11:20:55 EST Tue 31 Jan 2023
Enter Symbol
or Name
USA
CA



Falco Resources Ltd
Symbol FPC
Shares Issued 271,577,879
Close 2022-12-06 C$ 0.12
Recent Sedar Documents

Falco Resources extends maturity of loan, debenture

2022-12-06 20:08 ET - News Release

Mr. Luc Lessard reports

FALCO ANNOUNCES EXTENSION OF ITS SENIOR DEBTS AND RELATED WARRANTS

Falco Resources Ltd. has entered into binding agreements: (i) with Osisko Gold Royalties Ltd. to extend the maturity date of the corporation's existing convertible secured senior loan from Dec. 31, 2022, to Dec. 31, 2024; and (ii) with Glencore Canada Corp. to extend the maturity date of the corporation's existing senior secured convertible debenture from April 27, 2023, to Dec. 31, 2024.

Extension of the maturity date of the Osisko loan

In consideration for the extension of the maturity date of the Osisko loan, the Osisko loan will also be amended: (i) for the accrued interest on the existing Osisko loan to be capitalized such that the principal amount of the amended Osisko loan will be approximately $20,484,195; (ii) to increase the interest rate of the Osisko loan from 7 per cent per annum to 8 per cent per annum; and (iii) to reduce the conversion price of the Osisko loan from 55 cents to 50 cents per common share of Falco. In addition, the 10,664,324 warrants of the corporation previously held by Osisko, each exercisable for one common share at an exercise price of 69 cents and expiring on Nov. 27, 2022, will be replaced with 10,664,324 warrants of the corporation each exercisable for one common share at an exercise price of 65 cents and expiring on Dec. 31, 2024, maturing concurrently with the Osisko loan, as amended.

Extension of the maturity date of the Glencore debenture

In consideration for the extension of the maturity date of the Glencore debenture, the Glencore debenture will also be amended: (i) for the accrued interest on the existing Glencore debenture to be capitalized such that the principal amount of the amended Glencore debenture will be approximately $11,770,710; (ii) to increase the interest rate of the Glencore debenture from 8 per cent per annum to 9 per cent per annum; and (iii) to reduce the conversion price of the Glencore debenture from 40 cents to 36 cents per common share. In addition, the 15,061,158 warrants of the corporation held by Glencore, each exercisable for one common share at an exercise price of 41 cents and expiring on April 27, 2023, will be amended to be exercisable at an exercise price of 38 cents and expiring on Dec. 31, 2024, maturing concurrently with the Glencore debenture, as amended.

Luc Lessard, Falco Resources' president and chief executive officer, noted: "The concurrent extensions of the corporation's senior debts for a period of approximately 24 months demonstrate the strong relationship and long-standing support of Osisko and Glencore for Falco and the development of the Horne 5 project. Should these transactions become effective, the Osisko loan and Glencore debenture will have been extended by approximately two years, providing the corporation with additional flexibility to pursue the development and permitting of the Horne 5 project, including the admissibility of the environmental impact assessment and conclusion of the operating licence and indemnity agreement with Glencore."

Closing of the Osisko loan amendments and the Osisko warrants are conditional upon: (i) obtaining minority approval of the shareholders of the corporation, excluding the common shares held by Osisko Development Corp., to be sought at the annual and special meeting of the corporation to be held on Jan. 23, 2023; (ii) approval of the TSX Venture Exchange; and (iii) concurrent closing of the Glencore debenture amendments and the amendment of the Glencore warrants on the terms described herein.

Closing of the Glencore debenture amendments and the Glencore warrants are conditional upon: (i) approval of the TSX Venture Exchange; and (ii) concurrent closing of the Osisko loan amendments and the Osisko warrants on the terms described therein. Subject to satisfaction of such conditions, closing of the Osisko loan amendments and the Glencore debenture amendments, and the related issuance and amendment of the Osisko warrants and Glencore warrants, is expected to occur concurrently, shortly following the shareholders meeting. Additional information will be included in the management proxy circular to be filed at SEDAR.

Prior to the transactions contemplated by this press release, Osisko held the Osisko loan in the principal amount of $17,596,136, which is convertible into 31,992,974 common shares and also held 10,664,324 warrants of the corporation, which expired on Nov. 27, 2022, representing approximately 13.6 per cent of the issued and outstanding common shares on a partially diluted basis assuming the conversion in full of the Osisko loan and the exercise in full of the 10,664,324 warrants. Immediately following the closing of the Osisko loan amendments and the Osisko warrants, on a partially diluted basis assuming the conversion in full of the Osisko loan and the exercise in full of the Osisko warrants, Osisko would have beneficial ownership of, or control and direction over, 51,632,714 common shares, representing approximately 16 per cent of the common shares issued and outstanding. Osisko holds approximately 44 per cent of the issued and outstanding equity interests of Osisko Development, which has beneficial ownership of, or control and direction over, 46,885,240 common shares and 2.75 million warrants of the corporation, representing approximately 18.1 per cent of the issued and outstanding common shares on a partially diluted basis assuming the exercise in full of the 2.75 million warrants.

The Osisko loan amendments and the issuance of the Osisko warrants are considered related-party transactions under Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions. The Osisko transactions are exempt from the requirements to obtain a formal valuation pursuant to Section 5.5(b) of Regulation 61-101. However, Falco Resources is required to obtain the minority approval for the Osisko transactions as none of the exemptions contained under Regulation 61-101 are currently available to the corporation.

The common shares issuable upon conversion of the Osisko loan and the Glencore debenture will be subject to a hold period of four months from the closing date of the Osisko loan amendments and the Glencore debenture amendments in accordance with applicable Canadian securities laws. The Osisko warrants and the Glencore warrants (and the underlying common shares issuable pursuant thereto) will be subject to a hold period of four months from the date of issuance of the Osisko warrants and the Glencore warrants in accordance with applicable Canadian securities laws.

About Falco Resources Ltd.

Falco Resources is one of the largest mineral claim holders in the province of Quebec, with extensive landholdings in the Abitibi greenstone belt. Falco Resources owns approximately 70,000 hectares of land in the Noranda mining camp, which represents 70 per cent of the entire camp and includes 13 former gold and base metal mine sites. Falco Resources' principal asset is the Horne 5 project, located under 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. Osisko Development is Falco Resources' largest shareholder, owning a 17.3-per-cent interest in the corporation.

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