Trident Resources Corp. — Capital/Financing Update 2020

Nov 3, 2020

SEDAR VERSION

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY OR THE UNDERLYING SECURITIES BEFORE FEBRUARY 28, 2021.

WITHOUT PRIOR WRITTEN APPROVAL OF TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THIS DEBENTURE AND THE UNDERLYING SECURITIES MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL FEBRUARY 28, 2021.

FALCO RESOURCES LTD.

as the Corporation

and

GLENCORE CANADA CORPORATION

as the Holder

SENIOR SECURED CONVERTIBLE DEBENTURE

October 27 , 2020

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TABLE OF CONTENTS

ARTICLE 1 PRINCIPAL SUM

		ARTICLE 1 PRINCIPAL SUM
Section	1.1	Principal Sum. ................................................................................................. 1
Section	1.2	Interest. ............................................................................................................ 1
Section	1.3	Criminal Rate of Interest. ................................................................................. 1
Section	1.4	Interest Act (Canada). ..................................................................................... 2
Section	1.5	Use of Proceeds. ............................................................................................. 2
		ARTICLE 2
		INTERPRETATION
Section	2.1	Definitions. ....................................................................................................... 2
Section	2.2	Gender and Number. ....................................................................................... 9
Section	2.3	Headings, etc. .................................................................................................. 9
Section	2.4	Currency. ......................................................................................................... 9
Section	2.5	Certain Phrases, etc. ....................................................................................... 9
Section	2.6	Accounting Terms. ........................................................................................... 9
		ARTICLE 3
		SECURITY
Section	3.1	Security. ........................................................................................................... 9
Section	3.2	Registration of Security. .................................................................................. 9
Section	3.3	Registration of Security at the Quebec Land Registry. .................................. 10
Section	3.4	Blocked Account Agreements. ...................................................................... 10
		ARTICLE 4
		COVENANTS
Section	4.1	Affirmative Covenants. .................................................................................. 10
Section	4.2	Negative Covenants. ..................................................................................... 11

ARTICLE 5 CONVERSION OF DEBENTURE

		ARTICLE 5 CONVERSION OF DEBENTURE
Section	5.1	Conversion of this Debenture into Common Shares. .................................... 12
Section	5.2	Expiry of Debenture Conversion Right. ......................................................... 13
Section	5.3	Adjustment of Conversion Price, etc. ............................................................ 13
Section	5.4	No Requirement to Issue Fractional Shares. ................................................. 15
Section	5.5	Notice of Special Matters. .............................................................................. 15
Section	5.6	Corporation to Reserve Shares and Hold Period. ......................................... 15
Section	5.7	Holder not a Shareholder. ............................................................................. 15

ARTICLE 6 REPURCHASE OF DEBENTURE

Section 6.1 Redemption Offer Upon a Change of Control. .............................................. 16

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ARTICLE 7 EVENTS OF DEFAULT

		ARTICLE 7 EVENTS OF DEFAULT
Section	7.1	Events of Default. .......................................................................................... 16
Section	7.2	Consequences of an Event of Default. .......................................................... 17
		ARTICLE 8 MISCELLANEOUS
Section	8.1	Waiver. .......................................................................................................... 17
Section	8.2	Holder May Remedy Default. ........................................................................ 17
Section	8.3	Notices, etc. ................................................................................................... 18
Section	8.4	Confidentiality ................................................................................................ 18
Section	8.5	Severability. ................................................................................................... 18
Section	8.6	Successors and Assigns, etc. ........................................................................ 19
Section	8.7	Governing Law. ............................................................................................. 19
Section	8.8	Counterparts. ................................................................................................. 19

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UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY OR THE UNDERLYING SECURITIES BEFORE FEBRUARY 28, 2021.

WITHOUT PRIOR WRITTEN APPROVAL OF TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THIS DEBENTURE AND THE UNDERLYING SECURITIES MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL FEBRUARY 28, 2021.

SENIOR SECURED CONVERTIBLE DEBENTURE

$10,000,000

OCTOBER 27, 2020

ARTICLE 1 PRINCIPAL SUM

Section 1.1 Principal Sum.

For value received, Falco Resources Ltd. (the " Corporation "), a corporation continued under the laws of Canada, shall pay to the order of Glencore Canada Corporation, a corporation formed under the laws of the Province of Ontario (the " Holder "), subject to the Conversion (as defined herein), the principal sum of $10,000,000 (the " Principal ") in lawful money of Canada on presentation and surrender of this convertible debenture (the " Debenture ") at the head office of the Corporation at 1100, avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, H3B 2S2 or such other place as the Corporation may designate on the Maturity Date (as defined herein).

Section 1.2 Interest.

The Principal amount shall bear interest from and after the date hereof at a rate per annum equal to 7.0%, compounded quarterly and payable quarterly on January 27, 2021, April 27, 2021, July 27, 2021 and October 27, 2021. Accrued interest shall be capitalized quarterly by adding the interest to the Principal unless the Corporation elects at its sole discretion to settle in cash any accrued interest with the Holder within 30 days following the end of the applicable quarterly interest payment date. All accrued and unpaid or uncapitalized interest shall be payable at the Maturity Date of the Principal when due, as per the terms of this Debenture.

Section 1.3 Criminal Rate of Interest.

