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CORPORATE PRESENTATION December, 2013 - PowerPoint PPT Presentation

TSXV: LGO Near Term VANADIUM Producer Metals and Mining Deal of the Year Best Mining Deal CORPORATE PRESENTATION December, 2013 Forward Looking Statements The information presented contains forward-looking

  1. TSXV: LGO Near Term VANADIUM Producer Metals and Mining Deal of the Year Best Mining Deal CORPORATE PRESENTATION December, 2013

  2. 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. TSXV: LGO 2

  3. Production in sight. As at October 10, 2013 TSXV: LGO 3 Project as at November 19, 2013

  4. Maracas Vanadium Project  Vanadium Project in Brazil  Highest grade/quality; lowest cost project  Funded and in construction  Production to begin in Q1, 2014  Glencore Off-take: 100% Take-or-Pay Metals and Mining Best Mining Deal Deal of the Year TSXV: LGO 4

  5. 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 TSXV: LGO 5 Source:, 2013

  6. Vanadium – Few Substitutes = 2X 1 Tonne 2lbsV of Steel Strength Highest strength to weight ratio of any alloy TSXV: LGO 6 Source:

  7. Demand Drivers  Increased use in steel production  Growth in applications containing V  Higher quality steel standards in BRICs Growth Rate (CAGR) Strong growth profile TSXV: LGO 7 Source: Roskill, 2013

  8. Growth Example 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 TSXV: LGO 8 Source: Roskill 2013

  9. 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 TSXV: LGO Source: Vanitec 9

  10. Supply is Concentrated China 70,000 Tonnes (V2O5 Equiv) South Africa 35,000 Tonnes (V2O5 Equiv) Russia 14,000 Tonnes (V2O5 Equiv) Of global supply Total Supply 127,000 Tonnes (V2O5 Equiv) Total Demand 136,000 Tonnes (V2O5 Equiv) Brazil production provides stability of supply TSXV: LGO *Tonnage calculated in V2O5 Equivalent 10 Source: Roskill, 2013

  11. Vanadium Historical Pricing Historical Vanadium Price $20.00 $15.00 $10.00 $5.00 Largo Operating Costs $0.00 Consistent floor at $5.00 per lb TSXV: LGO 11

  12. Maracas – Ideal Location  Government and local support  Arid climate, ideal topography  Management with regional experience Best Mining Deal Metals and Mining Deal of the Year Safe, mining friendly jurisdiction TSXV: LGO 12

  13. Maracas - Mineralization  Magnetite deposit  Mineralization at surface  Highest grade and quality ore  Contains Platinum Group Metals Long strike zone Significant opportunity for future expansion TSXV: LGO 13

  14. Concessions and Mineralization = Gulcari “ A ” Deposit (first 12 Years) Maracás concessions and strike length TSXV: LGO 14

  15. Mineral Resources +2 Times Industry Average Grade Gulcari “A” Deposit 0.83% V2O5 24.6 Million Tonnes 30.4 Million Tonnes TSXV: LGO 15

  16. Gulcari “A” Cross Section TSXV: LGO 16

  17. Cost Advantage Highest Grade/Quality Vanadium Deposit in the World Results in Concentrate has Higher head-grade and Concentrate has fewer much higher V 2 O 5 higher iron content contaminants like silica Higher Recoveries Less Energy Required = Lower reagent costs LOWEST COST PRODUCTION Concentrate V 2 O 5 % Concentrate SiO 2 % Ore V 2 O 5 % TSXV: LGO 17 *Average grade comparisons compiled by Les Ford, presentation March 8, 2011

  18. 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 TSXV: LGO *including iron ore byproduct credit – OPEX without credit is $3.18 (still lowest cost producer) 18 **Average years 1-15

  19. Low Cost Environment  Open pit mining  At surface deposit  Highly magnetic ore  Few contaminants OPEX costs*  Water leaching process Ore provides better recoveries and reduces input costs TSXV: LGO 19 *including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer)

  20. Low Cost with Potential to Improve Potential reductions in operating costs  Lower mining costs  Lower power costs  In-house crushing OPEX costs*  Depreciation of the Real TSXV: LGO 20 *including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer)

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