/R E P E A T -- Largo announces positive preliminary economic assessment for the expansion of production at its Maracas Vanadium Project, Brazil/

Symbol: LGO (TSX.V)

• NPV $554 million vs $274 million previously (+102%)
• After tax IRR of 26.3% vs 22.4% previously
• Production increased by approximately 46%
• Production of V₂O₅ from 2014; FeV from 2016
• Mine life increased to 29 years versus 15

TORONTO, Jan. 18, 2013 /CNW/ - Largo Resources Ltd. ("Largo" or the "Company") is pleased to announce the results from a National Instrument 43-101 compliant Preliminary Economic Assessment (the "Report") which affirms very robust economics for an expanded production scenario for its Maracás Vanadium Project in Bahia, Brazil (the "Maracás Project").  The Report is being prepared by RungePincockMinarco ("Runge") and will be filed on SEDAR within 45 days of the date hereof in accordance with NI 43-101.

The Company commissioned the Report to re-scope its advanced stage Maracas Project by incorporating a new production stream of both V2O5 and FeV as opposed to an FeV only scenario (set out in the September 2008 Definitive Feasibility Study as amended in May 2009 (see www.sedar.com) prepared by Aker Solutions Canada Inc. (the "Feasibility Study")) as well as an expanded production scenario which considered the mineral resources available to Largo set out in its Amended Technical report filed on SEDAR on December 21, 2012 (the "December Report").

The new production scenario sees production increased by approximately 46% following year 2 and sees a dual revenue stream of V2O5 and FeV following year 3. The mine life is also increased to 29 years from the 15 years previously set out in the Feasibility Study.

These changes result in an increase to $554 million versus $274 million (+102%) in the Net Present Value ("NPV") and an increase to 26.3% versus 22.4% in the Internal Rate of Return ("IRR") versus the previous production profile each as compared to the results of the Feasibility Study.

Highlights:         

The Report follows extensive engineering work completed by Largo and Promon Engenheria S.A. (Largo's Maracas EPCM Contractor) to begin initial production at the Maracás Project by the end of 2013 which was based on the results of the Feasibility Study.  As previously disclosed, construction at the Maracas Project is well under way and Largo has ordered key equipment with additional capacity in anticipation of increasing production. Largo expects to be a low cost producer of Vanadium.

The expanded scenario adopts the following production strategy:

• 2014 - ramp up to 100% of base case design capacity producing vanadium pentoxide (V₂O₅) only
  
  
• 2015 - complete the expansion of the V₂O₅ plant by Q3 2015 and produce at an expanded rate in Q4 2015; design ferrovanadium (FeV) plant during this period
  
  
• 2016 - produce V₂O₅ throughout the year; construct FeV plant, and commence FeV production in Q4 2016
  
  
• 2017 and beyond - produce V₂O₅ and FeV

Details of Assessment:

The expanded production scenario is made possible by utilising all the mineral resources available to Largo in the Maracás Project area as reported in the December Report.  In the Report, the mill feed sources comprise:  Gulçari A, Gulçari A Norte, Gulçari B, Sao Jose, Novo Amparo and Novo Amparo Norte.  The Report provides for a total mill feed over the 29 year life of the mine of 41,737,000 tonnes at an average grade of 1.10% V₂O₅.  The authors of the Report based this estimate on Whittle pit optimizations carried out on the previously reported mineral resources in the measured, indicated and inferred resource categories (see press release dated September 17, 2012).

Largo cautions that the Report referred to in this announcement is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves.  Mineral resources that are not mineral reserves do not have demonstrated economic viability.  Due to the inclusion of inferred resources in the Report, the Company also cautions there is no certainty that the Report will be realized.  The results of the Report are not intended to disclaim existing mineral reserves under the Feasibility Study.

