Falco Resources Ltd. — Annual Report 2020

Feb 17, 2021

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FALCO RESOURCES LTD.

ANNUAL INFORMATION FORM FOR THE FISCAL YEAR ENDED JUNE 30, 2020

DATED AS OF FEBRUARY 16, 2021

TABLE OF CONTENTS

GLOSSARY OF TERMS ............................................................................................................................. 3 GENERAL MATTERS ................................................................................................................................. 8 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS ............................... 8 EXCHANGE RATE DATA ......................................................................................................................... 10 CORPORATE STRUCTURE ..................................................................................................................... 10 DESCRIPTION OF BUSINESS ................................................................................................................. 10 GENERAL DEVELOPMENT OF BUSINESS ............................................................................................ 11 MATERIAL MINERAL PROJECT - HORNE 5 PROJECT ........................................................................ 17 RISK FACTORS ........................................................................................................................................ 50 DIVIDENDS ................................................................................................................................................ 57 DESCRIPTION OF CAPITAL STRUCTURE ............................................................................................. 57 MARKET FOR SECURITIES..................................................................................................................... 58 DIRECTORS AND OFFICERS .................................................................................................................. 60 LEGAL PROCEEDINGS AND REGULATORY ACTIONS ....................................................................... 66 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ................................. 66 TRANSFER AGENTS AND REGISTRARS .............................................................................................. 67 MATERIAL CONTRACTS ......................................................................................................................... 67 INTERESTS OF EXPERTS ....................................................................................................................... 68 ADDITIONAL INFORMATION................................................................................................................... 68 AUDIT COMMITTEE .................................................................................................................................. 69

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GLOSSARY OF TERMS

In this Annual Information Form, the following capitalized words and terms shall have the following meanings:

“ 2016 Loan ” means the $10 million senior note dated May 30, 2016 between Falco and Osisko, as amended on November 29, 2017, June 1, 2018 and December 19, 2018, the principal amount of which was reimbursed to Osisko, and interest thereunder settled, by Falco on February 27, 2019. See “General Development of Business - Fiscal Year Ended June 30, 2019 - Closing of Silver Stream Transaction”.

“ 2018 Loan ” means the $10 million senior secured loan agreement between Falco and Osisko dated September 10, 2018, as amended on December 19, 2018, the principal amount of which was reimbursed to Osisko, and interest thereunder settled, by Falco, on February 27, 2019. See “General Development of Business - Fiscal Year Ended June 30, 2019 - Closing of Silver Stream Transaction”.

“ 2019 Loan ” means the $10 million senior secured loan agreement dated February 22, 2019 between Falco and Osisko, as more particularly described under the heading “General Development of Business - Fiscal Year Ended June 30, 2019 - $10 Million Loan with Osisko Gold Royalties Ltd (2019)”.

“ 43-101 ” means National Instrument 43-101 - Standards of Disclosure for Mineral Projects (Regulation 43101 respecting Standards of Disclosure for Mineral Projects in the Province of Québec).

“ 51-102 ” means National Instrument 51-102 - Continuous Disclosure Obligations (Regulation 51-102 respecting Continuous Disclosure Obligations in the Province of Québec).

“ affiliate ” means, with respect to any person, any other person that controls or is controlled by or is under common control with the referent person.

“ Ag ” is the chemical symbol for silver.

“ AIF ” means this annual information form.

“ Amended 2019 Loan ” has the meaning ascribed under the heading “General Development of Business - Fiscal Year Ended June 30, 2020 - Amendments to the 2019 Loan”.

“ Applicable Law ” means (a) any applicable domestic or foreign law including any statute, subordinate legislation or treaty; and (b) any applicable guideline, directive, rule, standard, requirement, policy, order, judgment, injunction, award or decree of a Governmental Authority having the force of law.

“ associate ” has the meaning ascribed to such term in the Securities Act (Québec).

“ Au ” is the chemical symbol for gold.

“ AuEq ” means gold equivalent.

“ BAPE ” means the Bureau des audiences publiques sur l’environnement .

“ BBA ” means BBA Inc.

“ BCBCA ” means the Business Corporations Act (British Columbia).

“ CAPEX ” means capital expenditures.

“ CBCA ” means the Canada Business Corporations Act.

“ Central Camp ” has the meaning ascribed under the heading “Material Mineral Project - Horne 5 Project”.

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“ Centre Polymétier ” means the Centre de Formation Professionnelle Polymétier (Quemont) .

“ cfm ” means cubic feet per minute.

“ CIL ” means carbon-in-leach.

“ CIM ” means the Canadian Institute of Mining, Metallurgy and Petroleum.

“ CIP ” means carbon-in-pulp.

“ Concession 156PTB ” means mining concession CM-156PTB underneath which lies the Horne 5 deposit.

“ Concession 243 ” means mining concession 243 on which is located the Quemont No. 2 shaft.

“ Consultation Committee ” has the meaning ascribed under the heading “Material Mineral Project – Horne 5 Project - Recent Exploration and Development Activities”.

“ Cu ” is the chemical symbol for copper.

“ DDH ” means diamond drill hole.

“ Falco ” or the “ Corporation ” means Falco Resources Ltd./Ressources Falco Ltée (which from March 16, 2010 to September 21, 2012 was named Druk Capital Partners Inc. and from September 21, 2012 to July 24, 2014 was named Falco Pacific Resource Group Inc.).

“ Falco Board ” means the board of directors of Falco, as the same is constituted from time to time.

“ Falco Long-Term Incentive Plan ” means the long-term incentive plan of Falco.

“ Falco Options ” means the outstanding options to purchase Falco Shares granted under the Falco LongTerm Incentive Plan.

“ Falco Share ” means a common share in the share capital of Falco.

“ Falco Shareholders ” means the holders of Falco Shares.

“ Falco Warrants ” means common share purchase warrants of Falco.

“ Feasibility Study ” means the 43-101 technical report filed on SEDAR entitled “ Feasibility Study Horne 5 Gold Project, Rouyn-Noranda, Québec, Canada ” with an effective date of October 5, 2017 and a signature date of October 30, 2017.

“ forward-looking statements ” means “forward-looking information” within the meaning of applicable Canadian securities laws.

“ G&A ” means general and administration expenses.

“ GEMS ” means Geovia GEMS software.

“ Glencore ” means, Glencore Canada Corporation (the owner of, among other mining and concession rights, Concession 243 and Concession 156PTB) and, as applicable, its affiliated companies.

“ Glencore Convertible Debenture ” has the meaning ascribed under the heading “General Development of Business - Events Subsequent to June 30, 2020 Fiscal Year End - $10 Million Convertible Debenture Financing and Life of Mine Concentrate Offtakes with Glencore Canada Corporation”.

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“ Glencore Offtake Agreements ” has the meaning ascribed under the heading “General Development of Business - Events Subsequent to June 30, 2020 Fiscal Year End - $10 Million Convertible Debenture Financing and Life of Mine Concentrate Offtakes with Glencore Canada Corporation”.

“ Glencore Maturity Date ” has the meaning ascribed under the heading “General Development of Business - Events Subsequent to June 30, 2020 Fiscal Year End - $10 Million Convertible Debenture Financing and Life of Mine Concentrate Offtakes with Glencore Canada Corporation”.

“ Globex ” means Globex Mining Enterprises Inc.

“ Golden Queen ” means Golden Queen Mining Consolidated Ltd.

“ Golden Queen Arrangement ” has the meaning ascribed under the heading “General Development of Business - Fiscal Year ended June 30, 2020 - Acquisition of Golden Queen Mining Consolidated Ltd.”.

“ Golden Queen Arrangement Agreement ” means the arrangement agreement dated February 10, 2020 between Falco and Golden Queen.

“ Golden Queen Shares ” means common shares in the share capital of Golden Queen.

“ Golden Queen Shareholders ” means the holders of Golden Queen Shares.

“ Golder ” means Golder Associates Ltd.

“ Governmental Authority ” means any legislative, executive, judicial or administrative body or person having or purporting to have jurisdiction in the relevant circumstances.

“ g/t ” means gram per metric tonne.

“ HDS ” means high density sludge.

“ Horne 5 Project ” means the project described under the heading “Material Mineral Project - Horne 5 Project” and Falco’s material mineral project for the purposes of 43-101.

“ hp ” means horsepower.

“ ID[2] ” means inverse distance square interpolation.

“ IFRS ” means International Financial Reporting Standards adopted by the International Accounting Standards Board, as updated and amended from time to time.

“ Indicated Mineral Resource ” means that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.

“ Inferred Mineral Resources ” means that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity.

“ InnovExplo ” means InnovExplo Inc.

“ IRR ” means internal rate of return.

“ IT ” means information technology.

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“ kg ” means kilogram.

“ km ” means kilometre.

“ LHD ” means load haul dump vehicle.

“ Loan Extension ” has the meaning ascribed under “General Development of Business - Events Subsequent to June 30, 2020 Fiscal Year End - Extension of Maturity of the Amended 2019 Loan and Amendment to the Stream Agreement”.

“ LOM ” means life of mine.

“ m ” means metre.

“ mm ” means millimetre.

“ m[3] ” means cubic metre.

“ Management and Technical Services Agreement ” means the management and technical services agreement made as of July 1[st] , 2016 with effect as of January 1[st] , 2016 between Osisko and Falco.

“ MELCC ” means the ministère de l’Environnement et de la lutte contre les changements climatiques (Québec).

“ Mt ” means million metric tonne.

“ MVA ” means mega volt ampere.

“ MW ” means megawatt.

“ Measured Mineral Resource ” means that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit.

“ Mineral Reserve ” means the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.

“ Mineral Resource ” means a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.

“ Modifying Factors ” are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.

“ Noranda ” means Noranda Inc.

“ Noranda Camp ” has the meaning ascribed under the heading “Material Mineral Project - Horne 5 Project”.

“ November 2016 MRE ” has the meaning ascribed under the heading “Material Mineral Project - Horne 5 Project”.

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“ NPV ” means net present value.

“ NSR ” means net smelter return.

“ October 2017 MRE ” has the meaning ascribed under the heading “Material Mineral Project - Horne 5 Project”.

“ OMC ” means Osisko Mining Corporation.

“ OPEX ” means operational expenditures.

“ Osisko ” means Osisko Gold Royalties Ltd.

“ Osisko Convertible Loan ” means the senior secured convertible loan described under the headings “General Development of Business - Events Subsequent to June 30, 2020 Fiscal Year End - Extension of Maturity of the Amended 2019 Loan and Amendment to the Stream Agreement”.

“ Osisko Debenture ” means the secured debenture having a principal amount of $7,000,000 issued by Falco to Osisko and described under the heading “General Development of Business - Fiscal Year Ended June 30, 2019 - Closing of $7 Million Financing with Osisko Gold Royalties Ltd”.

“ Osisko Development ” means Osisko Development Corp. (formerly Barolo Ventures Corp.).

“ Osisko Development Investor Rights Agreement ” means the investors rights agreement dated November 27, 2020 between Osisko Development and Falco.

“ Osisko Investor Rights Agreement ” means the investors rights agreement dated November 27, 2020 between Osisko Development and Falco.

“ oz ” means ounce.

“ PEA ” means the 43-101 technical report entitled “ Preliminary Economic Assessment of the Horne 5 Project ” with an effective date of April 28, 2016 and a signature date of June 23, 2016.

“ PCT ” means pyrite concentrate tailings.

“ PFT ” means pyrite flotation tailings.

“ Py ” means pyrite.

“ QA/QC ” means quality assurance/quality control.

“ QMX ” means QMX Gold Corporation (which, prior to June 13, 2012, was named Alexis Minerals Corporation).

“ qualified person ” has the meaning ascribed to such term in 43-101.

“ RIVVAL ” means Ingéniérie RIVVAL Inc.

“ SAG ” means Semi-autogenous grinding.

“ SEDAR ” means the System for Electronic Document Analysis and Retrieval.

“ Silver Stream Transaction ” has the meaning ascribed under the heading “General Development of Business - Fiscal Year Ended June 30, 2019 - Closing of Silver Stream Transaction”.

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“ SNC-Lavalin ” means SNC-Lavalin Stavibel Inc.

“ Stream Agreement ” has the meaning ascribed under the heading “General Development of Business - Fiscal Year Ended June 30, 2019 - Closing of Silver Stream Transaction”.

“ t ” means metric tonne.

“ TMF ” means tailings management facility.

“ tpd ” means metric tonnes per day.

“ TSX-V ” means the TSX Venture Exchange.

“ V ” means volt.

“ VOD ” means ventilation on demand.

“ VMS ” means volcanogenic massive sulphide.

“ Work Plan ” has the meaning ascribed under the heading “Events Subsequent to June 30, 2020 Fiscal Year End - $10 Million Convertible Debenture Financing and Life of Mine Concentrate Offtakes with Glencore Canada Corporation”.

“ WGC ” means the World Gold Council.

“ WSP ” means WSP Canada Inc.

“ Zn ” is the chemical symbol for zinc.

GENERAL MATTERS

Unless otherwise indicated, the information contained in this AIF, is given as of February 16, 2021, unless otherwise indicated. More current information may be available on Falco’s website at www.falcores.com or on SEDAR at www.sedar.com.

All capitalized terms used in this AIF and not defined herein have the meaning ascribed to such terms in the “Glossary of Terms” or elsewhere in this AIF.

For reporting purposes, Falco presents its financial statements in Canadian dollars and in conformity with IFRS.

Unless otherwise indicated herein, references to “$”, “C$” or “Canadian dollars” refer to Canadian dollars, and references to “US$” or “U.S. dollars” refer to United States dollars. See “General Matters - Exchange Rate Data”. See also “Cautionary Statement Regarding Forward-Looking Statements”.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Except for the statements of historical fact contained herein, certain information presented in this AIF constitutes forward-looking statements concerning the business, operations, plans and financial performance and condition of Falco. Often, but not always, forward-looking statements can be identified by words such as “plans”, “expects”, “may”, “should”, “could”, “will”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes”, or variations including negative variations thereof of such words and phrases that refer to certain actions, events or results that may, could, would, might or will occur or be taken or achieved. These statements are made as of the date of this AIF and Falco does not plan to

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update such forward-looking statements for subsequent developments, except as required by applicable securities laws.

These forward-looking statements include, among others, statements with respect to Falco’s objectives for the ensuing years, its medium and long-term goals and strategies to achieve those objectives and goals, the development of the Horne 5 Project, the timing for such development, receipt of relevant permitting from governmental entities and execution of operating license and indemnity agreement with Glencore, the potential revenues to be generated by the Horne 5 Project, the expected net present value and internal rate of return of the Horne 5 Project, the anticipated production from the Horne 5 Project, and estimated capital and operating costs for the Horne 5 Project, as well as statements with respect to its beliefs, plans, objectives, expectations, anticipations, estimates and intentions. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual plans, results, performance or achievements of Falco to differ materially from any future plans, results, performance or achievements expressed or implied by the forward-looking statements.

Such factors include, among others: (a) inability to raise funds on terms satisfactory to Falco; (b) inability in completing negotiations to enter into an operating license and indemnity agreement with Glencore and to provide a performance bond and ancillary insurance and assurances; (c) mineral resources and exploration targets; (d) inability to successfully complete development projects, planned expansions or other projects within the timelines anticipated; (e) the amount of future production over any period; (f) NPV and IRR; (g) assumptions relating to the recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the Feasibility Study; (h) assumptions relating to the gross revenues, operating cash flows and other revenue metrics set out in the Feasibility Study; (i) mine expansion potential and expected mine life; (j) expected time frame for completion of permitting and regulatory approvals and required third parties’ approvals; (k) expected time frame for the completion of the mine; (l) expected time frame for the completion of construction, start of mining and commercial production and the financial obligations and costs incurred in connection with such mine development; (m) future exploration plans; (n) sources and conditions of and anticipated financing requirements; (o) total cash, transaction costs, and administrative costs differing materially from those anticipated; (p) risks related to partnership or other joint operations; (q) actual results of exploration activities; (r) variations in mineral resources, mineral production, grades or recovery rates or optimization efforts and sales; (s) uninsured risks; (t) regulatory changes; (u) defects in title; (v) availability or integration of personnel, materials and equipment; (w) performance of facilities, equipment and processes relative to specifications and expectations; (x) unanticipated environmental impacts on operations; (y) market prices; (z) fluctuations in gold, silver and other metal prices and currency exchange rates; (aa) production, construction and technological risks; (bb) capital requirements and operating risks associated with the operations or an expansion of the operations; (cc) uncertainty relating to future production and cash resources; (dd) adverse changes to market, political and general economic conditions or laws, rules and regulations; (ee) changes in project parameters; (ff) the possibility of project cost overruns or unanticipated costs and expenses; (gg) accidents, labour disputes, community and stakeholder protests and other risks of the mining industry; (hh) failure of plant, equipment or processes to operate as anticipated; (ii) the foreign exchange rate between the US dollar and the Canadian dollar; (jj) risk of an undiscovered defect in title or other adverse claim; (kk) factors discussed under the heading “Risk Factors”; and (ll) those risks set forth in Falco’s continuous disclosure documents filed on SEDAR at www.sedar.com.

In addition, statements (including data in tables) relating to Mineral Resources and gold equivalent ounces are forward looking-statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates will be realized.

Although Falco has attempted to identify important factors that could cause actual plans, actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause plans, actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual plans, results and future

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events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

EXCHANGE RATE DATA

The following table sets forth the high and low exchange rates for one U.S. dollar expressed in Canadian dollars for each period indicated, the average of the exchange rates for each period indicated and the exchange rate at the end of each such period, as provided by the Bank of Canada.

High Low Rate at end of period Average rate for period	Year Ended June 30	Year Ended June 30	Year Ended June 30
	2020 (C$) 1.450 1.297 1.363 1.343	2019 (C$) 1.364 1.280 1.309 1.324	2018
			(C$) 1.331 1.213 1.317 1.270

On February 16, 2021, the exchange rate for one U.S. dollar expressed in Canadian dollars as reported by the Bank of Canada, was C$1.2684.

CORPORATE STRUCTURE

Name, Address and Incorporation

The Corporation was incorporated on March 16, 2010 under the BCBCA under the name Druk Capital Partners Inc. On September 21, 2012, the Corporation changed its name to Falco Pacific Resources Group Inc. On July 24, 2014, the Corporation changed its name to Falco Resources Ltd. On June 15, 2015, the Corporation was continued under the CBCA. A certificate of amendment was issued on November 24, 2017 to include the French form of its name, namely “Ressources Falco Ltée”.

Falco is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland.

The Falco Shares trade under the ticker symbol “FPC” on the TSX-V.

As of February 16, 2021, Osisko Development held 18.25% of the issued and outstanding Falco Shares and Osisko held 77.03% of the issued and outstanding shares of Osisko Development.

Falco’s head and registered office is located at 1100 avenue des Canadiens-de-Montréal, Suite 300, Montreal, Québec H3B 2S2. A project office is located at 161, avenue Murdoch, Rouyn-Noranda, Québec J9X 1E3.

DESCRIPTION OF BUSINESS

Falco is an exploration and development stage company in the business of acquiring, exploring and developing mineral properties in Canada. Falco’s focus is on the exploration and development of its mineral properties in the Rouyn-Noranda region of the Province of Québec for base and precious metals, mainly on its wholly-owned Horne 5 polymetallic deposit

Falco’s activities began in September 2012 following its acquisition of QMX’s rights and interests in a group of properties located in one of Canada’s most established mining districts, the Rouyn-Noranda mining camp, which has the necessary infrastructure (electricity, rail, water, etc.) in place for exploration and mine development.

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Falco is one of the largest claim holders in the Province of Québec, with extensive land holdings in the Abitibi Greenstone Belt. Falco owns mining claims and contractual rights in or in relation to mining concessions covering an aggregate of 70,619.51 hectares of land in the Rouyn-Noranda mining camp.

Rouyn-Noranda has a long history of mining and exploration. Since the Horne deposit discovery in the 1920’s, the area has been host to 50 former-producers, including 20 base metal mines and 30 gold mines. A number of copper-zinc VMS deposits in the mining camp contained gold grades well in excess of those associated with typical VMS deposits, which along with several mesothermal vein type deposits have accounted for more than 19 million ounces of historic gold production from the mining camp as a whole.

Falco acquired an extensive database accumulated by the former owners, consisting of detailed GoCad 3D computerized models of area geology, mine infrastructure, geophysics and lithogeochemistry, as well as results from over four million metres of surface and underground drilling.

On October 30, 2017, Falco filed the Feasibility Study which indicated that the Horne 5 Project represented a robust, high margin, fifteen-year underground mining project with attractive economics. Falco has determined that the technical feasibility and commercial viability of the Horne 5 Project had been established and accordingly, the development phase of the Horne 5 Project had commenced.

Falco believes that the realized project would have a significant impact on the Abitibi-Témiscamingue region with the potential of generating over $6.6 billion of gross revenue. A construction workforce of up to 900 people would be required at the peak of the Horne 5 Project’s 18-month construction period and the operating mine would provide direct employment for approximately 500 people over its 15-year operating life.

Falco considers the Horne 5 Project to be its only material mineral project for the purposes of 43-101.

For further details regarding the Horne 5 Project, please refer to the Feasibility Study and the section in this AIF entitled “Material Mineral Project - Horne 5 Project”.

GENERAL DEVELOPMENT OF BUSINESS

Events Subsequent to June 30, 2020 Fiscal Year End

Update on the on-going collaborative work program with Glencore

On February 12, 2021, Falco announced that significant progress has been made on the previously announced Work Plan (as hereinafter defined) with Glencore. On October 27, 2020, Falco announced that the Work Plan would include additional technical work, modelling and studies towards the further identification, mitigation and allocation of risks at its flagship Horne 5 Project, located in Rouyn-Noranda, Québec. The goal of the Work Plan is to allow the two parties to negotiate towards a Principal Operating License and Indemnity Agreement, which would allow the commencement of dewatering phase.

Falco also announced that, with the collaboration of a number of industry-recognized consulting firms, it is currently preparing an updated Feasibility Study, in accordance with 43-101 for the Horne 5 Project. The updated Feasibility Study, which is expected to be issued in March 2021, will include project economic analysis and the schedule for the Horne 5 Project.

Subsequent to the release of the updated feasibility study, Falco will be working with its financial advisors and partners to secure the additional financing to fund the development of the Horne 5 Project.

Extension of Maturity Date of the Amended 2019 Loan and Amendment to the Stream Agreement

On November 27, 2020, Osisko and Falco closed an amended and restated convertible secured loan agreement to extend the maturity date of the Amended 2019 Loan from December 31, 2020 to December 31, 2022 (the “ Loan Extension ”). In consideration for the Loan Extension, Falco agreed to

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issue to Osisko 10,664,324 Falco Warrants, each exercisable for one (1) Falco Share at an exercise price of $0.69 for a period of 24 months. The terms of the Falco Warrants provide for a cashless exercise feature. The Amended 2019 Loan was also amended to become convertible, at Osisko’s sole option, at any time from November 27, 2021 to December 31, 2022 into Falco Shares at a conversion price of $0.55 per share, subject to standard anti-dilution protections (the “ Osisko Convertible Loan ”). Together with capitalized interest, the principal amount outstanding as of November 17, 2020 was $17,596,136. For further information, see “General Development of Business - Fiscal Year Ended June 30, 2020 - Amendments to the 2019 Loan” and “General Development of Business - Fiscal Year Ended June 30, 2019 - $10 Million Loan with Osisko Gold Royalties Ltd (2019)”.

