FPC.V · 2017-10-16 12:00:00

Falco Announces Positive Feasibility Study Results ON Horne 5 GOLD Project

Economic Studies

*The Feasibility Study was prepared in Canadian Dollars (C$). The values have been converted to U.S. Dollars ($) at an exchange

rate of C$1.00 = US$0.78 for this press release.

For Immediate Release TSX.V - FPC

FALCO ANNOUNCES POSITIVE FEASIBILITY STUDY RESULTS

ON HORNE 5 GOLD PROJECT

Top Quartile Project at All-In Sustaining Costs of US$399/oz Au, net of By-Product Credits

All-In Cost (CAPEX plus OPEX) at US$643/oz Au

Annual Payable Gold Production of 219,000 Ounces for 15 Years

After-Tax IRR of 15.3%

(Montreal, Québec, October 16 , 2017) – Falco Resources (FPC: TSX-V) (“Falco” or the “Company”) is

pleased to announce the results of a feasibility study (the “Feasibility Study” ) prepared in accordance

with National Instrument 43 -101 (“NI 43 -101”) for the Company’s Horne 5 Gold Project (“Horne 5

Project” or the “Pr oject”) located in Rouyn -Noranda, Québec, Canada. Unless otherwise stated, all

dollar amounts are quoted in U.S. dollars ("$")*.

The Feasibility Study indicates that the Horne 5 Project represents a robust, high margin, fifteen year

underground mining proj ect with attractive economics in the current gold price environment. The

Feasibility Study was prepared by BBA Inc., under the direction of Mr. Luc Lessard, P. Eng., President and

Chief Executive Officer of the Company, and its Vice -Presidents Messrs. Francois Vezina, P. Eng.,

Christian Laroche, P. Eng., and Mrs. Hélène Cartier, P. Eng. LLB, the Osisko Gold Royalties technical team,

and included contributions from the geological and engineering teams at BBA Inc., InnovExplo Inc.,

Golder Associates Ltd., WSP Canada Inc., SNC-Lavalin Stavibel Inc., and Ingénierie RIVVAL Inc. At a gold

price of $1,300/oz and using an exchange rate of C$1.00 = US$0.78, the Feasibility Study shows that the

Horne 5 Project would generate an after -tax net present value (“NPV”), at a 5% discount rate, of $ 602

million and an internal rate of return (“IRR”) of 15.3% after -tax. In this scenario, the mine could become

the next significant gold producer in Québec, with a production profile averaging 219,000 payable

ounces annually over th e life of mine, with an all -in sustaining cash cost of $ 399 per ounce net of by -

product credits and all -in cost, CAPEX plus OPEX, estimated at $64 3 per ounce. The Environmental

Impact Assessment (“EIA”) study, which has been initiated by WSP Canada Inc., i s expected to be

completed in the fourth quarter of 2017.

Mr. Luc Lessard, Falco’s President and Chief Executive Officer commented: “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. The 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. The Feasibility Study envi sions a state -of-the-art operation with a high level of

automation. 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 the availability of existing infrastructure have the potential to positively

impact the long term viability of the Horne 5 Project.”

The realized Project would have a significant impact on the Abitibi -Témiscamingue region, with the

potential of generating over $6.6 billion of gross revenue and contributing approximately 500

permanent, well remunerated jobs.

FEASIBILITY STUDY HIGHLIGHTS

BASE CASE IS STATED USING GOLD PRICE OF $1,300 PER OUNCE, SILVER PRICE OF $19.50 PER OUNCE, COPPER PRICE OF $3.00 PER POUND,

ZINC PRICE OF $1.10 PER POUND AND AN EXCHANGE RATE OF C$1.00 equal to US$0.78

 NPV of $1,012 million at a 5% discount rate and an IRR of 18.9% before taxes and mining duties;

 NPV of $602 million at a 5% discount rate and an IRR of 15.3% after taxes and mining duties;

 Mine life of 15 years, with peak -year payable production of 268,000 ounces, average life -of-

mine (“LOM”) annual payable production of 219,000 ounces of gold and 235,000 ounce s at

steady-state;

 Net payable gold recovery of 88.1%;

 3,741,000 ounces of contained gold;

 3,294,000 ounces of payable gold LOM;

 1,007 million pounds of payable zinc LOM;

 229 million pounds of payable copper LOM;

 26.3 million ounces of payable silver LOM;

 80,897,000 tonnes total ore material mined;

 2.37 g/t AuEq average diluted gold equivalent grade;

 1.44 g/t Au average diluted gold grade;

 All-in Sustaining Costs* of $399/oz net of by-product credits, including royalties, over LOM;

 All-in cost, CAPEX plus OPEX, is estimated at $643 per payable ounce;

 C$41.00 per tonne milled total unit operating cost;

 Pre-Production Construction costs of $801. 7 million, including a $58.5 million contingency and

excluding $26.7 million of capital outlays to August 31st, 2017;

 Payback period of 5.2 years pre-tax and 5.6 years post-tax;

 Gross revenue of $6.6 billion and operating cash flow of $2.7 billion LOM;

 Process plant commissioning in first half of 2021;

 Full mine production in first half of 2022.

