Falco Resources (CVE:FPC) says it has signed an option agreement with the city of Rouyn-Noranda in Quebec, where its properties are located, to acquire surface rights to land that sits above its Horne 5 deposit, and immediately adjacent to the Horne smelter.
The deal gives Falco a five-year option to purchase over five hectares of land in the Horne complex area, which could support a headframe, mill and other surface facilities required to develop its prized Horne 5 underground deposit, according to the Quebec-based company's statement released late Monday.
The land is located in an industrial area north of Rouyn-Noranda, bounded by infrastructure and a rail line, Falco said.
"This is a significant milestone in the advancement of our long term strategy within the Horne Complex," said president and chief executive officer, Trent Mell.
"There are no plans to make a development decision in the near term but this acquisition preserves that option by ensuring there are surface rights from which to operate a mine."
The company will pay a total of $2.9 million for the property, of which a $1 million non-refundable deposit would be payable upon the transfer of the land, which is anticipated in the coming weeks.
The remaining consideration is payable by August 1, 2019. Falco said it recently accelerated approximately $1 million in warrants to offset the deposit amount.
Falco's Rouyn-Noranda Complex in Quebec is home to the former Horne Mine, the largest of the 14 former producers on Falco’s 700 sq km grounds and the primary building block for prior operator Noranda, which turned the mine into one of the largest resource enterprises in Canadian history. The mine produced in excess of 11 million ounces of gold and 2.5 billion pounds of copper from 1926 to 1976.
Falco is hoping to replicate this with its Horne 5 deposit, the largest undeveloped deposit in the region. Its current strategy is focused on identifying opportunities to increase the size of the resource estimate within its Horne complex, while also working on exploration targets within the remainder of its large land package.
The company said that over the next nine months, its two priorities will be to increase the size of the Horne 5 resource, and upgrade the confidence level from inferred to indicated status.
In March, the company announced a maiden inferred mineral resource estimate for Horne 5, outlining 2.8 million gold equivalent ounces grading 3.41 g/t gold.