In no event shall the aggregate "interest" (as defined in Section 347 of the Criminal Code (Canada)) (the " Criminal Code Section ") payable to the Holder under this Debenture exceed the effective annual rate of interest lawfully permitted under the Criminal Code Section. Further, if any payment, collection or demand pursuant to this Debenture in respect of such "interest" is determined to be contrary to the provisions of the Criminal Code Section, such payment, collection, or demand shall be deemed to have been made by mutual mistake

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of the Holder and the Corporation and such "interest" shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in the receipt by the Holder of interest at a rate not in contravention of the Criminal Code Section.

Section 1.4 Interest Act (Canada).

Each interest rate which is calculated under this Debenture on any basis other than a full calendar year (the "deemed interest period") is, for the purposes of the Interest Act (Canada), equivalent to a yearly rate calculated by dividing such interest rate by the actual number of days in the deemed interest period, then multiplying such result by the actual number of days in the calendar year (365 or 366, as the case may be).

Section 1.5 Use of Proceeds.

The Corporation shall use the Principal amount received under this Debenture as described in the subscription agreement dated October 27, 2020 between the Corporation and the Holder (the “ Subscription Agreement ”).

ARTICLE 2 INTERPRETATION

Section 2.1 Definitions.

As used in this Debenture, the following terms have the following meanings:

" Affiliate " has the meaning ascribed thereto under the Canada Business Corporations Act.

" Applicable Law " means all applicable past, present and future federal, provincial and local laws, rules, ordinances, treaties, regulations, judgments, decrees, or other valid governmental restrictions. Applicable Laws shall also include the decisions and authority of any Governmental Authority having jurisdiction and all applicable judicial and administrative and regulatory decrees pertaining thereto including licences and permits and other similar requirements, whether legislative, municipal, administrative or judicial in nature.

" Approval " means each and every approval, order in council, authorization, license, permit, consent, filing and registration by or with any Governmental Authority or other Person which are required by Applicable Law (including without limitation Environmental Laws) and necessary to authorize or permit the development and operation of the Horne 5 Property.

" Asset Purchase Agreement " means the Asset Purchase Agreement dated March 28, 2011 between Glencore (as successor to Xstrata Canada Corporation) and the Corporation (as assignee to Alexis Minerals Corporation), as amended pursuant to a first amending agreement as of July 29, 2011.

" BaseCore " means BaseCore Metals LP, together with its successors and permitted assigns.

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" BaseCore Hypothec " means the hypothec dated as of February 27, 2019 granted by the Corporation in favour of BaseCore on the universality of the Corporation's movable and immovable property, as security for the obligations described as being secured thereunder.

" BaseCore Royalty Agreement " means the royalty agreement dated July 29, 2011 between BaseCore (as assignee of the Holder, as successor to Xstrata Canada Corporation) and the Corporation (as assignee to Alexis Minerals Corporation).

" Business Day " means a day, excluding Saturday and Sunday, on which banks are generally open for regular business in Montreal, Québec, and in Toronto, Ontario.

" Capital Reorganization " has the meaning specified in Section 5.3(2).

" Change of Control " means

• (a) the direct or indirect sale, transfer or other disposition of all or substantially all of the property and assets of the Corporation to any Person or Persons;

• (b) the consummation of any transaction the result of which is that any Person, alone or together with joint actors for the purposes of applicable securities laws, becomes the beneficial owners of more than 50% of the voting shares of the Corporation; and

• (c) the consummation of any transaction or the occurrence of another event the result of which is that the majority of the incumbent directors of the Corporation are replaced, and such transaction or event is not supported by the incumbent board of directors.

" Common Shares " means the common shares in the share capital of the Corporation which the Corporation is authorized to issue.

" Controlled Properties " means the "Controlled Properties” as such term is defined in the Asset Purchase Agreement.

" Conversion " has the meaning specified in Section 5.1(1).

" Conversion Price " means $0.41 per Common Share, subject to adjustment in accordance with Article 5, and in the case of the Conversion of accrued but unpaid interest that has been capitalized the "Conversion Price" shall be the "Market Price" as defined in TSXV rules determined at the quarter end on which such interest became payable.

" Conversion Shares " has the meaning specified in Section 5.1(1).

" Corporation " means Falco Resources Ltd., together with its successors and permitted assigns.

" Criminal Code Section " has the meaning specified in Section 1.3.

" Debenture " has the meaning specified in Section 1.1.

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" Environmental Laws " means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directives, licenses, authorizations and permits of, and agreements with (including consent decrees) any governmental agencies or authorities, in each case relating to or imposing liability or standards of conduct concerning public health, safety and environmental protection matters.

" Event of Default " has the meaning specified in Section 7.1.

" Glencore " means Glencore Canada Corporation, as beneficiary of certain rights in respect of the Asset Purchase Agreement and the Glencore Properties, together with its successors and permitted assigns.

" Glencore Hypothec " means the hypothec dated as of February 27, 2019 granted by the Corporation in favour of Glencore on the universality of the Corporation's movable and immovable property, as security for the obligations described as being secured thereunder.

" Glencore Properties " means the "Properties" as such term is defined in the Asset Purchase Agreement.

" Governmental Authority " means any federal, provincial or local governmental entity, quasi-governmental authority, court, commission, board, bureau, agency or instrumentality, or any regulatory, administrative or other department or agency, or any political or other subdivision, department or branch of any of the foregoing.

" Holder " means Glencore Canada Corporation, as holder of the Debenture hereunder, together with its successors and permitted assigns.

