbon Steel 36% High strength low alloys 22% Stainless/tool 9% Full Alloy 20%
Ferro-vanadium (FeV) used in high performance steels for:
Construction (building frames, bridges, etc.) Ship construction Structural applications Airplanes Automobiles and parts
Railways & railcars Tools
11 *Source: CRU, Vanadium Outlook
Source: USGS, Byron Capital Markets
► Vanadium phosphate cathode material can support 20% more energy storage than cobalt oxide, 26% more than iron phosphate and 56% more than manganese oxide, solving the issue of quick discharge in electric cars
► Highest voltages measured, generating a more powerful battery V
an
ad
ium
Ad
va
nta
ge
s
Voltage with Different Cathodes (v)
12
4.8
4.1 4.0 3.7 3.6
3.3
Li3V2(PO4)3 LiVPO4F LiMn2O4 LiCoO2 Li2FePO4F LiFePO4
Lithium Vanadium Electric Car
The potential demand for electric cars can substantially increase demand for lithium-ion
batteries with cathodes compounded by vanadium
Photo Courtesy of Tesla Motors
Vanadium Uses: Growth in Green
Technologies
13
Vanadium Uses: Growth in Green
Technologies
Wind Turbines
Solar Panels
Backup Electrical Systems
Hybrid/Electric Cars
Vanadium shown to increase
effectiveness of energy storage in
traditional batteries
Mass amounts of energy can be
stored longer and re-charged faster
Low cost, low volatility, high
performance batteries
Vanadium Redox Storage Batteries
Vanadium Redox Batteries are the potential solution to “green energy’s” storage issues
Va
na
diu
m A
dva
nta
ge
s
Sto
rag
e A
pp
lic
atio
ns
Source: USGS, Byron Capital Markets
Strategic Metal with highest melting point of all metals
Main Commercial use: steel industry Automotive, drilling, electronics, construction materials & pipelines
Market dominated by China
Chinese produce 90% of global supply
Tight export restrictions
Chinese supply dwindling
Surging commodity price
14
Tungsten
15
Two Advanced-Stage Projects with Potential to Expand:
Vanadium:
Maracas: Highest grade/ quality vanadium deposit 90% Ownership
Production 1st Qtr 2013: 5,000 TPA V2O5 (cost <$13)
Cash flow: Approx. $100+ million per annum
Tungsten:
Currais Novos: Near term low cost production 100% Ownership
1.5 million lbs per annum to start July 2011 (cost <$59 MTU)
Approx. cash flow; $1 million per month ($400 MTU APT)
Near Term Cash Flow
Maracas Vanadium Project
16
• 5,000 tonnes FeV annual production • Lowest cost producer (less than $13 kg FeV) • 23 year production plan • 1.94% V2O5 mill feed during first 8 years • Open pit: low strip ratio of 2.23:1 • Mill throughput 1,600 tpd • Recovery of 71.6% • Proven mining technology and processes • 6 year Offtake with Glencore (take or pay) • Good local infrastructure • 208,000 Ounces 0.75g/t Platinum/ Palladium
Mineral reserve: 13.1 million tonnes grading 1.34% Vanadium Pentoxide (V2O5) Includes 8.7 Million tonnes grading 1.94% Vanadium Pentoxide (V2O5)
Mineral Resource: 23.2 million tonnes grading 1.27% Vanadium Pentoxide (V2O5) (M&I)
Near Term Production – Q1 2013
Maracas Resource Estimate:
Maracas: Concentrate Quality
17 *Average grade comparisons compiled by Les Ford, presentation March 8, 2011
Highest Grade/Quality Vanadium Deposit in the World
Deposit Characteristics Vanadium is contained in Magnetite with a
higher iron content than others High iron content results in highly magnetic
magnetite making beneficiation very efficient giving high vanadium recoveries.
