Falco Pacific Resource Group (FPC-V) secured a jewel of Canada’s mining history just as markets tightened. But rather than let the conditions get it down, the company wound up proving an old adage correct: necessity is indeed the mother of invention … or in this case, the mother of discovery.
“Under normal circumstances we would have raised money and spent a lot of it drilling, but in this market we weren’t really able to do that,” Dean Linden, Falco’s head of corporate development, says.
Fortunately for Falco, along with acquisition of 70% of the Rouyn-Noranda mining camp — a massive land package that covers 728 sq. km — it also received 250 banker’s boxes, covered in dust and nearly forgotten.
Vestiges of a pre-digital age, the boxes contained geological, exploration and mining data from the 1930s right up until the 1990s on one of Canada’s great mines and the land around it. And with cost-consciousness defining its corporate philosophy, the decision was made to comb through the boxes before any drilling was done.
The Horne mine was a world-class find that turned Noranda into a major player on the global mining scene.
Discovered in 1921, the deposit was the world’s most gold-rich volcanic massive sulphide (VMS) deposit ever found and produced 54 million tonnes of ore grading 6.1 grams gold per tonne, 13 grams silver per tonne and 2.2% copper.
With its coffers full from the cash that Horne was generating, Noranda did extensive work on the ground around it and it is now Falco’s good fortune that it did. Especially because acquiring 728 sq. km of prospective ground brings with it the challenge of finding a foothold.
“Where do you start on something that has fourteen former producing mines, all of which probably deserve a second look?” Dean asks rhetorically.
The boxes provided the answer. While the Horne deposit was mined of all of it riches, another deposit, deeper down was left largely untouched.
The Horne #5 zone is situated roughly 500 metres north of the Horne deposit, and is mineralized at deeper depths. Where Horne was mined from surface down to roughly 900 metres, mineralization at Horne #5 begins at roughly the 600 metre level, has been drill-tested down below the 2,500 metres level, and remains open at depth.
It is this deeper orientation that may have prevented Noranda from fully exploiting the zone. Not because mining at greater depths costs more — Noranda was flush with cash, as is evidenced by the degree to which it outlined Horne #5 with some 9,000 drill holes, four shafts and numerous drifts. The likely reason that Noranda left the deposit for posterity is that it wound up proving the conventional wisdom of miners along the Cadillac fault: above 500 metres, VMS deposits are copper-rich, below that level they are gold-rich.
“It appears as though the gold party was just getting started at 500 metres, which is consistent with what happens on the Cadillac break,” Linden says. “I don’t think Noranda was thinking about gold back in the 1960s but it set up for a hell of a gold mine in 2013.”
Not that Noranda didn’t have a go of it as a gold mine already. In the mid-seventies, after a spike in the gold price, Noranda pulled out 200,000 tonnes of rock from the zone averaging 7.1 grams gold and 0.73% copper. The operation was halted in 1976.
Using those production results as a guide, along with data from the 9,000 drill holes (most of which were done from drifts and only went roughly 20 metres in), Falco now plans to create a digital model of the entire Horne block.
“We’ll be able to give people a comprehensive look at this, the likes of which they haven’t seen before,” Linden says. “It’s old school drilling coming together with modern technology.”
The zone has a historic, non-National Instrument 43-101 compliant resource of 167.83 million tonnes grading 1.25 grams gold, 17.14 grams silver, 0.57% zinc and 0.1% copper for 6.75 million oz. gold, 92.5 million oz. silver, 2.1 billion lb. zinc and 360 million lb. copper.
Falco acquired the property after it had been operated as a joint venture between Noranda and Alexis Minerals, now known as QMX Gold (QMX-T). With Noranda serving as operator and Alexis providing exploration funds, the gold junior never really got a handle on the project and the banker’s boxes with all the information went unchecked.
“In our digital age a database means something different,” Linden says. “This got lost simply because a generation moved on and no one wanted to go in to check out the bankers boxes. It’s a dark, dusty, lonely place to go.”
So Alexis increasingly focused on its Lac Herbin and Snow Lake projects and decided to sell what was considered its most marketable non-core asset.
“It was a competitive bidding process,” Linden explains, “but we were able to entice them with an attractive offer that included stock.”
The deal also brought Osisko Mining (OSK-T) in as major shareholder with an 18.36% stake but also allowed Falco to maintain a tight share structure with 45 million shares outstanding and no warrants.
The property is also home to Xstrata’s (XTA-L) Horne mill and smelter, which sits right on top of the old deposit and could one day be used to process ore from Horne #5.
But being in Rouyn-Noranda means that should a deal not be reached with Xstrata, there are plenty of other mills within trucking distance.
“Our cup runneth over as far as available infrastructure,” Linden says.
As for the next steps, Linden says that over the coming few months the company will be meeting with consultants and drawing up a drill program.
“We’re probably 90 to120 days from having [the consultancy firm] tell us where to set the drills, and what we need to do to make it compliant,” he says. “We’ve very quickly gone from being an exploration company focused on how to raise money to drill a huge land package, to one that is overseeing an engineering exercise.”
And if Falco is able to outline a National Instrument 43-101 compliant resource in the range of the 6 million plus ounces from Noranda’s historical estimate, it could make Horne a hot topic of conversation in the mining world yet again. The company estimates that it could have its first compliant estimate in hand by the first quarter of next year.
Falco currently has $2 million in cash.
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