Falco Announces Positive PEA On Horne 5 Gold Project

Falco Resources (TSXV:FPC) announced the results of a Preliminary Economic Assessment prepared in accordance with National Instrument 43-101 (NI 43-101) for the Company’s 100% owned Horne 5 Gold Project located in Rouyn-Noranda, Québec, Canada.
As quoted in the press release:

The PEA indicates that the Horne 5 Project represents a robust, high margin, twelve year underground mining project with attractive economics in the current gold price environment. The study was prepared by BBA Inc., under the direction of Mr. Luc Lessard, P. Eng., President and Chief Executive Officer of the Company, and Messrs. Robert Wares, P. Geo., Francois Vezina, P. Eng. and Christian Laroche, P. Eng., Osisko Mining Group’s technical team and included contributions from the geological and engineering teams at InnovExplo Inc., Golder Associates Ltd., and WSP Canada Inc. At a gold price of US$1,250/oz and using an exchange rate of C$1.00 = US$0.75, the study shows that the Horne 5 Project would generate an after-tax net present value (“NPV”) (at a 5% discount rate) of$667 million and an Internal Rate of Return (“IRR”) of 16.0%.
In this scenario, the mine could become the next significant gold producer in Québec, with a production profile averaging 236,000 ounces annually over the life of mine, with an all-in sustaining cash cost of US$427 per ounce net of by-product credits and all-in cost (CAPEX plus OPEX) estimated at US$660 per ounce. Falco intends to move forward and immediately initiate a Feasibility Study on the Horne 5 Project, which is planned to be completed in the first semester of 2017. The Environmental Impact Assessment (“EIA”) study, which has been initiated by WSP, is expected to be completed in the first semester of 2017.
PEA HIGHLIGHTS
ALL AMOUNTS ARE IN CANADIAN DOLLARS UNLESS OTHERWISE INDICATED; BASE CASE IS STATED USING GOLD PRICE OF US$1,250 PER OUNCE, SILVER PRICE OF US$17 PER OUNCE, COPPER PRICE OF US$2.85 PER POUND, ZINC PRICE OF US$1.00 PER POUND AND AN EXCHANGE RATE OF C$1.00 equal to US$0.75

• NPV of $1,131 million at a 5% discount rate and an IRR of 20.0% before taxes and mining duties
• NPV of $667 million at a 5% discount rate and an IRR of 16.0% after taxes and mining duties
• Mine life of 12 years with peak-year production of 274,000 ounces and average LOM annual production of 236,000 ounces of gold
• Net payable gold recovery of 86.8%
• 3,051,000 gold ounces production at an average diluted grade of 2.60 g/t Au LOM
• 2,903,000 ounces of payable gold LOM
• 807 million pounds of payable zinc LOM
• 194 million pounds of payable copper LOM
• 23.8 million ounces of payable silver LOM
• All-in sustaining costs* of US$427/oz net of by-product credits (including royalties) over LOM, generating an operating margin of over US$823/oz or 66%
• All-in cost (CAPEX plus OPEX) is estimated at US$660 per payable ounce
• Initial capital costs of $905.2 million (including a $60 million contingency)
• Integration of historical & existing underground mine infrastructure
• Payback period of 3.8 years pre-tax and 4.1 years post-tax
• Gross Revenue of $6.8 Billion and Operating Cash-flow of $2.6 Billion
•  Commissioning in late 2020
• Full production in early 2021

Falco Resources President and CEO, Luc Lessard, stated:

We are very pleased with the results of the new preliminary economic assessment on the Horne 5 deposit, which shows the promise of bringing this world-class deposit back into production after a more than 40 year dormant phase, subsequent to having previously produced over 11 million ounces of gold and 2.5 billion pounds of copper. 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. 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.