Glencore will purchase copper and zinc concentrate produced by Falco for the life of Horne 5, currently estimated at 15 years, on terms comparable with October 2017 feasibility study assumptions. The concentrate will be processed at Glencore's Horne smelter adjacent to Horne 5.
Securing processing for Horne 5 concentrates at Glencore's Horne smelter was considered one of the key milestones Falco had to achieve to take Horne 5 forward.
Glencore will provide US$10 million to Falco via a 12-month senior secured convertible debenture bearing 7% interest and convertible at Glencore's sole option at C41c per share. Falco also issued Glencore 12.2 million one-year warrants exercisable at C51c.
The funds will be used for technical work, studies and modelling necessary to continue to reduce project risks, resolve technical and other challenges, and identify additional synergies.
"The Horne 5 project will benefit from Glencore's renowned expertise in processing base metal concentrates and metals marketing. The processing of Horne 5 copper concentrate at Glencore's Horne Smelter will also add to the local economic benefits generated by the Horne 5 project," said Falco president and CEO, Luc Lessard.
"While there remains significant work to be done and challenges to be addressed, Glencore Canada is committed to working with all stakeholders towards creating the winning conditions necessary for the further development of the Horne 5 project and of the fully integrated copper industry in Quebec," said Marc Bedard, Glencore global head of copper metallurgical operations.
Falco and Glencore have agreed to a detailed work plan, to be managed by Falco, with the goal of working towards a principal operating licence and indemnity agreement.
Falco management is updating the project financials and economic analysis, and the timeline of the Horne 5 Project development.
In June 2018, Falco announced a C$180 million silver stream deal with Osisko Gold Royalties to help fund the Horne 5 development under which Osisko will buy 90% of Horne 5's payable silver.
Horne 5 is expected to produce 219,000 ounces of gold a year along with a life-of-mine 1 billion pounds of zinc, 229Mlb of copper and 26.83Moz of silver, after pre-production capex close to US$802 million.
Shares in Falco Resources are trading at 40c, valuing the company at $82 million.