Largo Resources Ltd.
TSX VENTURE : LGO

Largo Resources Ltd.

October 24, 2006 07:00 ET

Largo Acquires the Maracas Vanadium-PGM Deposit in Bahia, Brazil

Highlights Company strategic shift to focus on late stage development projects Conference call to review operations Thursday October 26th at 11:00ET.

TORONTO, ONTARIO--(CCNMatthews - Oct. 24, 2006) - Largo Resources Ltd. (TSX VENTURE:LGO) is pleased to announce that it has signed a letter of intent with Odebrecht S.A. (ODEBRECHT) and Caemi Mineracao e Metalurgia S.A. (CAEMI) expressing its intention to acquire 90% of Companhia de Maracas (the "Company"), currently owned by CAEMI and ODEBRECHT.

The Company holds an equity stake of 95.38% (ninety-five and thirty-eight hundredths per cent) in Vanadio de Maracas Ltda., an entity that owns the mining rights of the vanadium substance, located in the municipality of Maracas, State of Bahia, relating to National Department of Mining Production ("DNPM") administrative processes nos. 870.134/82 and 870.135/82 (collectively referred to as the "Mining Rights").

The 2,000-hectare property is located 813 kilometres northeast of Brasilia, the capital of Brazil, and 250 kilometres southwest of Salvador, the capital of Bahia State. The vanadium deposit is hosted within the Jacare River mafic-ultramafic intrusion. The property has a reported historical mineral resource, estimated by the previous owners of 10.4 million tonnes of 1.37% Vanadium Pentoxide (V2O5) using a cut-off grade of 0.50% V2O5 to a vertical depth of 150 metres. This includes a higher grade core of 6.4 million tonnes grading 1.82% V2O5. The resource was estimated in 1990 using a block model and ordinary kriging; this estimate is not NI 43-101 compliant. Most of the previous work has focussed on vanadium. Largo has not completed the work necessary to verify the mineral resource and cautions that the historical resource should not be relied upon.

Platinum group metals (PGM) values are reported from a total of 167 samples in 10 drill holes. In the magnetite-rich zone, PGM's average 0.50 g/t with a Pt:Pd ratio of 1.5:1. Platinum (Pt) values range from 0.01 g/t to 3.94 g/t and palladium (Pd) values from 0.001 g/t to 1.43 g/t. The highest PGM values correlate with the high-grade vanadium-magnetite zone. However, only a small portion of this zone has been sampled.

Upon the potential signing of the respective acquisition agreement, Largo shall acquire a 90% interest in the Company, subject to the terms and conditions set forth therein, for a purchase price of US$10.0 million payable as follows:

- $US1.0 million payable upon filing under protocol of the Environmental License required by DNPM for the issuance of the Mining/Exploitation Licences (Portarias de Lavra), based on Art. 6 of Resolucao CONAMA no. 09/1990;

- $US4.0 million 12 months from the date of first payment (on the condition that the Mining/Exploitation Licenses (Portarias de Lavra) have been issued by DNPM);

- $US5.0 million 18 months from the date of first payment (on the condition that the Mining/Exploitation Licenses (Portarias de Lavra) have been issued by DNPM)

Mark Brennan, President & CEO stated "Maracas is an excellent opportunity for Largo as it combines the potential to develop an existing deposit of vanadium which is a commodity in strong demand as well as to explore the deposit for its significant PGM potential. The area also has very favourable logistics in a mining friendly jurisdiction. This acquisition also marks a strategic re-focus on advanced-stage assets for Largo now that its Macuchi gold exploration property is under option to Aur Resources Inc."

Andy Campbell, P.Geo., Vice President, Exploration commented: "Based on our initial examination of drill core, the deeper holes intersected wider zones of massive magnetite mineralization with higher V2O5 grades. The deposit is open along strike and at depth. The PGM values correlate very well with the higher grade V2O5 zones but these zones have not been systematically sampled for PGMs."

The Maracas deposit is hosted within gabbros and pyroxenites of the Jacare River mafic-ultramafic intrusion. This sheetlike linear intrusion extends for 70 kilometres along a north-south strike averaging about 1.2 kilometre in width. Vanadium and PGMs are associated with disseminated to massive bodies of titano-magnetite in pyroxenites which have been tested by 53 diamond drill holes to a vertical depth of 150 metres.

The massive, titano-magnetite mineralization at Maracas ranges from 2.0 to 90 metres in thickness with an average true width of 25 metres. Grades reported from drill core in these zones range from 0.63% V2O5 to 5.03% V2O5. The weighted average grade of all samples from the massive, magnetite zones in 50 drill holes are reported to be 2.06% V2O5. The high grade portion of the deposit is in a titano-magnetite layer hosted within a pyroxenite unit similar to vanadium deposits in the Great Dyke in Zimbabwe.

Some of the more significant assays reported from the historical drilling are as follows:



Hole Number Core length (metres) True Width (metres) % V2O5
FGA02 46.00 36.8 5.03
FGA26 18.00 14.4 3.20
FGA40 44.60 35.7 3.64
FGA20 58.00 46.4 2.69
FGA41 60.00 75.0 2.63
FGA43 90.00 72.0 2.15
FGA54 60.00 48.0 2.30
FGA03 63.93 51.1 2.13


Andy Campbell, P.Geo. has completed systematic sampling of 10% of the drill core to confirm the V2O5 values and to evaluate the PGM content of the deposit. Results are expected shortly as part of the due diligence process related to this acquisition. All drill core from the previous work is stored on site and is in excellent condition. Micon International has been retained to review the historical resource estimate, complete independent sampling to verify previous results, and to prepare an independent NI 43-101 technical report.

Largo Conference Call and Webcast

There will be a conference call and webcast regarding this new acquisition and Largo's new strategic direction on Thursday, October 26th, 2006 at 11:00 am ET. Details follow:



Thursday, October 26, 2006
11:00 AM ET
Live Conference Access information:
Local Access: 416-695-9757
Toll-Free Access: 1-888-789-0156

Callers should ask the operator for the Largo Resources conference call.


The call will also be webcast live on the Internet at www.largoresources.com

Vanadium is an important alloying element that is used for production of steel alloy and non-ferrous alloys. Ammonium meta-vanadate and vanadium pentoxide are used as catalysts in chemical industries.

Andy Campbell, P. Geo., Largo's Vice President of Exploration, is the Qualified Person responsible for the scientific and technical work for the program as defined under National Instrument 43-101.

In connection with the acquisition, Cancap Investments Limited will retain a 2% N.S.R. on the Company and will be issued 300,000 common shares of the Company at a deemed price of CDN$0.25 per share as a finder's fee. The agreement and finder's fee remain subject to regulatory approval.

For further information, please visit Largo Resources at www.largoresources.com.

Largo Resources is a Canadian natural resource development and exploration company with two advanced stage projects: the Northern Dancer Tungsten-Molybdenum deposit in the Yukon and the Maracas Platinum-Vanadium deposit in Brazil. Largo also has a large (60,000 hectare) land position and prospective gold exploration properties in Ecuador; one of which, the 5,000 hectare Macuchi property, is under option to Aur Resources Inc.. The company is listed on the TSX Venture Exchange under the symbol LGO.

Disclaimer

Statements in this release that are not historical facts are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation reform Act of 1995. Readers are cautioned that any such statements are not guarantees of future performance and that actual developments or results may vary materially from those in these "forward-looking statements".

Please note: There is a map available on CCNMatthews' website at the following link: http://www.ccnmatthews.com/docs/lgomaps1023.pdf

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