" Horne 5 Property " means the Horne 5 project, located in Rouyn-Noranda, Québec, Canada, which includes (i) all of the Corporation's rights and interests in the Controlled Property Mineral Interests (as defined in the Asset Purchase Agreement) (the " Rights to Minerals "), including certain surface rights surrounding the Quemont No. 2 shaft located on mining concession 243 (it being understood, for greater certainty, that ownership of the relevant mining concessions and leases forming part of the Controlled Properties remains with the Holder), (ii) any rights granted, renewing, replacing or complementing such Rights to Minerals, access and surface rights at any time, (iii) all future mineral rights, access rights and surface rights forming part of the Horne 5 Property, including any mining concession or surface leases related to any proposed tailings site, and (iv) all future other mineral rights, access rights and surface rights that have the effect of increasing the size or modifying the Horne 5 Property, which the Corporation or any Affiliate will own.

" IFRS " means the International Financial Reporting Standards adopted by the International Accounting Standards Board from time to time.

" Intercreditor Agreement " means the Amended and Restated Intercreditor Agreement dated the date hereof among Glencore, the Holder, the Corporation, Osisko and BaseCore.

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" Lien " means, whether or not registered or registrable or recorded or recordable, and regardless of how created or arising:

• (a) any royalty, stream, participation or production interest, offtake or similar right, mortgage, assignment of receivable, lien, encumbrance, adverse claim, charge, levy, execution, seizure, title defect, exception, reservation, encroachment, servitude, restriction on use, right of pre-emption, right of first refusal, privilege, security interest, hypothec or pledge, whether fixed or floating, against assets or property (whether real (immovable), personal (movable), mixed, tangible (corporeal) or intangible (incorporeal)), conditional sales contract, title retention agreement, and a subordination to any right or claim of others in respect thereof;

• (b) a claim, interest or estate against or in assets or property (whether real (immovable), personal (movable), mixed, tangible (corporeal) or intangible (incorporeal)), granted to or reserved or taken by any Person;

• (c) an option or other right to acquire, or to acquire any interest in, any assets or property (whether real (immovable), personal (movable), mixed, tangible (corporeal) or intangible (incorporeal));

• (d) any other encumbrance of whatsoever nature and kind against assets or property (whether real (immovable), personal (movable), mixed, tangible (corporeal) or intangible (incorporeal)); and

• (e) any contract to create, or right capable of becoming, any of the foregoing.

" Maturity Date " means October 27, 2021, provided that the Maturity Date may be extended by the Corporation to April 27, 2022 if, on the date that is 31 days prior to the Maturity Date or thereafter up to the Maturity Date, the Parties agree that progress continues to be made in good faith towards the negotiation and execution of a Principal Operating License and Indemnity Agreement (or equivalent) between the Parties and, if so extended, such extended date shall be the Maturity Date for the purposes of this Agreement

" National Bank Hypothec " means the hypothec granted by the Corporation in favour of National Bank of Canada in connection with the credit agreement dated as of June 27, 2017 between the Corporation, as borrower, and National Bank of Canada, as lender.

" Obligations " means all of the present and future obligations, liabilities, indebtedness, covenants and agreements, direct or indirect, absolute or contingent, matured or not, extended or renewed, of the Corporation to the Holder under this Debenture, including, if applicable, interest, interest on overdue and unpaid interest, fees, costs, expenses and indemnities, and " Obligation " means any of them.

" Osisko " means Osisko Gold Royalties Ltd., together with its successors and permitted assigns.

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" Osisko Hypothec " means the hypothec granted by the Corporation in favour of Osisko in connection with the secured senior loan agreement dated as of February 22, 2019 between the Corporation, as borrower, and Osisko, as lender.

" Party " means a party to this Debenture and " Parties " means all of them.

" Permitted Liens " means, in respect of any Person, any one or more of the following:

• (a) any Lien arising under any statute or regulation (in contrast with Liens voluntarily granted) in connection with, without limiting the foregoing, workers' compensation, unemployment insurance, employers' health tax or other social security or statutory obligations that secure amounts that are not yet due or which are being contested in good faith by proper proceedings diligently pursued and as to which adequate reserves have been established on the Corporation's books and records and a stay of enforcement of the Lien is in effect;

• (b) any Lien resulting from any judgment rendered or claim filed against the Corporation, which are being contested in good faith by proper proceedings diligently pursued and as to which adequate reserves have been established on the Corporation's books and records and a stay of enforcement of the Lien is in effect;

• (c) any construction, workers', materialmens', warehousemen’s storage, repairers’ or other like Lien created by Applicable laws (in contrast with Liens voluntarily granted), arising in connection with construction or maintenance in the ordinary course of business, in respect of obligations which are not due or which are being contested in good faith by proper proceedings diligently pursued and as to which adequate reserves have been established on the Corporation's books and records and a stay of enforcement of the Lien is in effect;

• (d) any Lien for Taxes not due or being contested in good faith by appropriate proceedings diligently pursued and as to which adequate reserves have been established on the Corporation's books and records and a stay of enforcement of the Lien is in effect;

• (e) minor imperfections in title on real property that do not materially detract from the value of the real property subject thereto and do not materially detract from the value of the Horne 5 Project, materially impair the Corporation's ability to carry on its business or materially impair the Holder's rights and remedies under this Debenture and the other Transaction Documents;

