Falco Resources, Glencore ink deal for Horne 5 project development in Quebec
Falco Resources (TSXV: FPC) and Glencore (LSE: GLEN) have signed an agreement in principle that paves the way for Falco to develop its Horne 5 project in Quebec.
The agreement in principle outlines the terms that will be
in a finalized operating licence and agreement (OLIA) expected in the third
quarter. Those include the establishment of a joint technical and strategic
committee to collaborate on development of Horne 5; rights of access, use and
transformation rights in favour of Falco; and financial assurances and
indemnification to cover risks to Glencore’s Horne smelting operations, located
within 1 km of Horne 5. Glencore will also have the right to appoint one
representative to Falco’s board.
Located in the Rouyn-Noranda area, Horne 5 lies at a depth
of between 600 and 2,300 metres, below the past-producing Horne mine. In order
to access the gold-silver-copper-zinc deposit, Falco needs to rehabilitate an
existing shaft, owned by Glencore. Glencore owns the mining concession at the
property, while Falco holds mineral rights below 200 metres and surface rights
around the shaft.
“The agreement with Glencore is a major step for Falco,”
said Haywood Securities’ mining analyst Pierre Vaillancourt in a research note.
“Assuming the Principal Operating License and Indemnity Agreement are finalized
in (the third quarter), and progress is made with permitting and early works,
Falco will be in position to start the dewatering process for Horne 5 by the summer
of 2022.”
The two companies previously signed a life-of-mine offtake
agreement for copper and zinc concentrates last October, and began a C$7.5
million work program in November to mitigate potential risks to Glencore’s
operations from Horne 5. The program, financed largely through a convertible
debenture financing provided by Glencore, includes geotechnical and water
management work as well as an investigation of synergies between the project
and the Horne Smelter.
Falco released an updated feasibility study for Horne 5 in
April outlining a $844.2 million, 15-year mine producing 220,300 oz. of gold
annually.
The project contains measured and indicated resources
totalling 105.6 million tonnes grading 1.44 g/t gold, 14.32 g/t silver, 0.17%
copper and 0.79% zinc (2.25 g/t gold-equivalent), based on a C$55 net smelter
return cutoff. Inferred resources add 24.3 million tonnes grading 1.35 g/t
gold, 21.4 g/t silver, 0.19% copper and 0.67% zinc (2.23 g/t gold-equivalent).
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