On November 27, 2020, Osisko and Falco also entered into an amendment agreement to the Stream Agreement in order to postpone by one (1) year certain deadlines granted to Falco to achieve milestones set as conditions precedent to Osisko funding the stream deposit.

Launch of Osisko Development Corp.

On November 25, 2020, Osisko and Osisko Development completed a spin-out transaction, which resulted in, among other things, Osisko transferring certain mining properties and a portfolio of marketable securities (through the transfer of the entities that directly or indirectly own such mining properties and marketable securities) to Osisko Development. In connection with this transaction, Osisko transferred to Osisko Development 41,385,240 Falco Shares and 6,052,222 Falco Warrants.

$10 Million Convertible Debenture Financing and Life of Mine Concentrate Offtakes with Glencore Canada Corporation

On October 27, 2020, Falco entered into agreements with Glencore related to the Horne 5 Project. The agreements with Glencore include a $10 million senior secured convertible debenture (the “ Glencore Convertible Debenture ”) bridge financing to fund the continued advancement of the Horne 5 Project and life of mine copper and zinc concentrate offtake agreements (the “ Glencore Offtake Agreements ”).

Convertible Debenture Financing

Glencore agreed to underwrite a $10 million senior secured convertible debenture bridge financing to fund a work plan, to be managed by Falco, for additional geotechnical work and analysis of the risks associated with the development of the Horne 5 Project, including technical work, studies and modelling necessary to continue to further investigate and mitigate geotechnical and other technical risks (including risks to Glencore’s Horne Smelter), resolve technical and other challenges and identify additional synergies, all with a goal of working towards a principal operating license and indemnity agreement between Falco and Glencore (the “ Work Plan ”). The Work Plan was developed in collaboration with Glencore.

The Glencore Convertible Debenture has an initial term to maturity of 12 months (the “ Glencore Maturity Date ”) and bears interest at a rate of 7% per annum, compounded quarterly. Accrued interest will be capitalized quarterly by adding the interest to the principal of the Glencore Convertible Debenture, unless Falco elects at its sole discretion to settle in cash any accrued interest. To the extent that Falco and Glencore agree that progress continues to be made towards the negotiation of a principal operating license and indemnity agreement and additional time is necessary, Falco has the right to extend the Glencore Maturity Date by an additional six (6) months.

The Glencore Convertible Debenture can be converted into Falco Shares within 10 days of the Glencore Maturity Date or on the Glencore Maturity Date at Glencore’s sole option at a conversion price of $0.41 per Falco Share.

Falco also issued to Glencore 12,195,122 Falco Warrants. Each warrant is exercisable for one (1) Falco Share at an exercise price of $0.51 up to 12 months from the date of issuance of the warrants. The terms of the warrants provide for a cashless exercise feature, under which the number of Falco Shares to be issued will be based on the number of Falco Shares for which warrants are exercised multiplied by the

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difference between the market price of a Falco Share and the exercise price divided by the market price at the time of the exercise. Glencore may utilize the cashless exercise feature in its sole discretion.

The Glencore Convertible Debenture is secured by first ranking security on all assets owned by Falco. Glencore will release the security upon the settlement of the Glencore Convertible Debenture and the repayment of interest.

So long as Glencore owns (or is deemed to own) a minimum equity interest of 5% in Falco, it will have the right to maintain its pro-rata interest in Falco by participating in equity financings and other dilutive instruments.

Offtake Agreements

Under the terms of the Glencore Offtake Agreements, Glencore will purchase from Falco the copper and zinc concentrate produced during the life of mine of the Horne 5 Project, which is currently estimated at 15 years. Terms were negotiated on an arms’ length basis and are comparable to the assumptions included in the Feasibility Study.

The copper concentrate will be processed at Glencore’s Horne Smelter located adjacent to the Horne 5 Project.

Appointment of Mr. Benoit Brunet to the Falco Board

On July 23, 2020, Falco announced the appointment of Mr. Benoit Brunet to the Falco Board.

Fiscal Year ended June 30, 2020

Investor Relations Services Agreement with Hinge Markets Inc.

On June 15, 2020, Falco retained the services of Hinge Markets Inc. to initiate and maintain contact with the financial community including shareholders, investors and other stakeholders for the purpose of increasing awareness of Falco and its activities. Hinge Markets Inc. was granted an option to acquire 100,000 Falco Share at a price of $0.30 per share. The options have a five-year term and will vest over a twelve-month period, in accordance with the Falco Long-Term Incentive Plan.

Acquisition of Golden Queen Mining Consolidated Ltd.

On February 10, 2020, Falco and Golden Queen entered into a definitive arrangement agreement (the “ Golden Queen Arrangement Agreement ”) pursuant to which Falco has agreed to acquire all of the issued and outstanding Golden Queen Shares by way of a statutory plan of arrangement under the BCBCA (the “ Golden Queen Arrangement ”). Under the terms of the Golden Queen Arrangement Agreement, the Golden Queen Shareholders were entitled to receive 1.18 Falco Shares in exchange for each Golden Queen Share held immediately prior to the effective time of the Golden Queen Arrangement.

On March 19, 2020, Falco increased the consideration offered to the Golden Queen Shareholders with an exchange ratio of 1.35 Falco Share for each Golden Queen Share held immediately prior to the effective time of the Golden Queen Arrangement. Golden Queen Shareholders representing 19% of the issued and outstanding Golden Queen Shares have entered into voting and support agreements in favour of the Golden Queen Arrangement. All other terms of the Golden Queen Arrangement remained unchanged.

On March 24, 2020, the Golden Queen Arrangement was approved by 99.64% of the votes cast by Golden Queen Shareholders.

On March 26, 2020, the Supreme Court of British Columbia granted a final order approving the Golden Queen Arrangement.

On March 27, 2020, the Golden Queen Arrangement closed. Golden Queen’s sole asset was a net cash balance estimated at approximately $4.2 million at closing of the Golden Queen Arrangement.

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Amendment to the Stream Agreement

On January 31, 2020, Falco and Osisko agreed to amend the Stream Agreement whereby Osisko agreed to postpone by one (1) year each of the deadlines granted to Falco to achieve milestones set as condition precedent to Osisko funding the stream deposit and certain other deadlines.

Amendments to the 2019 Loan

On November 22, 2019, Falco and Osisko agreed to amend the 2019 Loan by increasing the principal amount by $5.9 million from $10 million to $15.9 million and extending the maturity date from December 31, 2019 to December 31, 2020. As part of the amendment to the 2019 Loan (the “ Amended 2019 Loan ”), Osisko was entitled to withhold and set-off from the increased principal amount a sum of $0.9 million representing the current accounts payable owing to Osisko by Falco, so that on a net basis, Osisko made an amount of $5 million available to Falco for withdrawal. Under the terms of the Amended 2019 Loan, interest shall be payable on the principal amount at a rate per annum that is equal to 7%, compounded quarterly.

Fiscal Year ended June 30, 2019

Resignation of Sean Roosen

On March 20, 2019, Falco announced the resignation of Mr. Sean Roosen as a director and as Chair of the Falco Board. Mr. Bryan Coates has since been assuming the position of Chair of the Board of Falco.

Closing of Silver Stream Transaction with Osisko Gold Royalties Ltd

On February 27, 2019, Falco announced the closing of a silver stream transaction with Osisko pursuant to which Osisko has agreed to commit up to $180 million through a silver stream toward the funding of the development of the Horne 5 Project.

Osisko has agreed to commit up to $180 million payable as follows:

• $25 million on closing, net of any amounts owing by Falco to Osisko, including the repayment of the principal amounts under the 2016 Loan ($10 million) and of the 2018 Loan ($10 million);

• $20 million upon Falco receiving all necessary material third-party approvals, licenses, right of ways, and surface rights;

• $35 million following receipt of all material permits required for the construction of a mine on the Horne 5 Project, a positive construction decision for the Horne 5 Project, and raising a minimum of $100 million in equity, joint venture or any other non-debt financing for the construction of the mine;

• $60 million once the total projected capital expenditure for the Horne 5 Project has been demonstrated to be financed; and

• An optional payment of $40 million at the sole discretion of Osisko to increase stream percentage from 90% to 100%.

(the “ Silver Stream Transaction ”).

Under the terms of the Silver Purchase Agreement dated February 27, 2019 between Falco and Osisko (the “ Stream Agreement ”), Osisko will purchase up to 100% of the refined silver from the Horne 5 Project. In exchange for the refined silver delivered under the Stream Agreement, Osisko will pay Falco ongoing payments equal to 20% of the spot price of silver on the day of delivery, subject to a maximum payment of US$6 per silver ounce.

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Pursuant to the Stream Agreement, Falco has agreed to pay a $2 million capital commitment fee payable upon Osisko funding the third deposit under the Stream Agreement.

The Silver Stream Transaction was subject to a right of first refusal in favor of Glencore, which right was not exercised. In addition, Glencore agreed to subordinate certain security interests in accordance with its obligations pursuant to its existing security interests in Falco’s assets. Glencore remains the owner of an off-take option to purchase production from the Horne 5 Project. BaseCore Metals LP owns a 2% NSR royalty on the Horne 5 Project and has agreed upon security interests in respect of Falco’s assets as part of the Silver Stream Transaction. Osisko’s interest in the Stream Agreement is also secured by the assets of Falco.

Falco and Osisko have also reached an agreement to settle interest owed under the 2016 Loan and the 2018 Loan through the issuance of Falco Shares. The principal amount of each of the 2016 Loan and 2018 Loan was reimbursed with the first instalment under the Stream Agreement and the interest owed under such loans was paid through the issuance of 5,353,791 Falco Shares at a deemed price of $0.34 per share.

$10 Million Loan with Osisko Gold Royalties Ltd (2019)

On February 22, 2019, Falco announced the execution of a secured senior loan agreement with Osisko pursuant to which Osisko has agreed to loan $10 million to Falco in two (2) instalments of $5 million. The 2019 Loan had a maturity date of December 31, 2019 and interest was payable on the principal amount at a rate per annum that is equal to 7%, compounded quarterly. Accrued interest is payable upon repayment of the principal amount.

Resignation of the Chief Financial Officer

On October 10, 2018, Falco announced the resignation of Mr. Vincent Metcalfe from his position of Chief Financial Officer and Mr. Anthony Glavac was appointed as Chief Financial Officer.

$10 Million Loan with Osisko Gold Royalties Ltd (2018)

On September 11, 2018, Falco announced the execution of a secured senior loan agreement with Osisko pursuant to which Osisko agreed to loan $10 million to Falco with interest payable on the principal amount at a rate per annum equal to 7%, compounded quarterly (the “ 2018 Loan ”).

Initially, the principal amount was to be repaid on the earliest of the closing date of the Silver Stream Transaction or December 31, 2018. On December 19, 2018, Falco and Osisko agreed to extend the maturity date of the 2018 Loan to February 28, 2019.

The principal amount under the 2018 Loan was repaid by Falco upon closing of the Silver Stream Transaction on February 27, 2019.

Closing of $7 Million Financing with Osisko Gold Royalties Ltd

On July 3, 2018, Falco closed a financing transaction with Osisko under which Osisko purchased a secured debenture having a principal amount of $7,000,000 (the “ Osisko Debenture ”).

Fiscal Year Ended June 30, 2018

$180 Million Silver Stream Transaction and Concurrent $7 Million Debenture with Osisko Gold Royalties Ltd

On June 18, 2018, Falco announced a financing transaction with Osisko, pursuant to which Osisko has agreed to commit up to $180 million through a silver stream toward the funding of the development of Falco’s Horne 5 Project.

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Concurrent to this announcement, Osisko also purchased the Osisko Debenture having a principal amount of $7 million from Falco.

The Silver Stream Transaction closed on February 27, 2019 (See “General Development of Business - Fiscal Year Ended June 30, 2019 - Closing of Silver Stream Transaction with Osisko Gold Royalties Ltd”).

On November 29, 2018, following receipt of the approval of the disinterested shareholders of Falco, the Osisko Debenture was converted into 12,104,444 units of Falco. Each unit consists of one (1) Falco Share and one-half of one common share purchase warrant, each whole warrant entitling the holder to purchase one (1) Falco Share, subject to customary anti-dilution clauses, at a price of $0.75 for a period of 36 months.

Extension of Loan Maturity

On June 1, 2018, Falco announced that in connection with the 2016 Loan, both Falco and Osisko have agreed to extend its maturity date to December 31, 2018. On December 19, 2018, the maturity date was further extended to February 28, 2019.

As per the 2016 Loan, Falco and Osisko agreed to negotiate in good faith the terms, conditions and form of a silver and/or gold stream agreement, substantially in the form typical for such transaction in the industry, whereby Osisko may provide Falco with a portion of the development capital required to build the Horne 5 Project.

Amendment to 2016 Loan

On February 28, 2018, Falco announced that Falco and Osisko agreed to amend the provision relating to payment of interests under the 2016 Loan by deferring the payment date of the interest payable on the principal amount of $10 million to the earlier of (i) five (5) business days from the closing of a financing by Falco for minimum net proceeds of $40 million or (ii) March 31, 2019, provided that no interest shall be payable prior to the maturity date of the 2016 Loan, as amended.

Management Appointments

On January 8, 2018, Falco announced the appointment of Mr. Ronald Bougie to the position of Vice President, Engineering and Construction.

Closing of $8.5 Million Flow-Through Financing

On December 21, 2017, Falco closed a private placement financing of flow-through common shares at an issue price of $1.18 per share to raise aggregate proceeds of approximately $8.5 million.

Agreement to Purchase Mining Fleet for Horne 5 Project

On November 10, 2017, Falco announced that it signed an agreement to purchase its mining production fleet for the Horne 5 Project. Falco selected Sandvik Mining and Rock Technology, Val-d’Or, Québec, as its supplier of choice for the mining fleet. The total value of the new equipment fleet and AutoMine is approximately $60 million. No deposits are required until an initial equipment order is made and none has been made as of the date hereof.

Positive Feasibility Study Results on Horne 5 Project

On October 16, 2017, Falco announced the results of the Feasibility Study for the Horne 5 Project.

The Feasibility Study indicates that the Horne 5 Project represents a robust, high margin, fifteen-year underground mining project with attractive economics. At a gold price of US$1,300/oz and using an exchange rate of C$1.00 = US$0.78, the Feasibility Study shows that the Horne 5 Project would generate an after-tax net present value, at a 5% discount rate, of US$602 million and an internal rate of return of

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15.3% after-tax. In this scenario, the mine could become the next significant gold producer in Québec, with a production profile averaging 219,000 payable ounces annually over the life of mine, with an all-in sustaining cash cost of US$399 per ounce net of by-product credits and all-in cost, CAPEX plus OPEX, estimated at US$643 per ounce.

For further details regarding the Feasibility Study, please refer to the section in this AIF entitled “Material Mineral Project - Horne 5 Project”.

Acquisition of the Donalda Mining Claims

On September 27, 2017, Falco announced the execution of a letter of agreement for the acquisition from Globex of seven (7) mining claims covering approximately 146 hectares in the Rouyn Township, Québec, east of the Horne 5 deposit and Quemont mine infrastructure.

In consideration for this acquisition, Falco has agreed to pay $300,000 in cash and issue 350,000 units to Globex. Each unit consisted of one (1) Falco Share and one (1) common share purchase warrant. Each warrant will entitle the holder thereof to purchase one (1) Falco Share at a price of $1.15 per Falco Share, for a period of 5 years. Additionally, Falco has agreed to grant Globex a 2.5 % gross metal royalty on all mineral production from the Donalda property and to transfer a 100% ownership of Falco’s Dickenson property located on the east side and adjoining Globex’s Francoeur/Arntfield gold property. The transaction closed on October 5, 2017.

Memorandum of Understanding with Commission Scolaire de Rouyn-Noranda

On September 20, 2017 , Falco announced a memorandum of understanding with the Commission scolaire de Rouyn-Noranda to acquire a building (Pavilion Quemont) located on the site of the Horne 5 Project. The acquisition is one of the essential and pre-requisite steps in the dewatering and development phase of the Horne 5 Project. The school board of the Commission scolaire de RouynNoranda and the Falco Board have approved the memorandum of understanding regarding the relocation program for all Pavilion Quemont activities. The memorandum of understanding confirmed that Falco will own the building that bears the name Pavillon Quemont upon delivery of the relocation project. The Pavilion’s training and labour market integration activities would be provided at Complexe La SourcePolymétier . The construction of the extension to the Centre Polymétier began in September 2017 and was completed in August 2018. The official opening was held on November 13, 2018.

Significant Acquisitions

Falco has not completed any significant acquisitions during the fiscal year ended June 30, 2020, within the meaning of 51-102.

Outlook

In order to advance the Horne 5 Project, Falco must obtain all required regulatory approvals and complete negotiations to obtain third parties’ approvals, licenses, rights of way and surface rights required as described in the Feasibility Study and this AIF. In addition, Falco must secure financing which may be completed in a number of ways, including, but not limited to, the completion of stream agreements, the issuance of debt or equity instruments and joint venture agreements at the asset level. If the funds are not available on terms satisfactory to the Corporation, some planned activities may be postponed and the Corporation will be required to re-evaluate its plans and allocate its total resources in the Corporation’s best interest. This may result in a substantial reduction of the scope of existing and planned operations.

The Horne 5 Project

Management believes that the completion of the $10 million financing and the signing of the Offtake Agreements with Glencore on October 27, 2020 were significant steps forward for the Corporation, which could pave the way for project development work to begin once the Work Plan is complete. Management

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expects to release an updated Feasibility Study, which will include the updated project timeline by the end of March 2021. In addition, Falco will focus on the following key project execution activities:

1. Completing the Work Plan by mid-2021.

2. Finalizing a principal operating license and indemnity agreement with Glencore and thereafter agreeing on a mutually satisfactory work plan for the conduct of dewatering activities.

3. Continuing the environmental work, community engagement and permitting in order to receive the environmental impact study’s acceptability from the MELCC in the second half of calendar 2021. The Corporation’s objective is to initiate the public hearing process (BAPE) on the Horne 5 Project at the end of the calendar year 2021.

Exploration activities

Falco’s objectives regarding exploration are to complete statutory obligations and to plan future exploration programs. Management endeavours to proceed with future exploration programs targeted at increasing the Horne 5 Project’s mineral resources and ultimately its life of mine.

MATERIAL MINERAL PROJECT - HORNE 5 PROJECT

Current Technical Report

The most recent technical report filed in accordance with 43-101 is the Feasibility Study, entitled “ Feasibility Study Horne 5 Gold Project, Rouyn-Noranda, Québec, Canada ” with an effective date of October 5, 2017 and a signature date of October 30, 2017, prepared by Colin Hardie, P. Eng. (BBA) Yves Vallières, P. Eng. (RIVVAL), Pierre Lacombe, P. Eng. (Lundin Mining Corp. (ex BBA)), Geneviève Auger, P. Eng. (InnovExplo), Valérie Bertrand, P. Geo. (Golder), Patrick Frenette, P. Eng. (InnovExplo), Rob Bewick, P. Eng. (Golder), Carl Pelletier, P. Geo. (InnovExplo), Yves Boulianne, P. Eng. (Golder), Luc Gaulin, P. Eng. (SNC-Lavalin), Michael Bratty, P. Eng. (Golder), Marie-Claude Dion St-Pierre, P. Eng. (WSP), Janis Drozdiak, P. Eng. (Golder), Claire Hayek, P. Eng. (WSP), Mayana Kissiova, P. Eng. (Golder), Stéphane Lance, P. Eng. (WSP), Michel Mailloux, P. Eng. (Golder) and Dominick Turgeon, P. Eng. (WSP).

Reference should be made to the full text of the Feasibility Study. The Feasibility Study is not and shall not be deemed to be incorporated by reference in this AIF.

Information Contained in this Section

Unless otherwise indicated, technical information which has been disclosed since the release of the Feasibility Study has been prepared under the supervision of, or reviewed by, and approved by Mr. Luc Lessard, Eng., who is a “qualified person” for the purpose of 43-101. Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein.

Prior Considerations respecting the Horne 5 Project

Pursuant to an acquisition agreement dated September 12, 2012, QMX sold and transferred to Falco, among others, its rights and interests into the minerals located below 200 m from the surface of Concession 156PTB, where the Horne 5 deposit is located. Falco also owns certain surface rights surrounding the Quemont No. 2 shaft located on Concession 243. Ownership of Concession 156PTB and Concession 243 remains with Glencore.

In order to access and mine the Horne 5 Project, Falco must obtain one or more licenses from Glencore, which may not be unreasonably withheld, but which may be subject to conditions required by Glencore. These conditions may include the provision of a performance bond or other assurance to Glencore and the indemnification of Glencore by Falco. Among other things, a license may be subject to reasonable

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conditions that may include, among other things, that activities at the Horne 5 Project will be subordinated to the current use of the surface lands and subject to priority over such activities. Any license may provide for, among other things, access to and the right to use the infrastructure owned by Glencore, including the Quemont No. 2 shaft (located on Concession 243 held by Glencore) and some specific underground infrastructure in the former Quemont and Horne mines.

Furthermore, Falco will have to obtain a number of rights of way or other surface rights in order to construct the TMF and associated pipelines.

While Falco believes that it should be able to obtain in a timely manner the licenses from Glencore, including the provision of a performance bond or other assurance, and to obtain the required rights of way and other surface rights, there can be no assurance that any such license, rights of way or surface rights will be granted, or if granted will be on terms acceptable to Falco and in a timely manner.

Falco also notes that the timeline of activities described in the Feasibility Study, and the estimated timing proposed for commencement and completion of such activities, is subject at all times to matters that are not within the exclusive control of Falco. These factors include the ability to obtain, and to obtain on terms acceptable to Falco, financing, governmental and other third party approvals, licenses, rights of way and surface rights.

Major Contributors

The major contributors to the Feasibility Study and their respective areas of responsibility are presented in Table 1.

Table 1: Major Contributors to the Feasibility Study

Consulting Firm or Entity	Area of Responsibility
BBA	• Metallurgical testwork analysis, processing plant design; • Process plant capital costs and operating costs; • Electrical and IT infrastructure design and costs (supply and on-site); • Market studies and contracts; • General and administration operating costs; • Financial analysis and overall 43-101 integration.
InnovExplo	• Current and historical geology, exploration, drilling, sample preparation and QA/QC, and data verification; • Geological modelling and mineral resource estimate; • Mineral reserves estimate; • Underground mine design and underground infrastructure and material handling; • Determine ventilation requirements and design the underground ventilation network; • Electrical distribution and communication system; • Dewatering sequence and pumping system; • Production scheduling, underground capital costs and operating costs, void evaluation; • Historical data review.

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Consulting Firm or Entity	Area of Responsibility
Golder	• Waste rock, tailings, mineralization and water geochemical characterization; • Water treatment plant design, capital and operating costs; • Underground high-density sludge, slurry and paste backfill and slurry tailings distribution systems design and costs; • Surface tailings and waste rock management facility and water management designs and costs, including closure costs; • Surface tailings, reclaim and fresh water transport system design and costs; • Mine site water management infrastructure design and costs; • Rock mass characterization and rock mechanics input to underground mine design and ground control; • Hydrogeology input to underground mine design; • Geotechnical input for the surface infrastructure design.
WSP	• Environmental studies, permitting, mine closure requirements and Horne 5 mining complex closure costs; • Regulatory context, social considerations, and anticipated environmental issues; • Headframe and hoist room design and costs; • Ore handling system from underground mine (Phase 1) to surface stockpile, design and costs; • Paste backfill plant design, capital and operating costs.
SNC-Lavalin	• Existing infrastructure, municipal infrastructure and relocation, design and costs; • Site access road, security gate and light vehicle road design and costs; • First-aid and emergency services, costs; • Site utilities design and costs.
RIVVAL	• Railway engineering design and costing.

