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 study (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 benefits 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.
  

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

⁽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.

TABLE 2: SENSITIVITIES (UFS BASE CASE IN BOLD)

QUÉBEC ADVANTAGE

The Horne 5 Project is located in Québec’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 6^th 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.
  

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 in the early stage of the LOM. Items to be reviewed include: (1) the significant exploration potential for 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), WSP 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.

TABLE 3: MINERAL RESOURCES TABLE ⁽¹⁾

⁽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 inferred mineral resources. Measured and indicated 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

• The QP for the Mineral Reserve estimate is Mr. Denis Gourde, P.Eng (InnovExplo).
• Mineral reserves have an effective date of August 26, 2017.
• 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.
• Mineral reserve tonnage and mined metal have been rounded to reflect the accuracy of the estimate and numbers may not add due to rounding.
• 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 the deposit in each block.

TABLE 5: CAPITAL AND OPERATING COSTS SUMMARY