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Largo Resources Confident Of Meeting New Targets

Largo Resources Ltd. (CVE:LGO) is confident of meeting the newly announced targets on its Maracás vanadium project in Brazil, despite having been forced to delay its plans by one month due to an issue with a component necessary for the construction of the site's kiln, according to an operational update released Wednesday.

According to the update, the majority of system areas at the Maracás project remain on track for commissioning in the fourth quarter of the current calendar year. Nonetheless the Toronto-based mineral resource exploration and development company advised that its final schedule for the mechanical completion of the kiln area, and thus for full commissioning of the project, has been put back by roughly a month, to February 2014

The delay to the erection of the kiln is due to the need to recast four of the support rollers required as a consequence of the original rollers procured from the kiln manufacturer not meeting quality standards. The four replacement rollers are currently en route to Brazil and are expected to arrive on the site in early October 2013. Largo advised that it expected no further delays beyond the revised commissioning date.

Mark Brennan, president and CEO of Largo Resources, speaking Thursday emphasized that the Maracás project was "one of the few mining projects in construction that are tracking very close to originally targeted time. Not many projects come in a month off schedule; it's more likely to come in somewhere in the region of 10 months late and 50 per cent over budget. One month is quite a limited delay."

"I want to highlight that the team have done a phenomenal job; we had to start again with the casting of the rollers, that's a somewhat unusual occurrence and out of the control of management."

He said the company was roughly 75 per cent of the way through the process and had "a great degree of visibility of what can and can't go wrong."

He also pointed out that the Brazilian unit of currency, the Real, is currently trading at around $2.43 to the Canadian dollar, in contrast to the financial projections made in the Preliminary Economic Assessment published in January, which were calculated on an exchange of $2, meaning the company is benefiting from "a 20 per cent improvement in terms of numbers. We're seeing our operating costs coming way, way down."

The initial schedule targeted the mechanical completion of the project, apart from the kiln, for the fourth quarter of this calendar year and that schedule remains unchanged, as does the commissioning of the project apart from the kiln, which also had the target of the fourth quarter of this year.

"All other system areas at Maracás apart from the kiln remain on track and are expected to be commissioned before, or during, the fourth quarter of 2013," said Brennan, quoted in a company statement released with the operation update.

"Each system area will have been dry and wet tested and will therefore be ready for operations upon the completion of the kiln. As the rollers are now on a ship to Brazil, we are very confident that our revised February target date will be met."

The kiln delay aside, the operational update noted that significant progress had been made in all areas at the project site. Civil construction -- that is, the pouring of foundations and structures for equipment -- is currently in the process of ramping down and will be complete by mid-September. The update also stipulated that "good progress" was being made on the electrical-mechanical assembly front. Additionally the update noted that the majority of the steel structures for equipment and mechanical connections were now in place together with associated equipment.

Some recent arrivals of major equipment include: the deammoniator, all four belt filters, the boiler and all the live rings for the cooler and kiln. Several pieces of major equipment, including both ball mills and four belt filters, have been placed on their final bases. Fabrication of all remaining equipment procured from off-shore has concluded with shipments either anticipated in the near-term or already underway.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.