• (f) any purchase money Lien on specific fixed assets (including capital leases) to secure the payment of the purchase price of those fixed assets, and extensions, renewals or replacements thereof upon the fixed assets;

• (g) restrictions, easements, rights-of-way, servitudes or other similar rights in land (including rights-of-way and servitudes for railways, sewers, drains, gas and oil pipelines, gas and water mains, electric light and power and telephone or telegraph or cable television conduits, poles, wires and cables) granted to or reserved by other Persons which do not, in the aggregate, materially detract

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from the value of the Horne 5 Project, materially impair the Corporation's ability to carry on its business or materially impair the Holder's rights and remedies under this Debenture and the other Transaction Documents;

• (h) the rights reserved to or vested in any Person by the terms of any lease, licence, franchise, grant or permit held by the Corporation or by any statutory provision, to terminate any such lease, licence, franchise, grant or permit, or to require annual or periodic payments as a condition to the continuance thereof;

• (i) Liens in favour of Glencore with respect to the Asset Purchase Agreement, including the back-in right and the off-take right reserved by Glencore in connection with the Glencore Properties;

• (j) Liens in favour of BaseCore with respect to the BaseCore Royalty Agreement, including the 2% net smelter return royalty reserved by BaseCore on the Royalty Properties; provided the same at all times remain subject to the terms of the Intercreditor Agreement;

• (k)

• Liens with respect to the Underlying Agreements;

• (l) the Glencore Hypothec, the BaseCore Hypothec, the Osisko Hypothec and the Stream Hypothec; provided the same at all times remain subject to the terms of the Intercreditor Agreement;

• (m) the National Bank Hypothec provided however that such Liens secure only cash collateral held by National Bank of Canada in a segregated account and in an amount not exceeding [redacted maximum amount];

• (n) the Rouyn-Noranda Hypothec;

• (o)

• Liens with respect to the Security; and

• (p) restrictive covenants affecting the use to which real property may be put, provided that the covenants are complied with and which do not materially detract from the value of the Horne 5 Project, materially impair the Corporation's ability to carry on its business or materially impair the Holder's rights and remedies under this Debenture and the other Transaction Documents.

" Permitted Transfers " means:

• (a) sales, abandonment, or other dispositions of equipment that is substantially worn, damaged, or obsolete or no longer used or useful in the ordinary course of business; and

• (b) any collateral subject to the Security that is not related, used or usable to the Horne 5 Property, and when aggregated with other Transfers of collateral subject to the Security under this paragraph, not exceeding [redacted maximum amount] in any fiscal year.

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" Person " means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative or Governmental Authority.

" Principal " has the meaning specified in Section 1.1 and shall include capitalized interest in accordance with Section 1.2.

" Principal Operating License and Indemnity Agreement " means the principal operating license and indemnity agreement to be negotiated between the Holder and the Corporation.

" Repurchase Date " has the meaning specified in Section 6.1.

" Repurchase Notice " has the meaning specified in Section 6.1.

" Rouyn-Noranda Hypothec " means the hypothec granted by the Corporation in favour of the town of Rouyn-Noranda pursuant to a deed of hypothec published on July 3, 2017.

" Royalty Properties " means the "Properties" as such term is defined in the BaseCore Royalty Agreement.

" Security " has the meaning specified in Section 3.1.

" Share Reorganization " has the meaning specified in Section 5.3(1).

" Stream Agreement " means the senior secured silver stream purchase agreement for the Horne 5 Property entered into by the Corporation and Osisko on February 27, 2019.

" Stream Hypothec " means the hypothec granted by the Corporation in favor of Osisko as collateral agent under the Stream Agreement on the universality of the Corporation’s movable and immovable property.

" Taxes or Tax " means all foreign and domestic federal, provincial, state, municipal and other governmental taxes, levies, imposts, deductions, charges, claims, and assessments and withholdings, and all liabilities with respect thereto (including, without limitation, interest and penalties).

" Transaction Documents " means, collectively, this Debenture, the Security, the Intercreditor Agreement and each other agreement, document, instrument or certificate delivered for the benefit of the Holder pursuant to or otherwise in connection with any of this Debenture and the Security.

" Transfer " means to, directly or indirectly, sell, transfer, assign, convey, dispose or otherwise grant a Lien, right, title or interest (including expropriation or other transfer required or imposed by law or any Governmental Authority), whether voluntary or involuntary.

" TSXV " means the TSX Venture Exchange.

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" Underlying Agreements " means the "Underlying Agreements" as such term is defined in the Asset Purchase Agreement.

Section 2.2 Gender and Number.

Any reference in this Debenture to gender includes all genders and words importing the singular number only include the plural and vice versa.

Section 2.3 Headings, etc.

The provision of a Table of Contents, the division of this Debenture into Articles and Sections and the insertion of headings are for convenient reference only and are not to affect the interpretation of this Debenture.

Section 2.4 Currency.

All references in this Debenture to dollars, unless otherwise specifically indicated, are expressed in Canadian currency.

Section 2.5 Certain Phrases, etc.

In this Debenture (i) the words " including " and " includes " mean " including (or includes) without limitation ", and (ii) in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated, the word " from " means " from and including " and the words " to " and " until " each mean " to but excluding ".

Section 2.6 Accounting Terms.

All accounting terms not specifically defined in this Debenture shall be interpreted in accordance with IFRS.

ARTICLE 3 SECURITY

Section 3.1 Security.

