Falco Advancing & De-risking Its Flagship Horne 5 Project, Shooting For 5 Million Oz. By Year End

Note, the opinions contained in this article are entirely my own. I am not an insider of Falco Resources, nor am I in possession of any non-public information. The information contained herein was obtained by reading company press releases, the February, 2015 corporate presentation and an informative video clip of CEO Trent Mell.

TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

Impressive De-risking and Growth Announced by Falco Resources

On February 10th, Falco Resources (FPC.V) (FPRGF) provided a roadmap for 2015. Not only is the company advancing its work on its flagship Horne Au-Ag-Cu-Zn project in Quebec, it has officially announced an aggressive drilling campaign with a budget of $3.7 million. The Horne Project area encompasses the former producing Horne and Quemont mines as well as the Horne 5 deposit. The Horne mine was operated by Noranda from 1927 to 1976 and produced 11.6 million ounces of gold and 2.5 billion pounds of copper. The Quemont mine is located 600 metres north of Horne and produced approximately 2 million ounces of gold and 400 million pounds of copper between 1949 and 1971. The Horne 5 deposit lies immediately below the historical Horne mine.

Together, Horne and Horne 5 share many similarities to Agnico-Eagle's (AEM) La Ronde mine located 40 kilometres to the east. Those orebodies are dynamic multi-metallic systems that remain open, plunging steeply to depth for several kilometers. How many juniors can one name spending $3.7 million on drilling alone? By the time initial metallurgy results come back at mid-year, a lot of juniors could be out of business, unable to afford the annual audit fees. Last I checked, auditors don’t accept shares in the companies they audit. Recall from prior articles I’ve written [Here] & [Here] that Falco essentially inherited a 2.8 million gold equivalent Inferred resource due to an extensive database containing roughly 80 years of Noranda’s exploration, development and production records on 14 past-producing mines.

Up to 5 Million Gold Equivalent Ounces by Year-End Could be a Game-Changer

This Inferred resource was delineated without a single drill hole by Falco and supports management’s ambitious plans to book up to 5 million gold equivalent ounces in the NI 43-101 categories of Indicated & Inferred in the 4th quarter. A takeaway from the February 10th press release is a reminder that the company is fully funded through 2015. Even if one does not actively support a takeout thesis, the value creation and de-risking from achieving 2015’s stated corporate initiatives could be a meaningful catalyst for the stock price. Comparing Falco’s exploration project to that of neighboring mines, 2 out of 3 analog mines (Agnico-Eagle’s Goldex and AuRico’s (AUQ) Young Davidson) have considerably lower ore grades and less than Falco’s projected 5 million ounces of gold equivalent resources.

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Disclosure: I have no prior or existing relationship with any company mentioned in this article. 

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