Falco Resources Extends Senior Loans for Horne 5 Project

Falco Resources Extends Senior Loan Agreements

MONTREAL, Oct. 07, 2024 — Falco Resources Ltd. (TSX.V: FPC) is announcing an important development regarding its financial strategy. The Corporation has secured binding agreements with key partners to extend the maturity dates of significant funding sources. These agreements involve the existing convertible secured senior loan with Osisko Gold Royalties Ltd and the senior secured convertible debenture with Glencore Canada Corporation, pushing their maturity from the end of 2024 to the end of 2025.

Strengthening Partnerships and Project Development

President and CEO Luc Lessard expressed enthusiasm about these extensions, highlighting the robust support Falco enjoys from both Osisko and Glencore. He stated, “The concurrent extensions of the Corporation’s senior debts demonstrate the strong relationship and long-standing support of Osisko and Glencore to Falco and the development of the Horne 5 Project. Such extensions provide the Corporation with additional flexibility to pursue the permitting and development of this project.”

Details of the Loan Amendments

To facilitate the extension of the Osisko Loan, several amendments will take effect as of December 31, 2024. The terms include capitalizing accrued interest that will adjust the principal amount to approximately $23,881,821. Additionally, the conversion price has been updated, reduced from $0.50 to $0.45 per Common Share, while the interest rate will rise from 8% to 9%. Existing warrants held by Osisko will remain valid until their expiration, while new warrants will be issued at an attractive exercise price of $0.58 per Common Share.

Adjustments to the Glencore Debenture

Similar amendments will apply to the Glencore Debenture. The total principal will be adjusted to approximately $13,985,960, following the capitalization of accrued interest. The conversion price is being increased to $0.37 per Common Share from $0.36, and the interest rate will see an upward revision from 9% to 10%. New warrants will also be introduced, calculated at two different exercise prices for the shares, with a collective expiration on December 31, 2025.

Regulatory Considerations

These financial maneuvers involving the Osisko Loan and Glencore Debenture are classified as “related party transactions” under Regulation 61-101. Hence, Falco is bound to seek minority approval from its shareholders for the Osisko Transactions at an upcoming special meeting. It should be noted that these approvals are necessary for maintaining compliance with relevant Canadian securities laws.

Shareholder Meeting and Approval Structure

For the upcoming shareholders’ meeting anticipated to happen by the end of the year, it will be crucial to secure the required minority approval exempt from valuation requirements. This approval isn't restricted to the loan amendments but extends to the overall financing strategy, which includes obtaining clearance from the TSX Venture Exchange.

Implications for the Horne 5 Project

The finalized terms of these financing renovations are expected to position Falco favorably in the pursuit of developing Horne 5. This project is critical, as it encompasses valuable mineral rights across a historic mining region known for its rich resources. The extensions support Falco's commitment to advancing the project while also enhancing its capital structure and investor appeal.

About Falco Resources

Falco Resources Ltd. stands as a significant player in the mineral exploration landscape, especially in the Abitibi Greenstone Belt. Holding about 67,000 hectares of land in the Noranda Mining Camp, the Corporation's core asset, Horne 5, is situated where valuable production occurred in the past, further underpinning Falco's potential for future growth. Osisko Development Corp is recognized as Falco’s largest shareholder, evidencing confidence in the Corporation's trajectory.

For further assistance, please reach out to:
Luc Lessard
President, Chief Executive Officer and Director 514-261-3336
info@falcores.com

Frequently Asked Questions

What recent agreements has Falco Resources made?

Falco Resources has extended the maturity dates of senior loans with Osisko Gold Royalties and Glencore Canada to December 31, 2025.

How do these amendments affect the company's financial strategy?

These amendments provide additional financial flexibility and align with the strategic goals for developing the Horne 5 Project.

What are the new terms for the Osisko Loan?

The Osisko Loan will now have a principal of about $23.9 million, a conversion price of $0.45, and an interest rate of 9%.

Why is shareholder approval necessary?

Due to the related nature of these transactions, minority shareholder approval is required to comply with Canadian securities regulations.

What is the significance of the Horne 5 Project?

The Horne 5 Project holds historical interests and potential wealth in mineral resources that can greatly benefit Falco in the mining industry.

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