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Keno Hill exploration, development slows

Alexco scales back programs until COVID-19 crisis subsides North of 60 Mining News – April 3, 2020

Series: COVID-19 coverage | Story 21

Alexco Resource Corp. March 30 reported a slowing of mine development and exploration activities at its Keno Hill Silver District due to the uncertainty and unpredictable impacts of the COVID-19 pandemic.

To protect the health and safety of its employees, contractors and Yukon communities near the Keno Hill project, Alexco has implemented a COVID-19 response and management plan that follows territorial and federal guidelines, as well as industry-wide best practices.

This response plan includes the following protocols:

• Only essential employees and contractors are currently allowed access to Keno Hill operations, and all incoming personnel must be pre-screened and cleared for travel to Keno Hill by company health and safety medics.

• Keno Hill employees and schedules have been modified to reduce travel from locations outside the Yukon. Workers from outside of the territory must abide by 14-day self-isolation requirements issued by the Yukon government.

• Enhanced sanitation procedures have been implemented by the camp and catering contractor at Keno Hill, and mandatory hygiene techniques have been established for all employees and camp residents.

• On-site work schedules and other measures have been implemented to reduce employee interaction.

• On a companywide basis, only essential travel is allowed and, where reasonably possible, employees are working remotely from home.

There are no reported cases of COVID-19 within the area in or around Keno Hill. Alexco said it will continue to closely monitor the quickly changing conditions of this pandemic and will modify the operating protocols as appropriate and based on the advice of the healthcare professionals and government officials' requirements.

Scaled back development

Given the ongoing uncertainty and health concerns related to COVID-19, Alexco has suspended underground mine development activities at Keno Hill and buttoned-up capital investments made to date while continuing to maintain all areas of the site.

In mid-2019, Alexco published a pre-feasibility study that outlines a 430-metric-tons-per-day operation at Keno Hill that is expected to produce a 27.2 million ounces of silver, 67.2 million pounds of zinc and 65.4 million lb of lead over an eight-year mine life.

These payable metals will be recovered from 1.18 million metric tons of reserves averaging 804 grams per metric ton silver, 4.13 percent zinc, 2.98 percent lead and 0.34 g/t gold.

Since the completion of this financially robust PFS, the company has made steady progress on mine development at the high-grade silver project that includes the recruitment of key personnel and senior site management; securing long lead time orders for mine equipment; and advancing capital infrastructure projects at the mill and across the project site.

While this work has been scaled back, mill improvement projects that can be completed with existing Yukon employees will continue and non-essential Keno Hill-based employees will work remotely on engineering and project planning. Alexco said this approach allows for the rapid reacceleration of mine development activities once the coronavirus outbreak has subsided to the point that government travel restrictions have been lifted and certainty has returned to the markets.

Alexco is currently awaiting the issuance of an amended and renewed Water Use License from the Yukon Water Board, which will be needed to resume operations at Keno Hill. The water board completed public hearings in February. Given the disruption in most routine activities, the company advises that issuance of the water license is expected to be deferred into the second quarter of this year.

While the renewed water license is among the requisites for Alexco to make a final decision to move ahead with production at Keno Hill, the company said a second quarter issuance fits within the broader schedule of mine development activities now contemplated at Keno Hill and the ability to reach production this year.

Exploration delayed

Alexco's 2020 surface exploration program originally slated to include roughly 11,500 meters of surface drilling beginning in May, has also been decelerated as a result of the COVID-19 restrictions.

While the original 2020 drill program will likely not change in terms of targets and objectives, the company is developing contingency plans to execute a reduced surface exploration drilling program that could be deferred until the COVID-19 conditions change and circumstances allow.

At a minimum, Alexco is hopeful that activities can be scaled back up in mid- to late-summer, when appropriate, with the reduced drilling program to focus on the "deep target" at Bermingham, where exploration drilling in 2019 successfully confirmed the presence of wide, high-grade mineralization at depth below the Bermingham silver deposit.

Bermingham hosts 1.1 million metric tons of indicated resource averaging 930 g/t (33 million oz) silver.

The deep drilling program for Bermingham will evaluate the opportunity for expanding this very high-grade silver resource to depth.

Alexco said that much of its exploration work is preprogramed and considered routine from year to year. As such, delays in surface drilling activity will simply push the programs and schedules later into the summer, or into 2021. Work at Bermingham and a new discovery at the Inca target will remain a priority.

A C$8.6 million financing completed on March 27 provides Alexco with the financial flexibility to continue with the scaled back development and smoothly reaccelerate and ramp up operations in line with the 2019 PFS schedule when circumstances allow.

Author Bio

Shane Lasley, Publisher

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Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.


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