Falco lifts Quebec gold-zinc project value to $2.4B

An updated feasibility study for Falco Resources’ (TSXV: FPC) Horne 5 polymetallic project in western Quebec more than triples the project’s value while the province said its environmental review is almost done.

Discounted at 5%, the update gives Horne 5 a post-tax net present value (NPV) of C$3.35 billion ($2.37 billion), a 244% increase from the NPV in the 2021 feasibility, while initial capital costs rose 62% to C$1.75 billion.

The internal rate of return gained almost 10 percentage points to 28% for Horne 5, where Glencore (LSE: GLEN) has development rights and a nearby smelter. The project is about 630 km northwest of Montreal.

“These developments are significant de-risking milestones, well received by the market and set up further deliverables that should drive further revaluation,” BMO Capital Markets analyst Andrew Mikitchook said in a note on Thursday.

“The market will be watching for a near-term financing plan to allow continued advancement of Horne 5, and will also look for visibility on a full construction financing plan.”

Quebec’s top tier

The update, released on Wednesday, reinforces Horne 5’s standing as one of Quebec’s largest advanced undeveloped polymetallic projects. Falco continues to pursue financing and permitting for the proposed underground mine in Rouyn-Noranda.

The company’s shares gained 17% to C$0.59 apiece on Thursday morning in Toronto, a day after the stock reached an eight-year intra-day high of C$0.65 each. The company has a market capitalization of nearly C$205 million ($145 million).

Over a 15-year mine life, the site could produce 3.3 million oz. gold, 27.2 million oz. silver, 1.1 billion lb. zinc and 247.3 million lb. copper. Falco also has an offtake agreement with Glencore for copper and zinc concentrates produced at Horne 5.

While estimated output is largely identical to the 2021 study, the update assumes higher metal prices of $3,600 per oz. gold, $50 per oz. silver, $4.80 per lb. copper and $1.35 per lb. zinc.

Falco first submitted the environmental impact assessment for Horne 5 in December 2017, and the project has since undergone provincial review, information requests and public hearings. Quebec’s Environment Ministry expects to complete the acceptability analysis in the fall of 2026, Falco said on Monday.

80M tonne reserves

In addition, the update establishes proven and probable reserves of 80.9 million tonnes grading 1.44 grams gold per tonne, 14.1 grams silver, 0.17% copper and 0.77% zinc. That amounts to about 3.74 million contained oz. gold, 36.7 million oz. silver, 303 million lb. copper and 1.37 billion lb. zinc.

“The update confirms Horne 5 as a large-scale project capable of generating substantial cash flow and strong returns for shareholders,” Falco CEO Luc Lessard said in a release. “Located in the world-class Rouyn-Noranda mining district, the project benefits from well-established infrastructure and a skilled mining workforce.”