UPDATED FEASIBILITY STUDY CONFIRMS SIGNIFICANT VALUE OF THE HORNE 5 PROJECT Annual Average Payable Gold Production of Greater than 220,000 Ounces over 15 Years Post-Tax NPV (5%)/IRR of US$761 million and 18.9% All-In Sustaining Costs of US$587/oz Au, Net of By-Product Credits
For Immediate Release TSX.V - FPC
UPDATED FEASIBILITY STUDY CONFIRMS SIGNIFICANT VALUE OF THE HORNE 5 PROJECT
Annual Average Payable Gold Production of Greater than 220,000 Ounces over 15 Years
Post-Tax NPV (5%)/IRR of US$761 million and 18.9%
All-In Sustaining Costs of US$587/oz Au, Net of By-Product Credits
All dollar amounts are quoted in U.S. dollars (US$) unless otherwise stated
(Montreal, Québec, March 24, 2021) – Falco Resources Ltd. (FPC: TSX-V) (“Falco” or the “Corporation”) is pleased to announce
the results of the updated feasibility s tudy (the “Updated Feasibility Study” or the “UFS” ), prepared in accordance with National
Instrument 43-101 Respecting Standards of Disclosure for Mineral Projects (“NI 43-101”) for the Corporation’s Horne 5 Gold Project
(“Horne 5 Project” or the “Project”) located in Rouyn-Noranda, Québec, Canada.
The UFS was updated to reflect the improved commodity prices, the silver stream financing arrangement with Osisko Gold
Royalties Ltd. and the copper and zinc concentrate offtake agreements with Glencore Canada Corporation and its affiliated
companies (“Glencore”). The capital and operating costs were reviewed to reflect current market conditions for labour, supplies
and services.
UPDATED FEASIBILITY STUDY CONFIRMS SIGNIFICANT VALUE OF THE HORNE 5 PROJECT
The UFS reiterates that the Horne 5 Project represents a robust, high margin, 15-year underground mining project with attractive
economics in the current gold price environment. At a gold price of $1,600 per ounce and using an exchange rate of C$1.28 =
US$1.00, the UFS shows that the Horne 5 Project would generate an after -tax net present value (“NPV”), at a 5% discount rate,
of $761 million and an after-tax internal rate of return (“IRR”) of 18.9%. In this scenario, the mine could become the next significant
gold producer in Québec, with a production profile averaging 220,300 payable ounces annually over life of mine (“LOM”), with an
average all-in sustaining costs (“AISC”) of $587 per ounce, net of by-product credits.
Luc Lessard, President and Chief Executive Officer, noted: “The Horne 5 Project demonstrates robust returns from average annual
gold production of 220,300 ounces over a 15- year mine life. The significant copper and zinc by -product credits from the copper
and zinc production, as well as the highly automated modern operations result in a low projected all-in sustaining cost of $587 per
ounce. The Project benefits from strong existing infrastructure in the world-class Rouyn-Noranda mining area. We expect that the
Horne 5 Project will deliver strong cashflows and outstanding benefit s to all of its stakeholders with anticipated production in the
second half of 2025.”
UPDATED FEASIBILITY STUDY HIGHLIGHTS
The UFS was prepared in Canadian Dollars (C$). The values have been converted to U.S. Dollars (US$) at an exchange rate of
C$1.28 = US$1.00 for this press release.
Base case economics are stated using a gold price of $1,600 per ounce, silver price of $21.00 per ounce, copper price of
$3.20 per pound, zinc price of $1.15 per pound and an exchange rate of C$1.28 equal to US$1.00.
• NPV of $1,279 million at a 5% discount rate and an IRR of 23.0% before taxes and mining duties;
• NPV of $761 million at a 5% discount rate and an IRR of 18.9% after taxes and mining duties;
• Average annual gold production of 220,300 payable ounces annually over the 15-year LOM;
• Low average AISC of $587 per ounce;
• C$43.11 per tonne processed total unit operating cost;
• Forward capital and pre-production costs of $844.2 million, including 9.2% contingency;
• Conservative mining reserves by maintaining 2017 commodity price assumptions, which are well below current levels.