*All-in Sustaining Costs are presented as defined by the World Gold Council less Corporate G&A

SUMMARY ECONOMICS AT $1,300 GOLD PER OZ

Total LOM NSR Revenue ($M) $6,617.4

Total LOM Operating Cash Flow ($M) $2,691.7

Total LOM Pre-Tax Cash Flow ($M) $2,162.4

Average Annual Pre-Tax Cash Flow ($M) $205.4

LOM Income Taxes ($M) $784.7

Total LOM After-Tax Free Cash Flow ($M) $1,377.7

Average Annual After-Tax Free Cash Flow ($M) $146.1

Discount Rate 5%

Pre-Tax NPV 5% ($M) $1,012

After-Tax NPV 5% ($M) $602

Pre-Tax IRR 18.9%

After-Tax IRR 15.3%

Pre-Tax Payback (Years) 5.2

After-Tax Payback (Years) 5.6

ALL-IN CASH COSTS, INCLUDING SUSTAINING CAPEX

Mining Cost ($M) $795.3

Processing Cost ($M) $1,290.3

Tailings & Water Management ($M) $320.8

General & Administrative Cost ($M) $180.5

Refining & Smelting ($M) $493.5

Royalties ($M) $122.5

By-Product Credit ($M) ($2,337.9)

Cash Cost ($/oz) $260

Sustaining ($M) $417.6

Closure ($M) (net of salvage value) $32.9

TOTAL ($M) $1,315.4

All-in Cash + Sustaining Cost ($/oz) $399

SENSITIVITIES

BASE CASE IN BOLD

Gold Price US$/oz $1,100 $1,200 $1,250 $1,300 $1,400 $1,500 $1,600

Pre-Tax NPV 5% $M $631 $822 $917 $1,012 $1,202 $1,392 $1,582

After-Tax NPV 5% $M $365 $485 $544 $602 $718 $831 $944

Pre-Tax IRR 14.2% 16.6% 17.7% 18.9% 21.0% 23.1% 25.1%

After-Tax IRR 11.6% 13.5% 14.4% 15.3% 17.1% 18.7% 20.3%

Pre-Tax Payback Years 6.4 5.7 5.5 5.2 4.8 4.3 4.0

After-Tax Payback Years 6.8 6.1 5.8 5.6 5.2 4.8 4.5

FX: C$1.00: US$ $0.87 $0.84 $0.81 $0.78 $0.75 $0.72 $0.69

Pre-Tax NPV 5% $M $644 $758 $880 $1,012 $1,154 $1,308 $1,475

After-Tax NPV 5% $M $373 $446 $522 $602 $689 $781 $881

Pre-Tax IRR 14.4% 15.8% 17.3% 18.9% 20.5% 22.2% 24.0%

After-Tax IRR 11.7% 12.9% 14.1% 15.3% 16.7% 18.0% 19.4%

Pre-Tax Payback Years 6.4 6.0 5.6 5.2 4.9 4.5 4.2

After-Tax Payback Years 6.7 6.3 5.9 5.6 5.3 4.9 4.6

OPPORTUNITIES TO ENHANCE VALUE

Although Falco considers the Feasibility Study results using the base case to be excellent, future trade -

off studies are anticipated to evaluate alternate development scenarios that would be used to reduce

the initial capital requirements and increase revenue in the early stage of the LOM. Items to be reviewed

include: (1) the significant exploration potential for discoveries at depth and around the Horne 5 Project,

and the possibility to increase resources and extend mine li fe as further definition drilling may convert

some of the existing Inferred mineral resources to the Indicated or Measured mineral resource

categories; (2) determining whether larger underground stopes can be implemented through continued

geotechnical investigations, simulations and detailed mining studies; (3) determining whether the leach

and carbon in pulp (“CIP”) circuits in the process plant should be replaced by carbon in leach (“CIL”)

circuits, for which a trade -off study is recommended to select the circuit that has the best overall

economics; and (4) determining whether the application of pre -assembled steel structures, pre -cast

foundations and pre -fabricated buildings can reduce capital costs and shorten the on -site construction

period.

