Largo Resources Ltd.
TSX VENTURE : LGO

Largo Resources Ltd.

October 16, 2006 08:00 ET

Largo Resources Options Macuchi VMS Property in Ecuador to Aur Resources

Joint venture enables Largo to focus on later stage projects

TORONTO, ONTARIO--(CCNMatthews - Oct. 16, 2006) - Largo Resources Ltd. (TSX VENTURE:LGO) is pleased to announce that it has signed an agreement to option the Macuchi volcanogenic massive sulphide (VMS) property to Aur Resources Inc. (Aur). The earn-in agreement gives Aur the right to earn a 75% interest in the property by making cash payments to Largo totalling US$1.025 million and expenditures on the property totalling US$3.5 million dollars over a five year period.

Largo's Macuchi property covers over 5,000 hectares in north-central Ecuador, hosting a number of significant polymetallic (Au, Cu, Zn & Ag) volcanogenic massive sulphide deposits, including the past producing Mercedes mine (production 1940-1946 - 435,000 tonnes at 11.5g Au/t and 4.7% Cu). These types of deposits are typical of other major known precious metal rich VMS environments including Selbaie, Quebec, Eskay Creek, B.C. and Mount Read, Tasmania.

Work by Largo has outlined two, at least 6 km long,parallel mineralized trends on the Macuchi property. As previously reported (see press release May 9, 2005), drilling by Largo has outlined an inferred mineral resource of 360,000 ounces of gold equivalent based on US $400 Au/oz, $6.00 Ag/oz and $1.25 Cu/lb (3.9 million tonnes at 1.94 g Au/t, 0.59% Cu, and 7.5g Ag/t) in the Mercedes-Patino area. This resource, which was reviewed and confirmed by T. Hennessy, P.Geo, of Micon International, is open along strike as well as at depth and can be significantly increased by further drilling.

Largo President Mark Brennan stated: "We are very pleased to have a partner of Aur's stature and technical expertise on this property. Aur brings extensive experience in the exploration and development of volcanogenic massive sulphide systems. This partnership will allow us to focus our efforts on our advanced-stage Northern Dancer Tungsten-Molybdenum project in the Yukon."

To earn a 75% interest in the Macuchi gold property, Aur would be required make cash payments to Largo of US$50,000 upon signing, US$50,000 on or before October 13, 2007, US$100,000 on or before October 13, 2008, US$200,000 on or before October 13, 2009, US$200,000 on or before October 13, 2010 and US$425,000 on or before October 13, 2011. Additionally, Aur would be required to spend US$500,000 in exploration expenditures on the property on or before October 31, 2007 and a further US$3,000,000 on or before October 31, 2011.

The agreement with Aur follows the completion of Largo's exercise of its option to acquire the 49% interest in the Macuchi property that it does not currently own. In order to complete this acquisition, Largo is required to fulfil its cash payments to the owners of the property of US$1,000,000 and share issuances equivalent to US$500,000 in value over a four year period.

Largo continues to hold a 100% interest in the 60,000+ hectare Cotopaxi property (Ecuador) which covers a 60km strike length of the likely extension of the mineralized belt north of Macuchi.

Largo is a Canadian natural resource development and exploration company with an advanced stage project: the Northern Dancer Tungsten-Molybdenum deposit in the Yukon. Largo also has a large (60,000 hectare) land position and prospective gold exploration properties in Ecuador. Largo 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".

THE TSX VENTURE EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Largo Resources Ltd.
    Mark Brennan
    President & CEO
    (416) 861-5886
    or
    Largo Resources Ltd.
    Tony LaMantia
    Corporate Development
    (416) 861-5882
    Website: www.largoresources.com