As security for the due and punctual payment of all of the Obligations, the Corporation will grant in favour of the Holder a first ranking hypothec, subject to Permitted Liens, on the universality of all of the Corporation's movable and immovable assets, properties and undertakings, in an aggregate principal amount of [redacted amount] (the " Security "). The Holder’s first ranking Security will apply to any of the Corporation’s, as the case may be, present and future rights, property and assets, including all rights to the Horne 5 Property, and any future rights which the Corporation obtains from any Governmental Authority, Glencore or otherwise. The Corporation shall not contest in any manner the effectiveness, validity, binding nature or enforceability of the Security or the other Transaction Documents.

Section 3.2 Registration of Security.

The Corporation agrees that the Holder may register the Security in, as applicable, the Register of Personal and Movable Real Rights and the Québec Land Registry, in each case to effectively charge the collateral described therein, and such other registry systems as the

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Holder may from time to time deem appropriate. The Corporation covenants and agrees that it shall co-operate with such registration and provide its written consent or signature to any documents or things reasonably necessary to accomplish registration of the Security as contemplated in this Article 3 in order to obtain, set-up, render opposable, perfect and maintain the Security.

Section 3.3 Registration of Security at the Quebec Land Registry.

The Corporation shall, on or about the date hereof, submit the Security for registration at the Québec Land Registry and shall, within 30 days from the date hereof, cause the Security to be registered in the Québec Land Registry and provide the Holder with evidence of registration thereof.

Section 3.4 Blocked Account Agreements.

The Corporation shall, within 30 days from the date hereof, cause National Bank of Canada and The Bank of Nova Scotia to enter into blocked account agreements with the Holder in form and substance similar to the blocked account agreements entered into by Osisko on March 20, 2019 and March 22, 2019, respectively.

ARTICLE 4 COVENANTS

Section 4.1 Affirmative Covenants.

So long as this Debenture remains outstanding, the Corporation shall:

• (a) Performance . Observe or perform any other covenant, obligation, condition or agreement contained in this Debenture, including the due and punctual payment of Principal and interest hereunder, and in the other Transaction Documents;

• (b) Preservation of Corporate Existence . Preserve and maintain its corporate existence, rights and privileges, and qualify and remain qualified as a corporation in good standing in each jurisdiction in which such qualification is required;

• (c) No Change to Constating Documents. Not amend its constating documents in any manner that would be prejudicial to the Holder;

• (d) Compliance with Applicable Laws . Comply in all material respects with all Applicable Laws, including, without limitation, all applicable securities laws and the TSXV rules and regulations;

• (e) Financial and Other Information . So long as any amount owing under this Debenture remains unpaid, as soon as practicable following a request therefor from the Holder, the Corporation shall furnish to the Holder such financial or other information relevant to the Corporation's ability to perform its obligations under this Debenture as the Holder may reasonably request from time to time. The Holder shall have the right to audit such information with prior notice to the Corporation, provided that the Holder shall be responsible for its own costs in

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connection with such audit. The Corporation shall keep proper books of records;

• (f) Maintenance of Properties . The Corporation shall maintain or cause to be maintained in good repair, working order and condition, except normal wear and tear, all of its properties and assets and will make or cause to be made all commercially reasonable and appropriate repairs, renewals and replacements thereof. The Corporation shall maintain the Approvals necessary for the development of the Horne 5 Property as currently conducted or contemplated under the development plans. The Corporation shall maintain adequate equipment for the development of the Horne 5 Property in a reasonable and prudent manner;

• (g) Insurance. The Corporation shall maintain or cause to be maintained, with financially sound and reputable insurers, public liability and property damage insurance with respect to its businesses and properties against loss or damage of the kinds customarily carried or maintained by Persons of established reputation engaged in similar businesses and in amounts reasonably acceptable to the Holder. Concurrently with the execution of the Security, the Corporation shall cause the Holder to be named as first loss payee on all applicable insurance policies relating to the Security pursuant to appropriate endorsements which are commercially available, in form and substance reasonably satisfactory to the Holder, subject to the terms of the Intercreditor Agreement. If at the time of receipt of any insurance proceeds, no Event of Default has occurred and is continuing, the Corporation shall use any proceeds received from any policies of insurance for the replacement of the asset(s) for which such proceeds have been received or for other general corporate purposes. If an Event of Default has occurred and is continuing at the time of receipt of any insurance proceeds, the Corporation shall offer to apply any such proceeds received from any policies of insurance relating to the Horne 5 Property to satisfy the obligations under this Debenture;

• (h) Taxes . The Corporation shall pay when due all Taxes imposed upon it or any of its respective properties or assets or with respect to any of its respective franchises, business, income or property provided that no such Tax need be paid if the Corporation is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted; and

• (i) Notice of Event of Default . When any Event of Default has occurred, the Corporation will deliver to the Holder by hand delivery or electronic transmission a notice signed by an authorized officer of the Corporation specifying such event, notice or other action within two (2) Business Days of an officer or director becoming aware of such Event of Default unless such Event of Default will have been cured or waived within such period.

Section 4.2 Negative Covenants.

