Falco poised to add $20 million to war chest

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Falco Resources Ltd. [FPC-TSXV] is raising $10 million from a bought deal private placement of 25 million units priced at 40 cents per unit. Net proceeds are earmarked for development of Falco’s flagship Horne 5 gold project in Rouyn-Noranda, Quebec

The company said each unit will consist of one common share of the company and one half of one common share purchase warrant. Each warrant will be exercisable for one common share until July 31, 2025, at an exercise price of 55 cents.

Certain key shareholders, including Osisko Development Corp. [ODV-TSXV] and Caisse de depot et placement du Quebec have indicated that they will participate in the offering, Falco said in a press release that came after the close of trading on July 28, 2021.

The expiry date of the warrants may be accelerated at any time after the sixth anniversary of the closing date of the offering if the volume weighted average trading price of the common shares on the TSX Venture Exchange is greater than 80 cents for any 10 consecutive trading days.

The underwriters have been granted a green shoe option to purchase up to an additional 15% of the offering. If that option is exercised in full, the aggregate proceeds to Falco will would be $11.5 million.

As well, Falco said it is in talks with one of its shareholders regarding a proposed non-brokered private placement of units on the same terms that would generate up to $5 million.

Also, Falco said it has received a commitment from Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE) for an advance of $10 million on the installments to be made by Osisko under its silver streaming agreement with Falco. Osisko has agreed to pay the stream advance on closing of the offering.

Falco shares advanced on the news, rising 2.5% or $0.01 to 41 cents in light trading. The shares currently trade in a 52-week range of 60 cents and 34 cents.

The financing news follows the announcement that Falco has entered an agreement in principle with Glencore Canada Corp. regarding the development of Falco’s flagship Horne 5 gold project and the operating license.

Falco said the agreement establishes the framework of the terms and conditions under which the two parties will enter into a principal operating license and indemnity agreement (the OLIA) in order to allow Falco to develop and operate the Horne 5 project.

That announcement came after Falco recently agreed to issue a $10 million debenture to Glencore Canada and its affiliates to fund development at Horne 5.

The Horne 5 deposit is located immediately below the former Horne mine, which was operated by the company previously known as Noranda from 1926 to 1976. Those operations produced approximately 2.5 billion pounds of copper and 11.6 million ounces of gold.

After merging with Falconbridge Ltd. in 2005, Noranda continued to operate under the Falconbridge name until it was acquired in 2006 by Swiss mining company Xstrata, which was acquired by Glencore PLc (also of Switzerland) in 2013.

The Horne 5 Project is estimated to contains 6.0 million ounces of proven and probable gold equivalent reserves


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