Key Project Highlights

(Dollar amounts are presented on a pre-tax basis, except where otherwise indicated).

The base case is stated using a gold price of US$1,300/oz, a silver price of US$19.50/oz, a copper price of US$3.00/lb, a zinc price of US$1.10/lb and an exchange rate of $1.00 equal to US$0.78. The Feasibility Study was prepared in Canadian Dollars. The values have been converted to and presented in US$ at an exchange rate of $1.00 = US$0.78 for this section.

• NPV of US$1,012 million at a 5% discount rate and an IRR of 18.9%, before taxes and mining duties;

• NPV of US$602 million at a 5% discount rate and an IRR of 15.3%, after taxes and mining duties;

• Mine life of 15 years, with peak-year payable production of 268,000 ounces, average LOM annual payable production of 219,000 ounces of gold and 235,000 ounces at steady state;

• Net payable gold recovery of 88.1%;

• 3,741,000 ounces of contained gold;

• 3,294,000 ounces of payable gold LOM;

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• 1,007 million pounds of payable zinc LOM;

• 229 million pounds of payable copper LOM;

• 26.3 million ounces of payable silver LOM;

• 2.37 g/t AuEq average diluted AuEq grade;

• 1.44 g/t Au average diluted gold grade;

• All-in Sustaining Costs* of US$399/oz, net of by-product credits, including royalties, over LOM;

• All-in cost, CAPEX plus OPEX, is estimated at US$643 per payable ounce;

• $41.00/t milled total unit operating cost;

• Pre-production construction costs of US$801.7 million, including a US$58.5 million contingency and excluding US$26.7 million of capital outlays to August 31, 2017;

• Payback period of 5.2 years pre-tax and 5.6 years post-tax; and

• Gross revenue of US$6.6 billion and operating cash flow of US$2.7 billion LOM.

• (*) All-in sustaining costs are presented as defined by the WGC less corporate general and administrative expenses.

Property Description, Location and Access

The properties in which Falco holds interests are located in the Abitibi region, in the central-northwest part of the province of Québec, Canada. The approximate coordinates of the geographic centre of the Horne 5 deposit are 79° 00' 35" W and 48° 15' 15" N (UTM coordinates: 647746 E and 5346475 N, NAD 83, Zone 17). Figure 1 shows the location of the project site.

The Horne 5 mining complex will be located on the site of the former Quemont mine, located in the Industrial park, within the urban limits of the City of Rouyn-Noranda in Rouyn Township, while the surface TMF will be located at an existing TMF site approximately 11 km northwest of the Horne 5 mining complex site. Due to the Horne 5 Project’s urban location, excellent infrastructure, i.e. electricity, rail, water etc., is available and the site is easily accessible year-round via provincial highways 117 and 101.

==> picture [458 x 225] intentionally omitted <==

Figure 1: Horne 5 Project location in Québec

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Land Tenure, License Agreements and Royalties

Falco holds rights and interests in and to an aggregate of 2,032 mining claims and 17 mining concessions in non-contiguous blocks covering an aggregate surface area of 70,619.51 hectares (706.2 km[2] ). All the mining claims are registered under the name of Falco and/or certain joint venture partners (except for 31 mining claims registered under the name of Glencore). The 17 mining concessions are registered under the name of Glencore. Certain mining titles are subject to a number of agreements.

The group of mining titles acquired from QMX in 2012 is divided into four (4) groups of properties, referred in the agreements pertaining to their acquisition by Falco as follows:

• (a) the “Controlled Properties”;

• (b) the “Noranda Properties”;

• (c) the “Third Party Interest Properties”; and

• (d) the “West Ansil Property” which is held on a 50/50 joint venture basis with Glencore.

Glencore remains the registered owner of the Controlled Properties. Falco owns the rights to minerals contained at a depth of more than 200 m below the surface on the Controlled Properties.

Concession 156PTB, on which lies the Horne 5 deposit, is part of the Controlled Properties. Concession 156PTB has an irregular shape and a surface area of 191.96 hectares. Glencore owns the mineral rights contained between surface and a depth of 200 m. Concession 156PTB is subject to a 2% NSR royalty which was originally held by Glencore but having been transferred to BaseCore Metals LP on December 5, 2017.

Concession 243, on which lies the Quemont No. 2 shaft, is part of the Controlled Properties. Concession 243 has a surface area of 224.90 hectares.

Permitting and license agreements with Glencore are necessary if Falco is to perform exploration work or mining activities on Concession 156 PTB and Concession 243.

Concession 156PTB and Concession 243 are located within an urbanized perimeter.

Except pursuant to licenses granted by Glencore, as applicable, Falco is not responsible for any environmental liability relating to the surface rights, the mineral rights and the minerals contained at a depth of less than 200 m below the surface of the Concession 156PTB and Concession 243.

In October 2017, Falco acquired the Donalda mining rights from Globex. The Donalda property consists of seven (7) mining claims, covering approximately 146 hectares in the Rouyn Township. Falco has agreed to grant Globex a 2.5 % gross metal royalty on all mineral production from the Donalda property.

History

The Horne 5 deposit was staked by Edmund H. Horne for the Tremoy Lake Prospecting Syndicate in 1920. In 1922, it was transferred to Noranda. Mining of the Horne orebodies took place from 1927 to July 1976, with Noranda as the only owner. During this period, Noranda held several exploration and mining properties, often in joint ventures, throughout the Rouyn-Noranda mining camp.

In 2005, after acquiring a large interest in Falconbridge Limited (“ Falconbridge ”), Noranda completed a merger with Falconbridge, essentially purchasing it outright. The combined company continued under the name Falconbridge Limited. In 2006, Falconbridge was acquired by the Swiss-based mining company Xstrata plc. In Canada, the Xstrata plc name was registered in October of 2007 as Xstrata Canada Corp. (“ Xstrata Canada ”). The Canadian operations included the Horne smelter.

In 2012, Glencore Xstrata plc (“ Glencore Xstrata ”) was formed following the merger of Glencore International plc and Xstrata plc. In 2013, Glencore Xstrata’s subsidiary, Xstrata Canada, changed its name to Glencore Canada Corporation.

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On August 2, 2011, pursuant to an asset purchase agreement, Xstrata Canada transferred its interests in the Horne 5 deposit to QMX (formerly, Alexis Minerals Corporation). The terms of the agreement stipulated, among others, that Glencore retained a back-in right to acquire a 65% interest on any base metal deposit containing more than 350,000 tonnes copper metal equivalent after presentation of a 43-101 compliant resource. In September 2016, Glencore did not exercise its back-in right with respect to the Horne 5 Project.

Glencore had also retained a 1-2% NSR royalty on all metals on claims and other interests transferred to QMX. Where historical royalties exist, the combined royalty is capped at 3-4%. In areas with no prior royalties, the NSR royalty is capped at 2%. On December 5, 2017, Glencore assigned all of its rights in and to this NSR royalty to BaseCore Metals LP. Glencore has the right to explore for and exploit smelter materials (e.g. flux) in all areas. Should smelter materials be mined from QMX properties, QMX would receive a royalty of $0.50 per tonne plus 50% of any gold that may be recovered. For greater certainty, Concession 156PTB is subject to a 2% NSR royalty in favour of Glencore, which was assigned to BaseCore Metals LP on December 5, 2017.

Under the agreement, Glencore was also granted a right of first refusal should a good faith offer be received from an arm’s length third party for the purchase of or toll processing of all or any portion of the concentrates or other mineral products (including ores) produced from the property.

Falco’s obligations towards Glencore with respect to the back-in right and the off-take option, as well as the payment of certain liquidated damages in relation to such rights, are secured by a deed of hypothec. Falco’s obligations towards Basecore with respect to the royalty are also secured by a separate deed of hypothec.

Historical Work

From 1934 to 1976, multiple exploration works, i.e. drilling and developments, were done to delimit and develop the Horne 5 deposit. Since this time, numerous resource estimates have been produced based on varying depths and drilling methods.

In March 2013, Falco retained InnovExplo to complete a digital model of the Horne 5 deposit. The model incorporated 370 level plans, 620 cross-sections, 99 longitudinal sections, over 4,300 drill holes and over 150,000 assay results. Modelling also included more than 55,000 m of Noranda’s underground development on 22 levels and 18 sublevels, which was carried out between 1931 and 1976, during the exploration of the Horne 5 deposit. Since this time, various drilling campaigns were undertaken and mineral resource estimates were conducted.

Sample Preparation, Analyses and Security

The historical information used in the Feasibility Study was taken from reports produced before the implementation of 43-101. No information about sample preparation, analytical or security procedures is available in the reviewed historical documents. InnovExplo assumed that the exploration activities conducted by earlier companies were in accordance with prevailing industry standards at the time.

The results of confirmation and exploration drilling programs conducted by Falco in 2015 and 2016 were used for the current mineral resource estimate update (the “ October 2017 MRE ”). InnovExplo reviewed the following aspects related to these campaigns: laboratory accreditation and certification, sample preparation descriptions, analytical method descriptions and QA/QC protocols. The drill core was boxed, covered and sealed at the drill rigs, and transported by the drilling personnel to the logging facility of Services Technominex Inc. in Rouyn-Noranda, Québec, where their personnel took over the core handling.

Data Verification

The October 2017 MRE is largely supported by historical data. A great deal of effort was made during the data validation process to obtain the highest degree of confidence possible in terms of dataset quality and precision. Data validation was performed on the two phases of historical underground drill hole compilations carried out by Falco in 2013 and 2014. Assays were verified against digital versions of the original paper

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logs provided by Falco, because none of the certificates of analysis were available for the historical drill holes.

The first drill hole database was compiled by Falco from original logs, dated from 1931 to 1976, and includes the collar locations, down hole surveys, assays and iron contents for 4,384 DDH. InnovExplo’s data verification, conducted from 2013 to 2014, included a review of drill hole collar locations, down hole surveys, assays and iron contents, and a validation of the conversion formula from iron to specific gravity. To complete the data verification on the first compilation phase, InnovExplo re-sampled selected intervals from 16 DDH available at the Horne core storage site. The intervals were selected based on their metal contents.

The second drill hole database was compiled by Falco from original logs, dated from 1931 to 1976. InnovExplo’s data verification, conducted in 2014, included a review of drill hole collar locations, down hole surveys and assays. More than 90% of the drill hole collar locations and down hole surveys were validated using georeferenced vertical sections and level plan views.

Channel samples were compiled and digitized by InnovExplo from available historical plans. These historical plans were presented in Noranda’s local mine grid system. Channel sampling confirms the local geological and grade continuities observed in the historical and 2015-2016 drill holes. Channel sampling information improved the accuracy of the interpretation of mineralized zones in the Horne 5 deposit.

InnovExplo conducted comparisons between historical drill hole composites and historical channel composites. The comparisons show a very good correlation between the grade of DDH samples and the grade of corresponding channel samples.

InnovExplo’s data verification, performed from 2013 to 2016, increased the confidence of the different data sets supporting the October 2017 MRE, particularly in terms of geometry, geological continuity and grade continuity for the mineralized zones defined in the Horne 5 deposit.

Mineral Processing and Metallurgical Testing

An extensive metallurgical testwork program was undertaken on samples prepared from seven drill holes obtained from the Horne 5 deposit. The testwork consisted of chemical and mineralogical characterization, a preliminary evaluation of comminution characteristics, a series of flotation and leaching tests as well as preliminary cyanide destruction and rheology tests. Using the results available to the end of December 2015, a metallurgical process flowsheet was developed and recovery values for gold, silver, copper and zinc were determined for the calculation of the resource estimate. The results of subsequent testing conducted in 2016 and early 2017 were used to project the metal recovery values used for the feasibility study design criteria and financial model.

The process flowsheet consists of differential flotation producing saleable copper and zinc concentrates, followed by a pyrite flotation step. The pyrite flotation concentrate undergoes a regrind and leaching to recover gold and silver. The overall gold and silver recoveries are increased by also leaching the pyrite flotation tailings (PFT). Both the leached pyrite concentrate and tailings are treated in separate carbon-inpulp (CIP) and cyanide destruction circuits. The thickened pyrite concentrate tailings (PCT) and the PFT are pumped, as required, to the paste backfill plant for further dewatering.

Based on the proposed flowsheet, the overall projected metallurgical recovery and net payable values for gold, silver, copper and zinc from the Horne 5 deposit are presented in Table 2.

Table 2: Projected metallurgical recoveries and net payable values for Au, Ag, Cu and Zn

Stage	Product	Cu (%)	Zn (%)	Au (%)	Ag (%)
Flotation	Cu concentrate	81.9	4.5	40.0	32.2
	Zn concentrate	-	86.2	1.7	11.7
	Pyconcentrate	-	-	52.3	47.5
	Pytails	-	-	6.1	8.6

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Stage	Product	Cu (%)	Zn (%)	Au (%)	Ag (%)
Leaching	Pyconcentrate	-	-	85.0	78.6
	Pytailings	-	-	77.6	65.2
Overall Metallurgical Recovery (%)(1)		81.9	86.2	90.9	85.1
Net Payable (%)(2)		75.8	72.9	88.1	71.5

Notes:

(1) Metallurgical recovery based on LOM averages of yearly projections, including payable metal deportment to saleable concentrates and doré from leaching.

(2) Net payable percentages reflect payments and deductions for smelting and refining in the NSR estimate as well as bullion refiner’s deductions.

Mineral Resource Estimate

The October 2017 MRE, effective as of July 25, 2017, was prepared using all available information. The main objective was to update the previous 43-101 mineral resource estimate for the Horne 5 deposit, which was published in a report titled “Technical Report and Updated Mineral Resource Estimate for the Horne No. 5 Deposit”, dated November 7, 2016 (Pelletier et al., 2016) (the “ November 2016 MRE ”).

The October 2017 MRE is mainly based on changes made to the NSR parameters, supported by new assumptions concerning metal prices and net recoveries. Three additional DDH and 41 updated downhole surveys from the 2015-2016 confirmation drilling program were also used in the October 2017 MRE. No changes to the interpretation were deemed necessary.

The Mineral Resources presented hereunder are not mineral reserves as they have no demonstrable economic viability. The interpretation of mineralized zones was updated using a total of 5,980 additional DDH and 14,799 channel samples. The resource model is based largely on the model generated on past mineral resource estimates and complemented by two additional mineralized envelopes and one additional high-grade subzone. The result of the October 2017 MRE is a single mineral resource estimate for six mineralized envelopes: ENV_A, ENV_B, ENV_C, ENV_D, ENV_E and ENV_F. The distribution of metal contents in the main mineralized envelope (ENV_A) defines 11 high-grade subzones: six for gold (HG_A to HG_F), one for copper (Cu_HG), one for zinc (Zn_HG) and three for silver (HG_D, HG_F and SG_HD). The October 2017 MRE includes Measured, Indicated and Inferred Mineral Resources for an underground volume.

The October 2017 MRE was made using 3D block modelling and the inverse distance square interpolation (ID[2] ) method in a wireframe model of the Horne 5 deposit. The model has a strike length of 800 m, a width ranging from 7 m to 120 m, and a vertical depth from 600 m to 2,600 m below surface.

The GEMS DDH database contains 11,040 DDH. The October 2017 MRE uses 5,980 holes in the database, totalling 483,254 m (220,087 samples), with the remaining holes being too far from the deposit to be of use for the estimate. Of this total, 5,938 are historical underground DDH with specific gravity data and accompanying gold, copper and zinc assay results obtained by conventional analytical methods. The historical underground DDH cover the length of the deposit at a regular drill spacing of 15 m in a radiating (fan) pattern from 40 underground working levels and sublevels.

The database also includes the results of 34 DDH from the 2015-2016 confirmation drilling program that intersect the Horne 5 deposit. Another eight DDH drilled close to the Horne 5 deposit during the 2015-2016 exploration program have also been included.

Given the nature of the data, the density of the processed data, the search ellipse criteria and the specific interpolation parameters, InnovExplo is of the opinion that the October 2017 MRE can be classified as Measured, Indicated and Inferred Mineral Resources. Mineral Resources in the Measured category are reported for the first time on the Horne 5 Project. The NSR cut-off is supported by economic assumptions defined in the 2016 preliminary economic assessment. The October 2017 MRE also used an updated NSR calculation supported by new assumptions concerning metal prices, net recoveries and smelting costs.

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The October 2017 MRE is compliant with CIM standards and guidelines for reporting mineral resources and reserves. The selected NSR cut-off of 55 $/t allowed the mineral potential of the deposit to be outlined for an underground mining option. While the results are presented undiluted and in situ, the reported Mineral Resources are considered by the qualified person to have reasonable prospects for economic extraction.

The results of the October 2017 MRE at the base case cut-off of $55 NSR are presented in Table 3. InnovExplo estimates the Horne 5 deposit contains, based on an NSR cut-off of 55 $/t, Measured Mineral Resources of 9,259,600 t at 2.59 g/t AuEq (gold equivalent) for a total of 769,885 oz AuEq, Indicated Resources of 81,855,200 t at 2.56 g/t AuEq for a total of 6,731,443 oz AuEq, and Inferred Resources of 21,500,400 t at 2.51 g/t AuEq for a total of 1,735,711 oz AuEq.

Table 3: Horne 5 Mineral Resource (July 25, 2017)

Mineral Resource Category	Tonnes (Mt)	AuEq (g/t)	Au (g/t)	Ag (g/t)	Cu (%)	Zn (%)	Contained AuEq (Moz)	Contained Au (Moz)	Contained Ag (Moz)	Contained Cu (Mlbs)	Contained Zn (Mlbs)
Measured	9.3	2.59	1.58	16.2	0.19	0.83	0.770	0.470	4.824	38.0	168.5
Indicated	81.9	2.56	1.55	14.74	0.18	0.89	6.731	4.070	38.796	325.4	1,599.3
Inferred	21.5	2.51	1.44	23.04	0.20	0.71	1.736	1.000	15.925	96.3	337.2

Notes:

1. The effective date of the resource estimate is July 25, 2017.

2. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

3. While the results are presented undiluted and in situ, the reported Mineral Resources are considered by the qualified person to have reasonable prospects for economic extraction.

4. These estimates include six low-grade gold-bearing mineralized envelopes.

5. The main low-grade gold-bearing mineralized envelope includes six high-grade gold-bearing zones, one high-grade copper-bearing zone, one high grade zinc-bearing zone, and three high-grade silver-bearing zones. Note that these high-grade zones may overlap each other.

6. Resources were compiled at NSR cut-offs of $40, $45, $50, $55, $60, $65, $70, $75, $80, $85, $90, $95 and $100 per tonne for sensitivity purposes.

7. The official base case resource is reported at a 55 $/t NSR cut-off.

8. The appropriate NSR cut-off will vary depending on prevailing economic and operational parameters to be determined.

9. NSR estimates are based on the following assumptions: Exchange rate of 1.28 CAD/1.00 USD; Metal prices as follows: gold 1,300 USD/oz, silver 19.50 USD/oz, copper 2.90 USD/lb, zinc 1.10 USD/lb (inspired from a long-term analyst consensus price forecast study); Net recoveries are variable in function of grade of each commodity. Smelting cost (including transportation) of 6.52 $/t (based on the Mining Cost Service, as well as a nonpublic smelter contract obtained from one of the proposed destinations and talks with transport providers).

10. Gold equivalent calculations assume these same metal prices.

11. Inferred Mineral Resources are separate from Indicated Mineral Resources.

12. The quantity and grade of reported Inferred mineral resources are uncertain in nature and there has not been sufficient work to define these Inferred Mineral Resources as Indicated or Measured Mineral Resources. It is uncertain if further work will result in upgrading them to an Indicated or Measured Mineral Resource category.

13. The Mineral Resource was estimated using Geovia GEMS 6.8. The estimate is based on 5,980 DDH (483,254 m) of which 4,141 cut mineralized zones for a total of 178,150 m of core within these zones. For silver, the estimate also uses the results of an exhaustive metallurgical test comprising 2,112 DDH assayed for silver over a total length of 75,540 m. A minimum true thickness of 7.0 m was applied, using the grade of the adjacent material when assayed, or a value of zero when not assayed. Only the silver interpolation in the Inferred resources does not use the material when not assayed.

14. The estimate database also contains 14,799 channel samples for a total of 23,791 m from historically sampled drifts. Channel sample data was only used for distance to composite criterion for resource classification purposes.

15. 91% of density values were estimated using historical iron assay drill hole data and Falco density data for an average of 3.41 g/cm[3] . The interpolation method uses three passes for the ENV_A and HG_A to HG_F zones. 8% of the density values were fixed at 2.88 g/cm[3] for ENV_B to ENV_E due to the scarcity of the data. 2.88 g/cm[3] represents the median of the available data. 1% of density values were fixed at 2.67 g/cm[3] for ENV_F due to the scarcity of the data and to adequately characterize this quartz-rich zone.

16. Compositing was done on drill hole sections falling within the mineralized zones (composite = 3.0 m). Tails shorter than 0.75 m were not generated.

17. Resources were evaluated from drill holes using an ID[2] interpolation method in a block model (block size = 5 x 5 x 5 m).

18. High-grade capping was done on raw assay data and established on a per zone basis for gold (Au g/t): (HG_A: 35; HG_B: 35; HG_C: 25; HG_D: 35; HG_E: 25; HG_F: 35; ENV_A: 35; ENV_B: 25; ENV_C: 25; ENV_D: 20; ENV_E: 35; ENV_F: 25) and for silver (Ag g/t): SG_HG:100; HG_D: 165; HG_F: 165; ENV_A_SG_Low: 110; ENV_B: 100; ENV_C: 100; ENV_D: 100. Capping grade selection is supported by statistical analysis. No capping was applied to the Cu and Zn data based on statistical analysis.

19. The reported Mineral Resources are categorized as Measured, Indicated and Inferred. The Inferred category is only defined within the areas where blocks were interpolated during pass 1 or pass 2 in areas where continuity is sufficient to avoid isolated blocks. The Indicated category is only defined by blocks interpolated in areas where the maximum distance to the closest drill hole composite is less than 25 m for blocks interpolated in passes 1 and 2. The Measured category is only defined by blocks classified as Indicated and within sufficient proximity to sampled drifts (<15 m). The average distance to the nearest composite is 6.97 m for the Measured Mineral Resources, 10.01 m for the Indicated Resources and 40.10 m for the Inferred Mineral Resources.

20. Tonnage estimates were rounded to the nearest hundred tonnes. Any discrepancies in the totals are due to rounding effects. Rounding practice follows the recommendations set forth in Form 43-101F1.

21. CIM definitions and guidelines were followed in estimating mineral resources.

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1. InnovExplo is not aware of any known environmental, permitting, legal, title-related, taxation, socio-political, marketing or other relevant issue that could materially affect the mineral resource estimate, other than the Glencore and other third party approvals previously mentioned.

2. Metal contained in ounces (troy) = metric tonnes x grade / 31.10348. Calculations used metric units (metres, tonnes and g/t). Metal contents are presented in ounces and pounds.

Mineral Reserve Estimate

The mineral reserves estimate (Table 4) for the Horne 5 Project was prepared by Mr. Patrick Frenette P.Eng., an employee of InnovExplo, and is effective as of August 26, 2017. The mineral reserves estimate stated herein is consistent with the CIM Standards on Mineral Resources and Mineral Reserves and is suitable for public reporting. As such, the mineral reserves are based on Measured and Indicated Resources, and do not include any Inferred Mineral Resources. Measured and Indicated Mineral Resources are inclusive of proven and probable mineral reserves.

