Falco Resources

Overview

Falco Resources (TSXV:FPC) is a Canadian company focused on developing gold and base metal projects in the Rouyn-Noranda region of Quebec. Rouyn-Noranda is an established mining camp with a long history of exploration and development. The Noranda mining camp has historically produced 19 million ounces (Moz) of gold and 2.9 billion pounds (Blbs) of copper, and yet it is still under-explored for gold.

Falcon’s principal property, Horne 5 project, holds 67,000 acres or nearly 67 percent of the total area of the entire mining camp and is located under the former Horne mine which produced 11.6 Moz of gold and 2.5 Blbs of copper. The 2021 feasibility study on the Horne 5 project suggests strong project economics with a total mine life of 15 years, after-tax NPV at 5 percent of US$761 million, and a payback period of 4.8 years, assuming gold prices at $1,600/oz. At the current gold prices of over $2,300/oz, the project economics will be even better.

Recent news flow including the operating lease and indemnity agreement (OLIA) with Glencore (LON:GLEN) and the Horne 5 project’s environmental impact assessment (EIA) admissibility are significant milestones in the advancement of the project towards construction. Falco is now aiming to proceed with the next steps related to obtaining government permits and financing for its Horne 5 project.

Falco Resources operating license and indemnity agreement (OLIA) with Glencore Canada will enable Falco to utilize a portion of Glencore’s lands. The agreement entails establishing a technical committee comprising two representatives from Glencore and two from Falco, tasked with safeguarding the uninterrupted operations of Glencore’s Horne copper smelter. Additionally, a parallel strategic committee will be formed. Glencore will nominate one representative to join Falco’s board of directors.

The successful completion of the OLIA, coupled with life-of-mine copper-zinc concentrate offtake agreements with Glencore, positions Falco to advance its Horne 5 project towards construction. The company is advancing with the permitting and financing processes for the project.

Company Highlights

Falco Resources is a Canadian explorer of base and precious metals focused on developing its mineral properties in the Rouyn-Noranda region in Quebec, Canada.The company holds 67,000 acres of mining claims in the Rouyn-Noranda mining camp, accounting for nearly 67 percent of the entire mining camp.Rouyn-Noranda has a long history of mining and exploration. The area has established infrastructure and has been host to 50 former producers, including 20 base metal mines and 30 gold mines. Falco’s principal asset is the Horne 5 project which is a gold project with significant base metal by-products. It is located under the former Horne Mine which produced 11.6 Moz of gold and 2.5 billion pounds of copper.The Horne 5 is a world-class deposit containing 7.6 Moz gold equivalent in measured and indicated resources and 1.7 Moz gold equivalent in inferred resources.The Horne 5 project represents a robust, high-margin, 15-year underground mining project with attractive economics. The 2021 feasibility study indicates after-tax NPV at 5 percent of US$761 million and after-tax IRR of 18.9 percent.The operating lease and indemnity agreement (OLIA) with Glencore coupled with EIA admissibility receipt from the government body positions Falco to advance its Horne 5 project towards construction.

Key Project

Horne 5 Project

The Horne 5 project is a world-class deposit located beneath the former Horne mine in the Rouyn -Noranda mining camp. Horne mine was operated by Noranda from 1926 to 1976 and produced 11.6 Moz of gold and 2.5 Blbs of copper. The Rouyn-Noranda mining camp has a rich exploration history having produced 19 Moz of gold and 2.9 Blbs of copper. The camp has hosted 50 producers including 20 base metal mines and 30 gold mines.

The Horne 5 is a world-class deposit containing 6.1 Moz gold equivalent in proven and probable reserves, 7.6 Moz gold equivalent in measured and indicated resources, and 1.7 Moz gold equivalent in inferred resources. The project boasts strong partners including Osisko Development, Osisko Gold Royalties, Glencore, and the Quebec Government. Osisko Development is a major shareholder in Falco Resources with a 17.3 percent stake, and the Quebec Government holds close to 8 percent stake in Falco.

Aside from gold, Horne 5 has significant base metal by-products. As per the feasibility study, precious metals (gold + silver) account for 75.6 percent of the mining revenue, while base metals (copper and zinc), account for 24.3 percent of the total mine revenue.

The 2021 updated feasibility study on the Horne 5 project indicates robust project economics. The feasibility study shows the project would generate an after-tax NPV at 5 percent of US$761 million and an after-tax IRR of 18.9 percent over the 15-year mine life. The production profile would average annual production of 220,300 oz gold over the life of the mine. Further, the study suggests significant copper and zinc by-product credits from the copper and zinc production, as well as the highly automated modern operations resulting in a low projected all-in sustaining cost (AISC) of $587/oz. Horne 5’s AISC is among the first quartile of global low-cost operations.

Recent news flows including the OLIA with Glencore and the Horne 5 project’s EIA admissibility are significant milestones in the advancement of the project towards construction.

Falco Resources’ OLIA with Glencore Canada enables Falco to utilize a portion of Glencore’s lands. The agreement entails establishing a technical committee comprising two representatives from Glencore and two from Falco, tasked with safeguarding the uninterrupted operations of Glencore’s Horne copper smelter. Additionally, a parallel strategic committee will be formed. Glencore will nominate one representative to join Falco’s board of directors.

