(Adds detail on companies, deal)
By Freya Berry and Barbara Lewis
LONDON, June 16 (Reuters) - Glencore is planning to sell its option in a gold mine owned by Falco Resources, 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 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 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, Alamos Gold and Agnico Eagle Mines 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. (Additional reporting by Susan Taylor and John Tilak in Toronto; Editing by David Goodman and Elaine Hardcastle)