2
CONFERENCE CALL DETAILS
Furthermore, Falco will be hosting a conference call to discuss the results on Thursday, March 25 at 9:00 Eastern time with the
Falco Executive and Technical team. Participants may join the call by dialing:
Participant International Dial-In Number: (647) 788-4922
Participant North American Toll-Free Dial-In Number: (877) 223-4471
A recorded playback of the call will be available two hours after the call’s completion until April 1, 2021 by dialing (800) 585-8367
or (416) 621-4642 and entering the conference ID# 6740056.
TABLE 1: COMPARISON OF 2017 FS AND 2021 UFS ECONOMIC RESULTS
Category Unit 2021 UFS 2017 FS(3)
Inventory tonnes 80,896,876 80,896,876
Contained Gold oz 3,740,871 3,740,871
Payable Gold LOM oz 3,304,453 3,294,000
Payable Silver LOM oz 27,289,020 26,300,000
Produced Zinc LOM Million lbs 1,190 1,190
Produced Copper LOM Million lbs 247 247
Average Diluted Gold Equivalent Grade g/t Au Eq 2.24 2.37
Average Diluted Gold Grade g/t 1.44 1.44
Cash Cost $/oz Au 406 260
AISC* $/oz Au 587 399
Operating Cost C$/tonne processed 43.11 41.00
Total LOM NSR Revenue $M 6,813.9 6,123.9
Total LOM Pre-Tax Cash Flow $M 2,593.1 2,162.4
Average Annual Pre-Tax Cash Flow $M 232.7 205.4
LOM Income Taxes $M 982.9 784.7
Total LOM After-Tax Cash Flow $M 1,610.2 1,377.7
Average Annual After-Tax Cash Flow $M 158.4 146.1
Pre-Tax NPV 5% $M 1,279 1,012
After-Tax NPV 5% $M 761 602
Pre-Tax IRR % 23.0% 18.9%
After-Tax IRR % 18.9% 15.3%
Operating Costs $M 2,724.8 2,586.9
Refining & Smelting $M 525.7 493.5
Royalties $M 144.4 122.5
By-Product Credit $M (2,052.5) (2,337.9)
Pre-Production CAPEX $M 844.2(2) 801.7(1)
Sustaining CAPEX $M 526.6 417.6
Closure (net of salvage value) $M 69.0 32.9
Gold Price $/oz 1,600 1,300
Exchange Rate (US$:C$) 1 US$ = 1.28 1.28
After-Tax Payback Years 4.8 5.6
(1) Including a $58.5 million contingency and excluding $26.7 million of capital outlays to August 31, 2017
(2) Including a $70.8 million contingency and excluding $51.5 million of capital outlays to December 31, 2020
(3) The NI 43-101 report dated effective October 5, 2017 and entitled “Feasibility Study Horne 5 Gold Project” (“2017 FS”).
*AISC are presented as defined by the World Gold Council less Corporate G&A.