The successful completion of OLIA coupled with life-of-mine copper-zinc concentrate offtake agreements with Glencore positions Falco to advance its Horne 5 project towards construction. Further, the receipt of confirmation of the admissibility of its EIA for the Horne 5 project from the Ministry of the Environment, the Fight Against Climate Change, Wildlife and Parks is a significant milestone. It provides a path forward for the advancement of the project.

The company is now advancing with the permitting and financing processes for the project. The construction of the Horne 5 mine could begin by February 2025.

Management Team

Luc Lessard – President, Chief Executive Officer and Director

Luc Lessard brings over 30 years of experience in the design, construction, and operation of mines. Before joining Falco, he held senior executive positions at Osisko Gold Royalties, Canadian Malartic GP (a joint venture of Agnico Eagle Mines and Yamana Gold), and Osisko Mining Corporation. At Osisko Mining Corporation, he oversaw the design, construction, and commissioning of the Canadian Malartic gold mine. Lessard has been involved in numerous surface and underground mining projects throughout his career. Lessard holds a bachelor’s degree in mining engineering from Laval University.

Anthony Glavac – Chief Financial Officer

Anthony Glavac has 20 years of experience in financial reporting, including over 14 years in the mining industry. Before joining Falco, he served as the director of financial reporting and internal controls at Dynacor Gold Mines and as the interim chief financial officer at Alderon Iron Ore. Glavac was previously the senior manager at KPMG, where he worked with a diverse portfolio of public and private companies, offering services such as audit, taxation, strategic advisory, and assistance with public offerings. Glavac is also engaged with other public companies within the mining sector.

Helene Cartier – Vice-president Environment, Sustainable Development and Community Relations

Helene Cartier possesses over 20 years of expertise in the environmental field. She began her mining career as part of the Cambior team before transitioning to the role of vice-president of environmental services and sustainable development at Osisko Mining Corporation. There, she played a pivotal role in the development and commissioning phases of the Canadian Malartic gold mine. She has served on the board of directors of several public and private companies.

Mireille Tremblay – Vice-president Legal Affairs and Corporate Secretary

Mireille Tremblay possesses more than 25 years of experience in business law, primarily in securities, mergers and acquisitions, corporate finance, and governance. Before joining Falco in January 2021 as the director of legal affairs, Tremblay served as a legal advisor to clients across diverse industries, including the mining sector. She advocated for companies and investors involved in mining transactions in Africa, notably during the construction of a gold mine in Burkina Faso and in negotiations with the Ivorian government. Additionally, she has represented numerous companies, underwriters, and investors in various contexts, including public offerings and private placement financings, both domestically and internationally. Tremblay holds a law degree from the University of Montreal.

Mario Caron – Independent Chair

Mario Caron possesses extensive expertise in the mining sector, accumulating over four decades of experience in senior executive and board roles. He has garnered this wealth of knowledge through engagements in underground and open pit operations, both domestically and abroad. Caron has served as CEO of public companies and has experience securing mining licenses and various permits in numerous jurisdictions. Caron earned his Bachelor of Engineering in mining, at McGill University.

Alexander Dann – Non-independent Director

Alexander Dann, a chartered professional accountant, has served with multinational public enterprises on financial operations and strategic planning. He brings more than 25 years of experience within the mining and manufacturing domains. He was chief financial officer of The Flowr Corporation, where he led the company towards its public listing on the TSXV. He also served as the CFO of Avion Gold and Era Resources, contributing significantly until their acquisitions by Endeavour Mining and The Sentient Group, respectively. He holds a bachelor’s degree in business administration from L’Universite Laval in Quebec City.

Claude Dufresne – Independent Director

Claude Dufresne has over three decades of experience in the mining industry. He has served in leadership roles at companies such as Niobay Metals and IAMGOLD. He was the founder of a metals company, Camet Metallurgy, which specialized in the sale and marketing of various metals. He obtained a diploma in mining engineering with a specialty in mineral processing from Universite Laval in 1991.

Paola Farnesi – Independent Director

Paola Farnesi has over 30 years of experience in corporate finance, financial reporting, M&A, and risk management. She is currently vice-president and treasurer of Domtar Corporation. Before this, she held various senior executive positions at Domtar including vice-president, internal audit. Before joining Domtar, Farnesi worked at Ernst & Young. She holds a Bachelor of Commerce and a Graduate degree in Public Accountancy from McGill University. She is a member of the Chartered Professional Accountants of Quebec and has earned the ICD.D designation from the Institute of Corporate Directors.

Chantal Sorel – Independent Director

Chantal Sorel is a corporate director with over 30 years’ experience in general management with full profit & loss responsibility, project financing, project management, operations, strategic development, business development, mergers and acquisitions. She was executive vice-president and managing director at Capital at SNC-Lavalin from 2014 to 2019, where she over saw multibillion dollar projects. Since April 2020, Sorel has served as an advisor to the Montréal Aeroport for the development and delivery of the city’s projects’ portfolio valued at $2.5 billion. Sorel has a degree in architecture from Université de Montréal and a master’s degree in project management from Université du Québec à Montréal.

This article was written in collaboration with Couloir Capital.