Falco Resources Ltd. (TSX.V: FPC) (“
Falco” or
the “
Corporation”) is pleased to announce the
successful completion of its previously announced extension to the
maturity of the Corporation’s existing senior secured loan (the
“
Senior Loan”) with Osisko Gold Royalties Ltd
(“
Osisko”) from December 31, 2020 to December 31,
2022.
Senior Loan Amendment
Under the terms of the extension of the maturity
date of the Senior Loan (the “Senior Loan
Extension”), the Senior Loan was amended to become
convertible after the first anniversary of its execution date into
common shares of the Corporation (the “Common
Shares”) at a conversion price of $0.55 per share,
subject to standard anti-dilution protections. The Senior Loan will
continue to bear interest at a rate of 7.0% per annum compounded
quarterly. The Corporation did not receive any additional proceeds
in connection with the Senior Loan Extension.
In consideration for the Senior Loan Extension,
the Corporation also issued to Osisko 10,664,324 warrants of the
Corporation (the “Warrants”), each exercisable for
one Common Share at an exercise price of $0.69 for a period of 24
months from their date of issuance. The terms of the Warrants also
provide for a cashless exercise feature.
The underlying Common Shares issuable upon
conversion of the Senior Loan will be subject to a hold period of
four months from the closing date of the Senior Loan Extension in
accordance with applicable Canadian securities laws. The Warrants
(and the underlying Common Shares) will be subject to a hold period
of four months from the date of issuance of the Warrants, in
accordance with applicable Canadian securities laws.
Silver Stream
Amendment
Osisko and Falco have also amended the silver
stream agreement entered into on February 27, 2019, as amended on
January 31, 2020, in order to postpone by one year certain
deadlines granted to Falco to achieve milestones set as conditions
precedent to Osisko funding the stream deposit (the “Silver
Stream Amendment”).
Related Party Transactions
Immediately prior to closing of the Senior Loan
Extension and the Silver Stream Amendment, Osisko had beneficial
ownership of, or control and direction over, (i) 41,385,240 Common
Shares, representing approximately 18.3% of the issued and
outstanding Common Shares, and (ii) 6,052,222 warrants. Immediately
following the closing, on a partially-diluted basis assuming the
conversion in full of the Senior Loan and the exercise in full of
all of Osisko’s warrants, Osisko would have beneficial ownership
of, or control and direction over, 90,094,760 Common Shares,
representing approximately 32.8% of the Common Shares issued and
outstanding.
The Senior Loan Extension is a “related party
transaction” under Regulation 61-101 respecting Protection of
Minority Security Holders in Special Transactions
(“Regulation 61-101”). It is exempt from the
requirements to obtain a formal valuation pursuant to section
5.5(b) of Regulation 61-101, as the Common Shares are not listed on
any of the stock exchange or markets specified therein. The Senior
Loan Extension is also exempt from the requirement to obtain
minority approval pursuant to 5.7(a) of Regulation 61-101 as the
value of the transaction represents less than 25% of the market
capitalization of the Corporation.
The Silver Stream Amendment could be a “related
party transaction” under Regulation 61-101. It is exempt from the
requirements to obtain a formal valuation pursuant to section
5.5(b) of Regulation 61-101, as the Common Shares are not listed on
any of the stock exchange or markets specified therein. The Silver
Stream Amendment is also exempt from the requirement to obtain
minority approval pursuant to 5.7(1)(f) of Regulation 61-101, as it
(i) is on reasonable commercial terms that are not less
advantageous to the Corporation than if the Silver Stream Amendment
was obtained from an arm’s length party, and (ii) is not
convertible, directly or indirectly, into equity or voting
securities of the Corporation.
The independent directors of the Corporation
have approved the Senior Loan Extension and the Silver Stream
Amendment, and the board members who are nominees or officers of
Osisko abstained from voting on the resolutions to approve such
transactions.
About Falco
Falco is one of the largest mineral claim
holders in the Province of Québec, with extensive land holdings in
the Abitibi Greenstone Belt. Falco owns approximately 70,000
hectares of land in the Rouyn-Noranda mining camp, which represents
70% of the entire camp and includes 13 former gold and base metal
mine sites. Falco’s principal asset is the Horne 5 Project located
in the former Horne mine that was operated by Noranda (now Glencore
Canada Corporation) from 1927 to 1976 and produced
11.6 million ounces of gold and 2.5 billion pounds of copper.
Osisko is the largest shareholder of the Corporation through its
new subsidiary Osisko Development Corp. Osisko has recently
announced the completion of the transfer to Osisko Development Corp
of its share ownership in Falco representing 18.3% of the issued
and outstanding shares of Falco. Osisko retains its silver stream
interests.
For further information, please
contact:
Luc LessardPresident and Chief Executive
Officer514-261-3336info@falcores.com
Jeffrey White, LL.B, MBADirector, Investor Relations
416-274-7762rjwhite@falcores.com
Amélie LalibertéCoordinator, Investor
Relations418-455-4775info@falcores.com
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this press release.
Cautionary Note Regarding
Forward-Looking Statements
This news release contains forward-looking
statements and forward-looking information (together,
“forward-looking statements”) within the meaning of applicable
securities laws. These statements are based on information
currently available to the Corporation and the Corporation provides
no assurance that actual results will meet management’s
expectations. Forward-looking statements include estimates and
statements that describe the Corporation’s future plans, objectives
or goals, including words to the effect that the Corporation or
management expects a stated condition or result to occur. All
statements, other than statements of historical facts, are
forward-looking statements. Generally, forward-looking statements
can be identified by the use of terminology such as “plans”,
“expects’, “estimates”, “intends”, “anticipates”, “believes” or
variations of such words, or statements that certain actions,
events or results “may”, “could”, “would”, “might”, “will be
taken”, “occur” or “be achieved” and includes, without limitation,
the issuance of the Common Shares underlying the Senior Loan and
the Warrants. Forward-looking statements involve risks,
uncertainties and other factors that could cause actual results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking statements.
Forward-looking statements involve risks,
uncertainties and other factors that could cause actual results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ
materially from these forward-looking statements include, without
limitation, changes in general economic conditions and conditions
in the financial markets, changes in demand and prices for
minerals, failure to obtain the requisite permits and approvals
from government bodies and third parties, regulatory and
governmental policy changes (laws and policies),operational
difficulties encountered in connection with the activities of the
Corporation, other matters discussed in this news release and those
risks set out in Falco’s public documents, including in each
management discussion and analysis, filed on SEDAR at
www.sedar.com. Although Falco believes that the assumptions
and factors used in preparing the forward-looking statements are
reasonable, undue reliance should not be placed on these
statements, which only apply as of the date of this news release,
and no assurance can be given that such events will occur in the
disclosed times frames or at all. Except where required by
applicable law, Falco disclaims any intention or obligation to
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
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