Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (TSX &
NYSE: OR) is pleased to announce the closing of its previously
announced (see press release of June 18, 2018) senior secured
silver stream facility (“Silver Stream”) with reference to up to
100% of the future silver produced from the Horne 5 property
(“Horne 5” or the “Project”) located in Rouyn-Noranda, Québec from
Falco Resources Ltd. (“Falco”) (TSXV: FPC).
Pursuant to the silver purchase agreement
entered into between Osisko and Falco on February 27, 2019, Osisko
will purchase up to 100% of the refined silver from the Project. As
consideration for the Silver Stream, Osisko will pay to Falco
staged upfront cash deposits of up to C$180 million plus ongoing
payments equal to 20% of the spot price of silver on the day that
refined silver is delivered, to a maximum of US$6 per ounce of
refined silver.
On closing of the Silver Stream, Osisko has
funded the first deposit of C$25,000,000, net of C$23,390,733
representing the C$20,000,000 principal amount of loans from Osisko
to Falco entered into in May 2016 and September 2018 and accounts
payable by Falco to Osisko, resulting in a cash outlay of
C$1,609,267 to Falco. The Silver Stream is secured by the assets of
Falco.
“We are pleased to conclude this important
financing with Falco to continue the development of the Horne 5
project. The addition of the silver stream on Horne 5 brings in a
new generation of assets that have the potential to become anchor
assets within Osisko’s royalty and stream portfolio.” commented
Sean Roosen, Chair and CEO of Osisko.
Falco and Osisko have also reached an agreement
to settle interest owed under each of the May 2016 and September
2018 loans through the issuance of 5,353,791 common shares of Falco
(“Falco Common Shares”) at a deemed price of C$0.34 per share (the
“Shares for Debt Settlement”). Completion of the Shares for Debt
Settlement is subject to Falco obtaining necessary regulatory
approvals, including acceptance of the TSX Venture Exchange.
The Horne 5 Project
Horne 5 is a development-stage project located
in Rouyn-Noranda, Québec. Horne 5 is located in the former Horne
mine that was operated by Noranda from 1927 to 1976 and produced
11.6 million ounces of gold and 2.5 billion pounds of copper. Falco
completed a feasibility study for the Project in 2017 that
demonstrated positive economics, and estimated annual payable gold
production of 219,000 ounces at US$399 per gold ounce over a 15
year life of mine. Falco is currently in the permitting process and
working on obtaining all third-party approvals to advance project
construction.
Early Warning Disclosure
Immediately prior to the Shares for Debt
Settlement, Osisko had beneficial ownership of, or control and
direction over, (i) 36,031,449 Falco Common Shares,
representing approximately 17.8% of the issued and outstanding
Falco Common Shares, and (ii) 6,052,222 warrants each
entitling the holder to purchase one Falco Common Share (the “Falco
Warrants”). Immediately following the Shares for Debt Settlement,
Osisko will have beneficial ownership of, or control and direction
over, 41,385,240 Falco Common Shares, representing approximately
19.9% of the issued and outstanding Falco Common Shares, and
(ii) 6,052,222 Falco Warrants. Assuming the exercise of the
Falco Warrants, Osisko would have beneficial ownership of, or
control and direction over, 47,437,462 Falco Common Shares,
representing approximately 22.2% of the Falco Common Shares issued
and outstanding.
Osisko will acquire the Falco Common Shares
issued under the Shares for Debt Settlement for investment purposes
and in accordance with applicable securities laws, Osisko may, from
time to time and at any time, acquire additional Falco Common
Shares and/or other equity, debt or other securities or instruments
(collectively, “Securities”) of Falco in the open market or
otherwise, and reserves the right to dispose of any or all of its
Securities in the open market or otherwise at any time and from
time to time, and to engage in similar transactions with respect to
the Securities, the whole depending on market conditions, the
business and prospects of Falco and other relevant factors.
This news release is issued under the early
warning provisions of the Canadian securities legislation. A copy
of the early warning report to be filed by Osisko in connection
with the Shares for Debt Settlement described above will be
available on SEDAR under Falco’s profile. To obtain a copy of the
early warning report, you may also contact Joseph de la Plante,
Vice President, Corporate Development of Osisko at
(514) 940‑0670. Falco’s head office is located at 1100 avenue
des Canadiens-de-Montréal, Suite 300, Montréal, Québec, H3B
2S2.
