Falco Resources expects Quebec to sign off on its Horne 5 project by year-end, ending an environmental review that began with the impact assessment filed in December 2017. The gold-silver-zinc-copper project sits beneath a former mine in the Noranda camp in northwestern Quebec, beside Glencore’s copper smelter, about 510 km northwest of Montreal.
The June feasibility update put Horne 5 at 15,800 tonnes per day over 15 years, with pre-production costs of $1.7 billion and a net present value of $3.3 billion, or US$2.4 billion. Reserves are 80.9 million tonnes grading 1.44 grams per tonne gold, 14.1 grams silver, 0.17 percent copper and 0.77 percent zinc, containing 3.7 million ounces of gold, 36.7 million ounces of silver, 303 million pounds of copper and 1.37 billion pounds of zinc. The historical Horne mine on the site produced 11.6 million ounces of gold and 2.5 billion pounds of copper between 1927 and 1976.
The discount is the story. Falco shares closed Friday in Toronto at 50 cents, valuing the company at $171.6 million, within a 12-month range of 30 to 65 cents. BMO Capital Markets, after a site visit, called the nearly permitted project scarce value. Falco’s chief financial officer said a decree should produce a significant re-rating, with the company then among few Canadian gold and critical minerals projects on a path to production, and first production targeted for 2031.
A decree is not the finish line. Falco would still need permits, starting with dewatering and rehabilitating the former Quemont shaft, with much of next year taken by permitting, detailed engineering and financing. Options range from independent development to a minority partner or a 50:50 joint venture. OR Royalties has committed as much as $180 million under a staged silver stream tied to permitting and financing milestones, and Glencore has agreed to buy Horne 5 copper and zinc concentrates over the mine life. The environment ministry is expected to complete its analysis this fall, with five or six matters left to clarify.