Falco Resources Secures Key Agreement with Glencore Canada for Horne 5 Project Development
Falco Resources has finalized an operating license and indemnity agreement (OLIA) with Glencore Canada, marking a significant milestone for its Horne 5 project in Rouyn-Noranda. This agreement, stemming from a preliminary arrangement announced in June 2021, sets a cooperative framework for the development and operation of the Horne 5 project, considering its proximity to Glencore's Horne smelter operations.
Central to the OLIA are the formation of Technical and Strategic Committees, each comprising representatives from Falco and Glencore. These committees are tasked with overseeing the operational parameters and strategic development of the Horne 5 project, ensuring minimal interference and risk to Glencore's adjacent smelter operations. Additionally, Glencore will have the right to appoint a nominee to Falco's board, highlighting the collaborative spirit of this partnership.
Falco has committed to providing substantial financial assurances to Glencore, addressing potential risks and losses that may arise from the Horne 5 project's operations. These assurances include a structured financial commitment, escalating from C$40 million during the dewatering phase to C$80 million throughout mining operations, with a reduction during closure and remediation phases. These financial safeguards are designed to protect Glencore's interests, with provisions allowing Glencore to draw upon these funds in case of indemnifiable losses.
Progress and Future Plans
The agreement follows an intensive work program initiated in November 2020, aimed at mitigating risks to Glencore's operations. This collaborative effort has seen significant advancements in geotechnical, water management, and operational synergies between the Horne 5 project and the Horne smelter. With the key components of this program largely addressed, Falco and Glencore are poised to proceed with the next phases of the Horne 5 project, including dewatering, construction, and eventual operation, contingent upon meeting the OLIA's conditions.
Falco is also required to secure specific insurance coverage to further mitigate risks to Glencore's operations, a stipulation the company is confident it can fulfill based on preliminary discussions with brokers and underwriters. This coverage is a prerequisite for commencing dewatering and mining activities under the OLIA.