3
TABLE 2: SENSITIVITIES (UFS BASE CASE IN BOLD)
Gold Price US$/oz $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000
Pre-Tax NPV 5% $M 706 897 1,088 1,279 1,470 1,661 1,852 2,043
After-Tax NPV 5% $M 405 526 645 761 875 989 1,101 1,213
Pre-Tax IRR 15.8% 18.3% 20.7% 23.0% 25.2% 27.4% 29.5% 31.6%
After-Tax IRR 12.8% 14.9% 17.0% 18.9% 20.7% 22.5% 24.2% 25.8%
Pre-Tax Payback Years 6.2 5.5 5.1 4.6 4.2 3.9 3.6 3.4
After-Tax Payback Years 6.3 5.7 5.2 4.8 4.5 4.2 3.9 3.7
Copper Price US$/lb $2.50 $2.75 $3.00 $3.20 $3.50 $3.75 $4.00
Pre-Tax NPV 5% $M 1,189 1,221 1,253 1,279 1,318 1,350 1,382
After-Tax NPV 5% $M 707 726 746 761 784 803 822
Pre-Tax IRR 22.0% 22.3% 22.7% 23.0% 23.4% 23.8% 24.1%
After-Tax IRR 18.0% 18.3% 18.6% 18.9% 19.2% 19.5% 19.8%
Pre-Tax Payback Years 4.8 4.7 4.6 4.6 4.5 4.5 4.4
After-Tax Payback Years 5.0 4.9 4.9 4.8 4.8 4.7 4.6
Zinc Price US$/lb $0.90 $1.00 $1.10 $1.15 $1.20 $1.30 $1.40
Pre-Tax NPV 5% $M 1,129 1,189 1,249 1,279 1,309 1,369 1,430
After-Tax NPV 5% $M 669 706 743 761 779 815 852
Pre-Tax IRR 21.0% 21.8% 22.6% 23.0% 23.4% 24.2% 24.9%
After-Tax IRR 17.3% 17.9% 18.6% 18.9% 19.2% 19.8% 20.5%
Pre-Tax Payback Years 5.0 4.8 4.7 4.6 4.5 4.4 4.2
After-Tax Payback Years 5.2 5.0 4.9 4.8 4.7 4.6 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 870 998 1,137 1,279 1,446 1,621 1,810
After-Tax NPV 5% $M 512 591 676 761 860 962 1,072
Pre-Tax IRR 17.9% 19.5% 21.3% 23.0% 25.0% 27.0% 29.1%
After-Tax IRR 14.6% 16.0% 17.5% 18.9% 20.5% 22.1% 23.8%
Pre-Tax Payback Years 5.6 5.3 4.9 4.6 4.2 3.9 3.7
After-Tax Payback Years 5.8 5.4 5.1 4.8 4.5 4.2 4.0
QUÉBEC ADVANTAGE
The Horne 5 Project is located in Qué bec’s world-class Rouyn-Noranda mining camp. It benefits from well developed, in -place
infrastructure, including roads, railways, hydro-electric power distribution system and supplier base. Adjacent to the Project, there
is the Horne smelting facility owned and operated by Glencore which will process the copper concentrate.
Québec is recognized as a leading global jurisdiction, ranked 6th in 2020 by the Fraser Institute, to host a mining project.
Major advantages include:
• Access to low cost green hydro-electric energy;
• Well established regulatory and permitting frameworks;
• Fair and stable taxation system;
• Strong collaborative efforts between governments and mining industry to support mine development;
• Qualified mining labour expertise;
• Strong network of mining suppliers and contractors.
4
OPPORTUNITIES TO ENHANCE VALUE
Although Falco considers the UFS results using the base case to be excellent, future optimization studies are anticipated to
evaluate alternate development scenarios that would be used to reduce the initial capital requirements and increase revenue i n
the early stage of the LOM. Items to be reviewed include: (1) the significant exploration potential f or discoveries at depth and
around the Horne 5 Project, and the possibility to increase resources and extend LOM 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; and (3) the development of potential synergies with Glencore’s local smelting operations. In addition, the Corporation may
benefit from Falco’s large, highly prospective regional land package (approximately 70,000 hectares).
CONTRIBUTORS
The independent UFS 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), InnovExplo Inc. ("InnovExplo", Val d’Or, QC), WS P
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 and mineral reserve estimates, design
parameters and cost estimates for mine operations, processing facilities, major equipment selection, waste and tailings storage,
reclamation, permitting, operating and capital expenditures. The preparation of the UFS was overseen by Mr. Luc Lessard, P. Eng.,
President and Chief Executive Officer of the Corporation, and its Vice- Presidents Messrs. Francois Vezina, P. Eng., Christian
Laroche, P. Eng., and Mrs. Hélène Cartier, P. Eng. LLB, the Osisko Development Corp. and Falco technical teams.
