Largo Resources (CVE:LGO) has appointed Mark A. Smith, the former CEO of Molycorp and the current executive chairman ofNioCorp, as its new chief executive, to lead the company as it ramps up to commercial production.
The vanadium miner also announced that it will need to raise more equity capital as it negotiates with its lenders to restructure its debt.
The company said it has identified additional capital expenses to be made in 2015, including the improvement of recoveries of the leaching system, which, together with working capital needs, will require additional funds of about C$20 million in 2015.
This includes certain payments required to be made under its current debt facility, Largo said, which the company is currently looking to restructure, having signed an indicative term sheet with its lenders last month.
Largo, which is aiming to develop its Maracas Menchen mine in Brazil to phase 1 capacity by the third quarter, will be seeking additional financing to coincide with the debt restructuring that is currently being negotiated. It is also looking to sign for a short term facility to fund debt servicing requirements until May of this year, and said it anticipates it will need another C$30 million in financing over the course of 2016.
The company still remains on track to achieve its 12 month ramp-up at Maracas, with full phase 1 capacity expected by the third quarter. The mine started production last August.
The Toronto-based miner is expecting 2015 production to come in at 17 million pounds of vanadium pentoxide, at a cost of US$4.15 per pound, although costs are expected to drop to US$3.21 per pound by the end of this year.
Looking out to 2016, the company has the option to complete a $32 million expansion, which would raise capacity by some 50 percent and make Maracás the largest and lowest cost vanadium mine in production.
"Largo and Mark Brennan have put together a great team and I look forward to working with them to meet the challenges that face all resource companies in the current market environment," said incoming CEO Smith.
"I believe that Largo is uniquely positioned to meet these challenges and with the support of its very qualified board of directors will, I am confident, continue to succeed."
Smith will take over as CEO as of April 1, replacing Mark Brennan, who will be retiring, but will remain on as a consultant for one year. With Brennan at the helm, Largo transformed from a junior explorer to a new vanadium producer with over 250 employees in Canada and Brazil.