Falco Resources (FPC.V) has released the results of the feasibility study it has completed on the Horne 5 polymetallic project in Rouyn-Noranda, Québec. There were no huge surprises compared to the Preliminary Economic Assessment as the FS confirms a mine life of 15 years with an average gold production of 219,000 ounces per year at an AISC of $399/oz (thanks to the substantial by-product credits).
The initial capex is estimated at US$802M, resulting in an after-tax NPV5% of $602M and an IRR of 15.3%. Even though the NPV is lower than the initial capex and the Internal Rate of Return doesn’t clear the 20% hurdle, Falco does have a good chance to develop Horne 5 as it can still count on the (financial) backing of Osisko Gold Royalties (OR.TO, OR) which could be interested in a streaming deal on (some of) the produced commodities.
On top of that, the project could be a good addition for the pipeline of a larger company which is more interested in ounces in the ground and low production expenses, rather than a pure NPV calculation. As in excess of 5 million gold-equivalent ounces will be recovered at an AISC of $399 per (pure) gold ounce, Goldcorp’s (GG, G.TO) Garofalo might be very interested as part of his short-sighted ‘20% more ounces at a 20% lower cost by 2020’-plan.