The Feasibility Study LOM plans and mineral reserves estimate were developed from the previous November 2016 MRE and does not consider the October 2017 MRE as presented in the Feasibility Study. Updated metal prices, exchange rates and recovery equations from the October 2017 MRE were used however to calculate cash flows used to support the mineral reserve estimate. As of the date of the Feasibility Study, the QP had not identified any risks, legal, political or environmental, that would materially affect potential development of the mineral reserves other than Glencore and other third party approvals previously mentioned hereinabove.

Table 4: Statement of Mineral Reserves (August 26, 2017)

Mineral Reserve Category	Tonnes (Mt)	NSR ($)	Au (g/t)	Ag (g/t)	Cu (%)	Zn (%)
Proven	8.4	91.72	1.41	15.75	0.17	0.75
Probable	72.5	92.56	1.44	13.98	0.17	0.78
Proven + Probable	80.9	92.41	1.44	14.14	0.17	0.77

Notes:

1. Mineral reserves have an effective date of August 26, 2017.

2. Estimated at 2.15 USD/lb Cu, 1.00 USD/lb Zn, 1,300 USD/oz Au and 18.50 USD/oz Ag, using an exchange rate of 1.30 CAD:USD, cutoff NSR value of 55.00 $/t.

3. Mineral reserve tonnage and mined metal have been rounded to reflect the accuracy of the estimate and numbers may not add due to rounding.

4. Mineral reserves presented include both internal and external dilution along with mining recovery. The external dilution is estimated to be 2.3%. The mining recovery factor was set at 95% to account for mineralized material left in the margins of the deposit in each block.

Mining Methods

The proposed underground mine design supports the extraction of approximately 15,500 tpd average over the LOM of ore by transverse long-hole stoping, with primary and secondary stopes, with some areas being mined with the longitudinal mining retreat method. These mining methods are suitable, given the geometry, ground conditions and depth of the resources. Paste backfill is a key component for maximizing ore recovery and mining productivity. An ore recovery rate of 95% was applied to each mining stope. Individual dilution was calculated for each stope, giving an average dilution of 2.3% for the entire deposit. An 80% recovery factor was also added for the sills of Phase 2, to take into account any ground problems that could occur.

The mine has been designed to have low operating costs through the extensive use of automation, implementation of large modern remote controlled trackless equipment, gravity transport of mineralized material and waste through raises, shaft hoisting, minimal mineralized material and waste re-handling, and high productivity bulk mining methods.

For the Horne 5 deposit to be mined, the old excavations surrounding the mining area, including the interconnected historical Horne, Quemont and Donalda mines, must be dewatered. According to the preproduction schedule, the dewatering of the Horne 5 Project is expected to take approximately two years from the day pumping is initiated.

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Geotechnical and Hydrogeological Considerations

The geotechnical assessment for the underground mine is based upon existing openings, the resource envelope, level plans and the geological model. Due to the proximity to the historical Horne mine workings, historical DDH and the planned mining depths, the following items have been identified as relevant for the rock engineering aspects of the Horne 5 deposit:

• The impact of mining induced stresses and seismicity;

• The impact of historical mining;

• The corrosion potential.

Geotechnical engineering design criteria was developed to support the underground mining production sequence and design. The geotechnical assessments made for the Horne 5 Project include:

• Rock mass characterization;

• Ground support requirements;

• Sill pillar design and placement;

• Stope sizing and logistics;

• Backfill strength assessment;

• Rock mass monitoring.

Fieldwork studies were performed in the summer of 2015 and autumn of 2016 to determine the hydrogeological conditions on the Horne 5 mining complex site. The tests performed consisted of a packer test profile and the implementation of nine observation wells at four different locations. Based on the hydrogeological design basis developed, groundwater inflows were estimated and thus dewatering flow rate values were calculated.

Mine Design

The Quemont No. 2 shaft will be rehabilitated to accommodate a LOM average production rate of approximately 15,500 tpd and will provide the principal access to the deposit. The shaft is designed to operate two 43 t skips, one double-deck service cage, one double-deck auxiliary cage and services for the underground mine. The hoisting capacity of the rehabilitated shaft is 23,180 tpd for Phase 1 and 16,530 tpd for Phase 2. The shaft design calls for the rehabilitation of 24 existing stations, three of which will be used during production. Upon completion of shaft deepening, an additional station will be built. A total of four stations will be used in mine Phases 1 and 2.

Four main levels connect the Quemont No. 2 shaft and Horne 5, and production levels are connected by a main decline from the top to the bottom of the deposit. The proposed mine plan for the Horne 5 Project is divided into two production phases characterized by separate accesses to the mineralized zones:

• Phase 1: From surface to level 1310, near the bottom of the current Quemont No. 2 shaft, located on level 1230; and

• Phase 2: From level 1340 to level 2060, after deepening the Quemont No. 2 shaft.

A fleet of 14 t LHDs and 55 t trucks will be required for underground infrastructure development.

For extracting, the automated 21 t LHDs will dump directly from the stope to the ore pass; two main ore passes will then transfer material from the production area to two loading stations on levels 1180 and 1910.

For each phase, the ore passes will be connected to grizzlies and rock breaker facilities, which then lead to two primary crushers for Phase 1 and one primary crusher in Phase 2. In both cases the crusher product feeds a single conveyor that transports the ore from the Horne 5 mine to the Quemont No. 2 shaft loading facilities. Below level 1910, 55 t trucks will be used for haulage in the main ramp from level 2060 to level 1910.

Key mine infrastructure includes a paste backfill distribution network, five main pumping stations, a fuel distribution network, a main garage for equipment, electrical substations and other installations such as

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powder magazines, refuges and communications network. Figure 2 provides an overview of the proposed mine layout and infrastructure.

==> picture [334 x 473] intentionally omitted <==

Figure 2: Underground mine infrastructure

Mine Dewatering and Rehabilitation

Dewatering from surface will first be carried out from the Horne No.4, Quemont No. 2 shaft and Donalda shaft collars. In each case, a surface set-up will manage the submersible pumps. The pumps will be lowered down the shafts to a depth of between 100 m and 375 m from the collar. The combined water pumping rate sent to the water treatment plant at surface will be at a maximum of 600 m[3] /h. Several submersible, highvolume, high-pressure stainless-steel pumps will be required to remove water from the historical mines. These pumps can be remotely lowered down the shafts without any installation in the shaft.

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• The Horne No. 4 shaft installation consists of two 400 hp submersible pumps that are installed from the surface to a maximum of 230 m deep with rigid piping set-up;

• Quemont No. 2 shaft installation consists of one 400 hp submersible pump to a depth of 275 m;

• Donalda shaft installation consists of one 250 hp submersible pump to a depth of 375 m.

Once the Quemont No. 2 shaft has been dewatered down to level Q275 by means of the surface installation, new submersible pumps will be installed underneath the Galloway, a multi-decked platform, to follow the rehabilitation of the shaft. Two 150 hp stainless steel pumps will feed a 500 hp multistage pump, installed directly on the Galloway deck, to direct the water to surface or to the main pumping stations.

All permanent installations for dewatering will be set up near the Quemont No. 2 shaft. As soon as levels Q275 (connecting with level 322), Q715 (connecting with level 790), and Q1180 (connecting with level 1190), are reached, the main clear water pumping stations will be built as a priority to support and contribute to the dewatering of the Quemont and Horne mines. As the Galloway is lowered and the Quemont No. 2 shaft is dewatered and rehabilitated, the main pumping stations will be used as boosters to bring the water to surface as they become available.

Drainage holes will be used to dewater the historical Horne mine via the Quemont No. 2 shaft and the installed pumping infrastructure. Drilling bays will be used to drain Horne water to the Quemont main pumping station. This system will securely drain high-pressure water by drilling 3 inch diameter holes about 250 m to reach historical Horne openings. The water from these drain holes will be directed to sumps and then pumped to the main pumping stations by means of submersible pumps.

Mine Services

Mine services include underground electrical distribution, automation and monitoring systems, fuel distribution, mine dewatering network and a ventilation network.

The ventilation system is a push-pull system. Permanent main fans on level 322 will provide fresh air to the mine. Fans in the headframe will feed the shaft to lower global pressure in the infrastructure. A total of 800,000 cfm will be required for the mining operation. During preproduction, the old Quemont ventilation raise will be reused for development start-up. Two natural gas heating systems will be used during the winter months. VOD will be implemented to maximize the use of ventilation in working areas and thus lower requirements in other areas to help reduce energy costs.

Cemented Paste Backfill

Paste backfill is required for structural support in the mined out Horne 5 stopes. PFT, PCT and a pre-mix of cement and blast furnace slag will be used to produce the paste backfill for the underground mining operation. The estimated volumes of cemented paste backfill required are 0.46 Mm[3] and 0.18 Mm[3 ] for Phases 1 and 2, respectively. Over the life of mine of the project, approximately 45% of all the tailings produced will be used in the paste backfill.

Two key aspects that influence the design of the underground distribution systems are the capacity of the paste plant and the mix recipe. The plant capacity will determine the flow rates for all of the process streams, whereas the mix recipe is determined to achieve the required backfill strength at the lowest binder content while maintaining a material that can be pumped or delivered by gravity.

The plant capacity selected for the Horne 5 Project is based upon the use of 12,065 tpd of dry tailings for the backfilling of mining voids generated by ore extraction in any given year. Such plant capacity allows an overall plant utilization of approximately 60%, which is typical for a paste backfill operation. Because the Horne 5 orebody is mostly dipping vertically, it is possible to distribute the paste by gravity and avoid the operation of a pumping system.

Laboratory testing was completed to determine the optimal recipe to meet the geotechnical strength requirements. Laboratory tests on tailings performed by Golder and Unité de recherche et de services en technologie minérale (“ URSTM ”) confirmed that a mixture comprised of 50% PFT / 50% PCT at a 200 mm

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(8 in) slump was an appropriate mix design when using 80% blast furnace slag and 20% general use cement as the binder agent.

The paste plant design will include two parallel circuits and as a result, the paste backfill underground distribution system is based upon operating a distribution line for each of the circuits. All piping and boreholes will be twinned for the paste distribution system. Redundancy will also be built into the system; thus, four boreholes will be drilled from surface to underground. For all interconnecting underground boreholes there will also be four boreholes; two operating and a spare for each.

Production Plan

Developing and maintaining access to sufficient resources to sustain the approximate 15,500 tpd average LOM production sequence will require an extensive underground development program averaging 7,000 m per year, with a peak of 13,700 m in the final year of construction. A total of 129,100 m of lateral development will be required during the life of the mine.

The preproduction period will require 36 months from the onset of mine development, including the dewatering and rehabilitation sequence. Waste generated through infrastructure development will be disposed of in underground stopes, except during the preproduction period, where it will be transported to the TMF site and used as construction material. A total of 1.5 Mt of waste will be hoisted during that time.

A total of approximately 81 Mt of ore, including development, will be hoisted over the life of the mine, at an average grade of 1.44 g/t Au, 0.17% Cu, 0.77% Zn and 14.14 g/t Ag.

Underground High Density Sludge, Slurry Tailings and Paste Backfill Distribution

During preproduction, i.e. the dewatering phase, and the initial years of operation until the TMF becomes available, the high density sludge from the water treatment plant will be stored in the old drifts and mine workings at the historical Donalda and Quemont mines.

A significant portion of the tailings will be used as part of the paste backfill required for structural support in the Horne 5 mined-out stopes during production.

Cemented paste backfill will also be used to backfill the historical Horne mine on the levels where the Horne 5 development and mining activities will be intersecting the historical Horne drifts and voids during preproduction.

Tailings in excess of the paste backfill needs or generated while the paste backfill plant is not operating, will be stored in historical Horne mine openings as slurry. Based on the estimated underground storage capacity, tailings will be sent underground for a period of approximately two years, after which the remainder will be transported by pipeline to be stored at the TMF.

Mine Equipment and Personnel

The mine will operate seven days a week, night and day (24/7). Up to 333 people will be required in the mine for the production years (Phase 1), comprising 57 staff employees and 276 hourly employees. It is estimated that approximately 325 people will be required when the surface TMF is in operation.

A complete fleet of equipment will be needed to support mine operations and meet productivity requirements. A total of 77 units of mobile equipment are listed in the Feasibility Study. Production equipment, such as production drills, LHDs and trucks, will be automated.

Process Plant

The processing facility will be used to process an approximate average of 15,500 tpd of mineralized material over the LOM. A schematic flowsheet is presented in Figure 3. The flowsheet consists of a semi-autogenous ball milling circuit to grind primary crushed material to a target P80 size of 55-60 microns. The facility will have three flotation circuits to recover copper, zinc and pyrite concentrates. The copper and zinc circuits

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will see their respective concentrate filtered to reduce residual moisture content to approximately 10%. Both concentrates will be loaded for shipment to smelters: in trucks for the copper concentrate and railcars for the zinc concentrate.

The pyrite concentrate requires a finer regrinding stage, to a P80 of 12 microns, to achieve improved gold recovery by cyanide leaching. Both the pyrite flotation tailings and the reground pyrite concentrate will be leached separately before entering separate CIP circuits. Thickeners will be used to maximize water and cyanide recovery, and the Caro’s acid cyanide destruction method will be used to reduce the cyanide content of the two leach residues. A portion of the combined tailings will be used for paste backfill placement in the Horne 5 mine workings, while surplus tailings will initially be returned underground as well, but disposed of in existing historical openings. Bleed water liberated in the underground workings from the consolidated tailings will be recovered, recycled and pumped back to the process plant. At a later stage, once the historical mine openings are filled, a TMF will receive the excess tailings not used for paste backfill preparation.

The proposed process recovers zinc and copper concentrates, as well as gold and silver in the form of doré bars. The copper concentrate will have an estimated 16% copper content as well as payable gold and silver; the zinc concentrate will have an estimated 52% zinc content. Analysis of the copper and zinc concentrates produced at laboratory scale were free of deleterious elements and the eventual concentrate production from the full-scale facility is thus expected to be readily marketable to either smelters or traders.

The process plant facilities include a wet laboratory, offices, dry, maintenance shop and the paste backfill plant. A total of 93 personnel (including paste backfill operators) are required in the process plant, including 35 salaried staff and 58 hourly workers.

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Figure 3: Simplified process plant flowsheet

==> picture [556 x 444] intentionally omitted <==

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Project Infrastructure

The Horne 5 Project surface infrastructure will span over two separate sites: the Horne 5 mining complex and the TMF, which is located approximately 11 km to the northwest. The two sites will be connected via pipelines to allow for tailings disposal and water reclaim. Figure 4 shows the general layout of the Horne 5 mining complex.

==> picture [394 x 263] intentionally omitted <==

Figure 4: General site layout - Horne 5 Mining Complex

Geotechnical Studies

The main infrastructure to be constructed at the Horne 5 mining complex includes the process plant, head frame, hoist room, several thickeners and reservoirs located near the process plant, an ore storage reclaim tunnel and stockpile located in the southeast portion of the site, and an electrical substation located north of the process plant. A geotechnical study was conducted to confirm bedrock quality and depth throughout the site.

The head frame and hoist room will be built in the same location as the original head frame and hoist room for the Quemont No. 2 shaft and thus will be built directly on bedrock.

Existing site material will be excavated to bedrock for the preparation of the foundations of the process plant. Equipment will be installed directly on the surface of the rock or it will be built on controlled granular backfill. Pilings will be used for the concentrate loadout building.

Horne 5 Mining Complex

Site Access Control

Access to the Horne 5 mining complex is planned to be from Marcel-Baril Avenue. This road will be modified to end at the site control gate and parking lot.

A control gate building and a fence will be erected at the main entrance of the site to supervise the personnel entrance and merchandise transport. Security personnel will ensure visitor registration and that all safety protocols are followed.

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Electrical Infrastructure

Electricity will be supplied to the site at a voltage level of 120 kV originating in the nearby Hydro-Québec, Rouyn-Noranda substation, located approximately 1 km away.

At the site, the outdoor substation will lower the incoming voltage to 25 kV, using two main transformers of 120-25 kV, 75/100/125 MVA each, for a combined firm power of 125 MVA. During normal operation, both transformers will share the loads, but during maintenance or repair work, one transformer will supply the entire site load, thus increasing the overall reliability of the electrical supply.

Considering the close proximity between buildings on the site, 25 kV power will be distributed using underground cables rather than overhead lines.

The power demand of the overall Horne 5 mining complex is approximately 93 MW. The calculated power demand was derived from the mechanical and process equipment list, without considering standby equipment and applying representative efficiency and load factors.

Table 5 shows the distribution of power by area/sector for the mining complex.

Table 5: Power demand by area at the Horne 5 Mining Complex

Area	Description	Connected Load (MW)	Power Demand (MW)
200	Underground Mine	10.5	5.9
300	Mine Surface Facilities	32.3	15.7
400	Electrical and Communication	0.5	0.25
500	Site Infrastructure	4.5	2.5
600	Main Process Plant	85.3	66.2
800	Tailings and Water Management	1.2	0.8
--	Electrical Network Losses (2%)	-	1.8
	Total	134.3	93.2

Two emergency diesel generator units (4.16 kV and 600 V) are planned to be located near the electrical substation for the purpose of supplying electricity to the critical process equipment/installations when the main power is lost. Another generator will be located near the hoist room and will be connected to the auxiliary hoist, allowing it to be used as an emergency escape for underground mine personnel.

Hoist Room and Headframe

The hoist room located close to the headframe is designed to house the 5,500 mm double drum service hoist, driven by two 1,000 kW motors, and the 3,050 mm single drum auxiliary hoist, driven by one 1,000 kW motor. The hoisting main electrical room is located inside the hoist building.

The 100 m high concrete headframe is designed to support the 6,500 mm friction production hoist and the 6,500 mm deflection sheaves. The 5,500 mm service sheaves and the 3,050 mm auxiliary sheaves are also located in the headframe. The ore stockpile is fed by a surface conveyor from a 300 t bin located in an annex of the headframe building.

Process Plant

The process plant will be located adjacent to the mine office and dry building and approximately 80 m away from the mine hoist and headframe installations. The building will be 66 m wide by 235 m long, with a height of 32.5 m.

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The main processing building will house the grinding area, i.e. SAG and ball mills, flotation cells, regrind mills, CIP, carbon stripping, electrowinning, refining and reagent preparation areas, as well as the paste backfill plant, tailings pumps, mechanical services, offices and metallurgical laboratory. The pre-leach thickeners, leach tanks, pre-detox thickeners, cyanide destruction tanks, lime and paste backfill binder silos are to be located outside the process plant.

Warehouse and Service Building

The service building will consist of the renovated portion of the existing building (“ Sani-Tri ”) that was owned by the City of Rouyn-Noranda and located to the south of the new hoist room. The service building, including a service bay, will cover an area of approximately 420 m². The maintenance areas will also have access to a 5 t overhead crane. The warehouse will use a portion of the existing Sani-Tri building and will be renovated to serve its new purpose. It will cover an area of approximately 1,600 m².

Mine Office and Dry Building

The existing Quemont building that is sitting north of the proposed headframe location is now owned by Falco and will serve as the administration and dry facility for the mine. The two-storey plus basement building covers a surface area of 1,800 m². The building will be renovated to meet the current codes and standards as well as meet Falco’s esthetic requirements.

Administration Building

Falco intends on acquiring a building that is currently being used by Lamothe, Div. of Sintra Inc. (“ Lamothe ”) that was originally built for the Quemont mine and that will be used for the site administration offices. The building will also be renovated to meet current codes and standards, as well as to adhere to Falco’s architectural criteria.

Railways

Railway transport will be used to minimize the carbon footprint of the Horne 5 Project and to facilitate the reception of inbound goods and reagents as well as the shipment of concentrates. A railway spur will be built to link the process plant concentrate loadout area to a new storage area for inbound and outbound cars that will connect directly to the existing Canadian National Railway Co. rail line.

Bulk Explosives Storage and Magazines

The average explosives consumption for the Horne 5 Project is estimated at 54 t per week; bulk emulsion will be used, given its urban setting. The explosives will be sent directly underground, which will reduce the supervision requirements and the risk of freezing during the winter months.

For these reasons, two major powder and cap magazines are planned underground with a capacity of over 50 t each. One is planned on level 1190 for Phase 1 of the mine plan and another on level 1880 for Phase 2. The explosives will be brought underground using a service hoist and a dedicated compartment in the production shaft.

Fuel Storage and Delivery

It is expected that 77,000 L of fuel will be delivered to the mine site each week. Assuming biweekly deliveries, the fuel surface tank must have a storage capacity of 40,000 L and it must be equipped with spill prevention features. Fuel will be sent underground in batches of 5,000 L, requiring the installation of one 5,000 L tank on the surface. Underground, there will be two fueling stations (one on level 1190 and the other one on level 1880), each equipped with a 5,000 L tank and a 15,000 L tank. Batch production will be fully automated by controlling the pumps that produce the batches.

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Fire Water and Distribution System

Site fire hydrants as well as the surface buildings’ sprinklers are proposed to be supplied by an existing pipeline from Lac Dufault that is currently installed to the west of the Horne 5 mining complex. The main branch from the pipeline will feed booster pumps to be located in the process plant. The pumps will then feed one loop within the process plant and another underground line to service the buildings located to the south of Marcel-Baril Avenue.

Potable Water

The potable water supply for the surface infrastructures will be connected to the City of Rouyn-Noranda’s potable water system. The city’s potable water system has the capacity to provide the Horne 5 Project’s average water requirements of 39 m[3] /day as well as requirements during peak periods.

Sewage Treatment

The wastewater sewage system for all surface infrastructures will be connected to the city of RouynNoranda’s sewage treatment system. The city’s system can supply the sewage treatment requirements for the Horne 5 mining complex. A new 150 mm diameter by 180 m long sewage pipe will be installed on Marcel-Baril Avenue to accommodate the site requirements of 46 m[3] /day of sewage. All site surface water will be managed independently from the city's sewage system.

Natural Gas

The natural gas supplied to the Horne 5 mining complex will originate from the existing Gaz-Métro network. An estimated 8.35 Mm[3] of natural gas will be consumed per year. Upgrades to the supply network will be required to accommodate the Horne 5 Project requirements.

Fresh Water Pump House and Pipeline

A fresh water pumping station will be installed on Lac Rouyn to provide fresh water to the process plant. The fresh water pipeline will be approximately 7.1 km long.

Site Infrastructure Relocation

There are existing buildings on the Horne 5 Project site that must be relocated or demolished to make way for new infrastructure. The Eco-center building will be demolished; other buildings will be repurposed and thus the companies/services affected will be relocated.

Lamothe is currently using one of the historical Quemont administration buildings as their office building. Their aggregate crushing facilities and asphalt plant are currently located on the future process plant site. As part of the Horne 5 Project, Falco intends to relocate Lamothe’s infrastructure (offices and crushing facilities) to a lot on Saguenay Boulevard, next to their quarry, where an existing building will be renovated for Lamothe’s use.

The Centre Polymétier was using the historical Quemont building as an adult education and professional development school. As part of the Horne 5 Project, Falco has built an extension to the Centre Polymétier located on the site of La Source Secondary School, and the institutional activities have been permanently relocated to this new location. Falco has now acquired the Quemont building, pursuant to the Memorandum of Understanding with the Commission scolaire de Rouyn-Noranda upon delivery of the relocation project. The construction of the extension to the Centre Polymétier began in September 2017 and was completed in August 2018. The official opening was held on November 13, 2018.

As a result of the extension to La Source Secondary School, the existing soccer field must be relocated. As per the City of Rouyn-Noranda’s request, it will be relocated to parc St-Luc, which is located in the Noranda-North neighborhood. A protocol was signed on December 4, 2018 and the Corporation completed the first phase of these relocation activities in August 2020.

