Falco raises $17M for Horne 5 engineering, studies

Falco Resources (TSXV: FPC) has completed the last tranche of its $17.3 million private placement to continue engineering, technical and environmental studies related to its 100%-owned Horne 5 gold-copper-zinc project.

The project is located in the Rouyn-Noranda camp of Quebec, in the footprint of the former Horne mine that Noranda operated from 1927 to 1976.

Falco raised the final $5 million by issuing 12.5 million units at a price of 40¢ per unit to Investissement Quebec. Each unit includes one common share of the company and one-half of a share purchase warrant. Warrants may be exercised to acquire common shares at a price of 55¢ each until July 31, 2025.

This year, Falco updated the feasibility study originally released in 2017. Plans call for an owner-operated underground mine. Bulk mining methods will be used to produce 15,500 tonnes of mineralized material per day over the life of the mine. The plans are drawn around a high degree of equipment automation, minimal waste rehandling, and base backfill.

The mineral processing plant will be built with a single semi-autogenous (SAG) mill and single ball mill, followed by three flotation and thickening circuits to recover copper, zinc and pyrite concentrates. The pyrite concentrate will then be reground, leached, and gold recovered in a carbon-in-pulp circuit. A tailings management facility will be built on the nearby Norbec and Millenbach sites purchased from First Quantum Minerals (TSX: FM).

The updated feasibility study is updated to reflect stronger metal prices, principally gold at US$1,600 per oz., compared to US$1,300 per oz. in 2017. The study also used a copper price of US$3.20 per lb. and a zinc price of US$1.15 per lb.

The after-tax net present value at a 5% discount is US$761 million and the internal rate of return is 18.9%. The all-in sustaining cost for an ounce of gold, net of byproduct credits, will be US$587.

Total pre-production capital requirements and maintenance costs are estimated to be US$1.4 billion, including contingencies but excluding the US$41.4 million incurred at the project through December 31, 2020. The mine would produce 220,300 oz. of gold annually in each year of its 15-year life. Production is expected in the second half of 2025.

The Horne 5 project has measured and indicated resources of  105.6 million tonnes grading 1.44 grams gold per tonne, 14.32 grams silver per tonne, 0.17% copper and 0.8% zinc. The inferred resource estimate is 24.3 million tonnes at 1.35 grams gold per tonne, 21.4 grams silver per tonne, 0.19% copper, and 0.67% zinc. Within the resources, the proven and probable reserves total 80.9 million tonnes grading 1.44 grams gold per tonne, 14.14 grams silver per tonne, 0.17% copper, and 0.77% zinc.

Falco has a silver streaming agreement with Osisko Gold Royalties (TSX: OR; NYSE: OR) and an offtake agreement with Glencore (LSE: GLEN) for copper and zinc concentrates.

Falco is not ruling out future optimization studies for Horne 5. There is exploration potential to increase mine life and resources, the possibility of increasing the mining rate, and the opportunity to develop synergies with Glencore’s local operation.