Produces a concentrate with much higher V2O5,
higher Fe, and lower SiO2 (contaminant) than any other deposit
Largo – Comparative Landscape
18
Concentrate Quality* Ore Quality*
*Average grade comparisons compiled by Les Ford, presentation March 8, 2011
Maracás Resource and Property Maps
19
Gulcari “A” deposit detail
Maracás concessions and strike length
Gulcari “A” Potential to Expand
20
NI 43-101 Resource was
defined solely on Gulcari “A” deposit
Location of Gulcari “A” and proposed Open Pit
(400m x 150m) 8km
Target to double existing mineral resource
Extend Glucari “A” Deposit along strike and at depth
Multiple high priority targets identified along strike
11,000 Meter Drill Program Commenced in Q2, 2011
Maracás : Current Operating Parameters
21
(5,000 Tonne Per Annum Scenario)
* Does not include low grade iron
Current ferrovanadium price: US$32.00+ per Kg
Average cash operating costs of FeV:
US$12.89 per Kg
Average pre-tax operating cash
flow: US$ 95.6 MM per year*
Initial CAPEX US$ 212.0 MM
Payback 2.2 Years
Maracas Cash Flow Projections
22
Maracas Catalysts for Growth Year 1 = Current production parameters Year 2 = Sale of tailings material (pig-iron) Years 4+ = 50% increase in production capacity
* Projections assumes FeV pricing of $32.00 per Kg
Pro
jecti
on
pro
ject
ion
Maracás Milestones to Production
2011 Milestones
→Project equity financing complete – Announced April 11, 2011
→FEED contract awarded to Promon Engineering – Basic Engineering underway
→Process flow diagrams already drafted – to be reviewed and accepted by EPC
→Process instrumentation drawings complete – to be reviewed and accepted by EPC
→Granting of Installation License – Expected September 2011
→Project debt financing – Expected November 2011
→Equipment purchase & construction
→Production Q1, 2013
23
24
Initial processing of material commenced July, 2011
Short term cash-flow of $12 million per annum
Reprocessing and recovery of tungsten from
two tailings piles
Proven mining processes
Target 1.5 million pounds per year: 65,000 MTU’S
Low cost producer (less than $60 per MTU)
4.3 Million tonne 43-101 resource
Off-take agreement for 100% of product for present mine life
Short term target of 1.5 million lbs of WO3 per year
Currais Novos: Summary Highlights
Currais Novos: Potential to Expand
Historical producing District
Significant Production: 1940’s to 1970’s
Numerous other properties in immediate
vicinity – LOI signed to acquire 4
165 km west-southwest of Natal in south central Rio Grande do Norte State, Brazil
community of Currais Novos (37,300 pop) 12 kilometres north of the project area
Project located directly on the Campina Grande-Natal Highway
Region well suited for mine infrastructure, number of past producers in the immediate area
Significant expansion potential
25
26
Pro
ject
ion
Currais Novos Cash Flow Projections
Currais Novos Catalysts for Growth Year 2 = Current production parameters Year 4+ = Acquisition/ramp-up of additional underground properties
* Projections assumes acquisition ramp up
27
Two Early-Stage Projects with Tremendous Potential to Add Value:
Vanadium:
Campo Alegre: Titanium, Iron, Vanadium deposit/ high grade 100% Owned
133 million tonnes (Non 43-101 compliant) @ 0.75% V2O5, 50% Fe
Potential 1.5 Billion tonnes
Tungsten:
Northern Dancer: Largest undeveloped Tungsten deposit 100% Owned
423 MT Resource (M,I & I)
2011 PEA: 27.8% IRR & $1.8 Billion NPV @8% ($365 MTU APT)
Long-Term Growth
Northern Dancer Project
28
Northern Dancer Resource Estimate:
223.4 MT grading 0.102% WO3 and 0.029%Mo (M&I)
Higher-grade Tungsten and Molybdenum zone:
60.3 MT of 0.14% WO3 and 0.045% Mo (M&I) 201.2 MT grading 0.09% WO3 and 0.024% Mo (Inf)
PEA complete
Pre-Feasibility commenced (Q2, 2011)
Feasibility study to commence upon completion of
Pre-feasibility (1st Qtr 2012)
Environmental permitting under way
Discussions with off-take partners and JV partner
Development Milestones
Northern Dancer: PEA Highlights
Positive NPV of US$ 918 million at $275 MTU APT & an 8% discount rate
Current trading price of US$450 MTU
Low cash cost producer: US$116 per MTU (Metric Tonne Unit)
Cumulative cash flow US$ 4.8 billion
Average annual production of 833,000 MTU tungsten and 5,959,000 lb
molybdenum over initial 23 years
Pre-Production Capital Costs : $645 million
29
Tungsten (US$ per mtu)
Molybdenum (US$ per lb)
IRR (%) NPV @ 8% (US$ millions)
$275 $17.50 20 918
$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
Highlights
•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.
