Falco Announces Amendment and Extension of Convertible Debenture and Warrants, and Provides Update ON the Operating License and Indemnity Agreement with Glencore
For Immediate Release TSX.V - FPC
FALCO ANNOUNCES AMENDMENT AND EXTENSION OF CONVERTIBLE
DEBENTURE AND WARRANTS, AND PROVIDES UPDATE ON THE OPERATING
LICENSE AND INDEMNITY AGREEMENT WITH GLENCORE
(April 7 , 2022) Montreal, Québec - Falco Resources Ltd. (TSX.V: FPC) (“ Falco” or
the “Corporation”) announced today that the Corporation and Glencore Canada Corporation
(“Glencore”) (collectively, the “Parties”) have agreed to extend the maturity date of the $10 million
senior secured convertible debenture dated October 27, 2020 (the “Debenture”) issued by the
Corporation to Glencore, from April 27, 2022 to April 27, 2023 (the “Maturity Date”). The accrued
interest on the existing Debenture will be capitalized such that the principal amount of the
amended Debenture will be approximately $11,095,976.
The Debenture was previously convertible into common shares of Falco at a price of $0.41 per
share, subject to customary adjustments in accordance with the terms of the Debenture . In
connection with the extension of the Maturity Date, the conversion price of the Debenture will be
amended to $0.40 per share and the interest rate will be 8% per annum, compounded quarterly.
In accordance with its terms, the Debenture can be converted into common shares (the “Shares”)
of the Corporation within 10 days of the Maturity Date or on the Maturity Date except that Glencore
shall have the right to accelerate its conversion right upon the provision of a prior written notice
to the Corporation.
Concurrently with the issuance of the Debenture on October 27, 2020, Falco also issued to
Glencore 12,195,122 common share purchase warrants of the Corporation (the “Warrants”).
Each Warrant is exercisable for one Share of the Corporation at an exercise price of $ 0.51 per
share, subject to customary adjustments in accordance with the terms of the Warrants . The
Warrants expire on April 27, 2022. The Corporation announces that it will extend the expiry date
of the Warrants from April 27, 2022 to April 27, 2023. The exercise price of the Warrants will be
reduced to $0.41 per share. All other terms and conditions of the Warrants will remain unchanged.
As consideration for the amendment and extension, Falco will also issue to Glencore 2,866,036
common share purchase warrants of the Corporation (the “ Additional Warrants”). Each
Additional Warrant is exercisable for one Share of the Corporation and will have identical terms
to the terms of the Warrants.
The amendment and extension of the Debenture and Warrants, and the issuance of the Additional
Warrants remain subject to the approval of the TSX Venture Exchange. The Additional Warrants
(and the underlying Shares) will be subject to a hold period of four months from the date of their
issuance in accordance with applicable Canadian securities laws.
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Update on Operating License and Indemnity Agreement (“OLIA”)
Since entering into the Agreement in Principle with Glencore regarding the Horne 5 development
and the OLIA as announced on June 28, 2021, the Parties have essentially completed the Work
Program that was initially announced in October 2020, as updated by press releases of February
11, 2021 and June 28, 2021. The Parties have also made meaningful progress with respect to
the negotiation of the OLIA, including without limitation:
(i) the general terms for the creation of a Technical Committee and a Strategic
Committee, comprised of both Glencore and Falco representatives, to collaborate in
the successful and safe development and operation of the Horne 5 Project;
(ii) Falco’s right to access, use and transform certain areas currently owned or controlled
by Glencore;
(iii) the right of Glencore to nominate one Glencore representative on the board of
directors of Falco;
(iv) the remaining conditions precedent to commencement of the dewatering, construction
and operation of the Horne 5 Project; and
(v) certain principles, legal protections and other safeguards relating to the interaction of
the Horne 5 Project with the operation of the Horne smelter of Glencore , given their
physical proximity.
Negotiations between t he Parties are continuing in order to finalize the remaining terms of the
OLIA.
Permitting
Following completion of the relevant field work and studies, Falco has filed the documentation
responding to questions raised by the Ministère de l'Environnement et de la Lutte contre les
changements climatiques in light of the acceptability analysis of the Corporation’s Environmental
impact assessment study (“EIAS”). Such filing is an important milestone in progressing with the
Corporation’s permitting process towards a public hearing by the Bureau d’audiences publiques
sur l’environnement (BAPE) and to the required provincial decree.
Luc Lessard, President and Chief Executive Officer of Falco, commented that “We are pleased
with Glencore’s support in concluding this amendment and extension of the Debenture which
provides Falco with greater flexibility while pursuing our efforts to conclude the OLIA. The prior
execution of life of mine offtake agreements with Glencore on October 27, 2020, the successful
completion of the Work Program announced in October 2020 and which was financed with funds
provided by Glencore through the Debenture financing, the initial and contemplated extension of
the maturity of the Debenture and the Parties’ continuing negotiation of the OLIA are reflective of
the Parties’ collaboration and determination to finalize the OLIA and successfully develop the
Horne 5 Project. We are confident that both Falco and Glencore, together with the community of
Rouyn-Noranda and the Province of Québec, will realize significant benefits from the successful
development and operation of the Horne 5 Project and we look forw ard to providing further
updates as negotiations progress.”
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About Falco
Falco Resources Ltd. 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 Gold Royalties Ltd’s subsidiary, Osisko Development Corp. is Falco’s largest shareholder
owning a 17.3% interest in the Corporation.
For further information, please contact:
Luc Lessard
President and Chief Executive Officer
514-261-3336
Jeffrey White, LL.B, MBA
Director, Investor Relations
416-274-7762
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 Statement on Forward-Looking Information
This news release contains forward-looking statements and forward-looking information (together, “forward looking
statements”) within the meaning of applicable Canadian securities laws. Statements, other than statements of historical
facts, may be forward-looking statements. Generally, forward-looking statements can be identified by the use of
terminology such as “plans”, “expects”, “estimates”, “intends”, “anticipates”, “believes” or var iations of such words, or
statements that certain actions, events or results “may”, “could”, “would”, “might”, “will be taken”, “occur” or “be
achieved”, the negative of these terms and similar terminology although not all forward- looking statements contain
these terms and phrases. Without limiting the generality of the foregoing statements, the statements relating to the
extension of the maturity or expiry date and/or the amendment of the Debenture and the Warrants, as well as the
issuance of the Additional Warrants are forward-looking statements and will not be completed until approved by the
TSX Venture Exchange. There is no assurance that the approval of the TSX Venture Exchange to such amendment
and extension will be obtained. In addition, the statements relating to the negotiation and execution of the OLIA , the
development, construction, operation and closure of the Horne 5 Project, the benefits to be realized from the
development and operation of the Horne 5 Project as well as the acceptability of the Corporation’s EIAS and permitting
process generally, are also forward-looking statements. There is also no assurance that the negotiations of the OLIA
will be completed on terms satisfactory to Falco and Glencore, and there is no assurance with respect to the timing of
completion of such negotiation or the commencement of the construction and operation of the Horne 5 Project. 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. These risks
and uncertainties include, but are not limited to, the risk factors set out in Falco’s annual and/or quarterly management
discussion and analysis and in other of its public disclosure documents filed on SEDAR at www.sedar.com, as well as
all assumptions regarding the foregoing. U ndue 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 time
frame 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.