The Globe and Mail reports in its Friday, Sept. 8, edition that Canaccord Genuity analyst Kevin MacKenzie says Falco Resources' ($1.21) Home 5 project in Quebec is a "potential company building asset" (all figures Canadian unless otherwise stated). The Globe's David Leeder writes in the Eye On Equities column that Mr. MacKenzie sees the potential for a merger with the Osisko Group.
He commenced coverage of the Montreal-based junior exploration and development company with a "speculative buy" rating. Falco's 100-per-cent-owned Home 5 deposit sits below the Horne mine, owned by Noranda from 1927 to 1976, in Rouyn-Noranda, Que. Mr. MacKenzie's base case valuation of the project is a 22-year mine life, producing an average of 303,000 ounces per year of gold equivalent with cash costs of $396 (U.S.) per ounce, and an all-in sustaining cost of $524 (U.S.) per ounce. Mr. MacKenzie set a price target of $1.75 for Falco shares. Analysts on average target the shares at $1.91. Mr. MacKenzie says in a note: "The end goal of the vast majority of junior development companies is to be acquired by a more senior operator. In Falco's case there is certainly some arm waving to be done in that regard."
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