Moody’s rates Largo, bond B2

Moody's Investors Service said it assigned Largo Resources Ltd. a B2 corporate family rating, a B2-PD probability of default rating, a B2 senior secured rating and an SGL-2 liquidity rating.

The outlook is stable.

The proposed financing is for $150 million of senior secured notes due 2021.

Proceeds will be used to refinance existing debt.

Moody’s said the B2 rating is constrained by Largo Resources' small size (revenue of $135 million in 2017), concentration risk (only produces vanadium, at one mining site) and commodity price risk (vanadium pricing is volatile and opaque).

“Providing support to the ratings is the high grade of vanadium produced by Largo, a cost profile (cash costs of $3.64/lb in 2017) that is below the 15-year average price for vanadium ($7.71/lb), possible increasing use of vanadium in batteries, aerospace, chemical plants and steel, together with good liquidity and expected conservative financial policies,” the agency said in a news release.

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