The following interview was conducted on January 15-16 by phone and by email. Falco Resources’ SVP of Business Development, Dean Linden was very accommodating making time for me in his busy schedule.

Please describe Falco Resources to readers unfamiliar to the story.

– Falco Resources (FPC.V) / (FPRGF) is one of Quebec’s largest mining claim holders with over 750km of the former Noranda mining camp, including 14 former producing mines. The camp has historic gold production of 19M oz of gold and is the last Abitibi gold camp which is not controlled by a major gold producer. We have made a discovery of sorts at the Horne Complex with a maiden 43-101 inferred resource from historical data containing 2.8 million gold equivalent ounces.

Can you describe some of the key players on Falco’s team?

– The profile of our board and management teams is unlike most junior mining companies, as it is made up of people who have built and operated some of the most successful mines in the Abitibi, including Agnico-Eagle, (AEM), AuRico Gold (AUQ) and Osisko Gold Royalties (OR.TO). It’s a real tribute to the quality of Falco’s asset base that it has been able to attract this type of relevant and extensive experience.

Please tell us about Falco’s capital structure and key shareholders.

– We have a very strong balance sheet with about C$ 12 million in cash and no debt. Osisko is our largest shareholder at almost 12%. We have 93 million shares outstanding.

You essentially inherited a maiden 43-101 Inferred resource of 2.8 million gold equivalent ounces, will that resource grow in 2015?

– We had to do the compilation and analysis ourselves to come up with this resource estimate but we did indeed inherit an incredibly complete database of almost 4,400 historic drill holes. We were able to exploit a remarkable library of Noranda’s historical data spanning 50 years to essentially rediscover a gold-rich deposit. In 2015, we intend to increase the size of the resource by at least 30% and upgrade the resource to the measured & indicated categories.

Please describe the Horne 5 project in more detail.

– From the 1930s to the 1960s, Noranda embarked on a very ambitious drill program in the Horne 5 Zone. Horne 5 sits immediately below the Horne Mine but it was a lower grade ore body and mining techniques of the period did not yet allow for large scale bulk mining of this type of ore body. In addition, the gold price was fixed at only $35 per oz, so the Horne 5 zone was not economic at that time. When we went into the Noranda archives we digitized almost 4,400 drill holes that had been spaced every 15 meters throughout the orebody. This level of drill density is very uncommon and it gave us great deal of confidence in this resource. We still see lots of opportunity to take it from its current 2.8 million ounces to close to 4 million ounces in 2015.

You’ve said that LaRonde is a good analog to Horne 5, please explain.

– LaRonde is one of three modern bulk underground mines that Horne 5 could be modeled after. LaRonde is Agnico Eagle’s flagship mine and is located 80 kilometres to the east of us. Paul Henry Girard, who is a member of our board, was the VP of Canadian Operations for Agnico and was involved with the construction and operation of Laronde. When he joined Falco, Mr Girard saw an uncanny resemblance between Laronde and Horne 5. Since then, however, we have come to see similarities with another Agnico operation, the Goldex mine, as well as AuRico’s Young-Davidson mine – both in the Abitibi. LaRonde is a much deeper mine with a higher cost structure than we envision for Horne 5, so we need to inspire our stakeholders from the best features at each of these 3 world-class operations in conceiving Horne 5. Large stopes, paste backfill, automated ore handling and a large tonnage shaft system are some the features that come to mind.

Falco’s controlled property is quite large, are there opportunities to monetize some of your land portfolio?

While we are moving very aggressively in the exploration of Horne 5, it represents just a small piece of our land position. There are a number of other highly prospective areas of the camp and we cannot cover them all with our limited resources. There is a great deal of interest in this area of the world from a mining perspective. Falco is one of the largest landholder in the area and I do see opportunities to option and JV some properties in the camp. Our cost to maintain the camp is very manageable though, so we can be patient and do deals that make sense for Falco shareholders.

How important to the overall economics of your project(s) is the copper, zinc and silver?