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Water Treatment

Water treatment will be required at both the Horne 5 mining complex and the TMF site. A prime component of the water treatment systems is the treatment of excess water during preproduction, during which the flooded historical mine workings will be dewatered. Water treatment will continue through the production phase to ensure that the required discharge conditions are met.

Water treatment will consist of metals, sulphate and polythionate removal as well as pH adjustment for all phases of the Horne 5 Project.

A temporary water treatment plant with a 600 m[3] /hr capacity will be built to treat water from the historical mines during the preproduction phase. Treated water from the treatment plant will be discharged into the Dallaire watercourse. As the mine enters the production phase, the temporary water treatment plant will be shut down and the equipment will be dismantled and repurposed to be used as part of the process plant’s cyanide destruction, concentrate and tailings dewatering as well as lime storage circuits.

During production, a HDS water treatment plant will be in use at the TMF and treated water will be discharged into receiving waters draining into Waite Lake.

Tailings Management Facility

The TMF is located at an existing tailings facility (Historic Norbec Mine area) located approximately 11 km northwest of the Horne 5 mining complex site and will draw the required power from existing power lines. The estimated power load of the TMF is approximately 1.5 MW. Falco has executed non-binding agreements relating to the acquisition of the TMF and is in the process of securing definitive rights to the TMF from a third party.

The PFT and the PCT will be transported separately from the Horne 5 mining complex to the TMF. The pipelines will be installed mostly above ground, with underground segments built through open and cut construction or horizontal directional drilling for river, wetland and road crossings, where required.

The PCT and PFT pipelines include a 17.4 km segment of pipe between the process plant and the TMF as well as a 4.8 km segment of HDPE pipe around the TMF.

The TMF will consist of two separate cells, the PCT and PFT cells, as well as two water ponds, the internal pond and the polishing pond.

Construction of the TMF is proposed to occur in five stages with each stage lasting approximately two to four operating years. Four external dikes consisting of a granular fill, complete with upstream inclined low permeability element dikes, will be required to confine the two cells and the polishing pond during the first four stages of operation. The low permeability element will include a bituminous liner system comprised of the membrane itself laid on top of an appropriate transition layer and covered by a granular protection layer.

Surface water infrastructures will also be built at the TMF site to adequately collect or divert runoff water from this area; the aim will be to maximize the reuse of water, while limiting as much as feasible the ingress of “non-impacted” runoff from undisturbed areas.

A reclaim water pipeline will follow the same route as the tailings pipelines, but will flow in the opposite direction. The reclaim water pipeline will be approximately 19.4 km in length and will be installed above ground, directly on the ground with underground crossings, where required.

Environmental and Permitting

Pre production - Dewatering Activities

First stage of the project will be the development of the Horne 5 mine through among others, the dewatering of the Quemont, Horne and Donalda old mines and the rehabilitation of the Quemont No.2 shaft. Falco has submitted an application for a certificate of authorization under Sections 22 and 31.75 of the Environmental

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Quality Act (Québec) to be issued by the MELCC to support the development, dewatering and sludge management strategy. During the dewatering stage, which is expected to last 25 months, water will pumped, treated and high density sludge from the water treatment process will be stored in the former Donalda and Quemont underground mine openings. In parallel, environmental baseline studies and consultations with the Horne 5 Project’s stakeholders were initiated in 2016 and are continuing as required to support the permitting process and the Horne 5 Project’s timeline.

Studies and Permitting

Environmental baseline studies and consultations with the project stakeholders have been initiated in 2016 to support the EIA and permitting process in accordance with the Horne 5 Project timeline.

The Horne 5 Project will require a provincial decree. It is subject to a provincial impact assessment study, including public hearings to be held by the BAPE as forecasted production (15,500 tpd average over LOM) is over the 2,000 tpd threshold outlined in the applicable regulation.

A project notification and description was submitted to authorities in 2016 as the first step of the environmental assessment process and an updated version was resubmitted to support the addition of a TMF and pipelines.

On December 6, 2017, Falco was advised by the Canadian Environmental Assessment Agency (Government of Canada) that the Horne 5 Project is not a designated activity under the Regulations Designating Physical Activities pursuant to the Canadian Environmental Assessment Act, 2012. Therefore, the Horne 5 Project is not subject to the federal environmental assessment; however, there will be other federal authorizations to be obtained.

The environmental impact study (EIS) was filed with the MELCC at the beginning of January 2018 and Falco announced that the EIS was published in the Environmental Assessment Registry of the MELCC on August 1, 2018.

A number of approvals, permits and authorizations will be required in addition to the provincial decree prior to and during project execution.

Waste Management

During the initial years of production, and prior to the TMF becoming operational, tailings that are not used for the production of paste backfill will be stored in the old drifts and mine workings at the historical Horne mine. The estimated historical underground openings capacity, together with the use of paste backfill, will accommodate about two years of tailings production; the remainder will be stored at the TMF. Paste backfill will continue to require tailings and will be used throughout the entire life of the mine.

Approximately 1.5 Mt of waste rock that will not be used for underground mining operations, e.g. bulkheads, drains, etc., will be hoisted to the surface and used as construction material at the TMF and managed to control acid rock drainage.

Project Closure

In accordance with the Mining Act (Québec), closure and restoration requirements have been developed to return the Horne 5 Project site to an acceptable condition, ensuring that the site is safe and the surrounding environment is protected. The closure cost estimate for the Horne 5 Project is based on dismantling the mine’s buildings at the Horne 5 mining complex and the restoration of the TMF. Falco intends to dismantle all buildings that will have served its mining operations. Given the proximity of the site to the city, some buildings could be reused or modified for other purposes.

The cost of restoring the Horne 5 mining complex and the TMF site is estimated to be $87.2 million. As required by the Ministère de l’Énergie et des Ressources Naturelles , this cost estimate includes the cost of site restoration, the post-closure monitoring as well as engineering costs (30%) and a contingency of 15%.

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In accordance with the regulations, Falco intends to post a bond as a guarantee against the site restoration cost.

Market Studies and Contracts

Metal Pricing

The long term prices for gold, silver, copper and zinc were estimated on the basis of discussions with experts, consensus analyst estimates and recently-published economic studies that were deemed to be credible. The forecasts used are meant to reflect the average metal price expectation over the life of the Horne 5 Project. The base case gold, silver, copper and zinc prices used for the economic analysis are 1,300 USD/oz, 19.50 USD/oz, 3.00 USD/lb, and 1.10 USD/lb, respectively.

NSR Calculations

The commercial terms, which include payable metal quantities, treatment charges, refining charges and penalties, where applicable, are based on long-term charges, which are expected to apply to products with similar characteristics to the Horne 5 copper and zinc concentrates and gold doré.

Contracts

Concession 156PTB was subject to a 2% NSR royalty in favour of Glencore, which was assigned to BaseCore Metals LP on December 5, 2017. Glencore has rights of first refusal with respect to purchase or toll process on all or any portion of the concentrates and other mineral products. Under the terms of the Glencore Offtake Agreements, Glencore will purchase from Falco the copper and zinc concentrate produced during the life of mine of the Horne 5 Project, which is currently estimated at 15 years. Also, under the terms of the Stream Agreement, Osisko will purchase up to 100% of the refined silver from the Horne 5 Project.

As of the effective date of the Feasibility Study, Falco had awarded a number of equipment and service contracts as part of the preconstruction activities of the Horne 5 Project. These contracts pertained to the overall engineering, procurement, supply, performance services and installation of the mine hoisting system, mine hoist room and headframe engineering, mine dewatering engineering and the purchase of major water treatment equipment.

Capital Cost Estimate

The total capital cost of the Horne 5 Project, including preproduction and sustaining costs, is estimated at $1.597 billion. The preproduction costs were calculated at $1.062 billion, including a $75 million contingency. The sustaining costs, excluding site rehabilitation costs, were calculated at $535 million. Sunk costs of $34.3 million have been committed to August 31, 2017.

The overall capital cost estimate developed in the Feasibility Study meets the AACE International class 3 estimate requirements and has an accuracy range of -10% and +15%. The capital cost estimate was compiled using a combination of quotations (budgetary and fixed price), database costs, and database factors. Items such as sales taxes, certain land acquisition, permitting, licensing, price escalation, feasibility studies and financing costs are not included in the cost estimate. The Horne 5 Project capital cost summary is outlined in Table 6.

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Table 6: Project capital costs (preproduction and sustaining)

WBS	Cost Area	Preproduction Capital Cost ($million)	Sustaining Capital Cost ($million)	Total Cost ($million)
000	General Administration	47.2		47.2
200	Underground Mine	256.9	325.1	582.0
300	Mine Surface Facilities	81.8	4.7	86.5
400	Electrical & Communication	18.3	2.3	20.5
500	Site Infrastructure	13.2	-	13.2
600	Process Plant	379.4	13.0	392.5
700	Community Infrastructure and Relocation	36.1	-	36.1
800	Tailings and Water Management	68.5	190.3	258.7
900	Indirects	85.8	-	85.8
999	Contingency	75.0	-	75.0
	Total	1,062.1	535.4	1,597.5
	Less Outlays to August 31, 2017	(34.3)	-	(34.3)
	Site Reclamation and Closure	-	87.2	87.2
	Salvage Value	-	(45.0)	(45.0)
	Total - Forecast to Spend	1,027.8	577.5	1,605.4

Note: Sustaining costs include indirects and contingency.

All capital costs for the Horne 5 Project have been distributed against the development schedule to support the economic cash flow model.

Operating Cost Estimate

The operating cost estimate is based on a combination of experience, reference project, budgetary quotes and factors as appropriate with a feasibility study. The target accuracy of the operating cost is +/-10%. No cost escalation or contingency has been included within the operating cost estimate.

The operating cost estimate in the Feasibility Study includes the costs to mine, process the mineralized material to produce copper and zinc concentrates, gold doré, tailings and water management and environment services, and general and administration expenses.

The average operating cost over the LOM is estimated to be 41.00 $/t milled. Total LOM and unit operating cost estimates are summarized in Table 7.

Table 7: Project operating costs

Cost Area	LOM Total ($million)	Average ($million/year)	Average ($/tonne)	OPEX (%)
Mining	1,020	68	12.60	31
Processing	1,654	110	20.45	50
Tailings, Water Treatment and Environment	411	27	5.08	12
General and Administration	231	15	2.86	7
Total	3,316	221	41.00	100

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It is anticipated that 496 employees (staff and labour) will be required for operations during the period without a surface TMF. Once the TMF is in place (2023), the number of employees required is expected to increase to approximately 502. Table 8 provides a summary of the employees by facility.

Table 8: Employee summary - all areas

Facility Area	Number
Underground Mine(1)	325
Process Plant (Including Paste Plant)	93
Tailings, Water Treatment and Environment(2)	22
General and Administration	62
Total - Horne 5 Mining Complex	502

Notes:

(1) Total does not include employees for underground tailings service prior to the surface TMF operations.

(2) Total includes employees required by the surface TMF once operations begin at the facility.

Project Economics

The economic/financial assessment of the Horne 5 Project was carried out using a discounted cash flow approach on a pre-tax and after-tax basis, based on Q2-2017 metal price projections in U.S. currency and cost estimates (CAPEX and OPEX) in Canadian currency. Inflation or cost escalation factors were not taken into account. An exchange rate of 0.78 USD for 1.00 CAD has been assumed over the life of the Horne 5 Project. The base case gold, silver, copper and zinc prices are 1,300 USD/oz., 19.50 USD/oz., 3.00 USD/lb and 1.10 USD/lb, respectively. The input parameters used and results of the financial analysis are presented in Table 9.

Over the life of mine, a total of 3.294 Moz of gold (Payable) (Average annual: approximately 219,000 oz) will be produced.

The pre-tax base case financial model resulted in an internal rate of return of 18.9% and a net present value of $1,297 million using a 5% discount rate. The pre-tax payback period is 5.2 years.

On an after-tax basis, the base case financial model resulted in an IRR of 15.3% and a NPV of $772 million using a 5% discount rate. The after-tax payback period is 5.6 years.

The all-in sustaining costs over the LOM are 399 USD/oz net of by-product credits, including royalties and silver stream, which generates an operating margin of 901 USD/oz.

Table 9: Financial Analysis Summary

Description	Unit	Value
Total material mined	tonnes	80,896,876
Average Diluted Gold Equivalent Grade	g/t AuEq	2.37
Average Diluted Gold Grade	g/t Au	1.44
Total Gold Contained	oz	3,740,871
Total Gold Produced	oz	3,338,965
Total Gold Payable	oz	3,294,197
Total Silver Payable	oz	26,289,869
Total Copper Payable	million lbs	229

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Description	Unit	Value
Total Zinc Payable	million lbs	1,007
Average Annual Gold Production	Au oz per year	222,598
Average Annual Payable Gold Production	Au oz per year	219,462
Preproduction Capital Cost (less outlays as of August 31, 2017)	$ million	1,028
Sustaining Capital	$ million	535
Site Restoration Cost	$ million	87.2
Salvage Value	$ million	45
Overall Operating Cost	$ per tonne ($/t) milled	41.00
All-in Sustaining Costs (“AISC”)	USD/oz	399
LOM Royalties (2% NSR)	$ million	157
Total LOM Pre-Tax Cash Flow	$ million	2,772
LOM Taxes (Income and Mining)	$ million	1,006
Total LOM After-Tax Free Cash Flow	$ million	1,766
Average Annual After-Tax Free Cash Flow	$ million	187
Pre-Tax Summary
Pre-Tax NPV (@ 5% Discount Rate)	$ million	1,297
Pre-Tax IRR	%	18.9
Pre-Tax Payback	years	5.2
After-Tax Summary
After-Tax NPV (@ 5% Discount Rate)	$ million	772
After-Tax IRR	%	15.3
After-Tax Payback	years	5.6

A financial sensitivity analysis was conducted on the Horne 5 Project’s after tax NPV and IRR using the following variables: capital cost, including preproduction and sustaining, operating costs, USD:CAD exchange rate, and the price of gold.

The graphical representations of the financial sensitivity analysis on NPV and IRR are depicted in Figure 5 and Figure 6. The sensitivity analysis reveals that the USD:CAD exchange rate has the most significant influence on both NPV and IRR compared to the other parameters, based on the range of values evaluated. After the USD:CAD exchange rates, NPV was most impacted by changes in the gold price and then to a lesser but equal extent by variations in operating costs and capital costs. It should be noted that the economic viability of the Project will not be significantly negatively impacted by variations in the capital cost, within the margins of error associated with the Feasibility Study capital cost estimate.

After the USD:CAD exchange rates, the Horne 5 Project’s IRR was most impacted by variations in the capital cost and to a lesser extent by variations in gold price, followed by the operating costs.

Overall, the NPV and IRR of the Horne 5 Project are positive over the range of values used for the sensitivity analysis

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Figure 5: Net present value (5% discount rate, after-tax) sensitivity analysis

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Figure 6: Internal rate of return (after-tax) sensitivity analysis

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Project Organization

The execution of the Horne 5 Project will be directly managed by the Falco project management team. The engineering and construction works will be contracted out to qualified firms and contractors under the direct supervision of Falco. Procurement and project control functions such as scheduling, cost control, project logistics and site supervision will be executed directly by Falco personnel.

Contractors will carry out all project development activities, including rehabilitation and dewatering of the various historic underground mines, developing and installing the underground fixed infrastructure, water treatment plants, conveyor systems and process plant equipment as well as renovating the existing site buildings and constructing the planned surface TMF. The preliminary on-site workforce requirement for construction, including infrastructure, process plant, and development of the underground mine is expected to peak at approximately 950 individuals.

The projected timeline (as filed in the Feasibility Study) is subject at all times to matters that are not within the exclusive control of Falco. These factors include the ability to obtain, on terms acceptable to Falco, financing, governmental and other third parties’ approvals, licenses, rights of way and surface rights.

Interpretations and Conclusions

The Feasibility Study was prepared by a group of independent consultants to demonstrate the economic viability of an underground mine and process plant complex targeting all mineral resources defined in the Horne 5 Project. The Feasibility Study provides a summary of the results and findings from each major area of investigation. Standard industry practices, equipment and processes were used in the Feasibility Study. To date the QPs are not aware of any unusual or significant risks or uncertainties that could materially affect the reliability or confidence in the Horne 5 Project based on the information available.

The results of the Feasibility Study indicate that the proposed Project has technical and financial merit using the base case assumptions. The results are considered sufficiently reliable to guide Falco’s management in a decision to advance to the next stage of development: that being mainly the start of the dewatering program, detailed engineering, project financing and permitting.

Risks and Opportunities

An analysis of the results of the investigations has identified a series of risks and opportunities associated with each of the technical aspects considered for the development of the Horne 5 Project.

The most significant potential risks associated with the Horne 5 Project are:

• Ability of Falco to obtain financing, governmental and other third party approvals, licenses, rights of way and surface rights in a timely manner and on terms acceptable to Falco;

• Mine dewatering volume could be greater or lower, and water quality could be better or worse than estimated;

• Condition of historical mine openings and infrastructure could be worse than anticipated;

• The actual rock mass behaviour could differ from expected and influence stope dimensions, pillar recovery, ground support, mining and development sequences, as well as dilution and recovery. These could negatively affect the Horne 5 Project economics;

• Inability to achieve production targets with new technologies;

• Uncertainties with respect to the underground volumes available for tailings storage;

• Overestimation of available storage space would result in the surface TMF being required at an earlier stage of the Horne 5 Project; and

• Commodity price and exchange rate fluctuations.

Many of the previous noted risks are common to most mining projects, many of which may be mitigated, at least to some degree, with adequate engineering, planning and pro-active management.

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There are a number of opportunities that could improve the economics, timing and/or permitting potential of the Horne 5 Project.

The key opportunities that have been identified at this time are as follows:

• There is significant exploration potential for discoveries at depth and around the Horne 5 Project. Historical work did not focus on gold. The possibility exists to increase resources and extend mine life;

• Further definition drilling may convert some of the existing Inferred mineral resources to the Indicated or Measured Resource categories;

• Investigating the potential to transfer larger quantities of tailings to the historical underground mines, thus lowering the volume sent to the TMF, may lead to reduced OPEX and CAPEX;

• An improved conceptual TMF design and tailings pipeline routing through additional geotechnical and engineering studies could potentially reduce CAPEX;

• The leach-CIP circuits in the process plant could be replaced by CIL circuits. A trade-off study is recommended to select the circuit that has the best overall economics. Potential CAPEX and OPEX savings as well as increased gold recoveries may be realized; and

• Application of pre-assembled steel structures, pre-cast foundations and pre-fabricated buildings could reduce capital costs and shorten the on-site construction period.

Recommendations

The qualified persons recommend that the project proceed to the detailed engineering phase and that project execution activities commence at Falco's discretion. Important activities that need to be initiated or completed to maintain the proposed execution schedule are as follows:

• Complete negotiations in a timely manner to a obtain third party approvals, licenses, rights of way and surface rights required by the project as described in the Feasibility Study;

• The environmental work, community engagement and permitting should continue as needed to support Falco’s development plans;

• The relocation program should be initiated for the buildings located on the Horne 5 mining complex site;

• The preproduction dewatering program of the historical mines surrounding the Horne 5 deposit;

• The EIA should be completed and submitted;

• The early works program should be initiated and detailed engineering completed for the headframe and hoist room; and

• Secure financing.

The conduct of the foregoing activities remains subject to Falco obtaining the required licenses from the owner of the mining infrastructure. For greater certainty, such licenses will include a complete indemnity relating to the operation, restoration and rehabilitation of such infrastructure.

Update on Exploration and Development Activities

Falco has been working diligently at advancing the Horne 5 Project, focusing mainly on securing the necessary authorizations to proceed, optimizing its construction and operational approach, and reviewing the financial structure to fund the development of the Horne 5 Project.

Authorizations to Proceed

Falco continues to work with various stakeholders to secure the necessary permits and authorizations required to proceed with the development of the Horne 5 Project.

Falco has been in negotiations with third parties to obtain the necessary approvals to conduct the business in connection with the development and construction of the Horne 5 Project. Falco has yet to receive formal approvals and licenses from Glencore and other third parties but has been in constant discussions regarding the requirements to obtain such approvals and licenses.

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Falco’s team is working on revising some components of its environmental impact assessment (“ EIA ”) and meeting with various stakeholders to further mitigate the impacts of the Horne 5 Project. Falco is also benefiting from the input of its Consultation Committee in revising its EIA submission.

Falco is in the process of finalizing various studies in order to answer MELCC’s questions following the filing of the EIA. Mining titles and final authorizations from Glencore and other third parties will complete the EIA submission in view of securing its admissibility from the Québec Government. Subsequently, Falco expects to undertake a formal public consultation process under the supervision of the BAPE in accordance with Québec laws.

Specific activities initiated, advanced or completed by Falco for the environmental permitting process over the last eighteen months included:

• An updated Air Modelling and Air Emission Reduction Plan which evaluated the impact of the Horne 5 Project on air emissions and supported Falco’s position that the impact is negligible;

• Waste geochemical studies, key to establishing the Horne 5 Project’s Waste Management Plan and anticipated synergies with Glencore;

• TMF geochemical and geotechnical investigation providing data to improve the design basis for the TMF;

• The Horne 5 mining complex geotechnical investigation;

• Circulation Safety Studies for waste rock alternative routing;

• GHG (Green House Gas) Reduction Plan;

• Continued Advancement of the Fish Habitat Compensation Plan;

• Vibration rate sampled and analysed;

• Emergency Preparedness Plan for Construction and Operation;

• Crown pillar investigation; and

• Pipeline routing consultation meetings with stakeholders.

Stakeholder Engagement

Falco is committed to taking a proactive approach to its public consultation process and has been working diligently to identify as many stakeholders as possible in the Rouyn-Noranda and Abitibi region. Since March 2016, more than 60 private and public community meetings have been held with various stakeholders. In November 2017, Falco held its initial Horne 5 Project public presentation and information session in the City of Rouyn-Noranda. Approximately 140 individuals attended the meeting and Falco outlined various aspects of the Horne 5 Project, and responded to their observations and questions. A second public presentation of the Project and its impacts was held in June 2018 (15 thematic kiosks) and more than 150 people attended the event and the dialogue is on going. Two other public meetings were held on in October 2019 and December 2019, respectively, in the community of d’Alembert and for the residents of Lac Dufault/North Noranda borough to consult and to address concerns on protecting the Lac Dufault waters.

Over the last eighteen months, the following key stakeholder activities were initiated or completed:

• Discussions on social issues such as housing and emergency preparedness;

• In-depth technical sessions on water impacts from the Horne 5 Project with representatives of the community bearing an interest in water protection;

• Developing a “Community Portrait”, which would be used as a baseline for social monitoring programs;

• The continued consultation process on pipeline routing with land and mining rights owners both at Horne 5 mining complex (for dewatering and operations) and towards the future TMF; and

• Consultation activities with local land owners (hunting camps and sugar shacks) near the TMF.

Based on numerous community meetings held throughout the region, Falco observes strong community support for the Horne 5 Project. Development of the Horne 5 Project would bring substantial economic development to the City of Rouyn-Noranda and the surrounding region. A construction workforce of up to

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900 people would be required at the peak of the Horne 5 Project’s 18-month construction period and the operating mine would provide direct employment for approximately 500 people over its 15-year operating life.