UPDATED FEASIBILITY STUDY COMPONENTS
Mineral Resource Estimate
The mineral resources presented in the UFS, are based upon an updated mineral resource estimate (the “current MRE”) effective
as of February 24, 2021, prepared by Carl Pelletier, P.Geo of InnovExplo, 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 included
in the 2017 FS (the “November 2016 MRE”). The mineral resources presented in the UFS were not used to develop the mineral
reserves presented below.
The current MRE is primarily based on changes made to the net smelter return (“NSR”) parameters, supported by new assumptions
concerning metal prices and net recoveries and the creation of potentially mineable shape to constrain the 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 and 2017 Feasibility Study.
The current MRE is prepared in accordance with CIM standards and guidelines for reporting mineral resources and reserves. The
selected NSR cut-off of C$55/t and the mineable shape constrain used allowed the mineral resource to be outlined for a potential
underground mining scenario. While the results are presented undiluted and in situ, the reported mineral resources are considered
by the qualified persons under NI 43-101 (“QP”), to satisfy the reasonable prospects for eventual economic extraction.
The results of the current MRE are presented in the table below. InnovExplo estimates that the Horne 5 deposit contains, based
on an NSR cut- off of C$ 55/t, Measured Mineral Resources of 10.8M tonnes at 2.26 g/t AuEq (gold equivalent) for a total of
786,000 oz AuEq, Indicated Mineral Resources of 94.8M tonnes at 2.25 g/t AuEq for a total of 6.9M oz AuEq, and Inferred Mineral
Resources of 24.3M tonnes at 2.23 g/t AuEq, for a total of 1.7M oz AuEq.
5
TABLE 3: MINERAL RESOURCES TABLE (1)
Resource
Category
Tonnes
(Mt)
NSR($)
AuEq
(g/t)
Au
(g/t)
Ag
(g/t) Cu (%) Zn
(%)
Contained
AuEq (Moz)
Contained
Au (Moz)
Contained
Ag (Moz)
Contained
Cu (Mlbs)
Contained
Zn (Mlbs)
Measured 10.839 110.67 2.26 1.45 15.70 0.17 0.74 0.786 0.504 5.470 40.123 177.753
Indicated 94.767 109.88 2.25 1.44 14.16 0.17 0.80 6.854 4.382 43.155 348.704 1 672.328
Measured
+
Indicated
105.606
109.96
2.25
1.44
14.32
0.17
0.79
7.640
4.886
48.625
389.827
1 850.081
Inferred 24.311 107.40 2.23 1.35 21.40 0.19 0.67 1.740 1.058 16.730 103.666 357.931
(1)Please refer to the Mineral Resources Estimate Notes below.
Mineral Reserve Estimate
The Mineral Reserve estimate for the Horne 5 Project (effective as of August 26, 2017) was prepared by Mr. Denis Gourde, P.Eng.,
an employee of InnovExplo. The Mineral Reserve estimate stated herein is consistent with the CIM Standards on Mineral
Resources and Mineral Reserves and is suitable for public reporting. As such, the mineral reserves are based on measured and
indicated mineral resources, and do not include any i nferred mineral resources. Measured and i ndicated mineral resources are
inclusive of proven and probable reserves.
The UFS, LOM and Mineral Reserve estimate were developed from the November 2016 MRE (Jourdain et al., 2016) and do not
consider the October 2017 (Hardie et al., 2017) nor the current MRE. As of the date of this release, the QP, has not identified any
risks, legal, political or environmental, that would materially affect potential development of the Mineral Reserves other than the
third-party approval discussed below.
There are no changes to the mining mineral reserves in the UFS as compared to the 2017 FS. The metal prices used in the mineral
reserves are gold $1,300 per ounce, copper $2.15 per pound, zinc $1.00 per pound and silver $18.50 per ounce.