– The grade of the resource currently stands at 3.4g/ton gold equivalent. Actual gold content represents more than 75% of the value of the current resource estimate, so the by-product metals are important but this is clearly a gold mine. Silver was not included in the initial resource estimate and we expect to address this in 2015 with a confirmation drill program.  If all goes as planned, we anticipate up to 15 g/t silver content but this will not materially change the gold weighting once this is converted in a gold equivalent grade.

How important is the 80 years of historical Noranda drilling data?

– The importance of the Noranda database is difficult to articulate. The short answer is that Falco could not have come up with a resource estimate on a $500,000 budget without it. The database was solely responsible for the Horne 5 discovery and not one drill hole was required. The work was done and the data maintained by Noranda, a world-class mining company. The data was meticulously maintained with no detail overlooked. As a result, our ‘discovery’ cost is less that 0.25/oz of gold. This compares to a global average discovery cost of $40/oz worldwide and $24/oz in Canada. Falco is probably the most efficient exploration company in the world.

Given that Falco’s property includes 14 formerly producing mines, hasn’t the low hanging fruit already been picked? 

– That is a very important question. Noranda was a copper producer, and they built a large copper smelting complex in Rouyn-Noranda in the 1920s. The mandate of the Company was to feed copper to the smelter. Gold was not important and was only produced as a byproduct of copper production. Despite never being a focus the camp produced 19 million ounces of gold (along with almost 3 billion pounds of copper) making it amongst the most prolific gold camps in the Abitibi. During the 50-year operating life of the Horne mine, from 1927-1976, gold averaged less than US$45/oz, or less than US$300/oz on an inflation-adjusted basis. Needless to say, with current economics the narrative of the camp has changed dramatically and opportunity abounds in this camp.

Is Falco funded for 2015? How much drilling will you do?

– We currently have C$ 12 million the treasury. We will spend about $3.4 million on our Horne 5 drilling program, an additional sum on engineering and other studies and about $2 million on regional exploration in 2015. This part of Quebec is home to some of the finest drillers anywhere in the World. We certainly benefit by these Companies wanting to work close to home and the competitive market for services as our many of our peers have reduced their activities.

Falco’s corporate presentation says that Falco controls the last of the large Abitibi Greenstone Belt mining camps, please explain.

– The vast majority of the Abitibi Greenstone Belt is controlled by major gold producers like Goldcorp (GG), Agnico, Yamana (AUY), Hecla (HL) and AuRico, with the exception of this camp

How is Falco Resources different from the number of mid-tier and majors surrounding you?

– Falco is unlike any exploration company in the world. Firstly, we control an entire mining camp. It is extremely rare that a junior is able to acquire consolidated mining claims in a place as prolific as the Abitibi Greenstone Belt. Secondly, the value of the Noranda data library is hard to quantify. Falco bought the data in an analog form meaning it was in paper form and kept in file cabnets. Our efforts to digitize this data on just the first of 14 former producers resulted in the discovery of a 2.8 million gold equivalent ounces. This database was controlled and maintained by the same company for 80 years. It is not something that we will likely see again. Thirdly, our enterprise value per gold equivalent ounce is about $13, which is a very compelling entry point relative to a number of our peers.

Are there any misconceptions about Falco Resources that you would like to address? 

– Generally speaking I think that we are living in skeptical times in the junior mining space. The burden of proof weighs heavily on juniors and we readily accept this burden. The first issue we have to address is the tendency to paint everyone with the same brush such that a misstep by a peer reflects badly on the entire industry. Management teams build companies and I am very proud of the team that we have.  The second issue is that the average grade of gold deposits has been on a steady decline and some investors will not look at deposits with grades below 5-6 g/t. This ignores mining methods, metallurgy, infrastructure needs and a plethora of other variables. Our 3.4 g/t gold equivalent deposit is of a higher grade than two of the three world-class mines that we are benchmarking ourselves to. I am confident that we will convert non-believers over time. We have a good following already and our job is to add to that – one investor at a time.