Falco has created a consultation committee (the “ Consultation Committee ”) which is composed of representatives from the community. Falco remains committed to working with various stakeholders to finalize a plan for the Horne 5 Project that will maximize benefits for the entire community, our shareholders and other stakeholder groups. The mandate of the Consultation Committee is to propose enhancements to optimize cohabitation with all stakeholders and ensure that the consultation and engagements plan has been implemented and has fulfilled its objective. For 2020, Falco has prioritized activities on social impacts of the Horne 5 Project.

Dewatering Phase - Geotechnical Work Investigation

The dewatering of the old underground workings (former Horne and Quemont mines) constitutes the initial phase of the development of the Horne 5 Project and involves geotechnical analysis to mitigate risk in the long term associated with the dewatering stage of the old underground workings. As part of the risk assessment for the dewatering phase, Falco collaborated with Glencore on an initial geotechnical program to gather information and analyse the risks associated with the development of the Horne 5 Project.

During the year ended June 30, 2020, Falco continued to collaborate with Glencore, initiating a second phase of geotechnical work (conducted by Falco) and progressing on various mitigation measures to bring the Horne 5 Project to the dewatering phase. Falco has completed the geotechnical assessment and proposed mitigation measures for the Quemont North Area (closest to the future Horne 5 Project infrastructures) and completed an induced seismicity assessment on the potential impact generated by the Horne 5 Project. Falco continues discussions with Glencore and submits technical documentation as required to respond to concerns related the development and operation of the Horne 5 Project. Key steps have been accomplished and collaboration is on-going. Falco’s focus is on the advancement of Glencore’s approval of the dewatering phase of the Horne 5 Project.

In addition to being subject to the applicable legal framework, the development of the Horne 5 Project is subject to a contractual framework whereby the obtaining of the required license to operate from Glencore is subordinated to the entering into a comprehensive financial guarantee arrangement with Glencore in order to provide adequate financial protection to this operation.

In order to further investigate and mitigate geotechnical and other technical risks, and to identify additional synergies, Falco has collaborated with Glencore to develop the Work Plan.

Major water treatment facility components were received throughout the spring and summer of 2018. The treatment facility and pumping system will have a capacity of 600 cubic metres per hour. The application for the certificate of authorization required for the dewatering has been filed, but its review has been suspended until authorization of Glencore and other third parties have been received.

Detailed Engineering

Falco commenced the detailed engineering in relation to the dewatering program, focusing on the water treatment plant, the electrical sub-station and hoisting facilities. Falco has delayed the completion of the detailed engineering activities pending additional financing.

Hoisting System Construction and Delivery of Key Components

Construction and detailed engineering of the hoist building, which will host the auxiliary and service hoisting systems, commenced in December 2017. The concrete works are complete and the structural steel has been erected. The hoist building’s construction will enable Falco to start the mine dewatering and Quemont #2 shaft rehabilitation efforts efficiently and safely. Key auxiliary and service hoisting system components have been received.

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Acquisition Program

Falco acquired land, surface rights and strategic buildings near the Horne 5 Project footprint. As such, Falco acquired specific infrastructure and buildings from third parties, exercised its existing option to acquire land from the city of Rouyn-Noranda, and signed several other land acquisition agreements. The total purchase price of these acquisitions was $9 million.

Construction and Operations

The construction and engineering team of Falco is reviewing various aspects of the construction to improve the execution and the operability functions. Falco continues to liaise with various suppliers and contractors to finalize its execution plan.

Falco is developing various protocols to mitigate the impact of the planned operation on its stakeholders and is also updating its design to increase efficiency and reduce costs.

Pavilion Quemont School Construction

Historically, the Centre Polymétier was using the Pavilion Quemont School as an adult education and professional development school (the “ Pavilion ”). As part of the Horne 5 Project, Falco has built an extension to the Centre Polymétier on the site of La Source Secondary School and the institutional activities have been permanently relocated to this new location. Falco delivered the Pavilion to the school board of the Commission scolaire de Rouyn-Noranda in August 2018. The Pavilion was delivered in exchange for existing property and infrastructure assets that will be used by Falco during development and mine operations. The total relocation and construction costs of the Pavilion were $22.5 million. The Pavilion was delivered to Commission scolaire de Rouyn-Noranda on time and on budget.

Financing

Falco continues to discuss with a number of financial institutions, government agencies, investors and shareholders the opportunities to secure additional funding for the advancement and development of the Horne 5 Project.

On October 27, 2020, Falco entered into agreements with Glencore related to the Horne 5 Project. The agreements with Glencore include the $10 million Glencore Convertible Debenture bridge financing to fund the continued advancement of the Horne 5 Project and the Glencore Offtake Agreements.

Project Timeline

The Horne 5 Project timeline is subject at all times to matters that are not within the exclusive control of Falco. These factors include the ability to obtain, on terms acceptable to Falco, financing, governmental and other third parties’ approvals, licenses, rights of way and surface rights. Management expects to release an amended projected timeline in the course of calendar 2021 upon gaining a more comprehensive understanding of the potential terms and conditions relating to some of these factors.

Exploration Activities

During the year ended June 30, 2020, Falco has incurred the following costs on its exploration and evaluation assets in the Rouyn-Noranda region:

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	Year ended June 30 2020 Central Camp(i) Other Properties(ii) Total $ $ $ 12,251,099 8,919,722 21,170,821 9,157 67,480 76,637 13,737 123,911 137,648 - 38,758 38,758 16,335 128,415 144,750 11,489 121,110 132,599 50,718 479,674 530,392 - (206,705) (206,705) 50,718 272,969 323,687 (48,944) (1,117,137) (1,166,081) 12,252,873 8,075,554 20,328,427	Year ended June 30,
		2019
		**Total **
Balance – beginning of the period		$ 22,308,274
Compensation Drilling and data compilation Geology Geophysics Administrative and other Total for the year Refundable tax credits for the year Total for the year, net of tax credits Write-offs for the period(iii)		234,220 2,036,017 229,345 338,964 389,781
		3,228,327 16,745
		3,245,072 (4,382,525)
Balance – end of theperiod		21,170,821

(i) The Central Camp is located north of the Horne 5 Project and covers an area of approximately 289 square kilometers, including many former gold and base metal producers.

(ii) Including the Noranda Camp properties.

(iii) During the years ended June 30, 2020 and 2019, Falco wrote-off 100% of the capitalized historical costs related to specific areas where claims are not expected to be renewed, where Falco has decided to discontinue exploration and evaluation activities or the assets carrying amount exceeds its recoverable amount.

During the year ended June 30, 2020, Falco completed statutory obligations on existing mining claims.

RISK FACTORS

Risk Factors

Falco’s business being the acquisition, exploration and development of mineral properties in Canada, an investment in the Falco Shares is speculative and involves a high degree of risks. The risk factors listed below could materially affect Falco’s financial condition and/or future operating results, and could cause actual events to differ materially from those described in forward-looking statements relating to or made by Falco.

In evaluating Falco and its business, the readers should carefully consider the risk factors which follow and the risks set forth in Falco’s continuous disclosure documents filed on SEDAR. These risk factors may not be a definitive list of all risk factors associated with an investment in Falco or in connection with its business and operations.

Title to property

Pursuant to an agreement between Falco and Glencore, Falco owns certain rights to minerals and title to certain mining titles, including rights to the minerals located below 200 meters from the surface of mining concession CM-156PTB, where the Horne 5 Deposit is located. Falco also owns certain surface rights surrounding the Quemont #2 shaft (located on mining concession CM-243). Under this agreement, ownership of the mining concessions remains with Glencore. In order to access the Horne 5 Project, Falco must obtain one or more licenses from Glencore, which may not be unreasonably withheld, but which may be subject to conditions that Glencore may require. These conditions may include the provision of a performance bond or other assurance to Glencore and the indemnification of Glencore by Falco.

This agreement with Glencore stipulates, without limitation, that a license shall be subject to reasonable conditions which may include, among other things, that activities at the Horne 5 deposit will be subordinated to the current use of the surface lands and subject to priority, over such activities. Any license may provide

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for, among other things, access to and the right to use the infrastructure owned by Glencore, including the Quemont #2 shaft and some specific underground infrastructure in the former Quemont and Horne mines.

Furthermore, Falco will also have to obtain a number of rights of way or other surface rights in order to construct and lay in the ground the pipeline that will carry the tailings to a TMF located approximately 11 km from the City of Rouyn-Noranda. Falco is also required to obtain definitive rights to the TMF site which are currently held by a third party.

While Falco believes that it should be able to obtain the licenses from Glencore in a timely manner and to obtain the required rights of way and other surface rights, and to obtain definitive rights to the TMF site, there can be no assurance that any such license, right of way or surface right or rights to the TMF rights will be granted, or if granted will be on terms acceptable to Falco. Any delay may also negatively impact the project schedule. Although Falco believes that it has taken reasonable measures to ensure proper title to its assets, there is no guarantee that title to any of assets will not be challenged or impugned.

Falco’s ability to finance its operations

The Corporation’s ability to continue its business operations is dependent on management’s ability to secure additional financing. Currently, Falco does not have any producing projects and no sources of revenue and any projects it develops will require significant capital expenditures. As a result, the Corporation may be required to seek additional sources of debt and equity financing in the near future. While the Corporation has been successful in raising financing in the past, its ability to raise additional equity financing may be affected by numerous factors beyond its control including adverse market conditions, commodity price changes and economic downturn. There is no assurance that Falco will be able to raise the funds required to continue its operations or that such financing will be sufficient to meet the Corporation’s objective or obtained on terms favourable to it. The failure to obtain the necessary financing could have a material adverse effect on Falco’s growth strategy, results of operations, financial condition and project scheduling. The development of the Horne 5 Project remains subject to, among other things, Falco securing adequate financing on conditions acceptable to it.

Falco has significant indebtedness

The Corporation has a significant amount of secured debt, including the Glencore Debenture and the Osisko Convertible Loan, and other secured obligations under the Stream Agreement. In addition, the Corporation currently intends to continue to seek additional financing in the future, which may include the issuance of additional unsecured or secured debt securities, equity securities and equity-linked securities. There can be no assurance as to the timing of any such financing or that any such additional financing will be completed on favorable terms, or at all. The Corporation’s liquidity may in the future be, negatively affected by the risk factors discussed elsewhere. If the Corporation’s liquidity is materially diminished, the Corporation might not be able to timely pay or refinance its debt and interest thereon.

Third party approvals

Falco may require the consent or approval of third parties in order to enter into or complete certain agreements or transaction necessary in the course of its operations. There can be no assurance that such third parties, which may include shareholders, regulatory bodies or entities with an interest in the applicable property or others, will provide the required approval or consent in a timely manner, or at all. Failure to obtain such third party approval may result in a material adverse effect on Falco’s operations and financial condition.

Community relations, social license and land claim

Maintaining a positive relationship with the communities in which Falco operates is critical to its business operations and the development of the Horne 5 Project.

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Falco may come under pressure to demonstrate that other stakeholders (including employees, communities surrounding operations and the countries in which they respectively operate) benefit and will continue to benefit from its commercial activities, and/or that it operates in a manner that will minimize any potential damage or disruption to the interests of those stakeholders.

Erosion of social licence or activities of third parties seeking to call into question social licence may have the effect of slowing down the development of new projects and potentially may increase the cost of constructing and operating these projects. Productivity may be reduced due to restriction of access, proceedings initiated or delays in permitting and there may also be extra costs associated with improving the relationship with the surrounding communities.

While the Corporation is committed to operating in a socially responsible manner and working towards entering into agreements in satisfaction of such requirements that its efforts will be successful, in which case interventions by third parties, there is no guarantee that its efforts will be successful, in which case interventions by third parties could have a material adverse effect on the Corporation’s business, financial position and operations.

At the present time, to the knowledge of Falco, none of the properties in which Falco has an interest is the subject of an aboriginal land claim. However, no assurance can be provided that such will not be the case in the future.

Permits, licences and approvals

The operations of Falco require licences and permits from various governmental authorities. Such licences and permits are subject to changes in regulations and in various operating circumstances. There can be no guarantee that Falco will be able to obtain all necessary licences and permits that may be required to maintain its business operations and mining activities including the development of the Horne 5 Project. In addition, if Falco proceeds to production on any exploration property, it must obtain and comply with permits and licences which may contain specific conditions concerning operating procedures, water use, the discharge of various materials into or on land, air or water, waste disposal, spills, environmental studies, abandonment and restoration plans and financial assurances. There can be no assurance that Falco will be able to obtain such permits and licences or that it will be able to comply with any such conditions.

Exploration, development and operations

The long-term profitability of Falco’s operations will be in part directly related to the cost and success of its exploration programs, which may be affected by a number of factors, including the Corporation’s ability to develop the Horne 5 Project into a mine and generate profits from it.

The decision as to whether a property contains a commercially viable mineral deposit and should be brought into production will depend upon the results of exploration programs and/or feasibility studies, and the recommendations of duly qualified engineers and/or geologists, all of which involves significant expense. Major expenditures are required to develop metallurgical processes and to construct mining and processing facilities at a particular site.

While the discovery of an ore body may result in substantial rewards, few properties which are explored are commercially mineable and ultimately developed into producing mines.

Climate change

Falco recognizes that climate change is an international and community concern which may affect the business and operations of Falco, directly or indirectly. The continuing rise in global average temperatures has created varying changes to regional climates across the globe, resulting in risks to equipment and personnel. Governments at all levels are moving towards enacting legislation to address climate change by regulating carbon emissions and energy efficiency, among other things. Where legislation has already been

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enacted, regulation regarding emission levels and energy efficiency are becoming more stringent. The mining industry as a significant emitter of greenhouse gas emissions is particularly exposed to these regulations. Costs associated with meeting these requirements may be subject to some offset by increased energy efficiency and technological innovation; however, there is no assurance that compliance with such legislation will not have an adverse effect on Falco’s business, results of operations, financial condition and its share price.

Extreme weather events (such as prolonged drought or freezing, increased flooding, increased periods of precipitation and increased frequency and intensity of storms) have the potential to disrupt operations and the transport routes. Extended disruptions could result in interruption to production which may adversely affect Falco’s business results of operations, financial condition and its share price.

Climate change is perceived as a threat to communities and governments globally. Stakeholders may increase demands for emissions reductions and call upon mining companies to better manage their consumption of climate-relevant resources (hydrocarbons, water etc.). This may attract social and reputational attention towards operations, which could have an adverse effect on Falco’s business, results of operations, financial condition and its share price.

Regulatory matters

Falco’s activities are subject to governmental laws and regulations. These activities can be affected at various levels by governmental regulation governing exploration and development, taxes, labour standards and occupational health, expropriation, mine safety, environment and other matters. Exploration and commercialization are subject to various federal, provincial and local laws and regulations relating to the protection of the environment. These laws impose high standards on the mining industry to monitor the discharge of wastewater and report the results of such monitoring to regulatory authorities, to reduce or eliminate certain effects on or into land, water or air, to progressively rehabilitate mine properties, to manage hazardous wastes and materials and to reduce the risk of worker accidents.

Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities enjoining or curtailing operations or requiring corrective measures, installation of additional equipment or remedial actions, any of which could result in significant expenditures. Falco may also be required to compensate private parties suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also possible that future laws and regulations, or more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspensions of Falco’s activities and delays in the exploration of properties.

Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on Falco and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

Environmental risks and hazards

Mining is capital intensive and subject to a number of risks and hazards, including environmental pollution, accidents or spills, industrial and transportation accidents, labour disputes, changes in the regulatory environment, natural phenomena (such as inclement weather conditions, earthquakes, pit wall failures and cave-ins) and encountering unusual or unexpected geological conditions. Such risk and hazards might impact Falco’s business. Consequently, many of the foregoing risks and hazards could result in damage to, or destruction of, Falco’s mineral properties or future processing facilities, personal injury or death, environmental damage, delays in or interruption of or cessation of their exploration or development activities, delay in or inability to receive required regulatory approvals, or costs, monetary losses and potential legal liability and adverse governmental action. Falco may be subject to liability or sustain loss for certain risks and hazards against which it does not or cannot insure or against which it may reasonably

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elect not to insure because of the cost. This lack of insurance coverage could result in material economic harm to Falco.

Mineral resource and mineral reserve estimates

Mineral resource and mineral reserve figures are only estimates. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. While Falco believes that the mineral resource and mineral reserve estimates, as applicable, in respect of properties in which Falco holds a direct interest reflect best estimates, the estimating of mineral resources and mineral reserve is a subjective process and the accuracy of mineral resource and mineral reserve estimates is a function of the quantity and quality of available data, the accuracy of statistical computations, and the assumptions used and judgments made in interpreting available engineering and geological information.

There is significant uncertainty in any mineral resource and mineral reserve estimate and the actual deposits encountered and the economic viability of a deposit may differ materially from estimates. Estimated mineral resources and mineral reserves may have to be re-estimated based on changes in prices of gold or other minerals, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence such estimates. In addition, mineral resources are not mineral reserves and there is no assurance that any mineral resource estimate will ultimately be reclassified as proven or probable mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability.

Reliance on historical data

Although Falco’s normal data verification procedures have been employed in connection with the calculations of the mineral resource estimation on the Horne 5 Project and sampling, analytical and test data underlying the estimated mineral resources have been verified by qualified persons, an extensive amount of historical data and records on the Horne 5 Project was relied on in establishing these calculations. Falco cannot provide any comfort that it can rely upon, verify or necessarily authenticate such historical information in connection with its exploitation of the Horne 5 Project. Falco cannot guarantee that the historical records that are available are free from material errors or inaccuracies. While Falco believes that the mineral resource and mineral reserve estimates in respect of its Horne 5 Project reflect best estimates, the estimating of mineral resources is a subjective process and the accuracy of mineral resource estimate is a function of the quantity and quality of available data, the accuracy of statistical computations, and the assumptions used and judgments made in interpreting available engineering and geological information. There is significant uncertainty in any mineral resource estimate and the actual deposits encountered and the economic viability of a deposit may differ materially from estimates.

Market price of the Falco Shares

The market price of Falco Shares is affected by many variables not directly related to the corporate performance of Falco, including the strength of the economy generally, the availability and attractiveness of alternative investments, and the breadth of the public market for the stock. The effect of these and other factors on the market price of the Falco Shares in the future cannot be predicted and may cause decreases in asset values, which may result in impairment losses.

Mergers, acquisitions or joint ventures

Falco may evaluate from time to time opportunities to merge, acquire and joint venture assets and businesses or conduct any other type of transaction. Global landscape has changed and there are risks associated to such transactions due to liabilities and evaluations with the aggressive timelines of closing transactions from increased competition.

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There is also a risk that the review and examination process might be inadequate and cause material negative outcomes. These transactions may be significant in size, may change the scale of Falco’s business and may expose it to new geographic, political, operating, financial and geological risks. Falco’s success will depend on its ability to identify suitable partners, conclude a transaction on acceptable terms and integrate operations successfully. Any transactions would be accompanied by risks, such as the difficulty of integrating the operations and personnel; the potential disruption of Falco’s ongoing business; the inability of management to maximize the financial and strategic position of Falco; the maintenance of uniform standards, controls, procedures and policies; dilution of Falco’s present shareholders or of its interests in its assets or the decision to grant interests to a joint venture partner.

There can be no assurance that Falco would be successful in overcoming these risks or any other problems encountered in connection with such transactions or joint ventures. There may be no right for shareholders to evaluate the merits or risks of any future transaction or joint venture undertaken except as required by applicable laws and regulations.

Attracting and retaining qualified management

Falco is dependent on certain members of management, particularly its President and Chief Executive Officer. The loss of their services could adversely affect Falco.

Falco is dependent on the services of key executives and other highly skilled personnel focused on advancing its corporate objectives as well as the identification of new opportunities for growth and funding. The loss of these persons or its inability to attract and retain additional highly skilled employees required for its activities may have a material adverse effect on Falco’s business and financial condition. Further, while certain of Falco’s officers and directors have experience in the exploration of mineral producing properties, Falco remains highly dependent upon contractors and third parties in the performance of their exploration and development activities. There can be no guarantee that such contractors and third parties will be available to carry out such activities on behalf of Falco or be available upon commercially acceptable terms.

Information system and cyber security

Falco uses different IT systems, networks, equipment and software and has adopted security measures to prevent and detect cyber threats. However, Falco and its counterparties may be vulnerable to cyber threats, which have been evolving in terms of sophistication and new threats are emerging at an increased rate. Unauthorized third parties may be able to penetrate network security and misappropriate or compromise confidential information, create system disruptions or cause shutdowns to Falco or its counterparties. Although Falco has not experienced any losses relating to cyber attacks or other information security breaches, there can be no assurance that there will be no such loss in the future. Significant security breaches or system failures of Falco or its counterparties, especially if such breach goes undetected for a period of time, may result in significant costs, loss of revenue, fines or lawsuits and damage to reputation. The significance of any cyber security breach is difficult to quantify, but may in certain circumstances be material and could have a material adverse effect on Falco’s business, financial condition and results of operations.

Competition

Falco’s activities are directed towards the exploration, evaluation and development of mineral deposits. There is no certainty that the expenditures to be made by Falco will result in discoveries of commercial quantities of mineral deposits. There is aggressive competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. Falco will compete with other interests, many of which have greater financial resources than it will have, for the opportunity to participate in promising projects. Significant capital investment is required to achieve commercial production from successful exploration efforts, and Falco may not be able to successfully raise funds required for any such capital investment.

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Conflicts of interest

Certain directors and officers of Falco also serve as directors and officers of other companies involved in natural resource exploration and development; consequently, there is a possibility that such directors and officers will be in a position of conflict of interest. Any decision made by such directors and officers involving Falco will be made in accordance with their duties and obligations to deal fairly and in good faith with Falco and such other companies. In addition, such directors and officers will declare, and refrain from voting on, any matter in which such directors and officers may have a material conflict of interest. As applicable, Falco may form a special committee of independent directors on an ad hoc basis.

Factors beyond the control of Falco

The potential profitability of mineral properties is dependent upon many factors beyond Falco’s control. For instance, world prices of and markets for minerals are unpredictable, highly volatile, potentially subject to governmental fixing, pegging and/or controls and respond to changes in domestic, international, political, social and economic environments. Another factor is that rates of recovery of minerals from mined ore (assuming that such mineral deposits are known to exist) may vary from the rate experienced in tests and a reduction in the recovery rate will adversely affect profitability and, possibly, the economic viability of a property. Profitability also depends on the costs of operations, including costs of labour, equipment, electricity, environmental compliance or other production inputs. Such costs will fluctuate in ways Falco cannot predict and are beyond Falco’s control, and such fluctuations will impact on profitability and may eliminate profitability altogether. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for development and other costs have become increasingly difficult, if not impossible, to project. These changes and events may materially affect the financial performance of Falco and they may also negatively impact the project schedule.

Coronavirus (COVID-19)

Falco faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt, directly or indirectly, its operations and may materially and adversely affect its business and financial conditions.

Falco’s business could be adversely impacted by the effects of the coronavirus or other epidemics. In December 2019, a novel strain of the coronavirus emerged in China and the virus has spread to several other countries in 2020, including Canada and the U.S., and infections have been reported globally. The extent to which the coronavirus impacts Falco’s business, including its operations and the market for its securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak. In particular, the continued spread of the coronavirus globally, together with extraordinary actions taken by public health and governmental authorities to contain the spread of COVID19, including travel bans, social distancing, quarantines, stay-at-home orders and similar mandates to reduce or cease normal operations, could materially and adversely impact Falco’s business including without limitation, employee health, workforce productivity, increased insurance premiums, limitations on travel, the availability of industry experts and personnel, operations and business of third party operators, and other factors that will depend on future developments beyond Falco’s control, which may have a material and adverse effect on its business, financial condition and results of operations. There can be no assurance that Falco’s personnel will not be impacted by these pandemic diseases and governmental measures and ultimately see its workforce productivity reduced or incur increased medical costs / insurance premiums as a result of these health risks.

