Largo Reports Robust Economics from PEA for Currias Novos Tungst

Largo Resources Ltd. (TSX VENTURE:LGO) ("Largo" or the "Company") is pleased to report the results of a NI 43-101 compliant Preliminary Economic Assessment (the "PEA") on the Currais Novos Tungsten Project, which is currently under the Company's option, in Rio Grande de Norte, northeastern Brazil. The PEA has been completed by D.E.N.M Ltd. ("DENM") of Burlington, Ontario.

The results of the PEA are very positive and construction for the project is underway for the recovery of tungsten from mine tailings. Production of Tungsten (WO3 concentrate) from the Currais Novos Project is expected to commence by June 2011.

Largo remains confident that there is potential to significantly increase the tungsten asset base in the Currais Novos region. Largo also hopes to develop bi-product credits in order to increase production volumes and the production life at Currais Novos.

Projected Cash Flows and Economic Results

Based on an estimated initial capital investment of US$6.1 million (including resource purchase price) and the milling of 4,270,000 tonnes of tailings material at a grade of 0.115% WO3, the project has a discounted payback of less than one year and is expected to generate net revenues of US$29.8 million over its estimated production life of four years on a pre-tax basis.

This results in a pre-tax IRR of 163% and a NPV of US$15.2 million at a discount rate of 10% per year. Total WO3 concentrate produced over the projected life of the operation is estimated to be 4.9 million lbs (221,000 mtu).

Price forecasts for WO3 concentrate are based on the assumed long-term price of US$260 per mtu versus current tungsten prices at $325 per mtu.

The PEA was based on work carried out by DENM and other consultants, including Mr. Milko Rivera, P. Eng., an independent Qualified Person as defined by National Instrument 43-101, with DENM taking overall responsibility for compiling the study.

Project Description

The Currais Novos property is located 179 kilometres west-southwest of Natal in the State of Rio Grande do Norte, in northeastern Brazil. The project is in the municipality of Currais Novos. The tungsten tailings deposits are the result of the processing of ore from the Barra Verde and Boca de Laje Tungsten mines. The project has previously been explored by a number of companies including Union Carbide and Anglo American and from these workings the project has been described as a scheelite (tungsten) skarn type deposit.

Test work and process flow sheet development was carried out by CETEC, a mineral processing laboratory located in Belo Horizonte, Brazil. Two composite samples (approximately 10 tonnes) were processed to obtain a scheelite concentrate with, at least 65% WO3, and an economically acceptable recovery. The laboratory results highlights are as follows:

45% recovery of WO3;
Concentrate grade from testwork resulted in a +65% WO3 product;
Recovery technique was carried out which includes the repulping of 100% of tailings followed by gravity preconcentration using centrifuges, preconcentrate classification and regrinding, vibratory tabling cleaning and upgrading, and scheelite concentrate roasting followed by a high-intensity magnetic separation stage to remove iron sulphide impurities; and
Preliminary Fluorine work and recovery was carried out, but the results have not proved conclusive at this time.
The processing facilities are expected to include equipment and infrastructure capable of processing a minimum of 3,288 tonnes per day of reclaimed tailings. The plant will consist of gravity concentration, gravity tabling upgrade, concentrate cleaning, roasting and magnetic separation to produce the final concentrate. Tailings from the process will be pumped to a new tailings area nearby.

The town of Currais Novos has well established infrastructure for the transport of supplies as well as access to local labour, accommodations, power lines and communications systems telephone, both land and cellular, as well as internet connections. A paved main road services the project from outside Currais Novos which allows for accessible transportation of equipment, and for the shipping of the concentrate to the required port facility of Natal.

Estimated Mineral Resources

Largo has completed a new block model and updated mineral resource estimate incorporating the results from its 2010 auger drill program consisting of 121 holes totalling 794 metres and 556 samples.

The updated mineral resource for the two tailings deposits at a cut-off grade of 0.06 % WO3 is estimated as Indicated mineral resources of 3.46 million tonnes grading 0.12% WO3 and 1.74% F. The Indicated mineral resource estimate contains 7.2 million pounds of WO3. Inferred mineral resources were estimated to be 810,000 tonnes grading 0.093% WO3 and 1.44% F containing 1.3 million pounds of WO3.

Mineral Resources are presented in Table 1 below for the two tailings deposits for each resource category, which are included within the overall resource. The cut-off grade was determined based on comparison to similar deposit types that are being mined or planned to be mined by open pit methods, but has not been confirmed by appropriate economic studies.