From the date hereof until the Conversion, and so long as any amount owing under this Debenture remains unpaid, the Corporation shall not, except for the sole purpose of granting indemnities in connection with the Corporation's work on the Horne 5 Property or with the Holder’s prior written consent:

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• (a) other than Permitted Liens, encumber the Horne 5 Property, or otherwise create, incur, assume or suffer to exist any Lien on any of its material assets;

• (b) liquidate or dissolve;

• (c) amend the Corporation's articles of incorporation or its authorized share capital;

• (d) Transfer, in whole or in part, the Horne 5 Property or the collateral charged by the Security, except for (i) any Permitted Transfer, and (ii) any Transfer of Minerals (as defined in the Stream Agreement) pursuant to an Offtake Agreement (as defined in the Stream Agreement) in the ordinary course of business;

• (e) enter into any consolidation, amalgamation, merger, business combination, exchange offer, take-over bid or an arrangement with another Person, unless:

• (i) the continuing corporation or other entity which is formed by the applicable consolidation, amalgamation, merger, business combination, exchange offer, take-over bid or arrangement, as a successor to the Corporation, executes and delivers to the Holder its assumption in writing of the due and punctual performance and observance of each covenant and condition of this Debenture;

• (ii) in the event that the consolidation, amalgamation, merger, business combination, exchange offer, take-over bid or arrangement results in the Debenture becoming convertible into shares or securities of a new parent company or entity of the Corporation pursuant to Section 5.3(2) (Capital Reorganization) and the Corporation remains the owner of the Horne 5 Property and the collateral charged by the Security, such parent company or entity shall execute and deliver to the Holder its guarantee in writing of the due and punctual performance and observance of each covenant and obligation of the Corporation under this Debenture other than Article 3 (Security), Section 4.1(f) (Maintenance of Properties), Section 4.1(g) (Insurance) and Section 4.2(a)(a) (Negative Covenant – Permitted Liens) which shall continue to be binding solely on the Corporation as the owner of the collateral charged by the Security; and

• (iii) no Event of Default is continuing on the date of such transaction or would occur as a result of such transaction.

ARTICLE 5 CONVERSION OF DEBENTURE

Section 5.1 Conversion of this Debenture into Common Shares.

• (1) Upon and subject to the provisions and conditions of this Article 5, the Holder shall have the right, at its sole and absolute discretion, within the ten (10) days prior to the Maturity Date or on the Maturity Date, to convert this Debenture (in whole or in part) into such number of Common Shares equal to the Principal and any accrued and

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unpaid or uncapitalized interest, divided by the Conversion Price (the " Conversion ", and the Common Shares issuable pursuant thereto, the " Conversion Shares "), but provided that Conversion of any portion of the Principal which represents capitalized interest or any accrued and unpaid or uncapitalized interest shall be subject to TSXV approval at the future time of Conversion and the Conversion Price applicable to capitalized interest shall be the "Market Price" as defined in TSXV rules determined at the quarter end on which such interest became payable.

• (2) The Holder may exercise its right to effect the Conversion by sending to the Corporation at its principal address a notice to such effect in accordance with the provisions of this Article 5. Upon receipt by the Corporation of such notice, the Holder shall be entered in the books of the Corporation as at the date of Conversion as the holder of the number of Conversion Shares to which the Holder is entitled to upon Conversion and, as soon as practicable, the Corporation shall deliver to the Holder a certificate or certificates for such Conversion Shares and, if applicable, execute an electronic transfer (without deduction for any related fees or expenses) for any amount payable under Section 5.4. Upon delivery of the certificates for such Conversion Shares, the Principal, including any accrued and unpaid or uncapitalized interest thereon, in respect of which such notice was given, shall be deemed repaid in full and no longer owing by the Corporation.

• (3) The Holder's right of Conversion pursuant to this Article 5 shall extend only to the maximum number of whole Common Shares into which the Principal, including any accrued and unpaid or capitalized interest thereon, is then converted in accordance with the provisions of paragraph (1). No fractional interests in Common Shares shall be delivered in accordance with Section 5.4.

• (4) If a Conversion is in respect of capitalized interest, the Corporation shall promptly following receipt of the notice contemplated by Section 5.1(2) make and diligently pursue an application to TSXV to seek approval for the Conversion of such interest.

Section 5.2 Expiry of Debenture Conversion Right.

If, by 4:00pm (Toronto time) on the Maturity Date, the Holder has not exercised its Conversion right, the Principal outstanding, including any accrued and unpaid or uncapitalized interest thereon, shall remain due and payable by the Corporation to the Holder in accordance with Section 1.1, and the Holder's right to convert this Debenture into Common Shares shall automatically terminate, unless the Corporation fails to make due and timely payment of the Principal and any accrued and unpaid or uncapitalized interest by the Maturity Date, in which case the Conversion right shall not be terminated until such payment is made.

Section 5.3 Adjustment of Conversion Price, etc.

• (1) If and whenever at any time after the date hereof and prior to the Conversion the Corporation shall (i) subdivide, re-divide or change its then outstanding Common Shares into a greater number of Common Shares, (ii) reduce, combine or consolidate its then outstanding Common Shares into a lesser number of Common Shares, or (iii) issue Common Shares (or securities exchangeable for or convertible into Common Shares) to the holders of all or substantially all of its then outstanding Common Shares by way of a stock dividend or other distribution (any of such events herein called a " Share Reorganization "), then the Conversion Price shall be adjusted effective

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immediately after the effective date of any such event in (i) or (ii) above or the record date at which the holders of Common Shares are determined for the purpose of any such stock dividend or other distribution in (iii) above, as the case may be, by multiplying the Conversion Price in effect on such effective date or record date, as the case may be, by a fraction, (y) the numerator of which shall be the number of Common Shares outstanding on such effective date or record date, as the case may be, before giving effect to such Share Reorganization and (z) the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Share Reorganization including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would be outstanding if such securities were exchanged for or converted into Common Shares.