Capital Expenditures:

The additional CAPEX to expand the operation of approximately $US 50 million was minimised by the fact that the capacity of significant components of the original plant design were purposefully designed to be larger than required with a view to a future possible expansion. No additional expenditures are required for the most critical long-lead items such as the crushing circuit or the horizontal kiln. Other components of the circuit such as milling, beneficiation, leaching, precipitation, deammoniation and drying will require fairly minimal additional capital expenditures to cater for the increased production rates.  This additional $US 50 million in CAPEX would be over and above the already funded US$230.347 million presently being utilised at the project which is currently under construction (see press release dated: September 13, 2012).  Except for US$1.0 million of this additional amount, first funds for the expansion would not be required until 2015 and would then be disbursed over a 3 year period during which the Company expects to be in production. Largo anticipates that it will fund these additional expenditures through cash-flow generated by the operations.

Tim Mann, Chief Operating Officer to Largo stated: "In addition to being very pleased with the results of the PEA which demonstrate the significant upside of the Maracás operation, I can report that the site activity is proceeding very well with the procurement process well advanced allowing detailed engineering to be completed as needed. Earthworks for the plant site area are complete and good progress is being made with civil construction. The electrical-mechanical contractor has commenced mobilization.  In addition, water supply and power supply activity is proceeding well with construction underway in both cases including the main electrical sub-station.  Mechanical completion is scheduled for Q4 2013, which is consistent with the commissioning target of the company".

Long-Term Metal Pricing:

Runge has used the three year average pricing from Metal Bulletin (www.MetalBulletin.com) as their base case scenario for metal pricing for both V₂O₅ and FeV. Metal Bulletin is a widely accepted reference source for non-LME listed minor metal pricing and industry information.

As metal pricing for both V₂O₅ and FeV were subject to extreme fluctuations during the 2008 period, it was determined to use the three year average to exclude this period.            

* Vanadium pricing determined based pricing as reported on Metal Bulletin

Using vanadium prices as of January 17, 2013, the IRR increases to 28.3% and the NPV (8% discount rate) increases to US$651 million.

Quality Assurance Quality Control:

The scientific and technical information in this press release has been reviewed and approved by Tim Mann, P.Eng., Chief Operating Officer of Largo, and also by Don Arsenault, P. Eng., MBA, Vice President of Mining - Canada for Runge, both of whom are Qualified Persons as defined by National Instrument 43-101.

About Largo

Largo is a Canadian-based mineral resource exploration and development company focused on creating a world leading strategic metals company.  Largo currently holds a 100% interest in the Maracás Vanadium Project, a 100% interest in the Currais Novos Tungsten Tailings Project, a 100% interest in the Campo Alegre de Lourdes Iron-Vanadium Project, all in Brazil, and a 100% interest in the Northern Dancer Tungsten-Molybdenum property located in the Yukon Territory, Canada.  The immediate goal of the Company is to develop the Maracás Vanadium Project by Q4 2013 and continue to produce WO₃ concentrate from the reprocessing of tungsten tailings from Currais Novos.  Largo's skilled management team both in Canada and Brazil, are confident in their ability to advance these projects.

Largo is listed on the TSX Venture Exchange under the symbol "LGO".

For more information please refer to Largo's website: www.largoresources.com

Disclaimer

The Company cautions that the Report is a preliminary economic assessment only which was undertaken to re-scope an advance staged project based on new information and readers should not treat the results as enhancing the Feasibility Study or certainty of the Maracas Project. This press release contains forward-looking information under Canadian securities legislation. forward-looking information includes, but is not limited to, statements with respect to completion of the private placement, Largo's development potential and timetable of the Maracas and Northern Dancer projects; Largo's ability to raise additional funds necessary; the future price of tungsten and molybdenum; the estimation of mineral reserves and mineral resources; conclusions of economic evaluation; the realization of mineral reserve estimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capital and operating expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. Generally, forward-looking statements 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 statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Forward-looking statements 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 Largo to be materially different from those expressed or implied by such forward-looking statements, including but not limited to those risks described in the annual information form of Largo and in its public documents filed on SEDAR from time to time. Although management of Largo has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, 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. Largo does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

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SOURCE Largo Resources Ltd.