TSXV: LGO Near Term VANADIUM Producer Metals and Mining Deal of the Year Best Mining Deal CORPORATE PRESENTATION MAY 2014 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 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 TSXV: LGO
Production in sight. As at October 10, 2013 3 TSXV: LGO Project as at February 20, 2013
Maracas Vanadium Project § Vanadium Project in Brazil § Highest grade, quality; lowest cost project § Feed to plant underway, first production expected shortly § Glencore Off-take: 100% Take-or-Pay § Vanadium demand growth 6.5% per annum Metals and Mining Best Mining Deal Deal of the Year 4 TSXV: LGO
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 *As outlined in 2013 Preliminary Economic Assessment **including iron ore byproduct credit – OPEX without credit is $3.18 (still lowest cost producer) 5 TSXV: LGO ***Average years 1-15
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 6 TSXV: LGO Source: vanitec.org/Roskill, 2013
Vanadium – Few Substitutes 2X 1 Tonne of 2lbsV Steel Strength Highest strength to weight ratio of any alloy 7 TSXV: LGO Source: vanitec.org
Uses of Vanadium Uses of Vanadium Steel is the largest end- use for vanadium Vanadium in Steel High Strength Low Alloy Steels are the leading market for vanadium in the steel industry 8 TSXV: LGO Source: Roskill, 2013
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 9 TSXV: LGO Source: Vanitec
Vanadium Demand Drivers § Increased use in steel § Growth in applications containing V § Higher quality steel standards in BRICs Strong growth profile 10 TSXV: LGO Source: Roskill, 2013
Growth Example: China § 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. “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 11 TSXV: LGO (Global Steel 2013, Ernest&Younge)
Growth Example: China Projected Impact of China’s Increased Rebar Standards Total Tonnes by Region (V2O5 Equiv.) Projected Impact of China’s China 2013 Rebar Standards Europe Japan Actual Consumption 2010 % of Vanadium Used per Tonne of Steel by Region Source: Les Ford Vanadium and Steel presentation, PDAC 2010 12 TSXV: LGO Source: Roskill 2013
Growth Example: Automobiles Volkswagen Lowering Costs and Increasing Efficiency 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) Ford Reducing Weight 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. Ram Increasing Strength Ram’s 2013 3500 pickup 7,000 pounds additional towing capacity than previous version, all thanks to high-strength steel. 13 TSXV: LGO Source: www.autosteel.org
Projected Growth in Automotive USA: Consumption Growth of High-Strength Steels in Automobiles % 12% 50% 78% 41% 10% 47% 40% 22% 14 TSXV: LGO Source: Roskill, 2013 Source: US Steel
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