• (2) If and whenever at any time after the date hereof and prior to the Maturity Date, there is a capital reorganization of the Corporation or a reclassification or other change in the Common Shares (other than a Share Reorganization) or a consolidation or merger, amalgamation or arrangement of the Corporation with or into any other corporation or other entity (other than a consolidation, merger, amalgamation or arrangement which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other securities), or a transfer of all or substantially all of the Corporation's undertaking and assets to another corporation or other entity in which the holders of Common Shares are entitled to receive shares, other securities or other property (any of such events being called a " Capital Reorganization "), the Holder shall be entitled to receive, and shall accept, upon the exercise of the right of Conversion at any time after the effective date thereof, in lieu of the number of Common Shares to which the Holder was theretofore entitled on Conversion, the kind and amount of shares, other securities or money or other property that the Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Common Shares to which the Holder was entitled upon Conversion, subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in this Section 5.3(2).

• (3) If and whenever at any time after the date hereof and prior to the Maturity Date, any of the events set out in Section 5.3(1) or Section 5.3(2) shall occur and the occurrence of such event results in an adjustment of the Conversion Price pursuant to the provisions of Section 5.3(1) or Section 5.3(2), as the case may be, then the number of Common Shares issuable pursuant to this Debenture shall be adjusted contemporaneously with the adjustment of the Conversion Price by multiplying the number of Common Shares then otherwise issuable upon Conversion immediately prior to such adjustment by a fraction (y) the numerator of which shall be the Conversion Price in effect immediately prior to such adjustment, and (z) the denominator of which shall be the Conversion Price resulting from such adjustment.

• (4) If any question arises with respect to the adjustments provided in this Section 5.3, such question shall be conclusively determined by a firm of chartered professional accountants appointed by the Corporation and acceptable to the Holder. Such chartered professional accountants shall be given access to all necessary records of the Corporation and their determination shall be binding upon the Corporation and the Holder.

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Section 5.4 No Requirement to Issue Fractional Shares.

The Corporation shall not be required to issue fractional Common Shares upon the Conversion. If any fractional interest in a Common Share would, except for the provisions of this Article 5, be deliverable upon the Conversion, such fractional interest shall be rounded down to the nearest whole number of Common Shares.

Section 5.5 Notice of Special Matters.

The Corporation shall give notice to the Holder, in the manner provided in Article 8, of its intention to fix a record date for any event mentioned in Section 5.3 which may give rise to an adjustment in the number of Common Shares which may be acquired pursuant to Section 5.1, and, in each case, the notice shall specify the particulars of the event and the record date and the effective date for the event; provided that the Corporation shall only be required to specify in the notice such particulars of the event as shall have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 14 days prior to the applicable record date.

Section 5.6 Corporation to Reserve Shares and Hold Period.

The Corporation shall at all times reserve and keep available out of its authorized Common Shares and solely for the purpose of conversion as in this Article 5 provided, and conditionally allot to the Holder, such number of Common Shares as shall then be issuable upon the Conversion. The Corporation covenants with the Holder that all Common Shares which shall be so issuable shall be duly and validly issued as fully-paid and non-assessable. This Debenture shall be subject to a prescribed four month and one day hold period. Any certificate representing Common Shares issued within four months from the date hereof shall bear the following legend (and such other legend as required by the TSXV or applicable securities laws):

" UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY BEFORE FEBRUARY 28, 2021.

WITHOUT PRIOR WRITTEN APPROVAL OF TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THIS SECURITY MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL FEBRUARY 28, 2021. "

Section 5.7 Holder not a Shareholder.

Nothing in this Debenture shall, in itself, confer or be construed as conferring upon the Holder any right or interest whatsoever as a shareholder of the Corporation, including, but not limited to, the right to vote at, to receive, subject to Section 5.5, notice of, or to attend, meetings of shareholders or any other proceedings of the Corporation, or the right to receive dividends and other distributions.

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ARTICLE 6 REPURCHASE OF DEBENTURE

Section 6.1 Redemption Offer Upon a Change of Control.

Within 30 days following the occurrence of a Change of Control, the Corporation shall make an offer to the Holder to repurchase this Debenture in whole for cash by paying to the Holder an amount equal to the sum of (i) 105% of the Principal and (ii) any accrued and unpaid or uncapitalized interest under this Debenture. The notice to be delivered by the Corporation pursuant to this Section 6.1 (the " Repurchase Notice ") shall, among other things, specify the date on which the repurchase is to be completed if accepted by the Holder (the " Repurchase Date "), which date shall be no less than fifteen (15) and no more than thirty (30) days from the date on which the Repurchase Notice is received by the Holder. Notwithstanding the foregoing, despite having received a Repurchase Notice the Holder may convert any or all of the Principal at any time up to the earliest of the Maturity Date or the Repurchase Date in accordance with the procedures set forth in Article 5.

ARTICLE 7 EVENTS OF DEFAULT

Section 7.1 Events of Default.