TABLE 4: STATEMENT OF MINERAL RESERVES
1) The QP for the Mineral Reserve estimate is Mr. Denis Gourde, P.Eng (InnovExplo).
2) Mineral reserves have an effective date of August 26, 2017.
3) Estimated from the November 2016 MRE and does not consider the October 2017 nor the current MRE. The metal prices,
exchange rates and recovery equations that were used to support the Mineral Reserve estimate are: 2.15 US$/lb Cu, 1.00 US$/lb
Zn, 1,300 US$/oz Au and 18.50 US$/oz Ag, using an exchange rate of 1.30 C$:US$, cut-off NSR value of C$55/t.
4) Mineral reserve tonnage and mined metal have been rounded to reflect the accuracy of the estimate and numbers may not add
due to rounding.
5) Mineral reserves presented include both internal and external dilution along with mining recovery. The external dilution is
estimated to be 2.3%. The mining recovery factor was set at 95% to account for mineralized material left in the margins of th e
deposit in each block.
Category Tonnes (Mt) NSR ($) Au (g/t) Ag (g/t) Cu (%) Zn (%)
Proven 8.4 91.72 1.41 15.75 0.17 0.75
Probable 72.5 92.56 1.44 13.98 0.17 0.78
P&P 80.9 92.41 1.44 14.14 0.17 0.77
6
TABLE 5: CAPITAL AND OPERATING COSTS SUMMARY
2021 UFS 2017 FS
Capital Costs ($M)
Pre-
Production Sustaining Total(1)(2)
Pre-
Production Sustaining Total(1)(3)
Mining $218.7 $285.4 $504.1 $200.4 $253.6 $454.0
Mineral Processing Plant $313.0 $11.6 $324.5 $296.0 $10.2 $306.1
Electrical and Communication $15.0 $2.0 $16.9 $14.2 $1.8 $16.0
Project Infrastructure $76.6 $3.5 $80.1 $76.9 $3.7 $80.6
Tailings and Water Management $50.1 $224.1 $274.3 $53.0 $148.4 $201.4
Indirect Costs $61.3 -- $61.3 $65.9 -- $65.9
Owner's Costs $38.7 -- $38.7 $36.8 -- $36.8
Site restoration (net of salvage value) -- $69.0 $69.0 -- $32.9 $32.9
Subtotal $773.4 $595.6 $1,369.0 $743.2 $450.5 $1,193.7
Contingency $70.8 -- $70.8 $58.5 -- $58.5
Total Capital Costs (2) $844.2 $595.6 $1,439.8 $801.7 $450.5 $1,252.2
CAPEX per Oz ($/oz) $255 $243
OPEX per Oz ($/oz) $587 $399
All-In Cost per Oz ($/oz) $842 $643
(1) Totals may differ due to rounding.
(2) Excludes $51.5 million in outlays to December 31st, 2020.
(3) Excludes $26.7 million in outlays to August 31st, 2017.
TABLE 6: OPERATING COSTS
The LOM operating costs are summarized as follows:
2021 UFS 2017 FS
Operating Costs $M $M
Mining 776.6 795.3
Processing 1,388.1 1,290.3
Tailings & Water Management 375.3 320.8
General & Administration 184.7 180.5
Total Operating Costs 2,724.8 2,586.9
The average unit costs per tonne over the LOM are:
2021 UFS 2017 FS
Operating Costs C$/t Milled C$/t Milled
Mining 12.29 12.60
Processing 21.96 20.45
Tailings & Water Management 5.94 5.08
General & Administration 2.92 2.86
Total Operating Costs Per Tonne Milled 43.11 41.00
7
Mining
The underground deposit is located at a depth of approximately 600 metres to 2,300 metres below surface. The existing Quemont
#2 shaft, which extends to a depth of approximately 1,200 metres, would need to be rehabilitated. The shaft would provide for the
hoisting of mineralized material and waste, services personnel and materials, and the supply of ventilation to the underground
workings in the development stage. As previously stated, the access to and use of the Que mont #2 shaft by Falco is contingent
upon entering into an operating license and indemnity agreement (“OLIA”) with Glencore as the owner of such infrastructure.
