The loan bears interest at 7% per annum, compounded quarterly and matures on December 31.
The accrued interest will be payable upon repayment of the of the principal, which would become due when (and if) the $180 million silver streaming agreement with Osisko closes. Osisko currently holds about 12.7% of Falco.
Falco announced mid-June that Osisko intends to contribute capital under a silver streaming deal towards the estimated $802 million capital requirement to build the mine.
Falco and Osisko are currently finalising the stream transaction documentation, which they will then submit to Glencore Canada for consideration. This would trigger a 60-day period in which Glencore must consider its right of first refusal for the streaming deal.
Shareholders have approved the streaming transaction and a $7 million debenture by Osisko, which closed on June 29. The debenture would become convertible into 12.1 million units, comprising half a Falco share purchase warrant. Each whole warrant would allow Osisko to buy one additional Falco common share at a strike price of C75c apiece for 36 months from the date of issue.
On October 16, 2017, Falco announced the results of a positive feasibility study on Horne 5, which, based on price assumptions of US$1,300/oz for gold, US$19.50/oz for silver and US$3.00/lb copper, produced an after-tax net present value of $602 million (at a 5% discount rate) and an internal rate of return of 15.3%.
The 3.74-million-ounce gold project is expected to produce on average 235,000oz of gold over its estimated 15-year mine life, at top quartile all-in sustaining costs of $399/oz.
Falco's Toronto-quoted equity closed in the green Tuesday at C41.5c a share, having lost more than 52% since the start of the year, and giving the company a market value of about C$78.5 million.