In addition, a significant outbreak of coronavirus could result in a widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could have an adverse effect on the demand for precious metals and Falco’s future prospects.

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Potential fraud and corruption

Falco is subject to risks related to potential to gain benefits from improper transactions and financial reporting to hide operational deficiencies or enhance remuneration. Other risks include the potential for fraud and corruption by suppliers, personnel or government officials and which may implicate Falco, compliance with applicable anti-corruption laws.

Reputational risks

Reputational risk is the risk that an activity undertaken by an organization or its representatives will impair its image in the community or lower public confidence in it, resulting in loss of revenue, legal action or increased regulatory oversight and loss of valuation and share price. Possible sources of reputational risk could come from, but not limited to, operational failures, non-compliance with laws and regulations, or leading an unsuccessful financing. In addition to its risk management policies, controls and procedures, Falco has a formal Code of Ethics to help manage and support Falco’s reputation.

DIVIDENDS

Since its incorporation, Falco has not paid any cash dividends on its outstanding common shares. Any future dividend payment will depend on Falco’s financial needs to fund its exploration programs and its future financial growth and any other factors that the board deems necessary to consider in the circumstances. It is highly unlikely that any dividends will be paid in the next financial year. Falco is limited in its ability to pay dividends on its common shares by generally applicable restrictions under corporate law referred to “solvency tests”.

DESCRIPTION OF CAPITAL STRUCTURE

Falco Shares

Falco is authorized to issue an unlimited number of common shares without nominal or par value.

The rights, privileges, conditions and restrictions attaching to the Falco Shares, as a class, are equal in all respects and include the following rights.

Dividends

The holders of the Falco Shares shall have the right to receive, if, as and when declared by the Falco Board, any dividend on such dates and for such amounts as the Falco Board may from time to time determine.

Participation in case of Dissolution or Liquidation

The holders of the Falco Shares shall have the right, upon the liquidation, dissolution or winding-up of Falco, to receive the remaining property of Falco pro-rata among all holders of Falco Shares.

Right to Vote

The holders of the Falco Shares shall have the right to one (1) vote per share at any meeting of the shareholders of Falco.

As of February 16, 2021, 226,827,864 Falco Shares were issued and outstanding.

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Falco Warrants

The following table sets out the number of Falco Shares issuable pursuant to outstanding Falco Warrants, along with the exercise price and expiry date as of the date hereof.

Number of Falco Warrants	Exercise Price per Falco Share	Expiry Date
350,000	$1.15	October 4,2022
6,052,222	$0.75	November 28, 2021
12,195,122	$0.51	October 27, 2021
10,664,324	$0.69	November 27, 2022

Falco Options

The following table sets out the number of Falco Shares issuable pursuant to outstanding Falco Options, along with the exercise price and expiry date of each respective grant as of the date hereof.

Number of Falco Options	Exercise Price per Falco Share	Expiry Date
129,251	$0.46	March 10, 2021
946,800	$0.98	February2,2022
143,600	$0.89	March 22, 2022
1,740,100	$0.96	November 14, 2022
266,400	$0.90	February 21, 2023
6,602,333	$0.30	June 26, 2024
100,000	$0.30	June12,2025
6,076,000	$0.45	November 20, 2025

Glencore Convertible Debenture

The Glencore Convertible Debenture (principal amount of $10,000,000) can be converted into Falco Shares within ten (10) days of the Glencore Maturity Date or on the Glencore Maturity Date at Glencore’s sole option at a conversion price of $0.41 per Falco Share.

Osisko Convertible Loan

At any time from November 27, 2021 to December 31, 2022, the Osisko Convertible Loan (principal amount of $17,596,136) can be converted at Osisko’s sole option into Falco Shares at a conversion price of $0.55 per Falco Share.

MARKET FOR SECURITIES

Trading Price and Volume

Falco Shares

The Falco Shares are currently listed on the TSX-V. The following table sets forth the price range and trading volume for the Falco Shares on the TSX-V, listed under the symbol “FPC”, for the periods listed below.

Date	High ($)	Low ($)	Volume
February 2021(1)	0.46	0.39	1,910,011
January 2021	0.45	0.37	3,757,253

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Date	High ($)	Low ($)	Volume
December 2020	0.465	0.39	4,065,811
November 2020	0.465	0.365	6,380,303
October 2020	0.465	0.375	6,449,071
September 2020	0.47	0.375	3,018,969
August 2020	0.60	0.42	4,113,755
July 2020	0.53	0.365	8,961,308
June 2020	0.41	0.27	4,536,396
May 2020	0.315	0.28	2,551,631
April 2020	0.345	0.175	8,966,682
March 2020	0.285	0.17	4,297,390
February 2020	0.32	0.215	3,382,151
January 2020	0.36	0.275	2,895,540
December 2019	0.335	0.19	3,729,958
November 2019	0.225	0.19	1,742,991
October 2019	0.255	0.205	1,342,984
September 2019	0.255	0.205	2,734,186
August 2019	0.305	0.20	7,372,266
July 2019	0.28	0.22	2,772,836
Note: (1) Up to and including February 16, 2021.

The closing price of the Falco Shares on the TSX-V on February 16, 2021 was $0.425.

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DIRECTORS AND OFFICERS

Name, Address, Occupation and Security Holdings

The following table sets out the Falco directors and officers, together with their province or state and country of residence, positions and offices held, principal occupations during the last five years, the years in which they were first appointed as directors and/or officers of Falco and the number of Falco Shares and Falco Options beneficially owned, directly or indirectly, or over which control or direction is exercised by them, as of the date of this AIF.

Name and place of residence	Principal occupation during the last five (5) years (5)	Director and/or Officer since	Securities of Falco beneficially owned(5)
Luc Lessard(3) St-Bruno-de-Montarville, Québec President and Chief Executive Officer and Director	President and Chief Executive Officer of Falco. Senior Vice President, Technical Services of Osisko from February 2016 to December 2020. Chief Operating Officer of Osisko Development since November 25, 2020.	2014	1,808,003 Falco Shares 3,024,851 Falco Options
Mario Caron(1)(2)(3)(4) Toronto, Ontario Lead Director	Corporate Director.	2015	82,555 Falco Shares 1,086,600 Falco Options
Bryan A. Coates Mont-Tremblant, Québec Chair	President of Normetal Consulting Inc. since December 2019. President of Osisko from June 2014 to December 2019.	2017	707,280 Falco Shares 1,079,800 Falco Options
Benoit Brunet(6) Varennes, Québec Director	Vice President, Business Strategy of Osisko from February 2020 to November 2020. Vice President, Finance and Chief Financial Officer and Corporate Secretary of Osisko Development since November 25, 2020. Prior to February 2020, Senior Associate, Québec Private Equity group at Caisse de dépôt et placement du Québec.	2020	630,000 Falco Options
Paola Farnesi(1)(2)(4) Montréal, Québec Director	Vice President and Treasurer of Domtar Corporation.	2016	97,089 Falco Shares 1,155,200 Falco Options
Angelina Mehta(1)(4) Ile-Perrot, Québec Director	Director, Investment Banking (Mining) at the Laurentian Bank Securities Inc. since April 2019. From September 2017 to April 2019, Vice President of Operations for North American Nickel. From September 2017 to March 2019, Senior Advisor Investment Banking at Paradigm Capital Inc. From February 2013 to August 2017, Investment Manager for Sentient Asset Management.	2019	36,667 Falco Shares 1,183,333 Falco Options
Chantal Sorel(2)(3) Montréal, Québec Director	Corporate Director. Executive Vice President and Managing Director, Capital, at SNC-Lavalin until March 2019. From 2014 to 2015, Senior Vice President, Business Development, Infrastructure Group, at SNC-Lavalin.	2017	110,000 Falco Shares 1,075,700 Falco Options

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Name and place of residence	Principal occupation during the last five (5) years (5)	Director and/or Officer since	Securities of Falco beneficially owned(5)
Ronald Bougie Montréal, Québec Vice President, Engineering and Construction	Vice President, Engineering and Construction of Falco. Executive Vice President, Engineering, Construction and Operations for the McInnis cement project from July 2016 to July 2017.	2018	1,394,300 Falco Options
Hélène Cartier Montréal, Québec Vice President, Environment and Sustainable Development	Vice President, Environment and Sustainable Development of Falco.	2015	100,000 Falco Shares 1,402,300 Falco Options
Anthony Glavac Mercier, Québec Chief Financial Officer	Chief Financial Officer of Falco since November 2019. From October 2018 to November 2019, Interim Chief Financial Officer of Falco. From July 2017 to October 2018, Vice President, Corporate Controller of Falco. From 2015 to 2017 Director-Financial Reporting and Internal Controls at Dynacor Gold Mines.	2017	5,000 Falco Shares 632,000 Falco Options
Christian Laroche Granby, Québec Vice President, Metallurgy	Vice President, Metallurgy of Falco. Director Metallurgy for Osisko since 2015.	2017	383,100 Falco Options
André Le Bel Saint-Bruno-de- Montarville, Québec Vice President, Legal Affairs and Corporate Secretary	Vice President, Legal Affairs and Corporate Secretary of Falco and Osisko.	2015	20,000 Falco Shares 538,300 Falco Options
François Vézina Saint-Bruno-de- Montarville, Québec Vice President, Technical Services	Vice President, Technical Services of Falco and Osisko Development. He was Chief Operating Officer of Barkerville Gold Mines Ltd. from October 2018 to June 2019 and Vice President Project Development from September 2016 to October 2018. Director, Technical Services of Osisko from May 2017 to May 2018 and Mine Director from April 2015 to April 2017.	2017	156,500 Falco Shares 425,100 Falco Options

Notes:

(1) Member of the Audit Committee.

• (2) Member of the Compensation Committee.

• (3) Member of the Environment and Technical Committee.

• (4) Member of the Nominating and Corporate Governance Committee.

(5) The information as to principal occupations and securities of Falco beneficially owned has been furnished by each director and/or officer individually.

(6) On January 19, 2021, Osisko Development announced that Mr. Brunet accepted a role to return to the Caisse de dépôt et placement du Québec, effective at the end of February 2021.

Biographic Notes

Luc Lessard, Eng., President and Chief Executive Officer, Non-Independent Director

Mr. Luc Lessard has more than 30 years of experience in the mining industry and project development. He is the President and Chief Executive Officer of Falco and was Senior Vice President, Technical Services of Osisko from June 2015 to December 2020. Since November 25, 2020, he is the Chief Operating Officer of Osisko Development. Mr. Lessard was previously Chief Operating Officer of the Canadian Malartic

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Partnership (owned jointly by Agnico Eagle Mines Limited and Yamana Gold Inc.). From 2007 to 2014, he was the Chief Operating Officer and Senior Vice President of Engineering and Construction of Osisko Mining Corporation, which successfully developed the $1 billion Canadian Malartic gold mine and today being Canada’s largest gold mine. Mr. Lessard also previously held similar positions in Cambior Inc., which developed mining projects in Québec and in South America. Mr. Lessard holds a Bachelor’s degree in Mining Engineering, from Université Laval and is a member of the Ordre des ingénieurs du Québec .

Mario Caron, Eng., Independent Director

Mr. Mario Caron is a mining executive with over 40 years of experience in the mining industry in senior executive and board positions. His experience was gained nationally and internationally in both underground and open pits operations. Mr. Caron has been Chief Executive Officer and director with Axmin Inc, a company developing a gold project in Central African Republic and Tiberon Minerals Ltd., the developer of a tungsten/fluorspar mine in Vietnam. He was instrumental in obtaining the mining license for the Vietnamese project. He was also closely involved in the project financing, in the engineering and development of that project. As CEO of public companies, he secured mining licenses and various permits in numerous jurisdictions. He is the chairman of Alloycorp Mining Inc., a privatized company since August 2016 with a molybdenum deposit in British Columbia. Mr. Caron received his Bachelor of Engineering, Mining at McGill University and is a member of the Ordre des ingénieurs du Québec and the Association of Professional Engineers of Ontario.

Bryan A. Coates, CPA, CA, ICD.D, Chair, Non-Independent Director

Mr. Bryan A. Coates has more than 40 years of progressive experience within the global mining industry. He is President of Normetal Consulting Inc. and currently serves on a number of private and public company boards of directors. From June 2014 to December 2019, he was President of Osisko. He was previously Vice President, Finance and Chief Financial Officer of Osisko Mining Corporation, which successfully developed the $1 billion Canadian Malartic gold mine and today being Canada’s largest gold mine. During his career, Mr. Coates has gained expertise in project financing, financial controls, strategic development, risk management, government relations and sustainability. Mr. Coates holds an Honours Bachelor of Commerce from Laurentian University. He is a member of the Chartered Professional Accountants of Ontario and has obtained the ICD.D designation from the Institute of Corporate Directors. Mr. Coates is Osisko’s nominee to the Falco Board in accordance with the Osisko Investor Rights Agreement.

Benoit Brunet, CPA, Non-Independent Director

Mr. Benoit Brunet is Vice President, Finance and Chief Financial Officer and Corporate Secretary of Osisko Development since November 25, 2020. He was Vice President, Business Strategy of Osisko from February 2020 to November 2020. Prior to February 2020, he was with the Québec Private Equity group of the Caisse de dépôt et placement du Québec, one of the largest North American institutional investors where he helped deploy $700 million in the mining sector across the province of Québec. Up to his appointment with Osisko, he was overseeing investments totaling approximately $1.5 billion and known for having structured innovative financial instruments for some of the largest mining projects in Québec. As part of a world renowned institutional investor in terms of sustainability, Mr. Brunet was also exposed to best practices in sustainable investing and practices. Having worked for and with government institutionals, Mr. Brunet has an extensive knowledge in regards to government relations. Prior to joining the Caisse de dépôt et placement du Québec, Mr. Brunet worked at PricewaterhouseCoopers for the assurance group in Montréal. Mr. Brunet holds a CPA designation, an undergraduate and graduate degree in public accounting from the Université du Québec à Montréal . Mr. Brunet is Osisko Development’s nominee to the Falco Board in accordance with the Osisko Development Investor Rights Agreement.

Paola Farnesi, CPA, CA, ICD.D, Independent Director

Ms. Paola Farnesi is a senior financial professional with over 30 years of experience in corporate finance, financial reporting, M&A and risk management. She is currently Vice President and Treasurer of Domtar Corporation, responsible for negotiating and arranging in excess of $1 billion in corporate financings,

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overseeing an insurance portfolio of over $20 billion in insurable values and managing the investments of pension fund assets in excess of $3 billion. From 1994 to 2008, Ms. Farnesi held several other leadership positions at Domtar Corporation, including Vice President, Internal Audit, where she was responsible for the implementation and subsequent compliance efforts related to Sarbanes-Oxley. Prior to joining Domtar Corporation, Ms. Farnesi worked at Ernst & Young for the assurance group in Montreal. She serves on the Board of Directors of the Centaur Theatre Company since 2010. Ms. Farnesi holds a Bachelor of Commerce and a Graduate degree in Public Accountancy from McGill University, is a member of the Chartered Professional Accountants of Québec and obtained the ICD.D designation from the Institute of Corporate Directors.

Angelina Mehta, MBA, LLM, Independent Director

Ms. Angelina Mehta has over 20 years in the fields of finance and engineering and currently working as Director, Investment Banking (Mining) at Laurentian Bank Securities Inc. She was Senior Mining Advisor with Paradigm Capital Inc. in Investment Banking, as well as Vice President of Operations for North American Nickel. Over the years, she served as Investment Manager for Sentient Asset Management Canada and held various operational positions for multiple mining companies, including Rio Tinto’s subsidiary, Iron Ore Company of Canada. Ms. Mehta served on the Board of Directors of Women in Mining Canada from 2014 to 2019. Ms. Mehta holds a bachelor’s degree in mining engineering and a Master of Business Administration degree at McGill University, as well as a Master of Law degree from the Osgoode Hall Law School of York University.

Chantal Sorel, M.Sc., PMP, Independent Director

Ms. Chantal Sorel is a corporate director. She has over 30 years experience in general management with full profit & loss responsibility, project financing, project management, operations, strategic development, business development, mergers and acquisitions, in the industries of mining and metallurgy, power, infrastructure, industrial facilities, rail and transit. Ms. Sorel was Executive Vice President and Managing Director at Capital at SNC-Lavalin from 2014 to 2019. During her term at SNC-Lavalin, she was assigned, among other projects, to oversee the $1.5 billion construction and installation of the McGill University Health Care Centre Glen site in Montréal, which also involved the responsibility of a $1.5 billion installation of specialized equipment. She was also responsible for the project financing and asset management of a $20 billion infrastructure and industrial asset portfolio. Since April 2020, Ms. Sorel serves as a director and an advisor to the Montréal Aeroport for the development and delivery of the city side projects’ portfolio valued at $2.5 billion. She also serves as an advisor to Moltex Energy since October 2019 for a project development and financing estimated at $1 billion. Moltex Energy, is a privately held company striving to solve the world’s most critical challenge, providing safe clean and affordable energy. Ms. Sorel holds a Degree in architecture from Université de Montréal and a master’s degree in Project Management from Université du Québec à Montréal. She also has a Project Management Professional certification from the Project Management Institute and completed the Director Education Program jointly offered by the Institute of Corporate Directors, the McGill Executive Institute and the Rotman School of Management at the University of Toronto.

Ronald Bougie, Vice President, Engineering and Construction

Mr. Ronald Bougie has over 25 years of construction and project development experience gained throughout the construction of several successful mining and industrial projects. Prior to joining Falco, he served as Executive Vice President Engineering, Construction and Operation for the Ciment McInnis project. Mr. Bougie previously led the construction efforts of the Renard diamond mine as General Manager, Engineering and Construction. He also played a key role as General Manager, Engineering and Construction during the development and construction of the Canadian Malartic Mine which is currently Canada’s largest gold mine.

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Hélène Cartier, Eng., LL.B., Vice President, Environment and Sustainable Development

Ms. Hélène Cartier is Vice President, Environment and Sustainable Development of Falco since 2017. She was Vice president, Environment and Sustainable Development at OMC from 2012 to 2013. From 2013 to 2016, Ms. Cartier was Deputy Manager of La rue des Femmes de Montréal. She serves on the board of directors of Endeavour Mining Corporation since July 2020 and on the Board of l’Association Minière du Québec and has previously served on the board of directors of Semafo Inc. Ms. Cartier holds a degree in Industrial Engineering and a Bachelors Degree in Law. She was intimately involved in the community relations aspects during the development and operating phases of the Canadian Malartic Mine.

Anthony Glavac, CPA, CA, Chief Financial Officer

Mr. Anthony Glavac has over 15 years of experience in financial reporting, including over 10 years in the mining industry. He most recently held the positions of Director-Financial Reporting and Internal Controls at Dynacor Gold Mines and Interim Chief Financial Officer at Alderon Iron Ore Corp. Mr. Glavac was a Senior Manager at KPMG, working with both public and private companies, providing audit, taxation, strategic advisory and public offering services. Since (i) August 2018, he is Chief Financial Officer of Osisko Metals Incorporated (ii) October 2018, he is Chief Financial Officer of Falco, and (iii) since December 2019, he is Chief Financial Officer of Niobay Metals Inc.

Christian Laroche, Eng., Vice President Metallurgy

Mr. Christian Laroche has over 16 years of experience in engineering, design and construction of mining projects. Prior to joining OMC in 2009, Mr. Laroche spent nine years at BBA Inc. and participated as Project Manager on the Canadian Malartic Mine. Mr. Laroche was site support engineer for the construction and commissioning of the Canadian Malartic Mine. Upon the sale of OMC, Mr. Laroche transitioned with Yamana Gold for one year, where he served as Director Metallurgy. Mr. Laroche joined Osisko as Director Metallurgy in 2015.

André Le Bel, LL.B., B.Sc.A., ICD.D, Vice President, Legal Affairs and Corporate Secretary

Mr. André Le Bel was appointed as Vice President, Legal Affairs and Corporate Secretary of Osisko in February 2015. From November 2007 to June 2014, Mr. Le Bel was Vice President, Legal Affairs and Corporate Secretary of OMC. Mr. Le Bel was Vice President, Legal Affairs with IAMGOLD Corporation from November 2006 to October 2007 and before November 2006, Mr. Le Bel was Senior Legal Counsel and Assistant Corporate Secretary of Cambior Inc. Mr. Le Bel is also a director of Brunswick Exploration Inc., listed on the TSX-V. He was appointed as Vice President, Legal Affairs and Corporate Secretary of NioGold Mining Corp. from March 2015 to March 2016. He was a director of RedQuest Capital Corp., a capital pool company listed on the NEX board of the TSX-V from March 2010 to June 2017.

François Vézina, Eng., Vice President, Technical Services

Mr. François Vézina is a Mining Engineer with over 17 years of experience in mining and has extensive experience in open pit and underground operations in Canada, Mexico and Finland. Mr. Vézina was Technical Service Manager for Agnico-Eagle Mines Limited and was responsible for overseeing the completion of the feasibility studies of LaRonde II, Pinos Altos and Kittilä. Mr. Vézina participated in the construction and commissioning of Pinos Altos as Mine Development Manager and Kittilä as Mine Operations Manager before joining OMC and participating as Mine Manager in the construction of the Canadian Malartic Mine. He served for over 5 years as Mine Operations Manager at the Canadian Malartic Mine. Mr. Vézina is a specialist in mine operation optimization and is recognized for innovative mining techniques and optimization of feasibility studies. He was appointed Chief Operating Officer of Barkerville Gold Mines Ltd. from October 2018 to June 2019 and prior to such appointment he acted as Vice President Project Development from October 2018 to September 2016. On November 25, 2020, he was appointed as Vice President, Technical Services of Osisko Development. Mr. Vézina holds a Bachelor degree in

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Mining Engineering and a Master in Business Administration (MBA). He is a registered Engineer (Eng.) in Québec and (P.Eng.) in Ontario.

The directors of Falco are elected annually at each annual general meeting of Falco Shareholders and hold office until the next annual general meeting unless a director’s office is earlier vacated in accordance with the articles of Falco or until his or her successor is duly appointed or elected.

As at the date of this AIF, all of the directors and officers, as a group, beneficially own, directly or indirectly, or exercise control or direction over 3,123,094 Falco Shares, representing approximately 1.38% of the issued and outstanding Falco Shares.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Corporate Cease Trade Orders

As at the date of this AIF, no current director or executive officer of Falco is, or within the ten years prior to the date of this AIF has been, a director, chief executive officer or chief financial officer of any company (including Falco), that:

• (a) was subject to a cease trade order (including any management cease trade order which applied to directors or executive officers of a company, whether or not the person is named in the order), an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days (an “ Order ”) while that person was acting in that capacity; or

• (b) was subject to an Order that was issued after the current director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

Bankruptcy

To the knowledge of Falco, as at the date of this AIF, no current director (other than Ms. Angelina Mehta who served on the board of directors of Stornoway Diamond Corporation, a company having been granted on September 9, 2019 an initial order by the Superior Court of Québec for protection under the Companies’ Creditors Arrangement Act and which filed for bankruptcy on November 7, 2019), and no executive officer, or shareholder holding a sufficient number of securities of Falco to affect materially the control of Falco is, or within the ten years prior to the date of this AIF has:

• (a) been a director or executive officer of any company (including Falco) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

• (b) become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver manager or trustee appointed to hold the assets of the current or proposed director, executive officer or shareholder.

