Falco Resources (TSXV: FPC) and First Quantum Minerals (TSX: FM) have signed a deal that will give Falco 100% ownership in the Norbec and Millenbach sites located near Rouyn-Noranda, Quebec. Falco intends to establish a tailings management facility on the site for the Horne 5 gold mine.
Falco announced yesterday that is has signed an agreement in principle with Glencore (LSE: GLEN) that paves the way for mine development at Horne 5.
The First Quantum properties are about 11 km from the Horne 5 mining complex in an area already impacted by historical mining activities.
Falco will pay C$500,000 by Aug. 20 and issue to First Quantum common shares of Falco equal to the same amount, estimated to be 1.67 million shares. This constitutes a C$1 million option payment. The properties will then be transferred to Falco, which will assume historical and contingent environmental liabilities related to the sites.
First Quantum will then repay the option together with an additional amount of C$3.5 million over the next three years, giving First Quantum a 2% retained net smelter royalty on any production from a portion of the properties.
The Horne 5 project has proven and probable reserves of 80.9 million tonnes grading 1.55 g/t gold, 14.14 g/t silver, 0.17% copper and 0.77% zinc, containing 3.6 million oz. gold or 6 million oz. gold equivalent.
The updated feasibility study outlined plans for an underground mine with paste fill and a mineral processing plant capable of producing 220,300 oz. of gold annually.
(This article first appeared in the Canadian Mining Journal)