Related Party Transactions
The Silver Stream is considered a “related party
transaction” for Falco under Regulation 61-101 respecting
Protection of Minority Security Holders in Special Transactions
(“Regulation 61-101”). Osisko understands that Falco is exempt from
the requirements to obtain a formal valuation in connection with
the Silver Stream, as the shares of Falco are not listed on any of
the specified markets. The Silver Stream was subject to receipt of
the Disinterested Shareholder Approval of Falco which was obtained
on November 29, 2018.
The Shares for Debt Settlement is considered to
be a "related party transaction" for Falco under Regulation 61‑101
but Osisko understands that Falco is exempted from the requirements
to obtain a formal valuation and to obtain minority approval, as
the fair market value of the consideration for the Shares for Debt
Settlement does not exceed 25% of Falco’s market
capitalization.
Mr. Guy Desharnais, Ph.D., P.Geo, is the
qualified person for this release as defined by Regulation 43‑101
respecting Standards of Disclosure for Mineral Projects and has
reviewed and verified the technical information contained herein.
Mr. Guy Desharnais is an employee of Osisko and is
non-independent.
About Osisko Gold Royalties
Ltd
Osisko Gold Royalties Ltd is an intermediate
precious metal royalty company focused on the Americas. Osisko
holds a North American focused portfolio of over 130 royalties,
streams and precious metal offtakes. Osisko’s portfolio is anchored
by its 5% net smelter return royalty on the Canadian Malartic mine,
which is the largest gold mine in Canada. Osisko also owns a
portfolio of publicly held resource companies, including a 16.7%
interest in Osisko Mining Inc., a 32.2% interest in Barkerville
Gold Mines Ltd. and a 15.4% interest in Victoria Gold Corp.
Osisko’s head office is located at 1100 Avenue
des Canadiens-de Montréal, Suite 300, Montréal, Québec, H3B
2S2.
For
further information please contact, please contact Osisko Gold
Royalties: |
Joseph de la PlanteVice
President, Corporate DevelopmentTel. (514)
940-0670jdelaplante@osiskogr.com |
|
Forward-looking Statements
Certain statements contained in this press
release may be deemed “forward‐looking statements” within the
meaning of applicable Canadian and U.S. securities laws. These
forward‐looking statements, by their nature, require Osisko to make
certain assumptions and necessarily involve known and unknown risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied in these forward‐looking
statements. Forward‐looking statements are not guarantees of
performance. These forward‐looking statements, may involve, but are
not limited to the terms and conditions of the Silver Stream
facility and the amount and terms of deposit payments to be made by
Osisko under the Silver Stream facility, the anticipated benefits
deriving from the investment and transaction between Osisko and
Falco, the receipt of third party consents, TSX Venture Exchange
approvals and other regulatory approvals. Words such as “may”,
“will”, “would”, “could”, “expect”, “believe”, “plan”,
“anticipate”, “intend”, “estimate”, “continue”, or the negative or
comparable terminology, as well as terms usually used in the future
and the conditional, are intended to identify forward‐looking
statements. Information contained in forward‐looking statements is
based upon certain material assumptions that were applied in
drawing a conclusion or making a forecast or projection, including
the receipt of regulatory approvals, management’s perceptions of
historical trends, current conditions and expected future
developments, as well as other considerations that are believed to
be appropriate in the circumstances. Osisko considers its
assumptions to be reasonable based on information currently
available, but cautions the reader that their assumptions regarding
future events, many of which are beyond the control of Osisko, may
ultimately prove to be incorrect since they are subject to risks
and uncertainties that affect Osisko and its business.
For additional information with respect to these
and other factors and assumptions underlying the forward‐looking
statements made in this press release, see the section entitled
“Risk Factors” in the most recent Annual Information Form of Osisko
which is filed with the Canadian securities commissions and
available electronically under Osisko’s issuer profile on SEDAR at
www.sedar.com and with the U.S. Securities and Exchange Commission
and available electronically under Osisko’s issuer profile on EDGAR
at www.sec.gov. The forward‐ looking information set forth herein
reflects Osisko’s expectations as at the date of this press release
and is subject to change after such date. Osisko disclaims any
intention or obligation to update or revise any forward‐looking
statements, whether as a result of new information, future events
or otherwise, other than as required by law.
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