The mine has been designed to have low operating costs through the use of large, modern equipment, gravity transport of
mineralized material through raises, shaft hoisting, minimal mineralized material and waste re-handling, and high productivity bulk
mining methods. The mine is designed to employ state- of-the-art technology. Highly automated and using tele -operation
equipment, the mine would be able to operate 25-tonne LHD to transport ore to the ore pass systems. The underground crushing
facility would be fed by two ore pass systems. The crushed mineralized material would then be transported via two 250- metre
conveyors and transferred to a 600- metre conveyor leading to the shaft loading point, where it would be hoisted to the surface
using 43.5-tonne skips on a continuous basis. For servicing the mine, the shaft would have a double- deck service cage and a
double-deck auxiliary cage. Paste backfill would be used to fill the extracted stopes and strengthen stability of the adjacent stopes
and avoid or minimize dilution.
The Corporation expects to use transverse long hole as the primary mining method and will favor the minimization of dilution over
Mineral Resource recovery. The Corporation believes that the mineral resource dilution will be below 3%.
Processing
A Semi-Autogenous-Ball milling (“SAB”) facility on surface w ould be used to process an average of 15, 800 tonnes per day of
mineralized material at steady-state. The facility would also include a flotation and thickening section, divided in three circuits and
dedicated to recovering copper, zinc and pyrite concentrates. The copper and zinc circuits would have their concentrate filtered to
reduce humidity to 9%. Both concentrates would be stored directly in trucks and railcars, awaiting shipment. The pyrite concentrate
will require a finer liberation to enhance gold recovery by cyanide leaching, resulting in the requirement to regrind from the primary
grind size of 55 microns to the targeted P80 of 12 microns. The resulting reground pyrite concentrate would then be leached along
with the pyrite flotation tailings in separate leaching circuits, followed by CIP circuits. Thickeners would be used to maximize water
and cyanide recovery, and the Caro’s acid cyanide destruction method would be applied to reduce the cyanide content of the two
leach streams. Both pyrite tailings and pyrite concentrate streams from flotation would be used as paste backfill in the new mine
workings; excess volumes will be disposed of in existing historical openings, until the old mine openings are filled. Water liberated
in the underground workings from the consolidated tailings would be recovered, recycled and pumped back to the process plant.
Gold, zinc, copper and silver metal would be recovered. The process plant would produce two concentrates and doré bars. The
copper concentrate would have an estimated 16% copper content as well as payable gold and silver, and the zinc concentrate
would have an estimated 52% zinc content as well as payable gold and silver. The payable gold recovery is estimated to average
88.3% over the LOM and estimated payable recoveries average 75.7 % for copper, 72. 8% for zinc and 74.2 % for silver. Copper
and zinc concentrates have been analyzed and are considered to be free of deleterious elements and are expected to be readily
marketable to both smelters and traders.
The process plant facility would include a wet laboratory, site offices, mine and mill dry and a process plant maintenance shop.
Surface Infrastructure
The Horne 5 Project, located within the industrial park and former mine infrastructure (Quemont and Horne Mines) of the City of
Rouyn-Noranda, Québec, a mining community of over 42 ,000 people, benefits from great infrastructure. As important as the
physical infrastructure in the Rouyn- Noranda region is the high level of underground mining expertise that is readily available in
the region. The Corporation believes its advantageous location has the potential to positively impact the long term viability and
attractiveness of employment at the Horne 5 Project, given that employees and contractors could work in the community they live
in, a rare opportunity in the mining industry.
