By Cory댊 Falco Announces $180 Million Silver Stream Transaction and Concurrent $7 Million Debenture With Osisko Gold Royalties
This is news that a lot of the market was waiting to hear from Falco. The Company continues to move down the development road for the Horne 5 Project. The close relationship the Company has to Osisko Gold Royalties has always been a positive factor and this news shows that the groups are together in getting this project into production.
I will be getting an update from the Falco later this week. Please email me with your questions – Fleck@kereport.com.
Click here to visit the Falco website.
…Here’s the news…
All dollar amounts are in Canadian dollars unless otherwise specified.
MONTREAL, June 18, 2018 (GLOBE NEWSWIRE) — Falco Resources Ltd. (TSXV:FPC) (“Falco” or the “Company”) is pleased to announce a financing transaction with Osisko Gold Royalties Ltd (TSX:OR) (NYSE:OR) (“Osisko”), pursuant to which Osisko has agreed to commit $180 million through a silver stream (the “Silver Stream Transaction”) toward the funding of the development of Falco’s Horne 5 Project (the “Project”).
Concurrent to the announcement of the Silver Stream Transaction, Falco is also announcing that Osisko shall purchase from Falco a secured debenture having a principal amount of $7,000,000 (the “Debenture Transaction”).
“We are pleased to announce this financing with Osisko. The funds will be instrumental 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. The partnership with Osisko and its cornerstone investment further demonstrates its commitment to supporting the next significant mine build in Québec, a leading mining jurisdiction,” stated Luc Lessard, President & CEO.
SILVER STREAM PURCHASE AGREEMENT:
Osisko has agreed to enter into a silver stream purchase agreement (the “Stream Agreement”), whereby Osisko will provide the Company with staged payments totaling $180 million, payable as follows:
- A first deposit of $25 million on closing of the Silver Stream Transaction, net of any amounts owing by the Company to Osisko;
- A second deposit of $20 million upon the Company receiving all necessary material third-party approvals, licenses, rights of way, and surface rights;
- A third deposit of $35 million following receipt of all material permits required for the construction of a mine on the Project, a positive construction decision for the Project, and raising a minimum of $100 million in equity, joint venture or any other non-debt financing for the construction of the mine;
- A fourth deposit of $60 million upon the total projected capital expenditure for the Project having been demonstrated to be financed; and
- An optional fifth deposit of $40 million at the sole election of Osisko to increase the stream percentage, payable concurrently with the fourth deposit.
Under the terms of the Stream Agreement, Osisko will purchase 90% of the payable silver from the Project, increasing to 100% of the payable silver from the Project in the event the optional fifth deposit is paid. In exchange for the silver delivered under the Stream Agreement, Osisko will pay the Company ongoing payments equal to 20% of the spot price of silver on the day of delivery, subject to a maximum payment of USD$6.00 per silver ounce. The silver produced from the Project and properties within a 5 km area of interest will be subject to the Silver Stream Transaction.
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 Special Committee of the board of directors of the Company has received a verbal opinion from Macquarie Capital Markets Canada Ltd.that the consideration to be received pursuant to the Stream Agreement is fair, from a financial point of view, to Falco.
Closing of the Silver Stream Transaction is anticipated to occur in September, 2018 and is subject to the satisfaction of customary conditions, including obtaining regulatory approvals and approval from a majority of the minority shareholders of Falco (the “Disinterested Shareholder Approval”).
Pursuant to an agreement between Falco and Glencore Canada Corporation (“Glencore”), the Silver Stream Transaction is subject to a right of first refusal in favor of Glencore. Following the execution of binding term sheets between Falco and Osisko, a formal notice was sent to Glencore. Glencore shall have a period of 60 days to notify Falco that it wishes to purchase the Stream Agreement in accordance with the terms described herein.
Advisors
Macquarie Capital Markets Canada Ltd. acted as financial advisors to the Special Committee of the board of directors of the Company and Cassels Brock & Blackwell LLP and Lavery, de Billy, LLP acted as legal counsel.
DEBENTURE:
Osisko shall purchase from Falco a secured debenture (the “Debenture”) having a principal amount of $7,000,000 (the “Principal”). Upon receipt of disinterested shareholder approval, the Debenture shall be convertible (the “Conversion”) into units of Falco (the “Units”). There will be no interest payable at any time on the outstanding Principal of the Debenture unless Falco fails to obtain disinterested shareholder approval for the Conversion, in which case interest shall accrue retroactively from the closing date of the Debenture Transaction at a rate per annum that is equal to 7%, compounded quarterly. Accrued interest shall be payable upon repayment of the Principal when due, as per the terms of the Debenture. The maturity date of the Debenture shall be the earlier of (i) the date of the meeting of the Falco shareholders to be held to obtain the disinterested shareholder approval and (ii) December 31st, 2018.
On the date upon which Falco obtains the disinterested shareholder approval from shareholders for the Conversion, the Debenture shall be converted into such number of Units of Falco that is equal to the Principal divided by a conversion price, as described below. The conversion price for the Debenture shall be the 10-day volume weighted average price (“VWAP”) of Falco’s shares on the TSX Venture Exchange (“TSXV”) on the date of announcement of the Debenture, provided that should such VWAP be lower than that implied …read more
From:: The Korelin Economic Report