FEASIBILITY STUDY DETAILS

CONTRIBUTORS

The independent Feasibility Study was prepared through the collaboration of a number of industry -

recognized consulting firms, including BBA Inc. ("BBA", Montreal, QC), Golder Associates Ltd. ("Golder",

Montreal, QC), InnovExp lo Inc. ("InnovExplo", Val d’Or, QC), WSP Canada Inc. ("WSP", Rouyn -Noranda,

QC), SNC-Lavalin Stavibel Inc. (“SNC-Lavalin”, Rouyn-Noranda, QC) and Ingénierie RIVVAL Inc. (“RIVVAL”,

Deux-Montagnes, QC). These firms provided mineral resource estimates, desig n parameters and cost

estimates for mine operations, processing facilities, major equipment selection, waste and tailings

storage, reclamation, permitting, operating and capital expenditures. A summary of contributors to the

Feasibility Study is included in the table below:

Consulting Firm or Entity Area of Responsibility

BBA

 Metallurgical testwork analysis, processing plant design;

 Process plant capital costs and operating costs;

 Electrical and IT infrastructure design and costs (supply and on-site);

 Market studies and contracts;

 General and administration operating costs;

 Financial Analysis and overall NI 43-101 integration.

InnovExplo

 Current and historical geology, exploration, drilling, sample preparation and QA/QC, and data

verification;

 Geological modelling and mineral resource estimate;

 Mineral reserves estimate;

 Underground mine design, underground infrastructure and material handling, ventilation,

production scheduling, underground capital costs and operating costs, void evaluation;

 Historical data review.

Golder

 Waste rock, tailings, mineralization and water geochemical characterization;

 Water treatment plant design, capital and operating costs;

 Underground high density sludge, slurry and paste backfill and slurry tailings distribution

systems design and costs;

 Surface tailings and waste rock management facility and water management designs and

costs, including closure costs;

 Surface tailings, reclaim and fresh water transport system design and costs;

 Mine site water management infrastructure design and costs;

 Rock mass characterization and rock mechanics input to underground mine design and

ground control;

 Hydrogeology input to underground mine design;

 Geotechnical input for the surface infrastructure design.

Consulting Firm or Entity Area of Responsibility

WSP

 Environmental studies, permitting, mine closure requirements and Horne 5 Mining Complex

closure costs;

 Regulatory context, social considerations, and anticipated environmental issues;

 Headframe and hoist room design and costs;

 Shaft design and associated underground work and costs;

 Ore handling system from underground mine (phase 1) to surface stockpile, design and costs;

 Paste backfill plant design, capital and operating costs.

SNC-Lavalin

 Existing infrastructure, municipal infrastructure and relocation, design and costs;

 Site access road, security gate and light vehicle road design and costs;

 First-aid and emergency services, costs;

 Site utilities design and costs.

RIVVAL  Railway engineering design and costing.

MINERAL RESOURCE ESTIMATE

The mineral resources presented in the Feasibility Study are based upon an updated mineral resource

estimate (the “current MRE”) effective as of July 25, 2017, prepared by Carl Pelletier, P.Geo, using

available information. The main objective was to update the previous NI 43 -101 mineral resource

estimate for the Horne 5 deposit, which was prepared by InnovExplo and published in a report titled

“Technical Report and Updated Mineral Resource Estimate for the Horne No. 5 Deposit”, dated

November 7, 2016 (Pelletier et al., 2016) (the “November 2016 MRE”).

The current MRE is mainly based on changes made to the NSR parameters, supported by new

assumptions concerning metal prices and net recoveries. Three additional DDH and 41 updated

downhole surveys from the 201 5–2016 confirmation drilling program were also used in the current

MRE. No changes to the interpretation were deemed necessary. The mineral resource model for the

current MRE is based largely upon the model generated for the November 2016 MRE (Pelletier et al.,

2016).

The current MRE is compliant with CIM standards and guidelines for reporting mineral resources and

reserves. The selected NSR cut -off of 55$/t allowed the mineral potential of the deposit to be outlined

for an underground mining option. While the results are presented undiluted and in situ, the reported

mineral resources are considered by the QP, as defined below, to have reasonable prospects for

economic extraction.

The results of the current MRE at the base case cut -off of $55 NSR are prese nted in the table below.

InnovExplo estimates that the Horne 5 deposit contains, based on an NSR cut -off of 55$/t, Measured

Mineral Resources of 9,259,600 tonnes at 2.59 g/t AuEq (gold equivalent) for a total of 769,885 oz AuEq,

Indicated Mineral Resources of 81,855,200 tonnes at 2.56 g/t AuEq for a total of 6,731,443 oz AuEq, and

Inferred Mineral Resources of 21,500,400 tonnes at 2.51 g/t AuEq, for a total of 1,735,711 oz AuEq.

Mineral Resources Table(1)

Resource