Campo Alegre Project
30
100% owned iron, titanium and vanadium
deposit
650 kilometres west-northwest of Salvador
Excellent access & infrastructure
7 concessions covering 9,274.66 ha
24 km by 5.5km
Non NI 43-101 compliant resource: 133 million tonnes grading 50% Fe, 21% TiO2 , 0.75% V2O5*
Located in mining-friendly and politically stable Brazil Two railway lines in development within 140 Km with direct access to major ports Several major iron-ore projects in vicinity
Location Highlights
* Historical resource provided by CBPM (Bahia State Mining Development Agency)
Campo Alegre: Potential to Expand
31
14 Km x 2.5 Km trend Multiple mag-targets
Historical drill program only tested to 60m
Potential expansion at depth
Mag-Survey Indicates Fold Structure
Summary of Portfolio
Vanadium:
Maracas: Highest grade/ quality vanadium deposit Production 1st Qtr 2013: 5,000 TPA V2O5 (cost <$13)
Cash flow: Approx. $100+ million per annum
Campo Alegre: Titanium, Iron, Vanadium deposit/ high grade 133 million tonnes (Non 43-101 compliant) @ 0.75% V2O5, 50% Fe
Potential 1.5 Billion tonnes
Tungsten
Currais Novos: Near term low cost production 1.5 million lbs per annum to start July 2011 (cost <$59 MTU)
Approx. cash flow; $1 million per month ($400 MTU APT)
Northern Dancer: Largest undeveloped Tungsten deposit 423 MT Resource (M,I & I)
2011 PEA: 27.8% IRR & $1.8 Billion NPV @8% ($365 MTU APT)
32
Near Term Objectives
Maracas: Purchase outstanding 10% interest : May, 2011 Start exploration drill program : May, 2011 Receive Installation License (LI) : October, 2011 Complete FEED study : September, 2011
Secure US$142 debt facility : November, 2011 Double existing resource : December, 2011 Currais Novos: Production commenced: July, 2011 Additional acquisitions : November, 2011
Start underground program : November, 2011
Campo Alegre: Permits pending for exploration program: November, 2011 Start exploration drill program :January, 2012 Expand inferred resource to 1.5 billion tonnes : June 2012
Northern Dancer: Complete pre feasibility : January, 2012 Complete feasibility : December 2012
33
Investor Contact
34
Darcie Ladd
Business Development Manager
416-861-5938
Mark Brennan
President & CEO
www.LargoResources.com
Largo Resources
35
Appendix • Vanadium Pricing-Supply-Demand Projections • Maracas Vanadium Characteristics Chart • Maracas Optimal Pit Design • Maracas PGM Potential • Vanadium Fundamentals • Tungsten Fundamentals
Vanadium Price Outlook: Strong
$-
$9.00
$18.00
$27.00
$36.00
$45.00
$54.00
$63.00
$72.00
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
Market Balance (LHS) Ferro-V Price
Base Case: World Vanadium Supply and Demand
Annual, Projected through 2018p
Projected
Metric Tonnes $/Kg. V.
Actual
36 Source: CRU
Maracas Vanadium Characteristics
37
Maracas South African Australian
Concentrate V2O5 % 3.40 2.00 1.27
SiO2 % in concentrate 1.00 2.00 2.10
V2O5:SiO2 ratio 3.4 1.0 0.6
Fe % 60.0 54.0 53.5
Maracas South African Australian
Ore V2O5 % 1.34 0.47 0.47
Waste Ratio 2.23 2.00 2.00
Concentrate % SiO2 1.00 2.10 2.30
Concentrate % V2O5 3.42 2.00 1.27
38
Cross Section – Gulcari “A” Deposit
Maracás PGM Exploration Blue Sky
PGM’s: high Pt:Pd ratio similar to Bushveld
& Great Dyke
208,000 ounces PGMs
High Pt:Pd ratio (4:1)
Higher concentration PGMs interstitial to
sulphides
Phase II 5,000 metre drill program Q2 2008
High-priority targets: 700M anomaly NE of
Gulcari “A”; 900M anomaly south of Novo
Amparo
39
Overview – Vanadium and Steel
40
Vanadium is mainly used in the form of ferrovanadium (88%) Titanium alloys are the main non-ferrous use. (9%)
Source: CPM group, Vanadium Industry Outlook
Vanadium is used as an additive in steels and alloys because of its properties as an active grain refiner and deoxidant. Vanadium imparts strength, toughness and wear resistance due to its strong affinity to carbon. When added to steels and carbons, vanadium is able to retard grain growth and acts as an effective hardening agent.
Vanadium Demands
Vanadium End - Uses Carbon Steel 37%
High Strength Low Alloys 22% Stainless/tool 9%
41
Full Alloy 20% Titanium Alloy 9%
Chemicals 3%
Sources of Vanadium
2007 2015* Primary 20% 24%
By-Product 24% 14% Co-Product 56% 62%
42
Primary: Produced from vanadium-rich ore. Mines rely on vanadium for the majority of their revenue.
By-Products: Oil residues and recycling of spent catalyst.
By Product producers have higher operating costs than most primary and co-product producers. By-Product small Chinese producers currently occupy the “swing producer” in the vanadium industry. *
*Source: CRU, Vanadium Outlook
Co-Products: Production of vanadium with steel is driven by the economics of the steel industry.
Co-products cannot be increased without increasing the steel production.
Global Production
43
2007
World Production
China 46%
Russia 17%
South Africa 36%
2015P**
World Production
Maracás* 5%
Australia 7%
U.S 7%
China 45%
Russia 11%
South Africa 23%
**CRU, Vanadium Market Outlook
Tungsten End-Use
44
Hard metals and steel alloy: 81 percent of end-use
*Source: (USGS)
End Use in the United States heavy machinery and specialty alloys jet turbine engines and light-bulb filaments sporting goods (golf clubs, tennis racquets). electronics pipelines mining & construction materials.
China tungsten demand
The US is entirely dependant on imports and US Strategic stockpile.
Companies outside China with tungsten exposure are few and far between.
2007, US tungsten imports 11,500 tonnes from mainly: China, Canada, Bolivia
and Portugal.
US account for 13% of total tungsten consumption. Source: (USGS)
45
US domestic tungsten source
China demand growth Global Industry Analyst, Inc : China’s own use of tungsten was growing at 8 percent
per year.
China is the world’s largest tungsten consumer.
Chinese industries demand tungsten and authorities are keen to ensure
uninterrupted supply.
