UPDATE 1-Glencore plans to sell option in Falco's Horne gold project -sources

(Adds detail on companies, deal)
By Freya Berry and Barbara Lewis
LONDON, June 16 (Reuters) - Glencore GLEN.L is planning to
sell its option in a gold mine owned by Falco Resources FPC.V ,
two sources familiar with the situation said on Thursday, as the
mining group and commodities trader presses ahead with asset
sales.
London-listed Glencore has appointed BofA Merrill Lynch
BAC.N to sell the 65 percent option in the Horne 5 gold
project in Quebec, the sources said, and potential buyers have
been contacted.
Falco has calculated that the undeveloped Horne 5 deposit
could have a net present value (NPV) of about $667 million,
assuming a gold price of $1,250 an ounce and certain currency
exchange conditions, according to its website.
Spot gold XAU= was up 1 percent at $1,303.91 an ounce at
1148 GMT on Thursday.
Situated close to Canada's Val d'Or, the asset is likely to
appeal to Canadian miners already familiar with the region.
Barrick Gold ABX.TO , Alamos Gold AGI.TO and Agnico Eagle
Mines AEM.TO are among those who could be interested, one of
the people said, cautioning that no deal was certain.
Falco is the full owner of the project. However Glencore,
which originally inherited the mine when it bought Xstrata, has
a right to buy back a 65 percent stake.
That right was triggered when Falco released a positive
economic assessment in May on the low-cost Horne project. But
Glencore does not see gold as core and is seeking to sell the
option, one of the sources said.
The mine would average around 236,000 ounces a year of
production, making it a significant gold producer in Quebec.
Glencore declined to comment. BofA Merrill Lynch and Falco
Resources did not immediately respond to requests for comment.
Glencore has 90 days to sell the option outright. But if a
deal cannot be struck in that period then the miner would likely
opt to buy the stake and then sell it on in an auction, the
source said.
Like other mining majors, Glencore has been looking to sell
assets to reduce high levels of debt following a plunge in
commodity prices and a fall in Chinese demand for raw materials.
The Horne 5 deposit sits immediately below the former
producing Horne Mine, which was operated by Noranda Inc from
1926 to 1976, according to Falco's website.