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Penalties and Sanctions

To the knowledge of Falco, as at the date of this AIF, no current director, executive officer, or shareholder holding a sufficient number of securities of Falco to affect materially the control of Falco has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Conflicts of Interest

Certain of the directors and officers of Falco do not devote all of their time to the affairs of Falco. Certain of the directors and officers of Falco are directors and officers of other companies, some of which are in the same business as Falco. See “Risk Factors - Conflicts of Interest”.

The directors and officers of Falco are required by law to act in the best interests of Falco. They have the same obligations to the other companies in respect of which they act as directors and officers. Any decision made by any of such officers or directors involving Falco will be made in accordance with their duties and obligations under the Applicable Laws of Canada.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

Legal Proceedings

During the fiscal year ended June 30, 2020 and as of the date hereof, there have been and are no legal proceedings outstanding, threatened or pending, by or against Falco or to which Falco is a party or to which any of Falco’s properties are subject, nor to Falco’s knowledge are any such legal proceedings contemplated, and which could become material to Falco.

Regulatory Actions

During the fiscal year ended June 30, 2020 and as of the date hereof, there have been no penalties or sanctions imposed against Falco (a) by a court relating to securities legislation or by a securities regulatory authority or (b) by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision in Falco. Falco has not entered into any settlement agreements with a court relating to securities legislation or with a securities regulatory authority during the fiscal year ended June 30, 2020 and as of the date hereof.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Within the three (3) most recently completed financial years or during the current financial year, no director or executive officer of Falco, or shareholder who beneficially owns, or controls or directs, directly or indirectly, more than 10% of the outstanding Falco Shares, or any known associates or affiliates of such persons, has or has had any material interest, direct or indirect, in any transaction or in any proposed transaction that has materially affected or is reasonably expected to materially affect Falco, except for the following agreements and transactions with Osisko and Osisko Development :

• (a) the Management and Technical Services Agreement which provide for Osisko’s exclusive right to provide management services to Falco including financial advisory and technical and mining advisory and general management services to Falco in exchange for a service fee reviewed by the parties on a quarterly basis;

• (b) the Stream Agreement in connection the Silver Stream Transaction, as amended (see “General Development of Business - Fiscal Year Ended June 30, 2019 - Closing of Silver Stream Transaction with Osisko Gold Royalties Ltd” , “General Development of Business -

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Fiscal Year Ended June 30, 2020 - Amendment to the Stream Agreement” and “General Development of Business - Events Subsequent to June 30, 2020 Fiscal Year End - Extension of Maturity of the Amended 2019 Loan and Amendment to the Stream Agreement”);

• (c) the Osisko Convertible Loan (see “General Development of Business - Fiscal Year Ended June 30, 2019 - $10 Million Loan with Osisko Gold Royalties Ltd”, “General Development of Business - Fiscal Year Ended June 30, 2020 - Amendments to the 2019 Loan” and “General Development of Business - Events Subsequent to June 30, 2020 Fiscal Year End - Extension of Maturity of the Amended 2019 Loan and Amendment to the Stream Agreement”);

• (d) the 2018 Loan (see “General Development of Business - Fiscal Year Ended June 30, 2019 - $10 Million Loan with Osisko Gold Royalties Ltd”);

• (e) the Osisko Debenture (see “General Development of Business - Fiscal Year Ended June 30, 2019 Fiscal Year End - Closing of $7 Million Financing with Osisko Gold Royalties Ltd”);

• (f) the Osisko Investor Rights Agreement; and

• (g) the Investor Rights Agreement with Osisko Development.

The Osisko Investor Rights Agreement and the Osisko Development Investor Rights Agreement provide, among other things, for the following rights:

• (a) Nomination Rights : Osisko and Osisko Development shall each have the right, for so long the relevant party holds Falco Shares, or securities convertible or exercisable for Falco Shares, representing no less than 5% of the total number of Falco Shares outstanding on a partially-diluted basis, to nominate one (1) individual for election or appointment to the Falco Board.

• (b) Participation Rights : Osisko and Osisko Development shall each have the right, for so long the relevant party holds Falco Shares, or securities convertible or exercisable for Falco Shares, representing no less than 5% of the total number of Falco Shares outstanding on a partially-diluted basis, to participate in any future issuances of and to subscribe for and purchase each type, class or series of equity or voting securities, or securities convertible into or exchangeable for equity or voting securities, of the Issuer, up to an amount sufficient to maintain its pro rata ownership of Falco.

• (c) Registration Rights : Osisko and Osisko Development shall each have the right, for so long the relevant party holds Falco Shares representing no less than 10% of the total number of Falco Shares outstanding on a basic basis, to demand and piggy-back registration rights in favour of the relevant party.

TRANSFER AGENTS AND REGISTRARS

The transfer agent and registrar for the Falco Shares is TSX Trust Company, Suite 301 - 100 Adelaide Street West, Toronto, Ontario M5H 4H1.

MATERIAL CONTRACTS

The material contracts of Falco that are currently in force are the following:

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1. Asset purchase agreement dated March 28, 2011, as amended by agreement dated July 29, 2011, pursuant to which QMX purchased from Glencore certain properties including the Horne 5 deposit;

2. Assignment agreement dated August 22, 2012 between Falco, Glencore and QMX pursuant to which QMX agreed to assign to Falco all of its rights, title, benefit and interest in the asset purchase agreement described above and related agreements;

3. Acquisition Agreement dated September 12, 2012 between QMX and Falco pursuant to which the Falco acquired the rights, titles and interests held by QMX in the Rouyn-Noranda base/precious metal camp including the Horne 5 deposit;

4. Amended and Restated Convertible Secured Senior Loan Agreement dated November 27, 2020 pertaining to the Osisko Convertible Loan;

5. The Stream Agreement dated February 27, 2019 pertaining to the Silver Stream Transaction, as amended on January 31, 2020 and November 27, 2020;

6. The Glencore Convertible Debenture;

7. The Osisko Development Investors Rights Agreement; and

8. The Osisko Investor Rights Agreement.

INTERESTS OF EXPERTS

Mr. Luc Lessard, Eng. is named in this AIF as having reviewed and approved certain scientific and technical information as set out under the heading “Material Mineral Project - The Horne 5 Project”. As of the date of this AIF, Mr. Lessard holds the securities of Falco listed next to his name in the table under the heading “Directors and Officers - Name, Address, Occupation and Security Holdings”.

PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., a partnership of Chartered Professional Accountants, the auditors of Falco, has advised that it is independent with respect to Falco within the meaning of the Code of ethics of the chartered professional accountants (Québec).

Colin Hardie, P. Eng. (BBA), Yves Vallières, P. Eng. (RIVVAL), Pierre Lacombe, P. Eng. (Lundin Mining Corp. (ex BBA)), Geneviève Auger, P. Eng. (InnovExplo), Valérie Bertrand, P. Geo. (Golder), Patrick Frenette, P. Eng. (InnovExplo), Rob Bewick, P. Eng. (Golder), Carl Pelletier, P. Geo. (InnovExplo), Yves Boulianne, P. Eng. (Golder), Luc Gaulin, P. Eng. (SNC-Lavalin), Michael Bratty, P. Eng. (Golder), MarieClaude Dion St-Pierre, P. Eng. (WSP), Janis Drozdiak, P. Eng. (Golder), Claire Hayek, P. Eng. (WSP), Mayana Kissiova, P. Eng. (Golder), Stéphane Lance, P. Eng. (WSP), Michel Mailloux, P. Eng. (Golder) and Dominick Turgeon, P. Eng. (WSP) have prepared and certified the Feasibility Study which have been described in this AIF and, together with BBA, RIVVAL, InnovExplo, Golder and WSP are independent of Falco applying all of the tests contained in 43-101.

None of the aforementioned persons or companies, nor any director, officer or employee of any of the aforementioned persons or companies is, or is expected to be elected, appointed or employed as, a director, officer or employee of Falco or of any associate or affiliate of Falco, with the exception of Ms. Chantal Sorel, a director of Falco, who was also an officer of SNC-Lavalin until March 2019. In addition, in 2018, Ms. Mayana Kissiova became an employee of Osisko.

ADDITIONAL INFORMATION

Additional information relating to Falco is available electronically on SEDAR at www.sedar.com and on its website at www.falcores.com.

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Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of Falco’s securities and securities authorized for issuance under equity compensation plans, is contained in Falco’s management information circular for its annual meeting of shareholders held on November 18, 2020. For information relating to compensation and corporate governance related matters, please see sections entitled “Executive Compensation” and “Corporate Governance Practices”, respectively, in such circular.

Additional financial information is provided in Falco’s financial statements and Management Discussion and Analysis.

AUDIT COMMITTEE

Description of the Audit Committee

The purpose of the Audit Committee is to assist the Falco Board in its oversight of the integrity of Falco’s financial reporting process and the quality, transparency and integrity of its financial statements and other related public disclosures; Falco’s internal controls over financial reporting; compliance with legal and regulatory requirements relevant to Falco’s financial statements; the external auditors’ qualifications and independence; and the performance of the internal audit function and the external auditors.

More particularly, the Audit Committee oversees Falco’s practices with respect to preparation and disclosure of financial related information, including through its oversight of the integrity of the quarterly and annual financial statements and management’s discussion and analysis; compliance with accounting and finance-related legal requirements; the audit of the financial statements; the appointment and performance review of the independent auditors; the accounting and financial reporting practices and procedures including disclosure controls and procedures; the system of internal controls including internal controls over financial reporting and management of financial business risks that could materially affect Falco.

A copy of the Audit Committee’s mandate is included as Appendix 1 to this AIF.

All members of the Audit Committee are “financially literate” and/or “financial experts”, within the meaning of applicable regulations. In considering criteria for determination of financial literacy, the Falco Board assesses the ability to understand financial statements of Falco. In determining accounting or related financial expertise, the Falco Board considers familiarity with accounting issues pertinent to Falco, past employment experience in finance or accounting, requisite professional certification in accounting, and any other comparable experience or background which results in the individuals’ financial sophistication.

Audit Committee Members

As of the date of this AIF, the members of the Audit Committee are Ms. Paola Farnesi (Chair), Mr. Mario Caron and Mrs. Angelina Mehta.

Relevant Education and Experience

Ms. Paola Farnesi is a senior financial professional with over 30 years of experience in corporate finance, financial reporting, M&A and risk management. She is currently Vice President and Treasurer of Domtar Corporation, responsible for negotiating and arranging in excess of $1 billion in corporate financings, overseeing an insurance portfolio of over $20 billion in insurable values and managing the investments of pension fund assets in excess of $3 billion. From 1994 to 2008, Ms. Farnesi held several other leadership positions at Domtar Corporation, including Vice President, Internal Audit, where she was responsible for the implementation and subsequent compliance efforts related to Sarbanes-Oxley. Prior to joining Domtar Corporation, Ms. Farnesi worked at Ernst & Young for the assurance group in Montreal. She serves on the Board of Directors of the Centaur Theatre Company since 2010. Ms. Farnesi holds a Bachelor of Commerce and a Graduate degree in Public Accountancy from McGill University, is a member of the Chartered Professional Accountants of Québec and obtained the ICD.D designation from the Institute of Corporate Directors.

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Mr. Mario Caron is a mining executive with over 40 years of experience in the mining industry in senior executive and board positions. His experience was gained nationally and internationally in both underground and open pits operations. Mr. Caron has been Chief Executive Officer and director with Axmin Inc, a company developing a gold project in Central African Republic and Tiberon Minerals Ltd., the developer of a tungsten/fluorspar mine in Vietnam. He was instrumental in obtaining the mining license for the Vietnamese project. He was also closely involved in the project financing, in the engineering and development of that project. As CEO of public companies, he secured mining licenses and various permits in numerous jurisdictions. He is the chairman of Alloycorp Mining Inc., a privatized company since August 2016 with a molybdenum deposit in British Columbia. Mr. Caron received his Bachelor of Engineering, Mining at McGill University and is a member of the Ordre des ingénieurs du Québec and the Association of Professional Engineers of Ontario.

Ms. Angelina Mehta has over 20 years in the fields of finance and engineering and currently working as Director, Investment Banking (Mining) at Laurentian Bank Securities Inc. She was Senior Mining Advisor with Paradigm Capital Inc. in Investment Banking, as well as Vice President of Operations for North American Nickel. Over the years, she served as Investment Manager for Sentient Asset Management Canada and held various operational positions for multiple mining companies, including Rio Tinto’s subsidiary, Iron Ore Company of Canada. Ms. Mehta served on the Board of Directors of Women in Mining Canada from 2014 to 2019. Ms. Mehta holds a bachelor’s degree in mining engineering and a Master of Business Administration degree at McGill University, as well as a Master of Law degree from the Osgoode Hall Law School of York University.

External Auditor Service Fees

The aggregate fees billed by the Corporation’s external auditor in each of the last two (2) fiscal years are as follows:

	2020(1)	2019(1)
Audit fees(2) Audit-related fees Tax fees(3) All other fees	$171,310 Nil Nil Nil	$110,250 Nil $10,332 Nil
Total	$171,310	$120,582

Notes:

(1) For the years ended June 30, 2020 and June 30, 2019, none of the Corporation’s audit-related fees, tax fees or all other fees described in the table above made use of the de minimis exception to pre-approval provisions contained in Section 2.4 of Regulation 52-110.

(2) The aggregate fees billed for audit services, including fees relating to the review of quarterly financial statements and statutory audits of the Corporation.

(3) The aggregate fees billed for tax compliance, tax advice and tax planning services.

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APPENDIX 1

FALCO RESOURCES LTD.

(the “ Corporation ”)

AUDIT COMMITTEE CHARTER

I. PURPOSES OF THE AUDIT COMMITTEE

The purposes of the Audit Committee are to assist the Board of Directors:

1. in its oversight of the Corporation’s accounting and financial reporting principles and policies and internal audit controls and procedures;

2. in its oversight of the integrity, transparency and quality of the Corporation’s financial statements and the independent audit thereof;

3. in selecting, evaluating and, where deemed appropriate, replacing the external auditors;

4. in evaluating the qualification, independence and performance of the external auditors;

5. in its oversight of the Corporation’s risk identification, assessment and management program; and

6. in the Corporation’s compliance with legal and regulatory requirements in respect of the above.

The function of the Audit Committee is to provide independent and objective oversight. The Corporation’s management team is responsible for the preparation, presentation and integrity of the Corporation’s financial statements. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The external auditors are responsible for planning and carrying out a proper audit of the Corporation’s annual financial statements and other procedures. In fulfilling their responsibilities hereunder, it is recognized that members of the Audit Committee are not full-time employees of the Corporation and are not, and do not represent themselves to be, accountants or auditors by profession or experts in the fields of accounting or auditing including in respect of auditor independence. As such, it is not the duty or responsibility of the Audit Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards, and each member of the Audit Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and external to the Corporation from which it receives information, (ii) the accuracy of the financial and other information provided to the Audit Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board of Directors) and (iii) representations made by management as to non-audit services provided by the auditors to the Corporation.

The external auditors are ultimately accountable to the Board of Directors and the Audit Committee as representatives of shareholders. The Audit Committee is directly responsible (subject to the Board of Directors’ approval) for the appointment, compensation, retention (including termination), scope and oversight of the work of the external auditors engaged by the Corporation (including for the purpose of preparing or issuing an audit report or performing other audit, review or attestation services or other work of the Corporation), and is also directly responsible for the resolution of any disagreements between management and any such firm regarding financial reporting.

The external auditors shall submit annually, to the Corporation and the Audit Committee:

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• as representatives of the shareholders of the Corporation, a formal written statement delineating all relationships between the external auditors and the Corporation (“Statement as to Independence”); and

• A formal written statement of the fees billed in compliance with the disclosure requirements of Form 52-110F1 of National Instrument 52-110.

II.

COMPOSITION OF THE AUDIT COMMITTEE

The Audit Committee shall be comprised of two or more independent directors as defined under applicable legislation and stock exchange rules and guidelines and are appointed (and may be replaced) by the Board of Directors. Determination as to whether a particular director satisfies the requirements for membership on the Audit Committee shall be made by the Board of Directors.

All members of the Committee shall be financially literate (able to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Corporation’s financial statements), and at least one member of the Committee shall have accounting or related financial expertise or sophistication as such qualifications are interpreted by the Board of Directors in light of applicable laws and stock exchange rules. The later criteria may be satisfied by past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer of an entity with financial oversight responsibilities.

III.

MEMBERSHIP, MEETINGS AND QUORUM

The Audit Committee shall meet at least four times annually or more frequently if circumstances dictate, to discuss with management the annual audited financial statements and quarterly financial statements, and all other related matters. The Audit Committee may request any officer or employee of the Corporation or the Corporation’s external counsel or external auditors to attend a meeting of the Audit Committee or to meet with any members of, or consultants to, the Audit Committee.

Proceedings and meetings of the Audit Committee are governed by the provisions of By-Law No. 1 relating to the regulation of the meetings and proceedings of the Board of Directors as they are applicable and not inconsistent with this Charter and the other provisions adopted by the Board of Directors in regards to committee composition and organization.

The quorum at any meeting of the Committee is a majority of members in office. All members of the Audit Committee should strive to be at all meetings.

IV. DUTIES AND POWERS OF THE AUDIT COMMITTEE

To carry out its purposes, the Audit Committee shall have unrestricted access to information and shall have the following duties and powers:

1. with respect to the external auditor,

2. (i) to review and assess, annually, the performance of the external auditors, and recommend to the Board of Directors the nomination of the external auditors for appointment by the shareholders, or if required, the revocation of appointment of the external auditors;

3. (ii) to review and approve the fees charged by the external auditors for audit services;

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• (iii) to review and pre-approve all services other than audit services, to be provided by the Corporation’s external auditors to the Corporation or to its subsidiaries, and associated fees and to ensure that such services will not have an impact on the auditor’s independence. The Audit Committee may delegate such authority to one or more of its members, which member(s) shall report thereon to the committee;

• (iv) to ensure that the external auditors prepare and deliver annually a Statement as to Independence (it being understood that the external auditors are responsible for the accuracy and completeness of such statement), to discuss with the external auditors any relationships or services disclosed in the Statement as to Independence that may impact the objectivity and independence of the Corporation’s external auditors and to recommend that the Board of Directors take appropriate action in response to the Statement as to Independence to satisfy itself of the external auditors’ independence; and

• (v) to instruct the external auditors that the external auditors are ultimately accountable to the Audit Committee and the Board of Directors, as representatives of the shareholders;

• with respect to financial reporting principles and policies and internal controls,

• (i) to advise management that they are expected to provide to the Audit Committee a timely analysis of significant financial reporting issues and practices;

• (ii) to ensure that the external auditors prepare and deliver as applicable a detailed report covering 1) critical accounting policies and practices to be used; 2) material alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the external auditors; 3) other material written communications between the external auditors and management such as any management letter or schedule of unadjusted differences; and 4) such other aspects as may be required by the Audit Committee or legal or regulatory requirements;

• (iii) to consider any reports or communications (and management’s responses thereto) submitted to the Audit Committee by the external auditors, including reports and communications related to:

  • deficiencies noted following the audit of the design and operation of internal controls;

  • consideration of fraud in the audit of the financial statements;

  • detection of illegal acts;

  • the external auditors’ responsibilities under generally accepted auditing standards;

  • significant accounting policies;

  • management judgements and accounting estimates;

  • adjustments arising from the audit;

  • the responsibility of the external auditors for other information in documents containing audited financial statements;

  • disagreements with management;

  • consultation by management with other accountants;

  • major issues discussed with management prior to retention of the external auditors;

  • difficulties encountered with management in performing the audit;

  • the external auditor’s judgements about the quality of the entity’s accounting principles; and

  • reviews of interim financial information conducted by the external auditors.

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• (iv) to meet with management and external auditors:

• to discuss the scope of the annual audit and to review and approve the audit plan;

• to discuss the audited financial statements, including the accompanying management’s discussion and analysis;

• to discuss the unaudited interim quarterly financial statements, including the accompanying management’s discussion and analysis;

• to discuss the appropriateness and quality of the Corporation’s accounting principles as applied in its financial reporting;

• to discuss any significant matters arising from any audit or report or communication referred to in item 2 (iii) above, whether raised by management or the external auditors, relating to the Corporation’s financial statements;

• to resolve disagreements between management and the external auditors regarding financial reporting;

• to review the form of opinion the external auditors propose to render to the Board of Directors and shareholders;

• to discuss significant changes to the Corporation’s auditing and accounting principles, policies, controls, procedures and practices proposed or contemplated by the external auditors or management, and the financial impact thereof;

• to review any non-routine correspondence with regulators or governmental agencies and any employee complaints or published reports that raise material issues regarding the Corporation’s financial statements or accounting policies;

• to review, evaluate and monitor (as applicable) the Corporation’s risk management program including the revenue protection program. This function should include:

  • ➢ risk assessment;

  • ➢ quantification of exposure;

  • ➢ risk mitigation measures; and

  • ➢ risk reporting;

• to review the adequacy of the resources of the finance and accounting group, along with its development and succession plans;

• to monitor and review communications received in accordance with the Corporation’s Internal Whistleblowing Policy;

• following completion of the annual audit and quarterly reviews, review separately with each of management and the independent auditor any significant changes to planned procedures, any difficulties encountered during the course of the audit and reviews, including any restrictions on the scope of the work or access to required information and the cooperation that the independent auditor received during the course of the audit and review;

• (v) to discuss with the Chief Financial Officer any matters related to the financial affairs of the Corporation;

• (vi) to discuss with the Corporation’s management any significant legal matters that may have a material effect on the financial statements, the Corporation’s compliance policies, including material notices to or inquiries received from governmental agencies; and

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• (vii) to review, and discuss with the Corporation’s President and Chief Executive Officer and Chief Financial Officer the procedure with respect to the certification of the Corporation’s financial statements pursuant to National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings and any other applicable law or stock exchange rule.

• with respect to reporting and recommendations,

• (i) to prepare/review any report or other financial disclosures to be included in the Corporation’s annual information form;

• (ii) to review and recommend to the Board of Directors for approval, the interim and audited annual financial statements of the Corporation, management’s discussion and analysis of the financial conditions and results of operations (MD&A) and the press releases (as applicable) related to those financial statements;

• (iii) to review and recommend to the Board of Directors for approval, the annual report, management’s assessment on internal controls (as applicable) and any other like annual disclosure filings to be made by the Corporation under the requirements of securities laws or stock exchange rules applicable to the Corporation;

• (iv) to review and reassess the adequacy of the procedures in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements, other than the public disclosure referred to in paragraph 3(ii) above;

• (v) to review this Charter at least annually and recommend any changes to the Board of Directors; and

• (vi) to report its activities to the Board of Directors on a regular basis and to make such recommendations with respect to the above and other matters as the Audit Committee may deem necessary or appropriate.

• to review, discuss with management, and approve all related party transactions;

• to create an agenda for the ensuing year;

• to review quarterly the expenses of the President and Chief Executive Officer;

• to establish and reassess the adequacy of the procedures for the receipt, retention and treatment of any complaint received by the Corporation regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential anonymous submissions by employees of concerns regarding questionable accounting or auditing matters in accordance with applicable laws and regulations; and

• to set clear hiring policies regarding partners, employees and former partners and employees of the present and, as the case may be, former external auditor of the Corporation.

V. RESOURCES AND AUTHORITY OF THE AUDIT COMMITTEE

The Audit Committee shall have the resources and authority appropriate to discharge its responsibilities, as it shall determine, including the authority to engage external auditors for special audits, reviews and other procedures and to retain special counsel and other experts or consultants.

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