Osisko agrees to extend Falco loan; in talks to pick up Horne 5 stream

VANCOUVER (miningweekly.com) – Royalties and streaming firm Osisko Gold Royalties has entered innto negotiations with Abitibi-focused explorer Falco Resources on a precious metals streaming agreement for its Horne 5 project, following Osisko agreeing to extend a loan.

TSX-V-listed Falco reported that Osisko has agreed to extend a C$10-million loan made to Falco in May 2016 by six months to May 31, 2018.

Under the terms of the loan agreement, Falco and Osisko will negotiate in good faith the terms, conditions and form of a silver and/or gold stream agreement, typically found in the market, whereby Osisko can provide Falco with a portion of the development capital required to build the Horne 5 project. In that case, the principal amount of the loan and any accrued interest will be applied against the stream deposit.

At the extended maturity date, if Falco and Osisko have not yet concluded a stream agreement, the principal amount of the loan will be converted into a 1% net smelter return royalty on the Horne 5 project and accrued interests will be paid in cash.

Under certain events of default, Osisko may, at its option, require the repayment of the principal amount and the accrued interest in cash.

According to Falco, the Horne 5 deposit sits immediately below the former producing Horne mine, in Rouyn-Noranda, Quebec, which was operated by Noranda from 1926 to 1976 and produced about 2.5-billion pounds of copper and 11.6-million ounces of gold.

Falco announced a maiden National Instrument 43-101-compliant resource estimate for the Horne 5 deposit on March 4, 2014, followed by an updated resource estimate in October 2016. The measured resource now holds 736 000 oz of gold equivalent, including 475 410 oz gold contained in 9.4-million tonnes averaging 2.45 g/t gold equivalent grading 1.58 g/t gold, 16.33 g/t silver, 0.18% copper and 0.81% zinc.

The indicated resource stands at 6.34-million gold-equivalent ounces, including 4.09-million ounces of gold contained in 81.7-million tonnes averaging 2.41 g/t gold equivalent, made up of 1.56 g/t gold, 14.19 g/t silver, 0.18% copper and 0.86% zinc. The inferred resource stands at 1.71-million ounces of gold equivalent, including 1.05-million ounces gold, held in 22.3-million tonnes averaging 2.39 g/t gold equivalent, comprising 1.47 g/t gold, 22.98 g/t silver, 0.2% copper and 0.68% zinc.