Under the company’s base-case scenario, which uses a gold price of $1,300 per ounce and an exchange rate of C$1 = US$0.78, the project has an after-tax NPV of US$602 million and an after-tax IRR of 15.3 percent.
Life-of-mine all-in sustaining costs are estimated at $399 per ounce, net of by-product credits, while all-in costs (CAPEX plus OPEX) are pegged at $643 per ounce. The project has a post-tax payback period of 5.6 years, and pre-production construction costs of $801.7 million.
Horne 5 is seen producing an average of 219,000 payable ounces annually over a life of about 15 years. Peak production will come in at 268,000 payable ounces a year, while steady-state production will be 235,000 payable ounces annually. Horne 5 will also produce 229 million pounds of payable copper and 26.3 million ounces of payable silver over the course of its life.
“We are very pleased with the results of the Feasibility Study on the Horne 5 Project, which demonstrates the robust economics of bringing this world-class deposit back into production,” said Luc Lessard, president and CEO of Falco. He added, “[t]he Feasibility 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.”
Map of the Rouyn-Noranda Mining Camp via Falco Resources.
The project is located in Quebec’s Rouyn-Noranda Mining Camp, which is situated in the Abitibi Greenstone Belt. According to Falco, Rouyn-Noranda is home to 14 former gold and base metals sites.
Horne 5 sits immediately below the past-producing Horne mine, which was operated by Noranda from 1926 to 1976, producing about 2.5 billion pounds of copper and 11.6 million ounces of gold during that time. It is also just 600 meters north of the past-producing Quemont mine, which put out around 2 million ounces of gold and 400 million pounds of copper between 1949 and 1971.
Falco recently initiated an environmental impact assessment for Horne 5, and expects it to be completed this quarter. Following that, the company will move on to permitting activities to support a 2019 construction start. Process plant commissioning will begin in the first half of 2021, and full mine production will commence in the first half of 2022.
The company says in Monday’s release that it will also be looking at future trade-off studies that will evaluate alternate development scenarios that could “reduce the initial capital requirements and increase revenue in the early stage of the [life of mine].”
At close of day Monday, Falco’s share price was down 6.45 percent, at C$1.16. The company’s share price is up 30.34 percent year-to-date.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Falco Resources is a client of the Investing News Network. This article is not paid-for content.