Mr. Trent Mell reports

FALCO PACIFIC ADOPTS NEW SHAREHOLDER RIGHTS PLAN

Falco Pacific Resource Group Inc.'s board of directors has adopted a new shareholder rights plan.

The rights plan is intended to achieve three objectives in the event of an unsolicited takeover bid for the shares of Falco: (1) ensure that Falco shareholders are treated fairly in connection with any such takeover bid, (2) give all shareholders and the board adequate time to evaluate any such takeover bid, and (3) provide the board adequate time to identify and negotiate value-enhancing alternatives, as considered appropriate.

"The rights plan is not intended to prevent a change of control of Falco to the detriment of shareholders," said Trent Mell, president and chief executive officer. "Rather, we want to ensure that the future of Falco is decided by a fair process that will protect the rights and determine the wishes of all our shareholders."

The board has approved the rights plan, which authorizes the issue of one right for each common share of Falco outstanding at 4 p.m. (Toronto time) today and each common share issued thereafter. The rights will become exercisable if at any time following the adoption of this rights plan a person, together with its affiliates, associates and joint actors, acquires beneficial ownership of common shares which, when aggregated with its holdings, total 15 per cent or more of the outstanding common shares of Falco (determined in the manner set out in the rights plan). Following any such acquisition, each right held by a person other than the acquiring person, and its affiliates and joint actors would, upon exercise, entitle the holder to purchase common shares at a substantial discount to the market price of the shares at that time.

The board has the discretion to defer the time at which the rights become exercisable, to waive the application of the rights plan and to amend the rights plan.

The rights plan permits the acquisition of control of Falco through a permitted bid, a competing permitted bid or a negotiated transaction. A permitted bid is one that, among other things, is made to all holders of common shares for all of their shares, is open for a minimum of 60 days and is subject to an irrevocable minimum tender condition of at least 50 per cent of the common shares held by independent shareholders.

To the best of the board's knowledge, no existing shareholder of Falco owns greater than 15 per cent of the outstanding common shares of Falco.

Falco is not aware of any specific takeover bids for the common shares of Falco or any intention on the part of any party to make such a takeover bid.

The board considered a number of factors in adopting the rights plan. Given recent weakness in the share prices of many junior mining companies including Falco, the board believes that there is a material risk of an opportunistically timed takeover bid. The board believes that the rights plan benefits shareholders by providing a substantially greater opportunity to run a value-maximizing auction process in the event that Falco is put in play through a hostile takeover bid.

Although effective as of today, the rights plan is subject to TSX Venture Exchange approval. The rights plan will be submitted to Falco shareholders for ratification at the annual and special meeting to be held later this year. If the rights plan is not ratified by shareholders, the rights plan and any rights issued pursuant to it will terminate. If the rights plan is ratified, it will continue in effect until the third annual meeting of shareholders thereafter.

A copy of the rights plan will be available shortly on SEDAR. Falco's existing shareholder rights plan, which was approved by shareholders on Dec. 5, 2013, will terminate at the upcoming shareholders meeting if the rights plan is ratified by shareholders.

We seek Safe Harbor.