Largo seeks financial hardship exemption for $23.4 million funding

Largo Inc. (TSX: LGO) (NASDAQ: LGO) announced a $23.4 million offering comprising a registered direct offering and private placement, while applying to the Toronto Stock Exchange for a financial hardship exemption to bypass shareholder approval requirements.

The offering includes common shares and warrants priced at $1.22 per unit, with warrants exercisable for five years. The company has secured binding commitments for the entire amount, including $6 million from Arias Resource Capital Fund III L.P., an affiliate of Largo's largest shareholder.

Largo received a $5 million secured convertible bridge loan from ARC Fund III carrying 12% annual interest. The loan will convert to equity units if TSX approves the hardship exemption, or remain as debt maturing in two years if approval is denied.

The company cited serious financial difficulties stemming from depressed vanadium prices due to oversupply from China and Russia, plus weaker demand in steel and construction markets. Additional challenges include U.S. tariffs on Brazilian imports increasing from 10% to 50% in August 2025, affecting high-purity vanadium sales.

Proceeds will address working capital deficiencies and payments to Brazilian lenders and mining contractors. The company stated that liquidity constraints are already negatively impacting mine production rates at its Maracás Menchen Mine.

The offering would issue approximately 39.4 million shares, representing 36% of total outstanding shares on a fully-diluted basis post-transaction. Arias Resource Capital's ownership would decrease from 43.7% to 34.2% assuming full warrant exercise.

TSX typically places companies under remedial delisting review when they rely on financial hardship exemptions. The offering is expected to close around October 22, 2025, subject to TSX approval and other closing conditions.

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