Falco Resources Ltd. [FPC-TSXV; FPRGF-OTC] said Tuesday October 27 THAT it has agreed to issue a $10 million debenture to Glencore Canada Corp. and its affiliates to fund development at Falco’s flagship Horne 5 gold project in Rouyn-Noranda, Quebec.
Falco shares advanced on the news, rising 14% or $0.05 to 44.5 cents on active volume of 1.85 million. The shares currently trade in a 52-week range of 60 cents and 17 cents.
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 contain 6.0 million oz proven and probable gold equivalent reserves. Results of a feasibility study announced in October, 2017 envisages a 15-year mine life for Horne 5, producing an average of 219,000 oz gold annually at an all-in-sustaining cost of US$399/oz, net of by-product credits, including royalties. Pre-production construction costs have been estimated at $801.7 million. The feasibility study foresees full mine production by the first half of 2022.
Glencore has agreed to underwrite a $10 million senior secured convertible debenture bridge financing to fund on-going Horne 5 Project operations.
The convertible debenture has an initial term to maturity of 12 months with an interest a rate of 7% annually. It can be converted into shares of Falco within 10 days of the maturity date at Glencore’s sole option at a conversion price of 41 cents per share.
Falco has also issued to Glencore 12.2 million warrants exercisable for one share at an exercise price of up to 51 cents for up to 12 months. Under the terms of offtake agreements, Glencore will purchase from Falco the copper and zinc concentrate produced during the life of mine.