Falco finds gold in Horne’s old data

Falco Pacific Resource Group (FPC-V) secured the jewel of Canada’s mining history just as markets tightened. But rather than let the conditions get it down, the company wound up proving that necessity is indeed the mother of invention — or in this case, the mother of discovery.

“Under normal circumstances we would have raised money and spent a lot of it drilling, but in this market, we weren’t really able to do that,” says Dean Linden, Falco’s head of corporate development.

Fortunately for Falco, along with acquiring 70% of the Rouyn-Noranda mining camp — a vast land package that covers 728 sq. km — it also received 250 banker’s boxes, covered in dust and nearly forgotten.

Vestiges of a pre-digital age, the boxes contained geological, exploration and mining data compiled by Noranda from the 1930s right up until the 1990s on one of Canada’s greatest mines and the land around it. And with a cost-conscious mentality defining its corporate philosophy, the decision was made to comb through the boxes before any drilling was done.

The Horne mine was a world-class find that turned Noranda into a major player on the global mining scene.

Discovered in 1921, the deposit was the world’s most gold-rich volcanogenic massive sulphide (VMS) deposit ever found, and produced 54 million tonnes of ore grading 6.1 grams gold and 13 grams silver, with an average grade of 2.2% copper.

With its coffers full from the cash that Horne was generating, Noranda did extensive work on the surrounding ground, and it is Falco’s good fortune that it did — especially considering the challenge of trying to find a foothold on 728 sq. km of prospective ground.

“Where do you start on something that has fourteen former producing mines, all of which probably deserve a second look?” Dean says.

The boxes provided the answer. While the Horne deposit was mined of all of its riches, another deposit deeper down was left mostly untouched.

The Horne #5 zone is located 500 metres north of the Horne deposit, and is mineralized at deeper depths. Horne was mined from surface down to 900 metres, but mineralization at Horne #5 begins at the 600-metre level and has been drill tested beyond the 2,500-metre level, and remains open at depths.

This deeper orientation may have prevented Noranda from fully exploiting the zone, but not because mining at greater depths costs more. Noranda was flush with cash, having outlined Horne #5 with 9,000 drill holes, four shafts and numerous drifts. The likely reason that Noranda left the deposit for posterity is that it wound up proving the conventional wisdom of miners along the Cadillac Fault: above 500 metres VMS deposits are copper rich, but below that level they are gold rich.

“It appears as though the gold party was just getting started at 500 metres, which is consistent with what happens on the Cadillac Break,” Linden says. “I don’t think Noranda was thinking about gold back in the 1960s, but it’s set up for a hell of a gold mine in 2013.”

In the mid-1970s a spike in the gold price likely inspired Noranda pulling out 200,000 tonnes of rock from the zone. That rock averaged 7.1 grams gold and 0.73% copper. The operation was halted in 1976, but the production results, along with data from 9,000 drill holes, are guiding Falco’s plan to create a digital model of the entire Horne block.

“We’ll be able to give people a comprehensive look at this, the likes of which they haven’t seen before,” Linden says. “It’s old-school drilling coming together with modern technology.”

As it stands now, the zone has a historic, non-compliant resource of 167.83 million tonnes grading 1.25 grams gold, 17.14 grams silver, 0.57% zinc and 0.1% copper for 6.75 million oz. gold, 92.5 million oz. silver, 2.1 billion lb. zinc and 360 million lb. copper.

Falco acquired the property after it had been operated as a joint venture between Noranda and Alexis Minerals, now known as QMX Gold (QMX-T). With Noranda serving as operator and Alexis providing exploration funds, the gold junior never really got a handle on the project, and the banker’s boxes went unchecked.

“In our digital age, a database means something different,” Linden says. “This got lost simply because a generation moved on and no one wanted to go in to check out the banker’s boxes. It’s a dark, dusty, lonely place to go.”

With Alexis focusing on its Lac Herbin and Snow Lake projects, it decided to sell what was considered its most marketable non-core asset.

“It was a competitive bidding process,” Linden says, “but we were able to entice them with an attractive offer that included stock.”

The deal also brought Osisko Mining (OSK-T) in as major shareholder with an 18.36% stake, while allowing Falco to maintain a tight share structure with 45 million shares outstanding and no warrants.

The property is also home to Xstrata’s (XTA-L) Horne mill and smelter, which sits on top of the old deposit, and could one day process ore from Horne #5.

But being in Rouyn-Noranda means that if a deal isn’t reached with Xstrata, there are plenty of other mills within trucking distance.

“Our cup runneth over as far as available infrastructure,” Linden says.

As for the next steps, Linden says that in a few months the company will be meeting with consultants and drawing up a drill program.

“We’re probably 90 to 120 days from having [the consulting firm] tell us where to set the drills, and what we need to do to make it compliant,” he says. “We’ve quickly gone from being an exploration company focused on how to raise money to drill a huge land package, to one that is overseeing an engineering exercise.”

If Falco can outline a National Instrument 43-101 compliant resource that exceeds 6 million oz. from Noranda’s historical estimate, it could make Horne a hot topic of conversation in the mining world yet again. The company estimates that it could have its first compliant estimate done before next March.

Falco has $2 million in cash.