Falco Provides a Corporate Update and Announces the Appointment of a New Board Member
For Immediate Release TSX.V - FPC
FALCO PROVIDES A CORPORATE UPDATE AND ANNOUNCES THE
APPOINTMENT OF A NEW BOARD MEMBER
(January 24, 2019) Montreal, Québec - Falco Resources Ltd. (TSX.V: FPC) (“Falco” or the “Corporation”) is pleased
to provide a corporate update on the Horne 5 project (the “Horne 5 Project” or the “Project”) , as well as to
announce the appointment of a new member to the Corporation’s Board of Directors.
Luc Lessard, President and CEO, comments: “Despite 2018 having been a challenging year for the mining sector,
the Corporation continued to advance the development of the Horne 5 Project. We have increased the number
of surface properties under ownership , completed an exploration campaign, filed environmental permitting
documentation, continued our discussions with the community, entered into significant financing transactions
and held preliminary discussions with a major stakeholder for various authorizations required for the
Horne 5 Project.”
REVIEW OF THE PROJECT
The Corporation completed a feasibility study for the Horne 5 Project (See press release dated October 16, 2017).
The technical team has continued to review opportunities to enhance the economics of the Project. These efforts
are being directed by two members of the team that joined in January 2018 - Ronald Bougie, Vice President
Engineering and Construction and Guy Belleau, Mine General Manager.
2018 HIGHLIGHTS
Exploration
The Corporation completed a 25,000 metre drill program (the “Program”) at a cost of $8.5 million. The Program
targeted highly prospective properties contiguous to Horne 5 Project. The compilation of all data produced during
the Program will provide inform ation to better understand the Horne area, which remains one of the best
environments to discover Volcanogenic Massive Sulfide (VMS) mineralization and potentially increase the Horne
5 Project’s geological resources.
Environmental
Falco submitted its Environmental Impact Assessment study (the “EIA”) to the Environmental Assessment Register
of the Ministry of Environment and the Fight against Climate Change (the “MELCC”) of the Government of Québec.
The EIA is now publicly available and currently under review. For additional information, studies, opinions, Q&As
and commentaries on the permitting process and the Corporation’s EIA, refer to the documentation available on
the MELCC website at www.ree.environnement.gouv.qc.ca.
The Corporation is committed to taking a proactive approach to its public consultation process and has been
working diligently to identify stakeholders that may be impacted in the Rouyn -Noranda and Abitibi region s. In
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June, the Corporation held its second Horne 5 Project public presentation and information session in the City
of Rouyn-Noranda with more than 150 persons in attendance and dialogue is on going.
Based on the numerous community meetings held to date, the Corporation observes strong community support
for the Horne 5 Project. Development of the Project would bring substantial economic development to the City of
Rouyn-Noranda and the surrounding region over its 15-year operating life.
Pavilion Quemont School (the “Pavilion”) Relocation
The new Pavilion’s construction and relocation was completed in August at the budgeted cost of $22.5 million and
Falco attended the official opening on November 13, 2018. Falco delivered the Pavilion to the school boar d of
Rouyn-Noranda in exchange for existing property and infrastructure assets that are in close proximity to the Horne
5 Project. Obtaining these assets will allow the Corporation to build the infrastructure required for the dewatering
and operating phases of the Horne 5 Project.
The Pavilion was constructed in less than eleven months, allowing the community to access these modern facilities
in time for the 2018 -2019 school year. The Pavilion will also serve as a platform for the training of the new
generation of mining talent for the Corporation.
Financing
On June 18, 2018, the Corporation announced a financing transaction with Osisko Gold Royalties Ltd (“Osisko”)
pursuant to which Osisko agreed to commit up to $180 million through a silver stream transaction (the “Stream
Agreement”) toward the funding of the development of the Horne 5 Project.
The Stream Agreement is subject to a right of first refusal (the “ROFR”) in favor of Glencore Canada Corporation
(“Glencore”). Pursuant to the ROFR, Glencore shall have a period of 60 days following the receipt of a no tice
accompanied by a copy of the Stream Agreement to notify Falco that it wishes to purchase the silver stream in
accordance with the terms described in the Stream Agreement. Falco and Osisko have submitted to Glencore
documents to allow Glencore to determine their interest in exercising the ROFR . The Corporation expects to
receive its response in the first quarter of 2019.
Concurrent with the announcement of the Stream Agreement, the Corporation also announced the subscription
by Osisko to a $7 million debenture (the “Debenture”). The Debenture was convertible into 12,104,444 units of
Falco (the “Units”) upon receipt of disinterested shareholder approval. Each Unit consists of one common share
and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one
common share of Falco, subject to customary anti-dilution clauses, at a price of $0.75 for a period of 36 months
from the date the Units are issued.
The Stream Agreement and the conversion of the Debe nture were both approved at t he special meeting of
shareholders of Falco held on November 29, 2018 and the $7 million debenture was converted into equity. As at
December 31, 2018 Osisko owns 17.8% of the outstanding common shares of Falco.
$10 million Secured Loan
In September, the Corporation completed a $10 million secured senior loan agreement (the “Secured Loan”) with
Osisko. The Secured Loan’s maturity date was extended to February 28, 2019 and interest shall be payable on the
principal amount of $10 million at a rate per annum that is equal to 7%, compounded quarterly. The Secured Loan
will be reimbursed from the first drawdown under the Stream Agreement.