The Horne 5 Project is located 1.1 km from route 101 and 4.0 km of the Trans-Canada Highway, with all services readily available
at site. The Horne 5 Project is also located less than 700 meters from Glencore’s operating Horne custom copper smelter, which
treats both copper concentrates and precious metal-bearing recyclable materials as its feedstock to produce 99.1% copper anodes.
Development of the future mine would be done on the former Quemont mine site, the surface rights for which were acquired by
Falco. Acquisition of land adjacent to the currently proposed mine site would likely be necessary for some of the new infrastructure.
8
Electric power would be supplied to the site at a voltage level of 120 kV, originating from the nearby Hydro-Québec, Rouyn-Noranda
substation, approximately 1 km away.
The Horne 5 Project envisions the following key infrastructure item s to support the mine to be constructed: site access road, on-
site parking area, process plant , including site offices, dry and paste backfill plant, headframe and shaft house, hoist building,
120kV sub-station and railway spur lines and storage area.
As previously stated, the access to and use by Falco of surface rights and infrastructure not owned by it may, in some instances ,
be contingent upon entering into an OLIA with Glencore as the owner of such surface rights and infrastructure.
Environment and Permitting
Environmental baseline studies were initiated in 2016 and have continued to support the permitting process and the project timeline.
The Horne 5 Project will require a provincial decree. The Project is subject to a provincial impact assessment and review procedure
under the Environment Quality Act, including public hearings, as forecasted production is over the 2,000 tonnes per day threshold
outlined in the applicable regulation.
On December 6, 2017, Falco was advised by the Canadian Environmental Assessment Agency (Government of Canada) that the
Horne 5 Project is not a designated activity under the Regulations Designating Physical Activities pursuant to the Canadian
Environmental Assessment Act. Therefore, the Horne 5 Project is not subject to the federal environmental assessment. However,
other federal authorizations will need to be obtained.
An environmental impact study was filed with the MELCC in January 2018 and was published in the Environmental Assessment
Registry of the MELCC on August 1, 2018.
Falco is in the process of finalizing various studies to obtain its admissibility with the Government of Qué bec, which shall lead to
formal public consultation process under the supervision of the Office of Public Hearings on the Environment (“BAPE”) in
accordance with applicable Québec legislation.
Falco continues to work with various stakeholders to obtain the permits and authorizations required to continue the development
of the Project.
The Corporation will also be submitting an application for an authorization under Section 22 of the Environmental Quality Act to be
issued by the MELCC, to support the pre- production dewatering and sludge management strategy as part of the Horne 5 project
development.
During the dewatering phase, which is expected to last approximately two years, high density sludge from the water treatment will
be stored in the old Donalda and Quemont underground mine openings.
Mine Tailings and Waste Management
During the initial years of production, tailings that are not used for the production of paste backfill for the Horne 5 workings will be
stored in old underground openings. The remainder of the LOM tailings produced will be stored at surface in a tailings management
facility (“TMF”). The Corporation has identified an old TMF located at approximately 11 km from the City of Rouyn-Noranda, a site
already impacted by historical mining activities, to serve for the surface storage of tailings for the Horne 5 Project. Discussions for
the acquisition of the site are ongoing. Tailings will be transported from the mining complex to the surface TMF by pipelines. Waste
rock that is not used for underground mining operations will be transported by truck and stored at the TMF.
Closure and Rehabilitation
A closure and rehabilitation plan for the sites has been developed in accordance with the Mining Act (Québec). Site restoration
costs were updated and are now estimated at $104.2 million, less $ 35.2 million of equipment salvage value, resulting in a
restoration cost (net of salvage value) of $69.0 million . The site restoration cost estimate for the Horne 5 Project is based on the
dismantling of the mine buildings, the pipelines and the restoration of the TMF. This cost estimate includes the cost of site
restoration as well as post- closure monitoring. In accordance with the applicable regulations, the Corporation intends to post a
bond as a guarantee against the site restoration cost.