Last week marked the 2013 Prospectors and Developers Association
of Canada (PDAC) international convention. In light of this
four-day annual convention that brings together leaders from around
the world in the mineral exploration industry, WeirFoulds would
like to congratulate its client – Largo Resources Ltd.
– for being awarded Project Finance Magazine's Latin
American Mining Deal of the Year 2012.
Largo Resources Ltd. is a Canadian based strategic mineral
company focused on developing its vanadium and tungsten projects in
Brazil and Canada. Its primary focus is to continue to advance its
flagship Maracás Vanadium Project with the target to
commence production in Q4 2013. The Maracás Vanadium Project
is poised to become one of the world's premier producers of
vanadium as a result of the high grade and projected low operating
The nature of the deal itself is innovative as this was one of
just a few full non-recourse project finance transactions relating
to a greenfield mining project in Brazil – meaning the
lending bank or banks are only entitled to repayment from the
profits of the project the loan is funding, not from other assets
of the borrower.
The deal involved different banks each providing different
financing to Largo's Brazilian subsidiary Vanádio de
Maracás S.A. A bridge loan was provided by Banco Itaú
BBA S.A. and Banco Votorantim S.A. ("Bridge Banks") in
the amount of R$54 million. Long term financing was provided by
Banco Nacional de Desenvolvimento Econômico e Social
("BNDES") through a facility agreement in the amount of
R$333 million, fully backed and guaranteed by the Bridge Banks and
Banco Bradesco S.A. (together, "Banks") through a
guarantee agreement governing the issuance of relevant bank
guarantees in favour of BNDES.
The syndicate of banks were involved in all phases of the deal,
including due diligence in respect of their greenfield project, as
well as on all phases of the non-recourse project finance
transaction including the bridge loan transaction and the long term
financing transaction. Due to the multijurisdictional aspects, a
number of law firms from Canada, Brazil, Switzerland, the Caymans,
and England were involved in the project.
WeirFoulds acted as Canadian counsel to Largo Resources Ltd., in
connection with obtaining the required approvals and reviewing for
Largo matters not governed under Brazilian law. In addition,
WeirFoulds was involved in reviewing and negotiating the facility
agreement, guarantee agreement, security package, and the
engineering, procurement, and construction management agreement
with the management team in Toronto, the Board, and related
interactions with relevant parties outside of Brazil.
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