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2019 OUTLOOK
Exploration
Falco’s 2019 objectives regarding exploration will aim at completing the compilation of geological data in order to
plan future exploration programs . Management endeavours to proceed with future exploration program s
targeted at increasing the Horne 5 Project’s mineral resources and ultimately the Project’s life of mine.
Environmental Assessment Process
Falco is continuing the environmental assessment process and technical work as required to support its
development plans in order to receive the EIA’s acceptability from the MELC C. The Corporation’s objective is to
start the public hearing process (Bureau d’audiences publiques sur l’environnement) on the Horne 5 Project by the
end of the year.
Consultation Committee (the “Committee”)
The Corporation will create the Committee which will be composed of representatives from the community. Falco
remains committed to working with various stakeholders to finalize a plan for the Horne 5 Project that will
maximize benefits for the entire community, our shareholders and other stakeholder groups. The mandate of the
Committee will be to review the Project and prepare enhancements to provide better returns to all stakeholders.
Major Stakeholder
The Corporation continues discussions with a major stakeholder to obtain the authorizations required for the next
steps in the development of the Horne 5 Project including the negotiation of an operating licence.
Financing
The Corporation continues to pursue various financing alternatives including, but not limited to, discussions with
the Québec Government and other potential partners.
APPOINTMENT OF A NEW BOARD MEMBER
Falco is pleased to announce the appointment of Ms. Angelina Mehta to the Corporation’s Board of Directors.
Ms. Mehta has over twenty years of experience in the fields of finance and engineering. Since September 2017,
she has been acting as Senior Mining Advisor with Paradigm Capital Inc. in investment banking, as well as Vice
President of Operations for North American Nickel. Over the years, Ms. Mehta also served as Investment Manager
for Sentient Asset Management Canada and held various operatio nal positions for multiple mining companies.
She currently serves on the board of directors of Storn oway Diamond Corporation, The Foundation of Greater
Montreal, Azimut Exploration Inc. and Women in Mining Canada. Previously, she served on the board of directors
of Meridian Mining SE and Pershimco Resources Inc. Ms. Mehta holds a bachelor’s degree in mining engineering
and an MBA from McGill University, as well as a Master of Law degree from the Osgoode Hall Law School of York
University.
Mr. Sean Roosen, Chair of the Board of Directors of Falco, stated: “We are very pleased to have Ms. Mehta join
our Board of Directors. She brings industry knowledge, technical expertise and tremendous experience which will
allow her to contribute to Falco’s success.”
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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 about 67,000 hectares of land in the Rouyn-Noranda mining
camp, which represents approximately 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
from 1927 to 1976 and produced 11.6 million ounce s of gold and 2.5 billion pounds of copper . Osisko Gold
Royalties Ltd is the largest shareholder of the Corporation and currently owns 17.8% of the issued and outstanding
shares of the Corporation. The Corporation has 202,524,945 shares issued and outstanding.
For further information, please contact:
Luc Lessard
President and Chief Executive Officer
514-261-3336
Amélie Laliberté
Coordinator, Investor Relations
418-455-4775
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 . All statements, other than statements of
historical facts, are forward-looking statements, and subject to risks and uncertainties. Generally, forward-looking
statements can be identified by the use of terminology such as “plans”, “seeks”, “expects”, “estimates”, “intends”,
“anticipates”, “believes”, “could”, “might”, “likely” or variations of such words, or statements that certain actions,
events or results “may”, “will”, “could”, “would”, “might”, “will be taken”, “occur”, “be achieved” or other similar
expressions. Forward-looking statements, including statements concerning the obtaining of all approvals to close
the Stream Agreement in a timely manner, maintaining community support for the Project, the timely development
of the Project, increasing the Project’s mineral resources through future exploration programs, the timely creation
of the Committee, the timely obtaining of all operating l icences on conditions acceptable to the Corporation and
the obtaining of further financing for the Project, involve risks, uncertainties and other factors that could cause
actual results, performance, prospects and opportunities to differ materially from those expressed or imp lied by
such forward-looking statements. Forward-looking statements are subject to business and economic factors and
uncertainties, and other factors that could cause actual results to differ materially from these forward -looking
statements, including the obtaining of all required authorizations from third parties on terms acceptable to the
Corporation and in a timely manner and those risks set out in Falco's public documents, including in each
management discussion and analysis, filed on SEDAR at www.sedar.com. Furthermore, should one or more of the
risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in forward-looking statements or information. These risks, uncertainties
and other factors include, among others, political, economic, environmental and permitting risks, regulatory
restrictions, mining operational and development risks, litigation risks, regulatory restrictions, environmental and
permitting restrictions and liabilities, internal and external approval risks, changes in the use of proceeds relating
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to the Secured Loan , the Stream Agreement and Debenture financings, currency fluctuations, global economic
climate, dilution, share price volati lity, competition, loss of key employees, additional funding requirements, and
defective title to mineral claims or property . Although Falco believes that the assumptions and factors used in
preparing the forward -looking statements are reasonable, undue r eliance 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 discl aims any
intention or obligation to update or revise any forward-looking statement, whether as a result of new information,
future events or otherwise.