Falco Resources Closes $180 Million Silver Stream Transaction With Osisko to Advance Horne 5 Project
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Falco Resources Ltd. has closed on the silver stream transaction with Osisko Gold Royalties Ltd. Osisko has agreed to commit up to $180 million through a silver stream toward the funding of the development of the Horne 5 Project. Falco has reached an agreement with Osisko for the repayment of the interest owed to Osisko under certain outstanding loans through the issuance of common shares of Falco.
“This financing transaction demonstrates the strong support of Osisko and its positive outlook on the Horne 5 Project. The closing of this silver stream transaction is a major milestone as Falco looks forward to building a high-quality, profitable, and environmentally safe project that will deliver significant economic benefit to all of our stakeholders,” said Luc Lessard, president and CEO.
Under the terms of the stream agreement, Osisko will purchase 90 percent of the refined silver from the project. In exchange for the refined silver delivered under the stream agreement, Osisko will pay the company ongoing payments equal to 20 percent of the spot price of silver on the day of delivery, subject to a maximum payment of US$6 per silver ounce.
Pursuant to the stream agreement, the company has agreed to pay a $2,000,000 capital commitment fee. The fee is payable upon Osisko funding the third deposit under the stream agreement.
The silver stream transaction was subject to a right of first refusal in favor of Glencore Canada Corporation which right was not exercised. In addition, Glencore agreed to subordinate certain security interests in accordance with its obligations pursuant to its existing security interests in Falco’s assets.
Glencore remains the owner of an off-take option to purchase production from the project. BaseCore Metals LP owns a 2 percent NSR royalty on the project and has agreed upon security interests in respect of Falco’s assets as part of the silver stream transaction. Osisko interest in the stream agreement is also secured by the assets of Falco.
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 rights on about 67,000 hectares of land in the Rouyn-Noranda mining camp, which represents approximately 70 percent 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 ounces of gold and 2.5 billion pounds of copper. Osisko is the largest shareholder of the company and currently owns 17.8 percent of the issued and outstanding shares of the company.
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