Falco study outlines $905M gold mine in Quebec
A former operating gold complex in Quebec could be back in business by 2020 according to Falco Resources (TSXV:FPC), which released a PEA on its Horne 5 gold project.
The tiny junior, valued at $62-million on Thursday, is one of the largest claim holders in the Abitibi Greenstone Belt, a historic mining district in the Canadian province of Quebec.
Its principal property is the Horne Mine Complex, operated by Noranda from 1927 to 1976, during which 11.6 million ounces of gold and 2.5 billion pounds of copper was mined and milled.
The company is 16.2 percent owned by Osisko Gold Royalties (TSX:OR), which has a 5 percent net smelter royalty on the Malarctic mine in Quebec. The 600,000-ounce per year operation is one of Canada's largest gold mines; in 2014 Yamana Gold (TSX:YRI, NYSE:AUY) and Agnico Eagle Mines (TSX, NYSE:AEM) purchased Osisko Resources and created the Canadian Malarctic Partnership.
On Monday, Falcon published a preliminary economic assessment on the Horne 5 deposit, which sits below the Horne mine. The PEA advances the project another significant step from an updated resource estimate released in January, which showed an indicated resource of 5.361 million gold-equivalent ounces (including gold, silver, copper and zinc) and 1.254 million ounces gold-equivalent inferred.
According to The Northern Miner, Falco is the only junior to control the last of the large Abitibi mining camps – the Rouyn-Roranda camp – not owned by a major gold producer.
The PEA envisages an underground mine with a life of approximately 12 years, targeting 63.8 million tonnes of volcanic-massive sulphide material with an average diluted grade of 2.6 grams per tonne gold equivalent. Over 12 years of production the mine would produce 3.051 million ounces, or an average 236,000 ounces annually. The project has a capital cost of $905.2 million.
"The study firmly establishes the Horne 5 Project as one of the best undeveloped gold projects by value and margin in today's gold-price environment. The Horne 5 Project benefits from being situated in one of the world's best mining jurisdictions where a high level of underground mining expertise is readily available. We believe our advantageous location and existing infrastructure has the potential to positively impact the long term viability of the Horne 5 Project," said Luc Lessard, Falco president and CEO.
"The study marks a significant milestone for our Company. At a US $1,250 per ounce gold-price, Horne 5 could generate more than $6.8 billion in gross revenue, deliver total life of mine, after-tax net present value of $667 million, and payback capital in approximately 4 years. Further upside to this evaluation is anticipated through optimization studies and continued successful exploration."
A feasibility study and an Environmental Impact Assessment (EIA) are both expected to be completed in the first part of 2017.