An interview with Luc Lessard, President and CEO, Falco Resources. Part of our Junior Mine 2018 series.
As Falco Resources prepares to develop Horne 5, its gold and base metals mine in Rouyn-Noranda, Quebec, the company’s president and CEO, Luc Lessard, is vowing that the project will be “the most state-of-the-art technological platform in North America.”
Montreal-based Falco has already used artificial intelligence to analyze large quantities of digitized historical data to pinpoint new prospecting targets. Next it’s preparing to use automation and robotics for repetitive and high-risk tasks.
Horne 5—forecasted to produce 219,000 ounces of gold annually for over 15 years at an all-in cost per ounce of $643—will feature surface-controlled underground development and production operations.
“It’s easy to incorporate cutting-edge technologies when it’s a new project, and that’s the opportunity we have today,” Lessard says. “We’re going to build a prosperous and efficient mine, certainly the most state-of-the-art platform in North America.”
Falco expects the advanced technology will help attract high-quality employees who are looking for the opportunity to grow professionally, he says.
“Young people sometimes ask me, ‘What are you offering so I can grow?’ And I tell them: ‘Falco. Because this new mine will be a true hub for new mining technologies.’”
The question is a critical one for the mining industry today, agrees Maxime Guilbault, a PwC Canada partner and the firm’s mining leader for Quebec. “Young workers are bringing fresh skill sets to the industry and they are used to working in new ways. They want to use the latest technology, and that can create challenges for conventional mining executives who have been slow to adopt new techniques,” he says. “So I think if a company like Falco really is rethinking how to build and operate a mine, then that could prove very appealing to a young workforce.”
But the strategy to invest in some of the latest mining technologies is directed at more than just recruitment. Falco’s early assessment work made it clear that the company would need to boost efficiencies above industry standards in order to make its low-grade, high-bulk tonnage mine economically viable, Lessard says.
The origins of the plan date back to 2012, when Falco purchased 74,000 hectares of the Rouyn-Noranda mining camp (about 70% of the entire area), including the Horne Mine complex. Development of the site, part of the renowned Abitibi mining region, stands to benefit from numerous geographical advantages.
There’s an experienced labour pool and base of suppliers and contractors within 30 minutes of the site. Public services and existing infrastructure include rail and highway access and affordable hydroelectric power. And the Quebec government has a track record of supporting the mining industry and facilitating development with a clear permitting process. In addition, the host community, including the Indigenous population, has traditionally been receptive to mining projects in the region.
Falco executives say its Horne 5 mine is one of the largest undeveloped underground gold projects in the world with proven and probable gold equivalent reserves of more than 6 million gold equivalent ounces. They forecast that eventually about two-thirds of the mine’s revenue will come from gold and the remainder from zinc, copper and silver.
At this point, Falco enjoys a strong shareholder base and stakeholder support. Osisko Gold RoyOsisko has committed to invest up to $180 million in return for 100% of the refined silver from Horne 5. Tocqueville owns a 8% stake, the Quebec provincial government has a 5% stake, and the Caisse de Dépôt du Québec and CIBC each own 1% of the company.
Looking forward, 2019 will be a critical period for Falco Resources as it looks to get the necessary permits and authorization, begins a public hearing process on the Horne 5 project and hopes to secure all the necessary financing. If everything goes according to plan, the company says the construction phase of nearly $1 billion will start in 2020 and commercial production will be begin in 2023, with a workforce of about 525.
Partner, Tax, PwC Canada
Tel: +1 416 365 8831
Quebec Mining Leader, PwC Canada
Tel: +1 514 205 5448
Director, Consulting & Deals, PwC Canada
Tel: +1 416 815 5323