The occurrence of any of the following events shall constitute an " Event of Default " under this Debenture:

• (a) the Corporation fails to make payment when due of the Principal outstanding or of any accrued and unpaid or uncapitalized interest thereon;

• (b) default by the Corporation in the performance or observance of any other covenant, condition or obligation contained in this Debenture or the other Transaction Documents, unless such default with respect to a covenant that is in subsection 4.1(b),(d) or (h), that is curable and is remedied within thirty (30) days after notice thereof by the Holder to the Corporation;

• (c) the Corporation fails to make a redemption offer in connection with a Change of Control with respect of the Corporation as required pursuant to Section 6.1;

• (d) the Corporation ceases to carry on business or ceases to be in good standing in its jurisdiction of incorporation;

• (e) the Corporation becomes generally not able to pay its debts as they become due or a proceeding in bankruptcy or insolvency of the Corporation or for a receiver or trustee or other custodian for any of its property is filed by or against the Corporation; and

• (f) any execution, distress or other enforcement process, whether by court order or otherwise, becomes enforceable against any material property and assets of the Corporation, provided that the Corporation shall not be in default hereunder if it is contesting such proceeding in good faith and has obtained a stay of such proceedings and has set aside in trust a satisfactory amount of

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money to satisfy the claim in the event that it is not successful in opposing the proceeding;

• (g) a cease trade order has been issued by a securities regulator in any province of Canada restricting trading in the Corporation’s securities, other than a cease trader order only applicable to the directors and officers of the Corporation; and

• (h) the Corporation ceases to remain a reporting issuer in any province in Canada or is delisted from the TSXV, other than as a result of a transaction pursuant to which holders of Common Shares receive cash or securities of an entity which is listed on a stock exchange in Canada or such other exchange as may be agreed upon by the Corporation and the Holder.

Section 7.2 Consequences of an Event of Default.

Upon the occurrence of any Event of Default, the Holder may by notice to the Corporation, declare that all Obligations and all monies secured shall at the option of the Holder become forthwith due and payable and all of the rights and remedies hereby conferred in respect of the Security shall become immediately enforceable and any and all additional and collateral securities for payment of this Debenture shall become immediately enforceable.

ARTICLE 8 MISCELLANEOUS

Section 8.1 Waiver.

• (1) No amendment or waiver of any provision of this Debenture, nor consent to any departure by the Corporation or any other Person from such provisions, is effective unless in writing and approved by the Holder. Any amendment, waiver or consent is effective only in the specific instance and for the specific purpose for which it was given.

• (2) No failure on the part of the Holder to exercise, and no delay in exercising, any right under this Debenture shall operate as a waiver of such right; nor shall any single or partial exercise of any right under this Debenture preclude any other or further exercise of such right or the exercise of any other right.

Section 8.2 Holder May Remedy Default.

If the Corporation fails to do anything hereby required to be done by it, the Holder may, but shall not be obliged to, do such thing and all sums thereby expended by the Holder shall be payable forthwith by the Corporation, shall be secured by the Security, but no such performance by the Holder shall be deemed to relieve the Corporation from any default hereunder.

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Section 8.3 Notices, etc.

Any notice, direction or other communication to be given under this Debenture shall, except as otherwise permitted, be in writing and given by delivering it or sending it by email or other similar form of recorded communication addressed:

• (a) To the Corporation at:

Falco Resources Ltd. 1100, avenue des Canadiens-de-Montréal, Suite 300 Montréal, Québec, Canada H3B 2S2

Attention: [redacted contact information] Email: [redacted contact information]

With a copy to:

Attention: Corporate Secretary Email: corporatesecretary@falcores.com

• (b) To the Holder at:

Glencore Canada Corporation 100 King St. West, Suite 6900 Toronto, ON, M5X 1E3

Attention: [redacted contact information] Email: [redacted contact information]

Any such communication shall be deemed to have been validly and effectively given if (i) personally delivered, on the date of such delivery if such date is a Business Day and such delivery was made prior to 4:00 p.m. (Montreal time), otherwise on the next Business Day, (ii) transmitted by email or similar means of recorded communication on the Business Day following the date of transmission. Any party may change its address for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to the Party at its changed address.

Section 8.4 Confidentiality

Except as specifically otherwise provided for herein, the Parties will not without the consent of the other Party, disclose to any person other than their respective affiliates, legal and financial advisors, the existence, content or status of this Debenture.

Section 8.5 Severability.

If any provision of this Debenture is deemed by any court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect.

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Section 8.6 Successors and Assigns, etc.

Neither this Debenture nor any of the rights, interests or obligations hereunder may be transferred or assigned, by operation of law or otherwise, as a whole or in part by any Party without the prior written consent of the other Party and shall enure to the sole benefit of and be binding upon the Parties and their respective successors and permitted assigns.

Section 8.7 Governing Law.

This Debenture shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and the parties hereby irrevocably attorn to the jurisdiction of the courts of the Province of Ontario, provided that the Security is governed by the Laws of the Province of Quebec and any actual enforcement thereof will be governed by the Laws of the Province of Quebec and will be subject to the jurisdiction of the Courts of the Province of Quebec.

Section 8.8 Counterparts.

This Debenture may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument.

• [ Signature page follows. ]

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IN WITNESS WHEREOF the parties have executed this Debenture as of the date first written above.

FALCO RESOURCES LTD.

By: (s) Luc Lessard Luc Lessard President and Chief Executive Officer

By: (s) Anthony Glavac Anthony Glavac Chief Financial Officer

GLENCORE CANADA CORPORATION

By: (s) Peter Wright Peter Wright VP Legal

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