Alexco greenlights Keno Hill silver mine
With water license approval, company ramps up mine activities North of 60 Mining News – June 26, 2020
Last updated 6/25/2020 at 11:09am
With permits in-hand, Alexco Resource Corp. is moving ahead with the restart of production at its Keno Hill Silver District mine in the Yukon.
Alexco operated a mine and mill at Keno from 2011 to 2013 but idled down operations due to weak silver prices and uncertain markets. Over the ensuing years, the company has steadily expanded silver resources with continued exploration. Crews have also completed additional underground development and upgrades to the mill in anticipation of a restart.
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% zinc, 2.98% 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.
Before a definitive decision to restart operations at Keno could be made, however, Alexco needed an amended and renewed water use license, which has now been issued by the Yukon Water Board.
"The receipt of the draft Water Use License provides us with the proposed terms and conditions of the final WUL and represents an important regulatory hurdle we had to clear to be able to make a final production decision at Keno Hill," said Alexco Resource CEO and Chairman Clynton Nauman. "We worked for approximately two and a half years to renew and amend our primary WUL, but also used that time to de-risk the project and add value through exploration."
Most of these reserves – 704,211 metric tons averaging 672 g/t silver, 5.73% zinc, 2.71% lead and 0.49 g/t gold – are found in the Flame & Moth deposit.
While this represents the lowest grades of the four deposits to be mined, a consistent orebody and portal adjacent to the mill makes Flame & Moth the centerpiece of the initial eight-year plan.
Mining, however, is slated to begin at Bellekeno, a higher-grade orebody that hosts 40,109 metric tons of the Keno reserves at an average grade of 843 g/t silver, 11.79% lead and 6.31% zinc, will be the first deposit mined.
"As per our March 2019 PFS, underground mining will start in the past producing Bellekeno mine, while we resume underground development at the Bermingham and Flame & Moth deposits," said Alexco Resource President Brad Thrall.
Much of the development and exploration work at Keno Hill was scaled back earlier this year due to restrictions and uncertainty caused by COVID-19.
While much of the activities at the mine project had been scaled back, existing Yukon employees continued work on mill upgrades and non-essential Keno Hill-based employees worked remotely on engineering and project planning. This approach sets the mine project up for the rapid reacceleration of mine development activities.
With the renewed water use license process now nearly complete, Alexco has begun preparations to restart underground development work in the Flame & Moth and Bermingham declines where a total of approximately 300 meters of underground development needs to be driven in each mine to reach the first ore access levels.
In the meantime, the Bellekeno mine will be rehabilitated and approximately 20,000 metric tons of ore extracted during the second half of 2020 and used for mill commissioning and initial concentrate production. Final commissioning and the first silver sales from the renewed Keno Hill mine are expected by the end of the year.
"We have started to deploy resources while continuing to observe the strict COVID-19 health and safety protocols that are still in place to protect the well-being of our employees, contractors, and communities," said Thrall. "In this scenario, we are confident that we can achieve first concentrate production in Q4 2020 ramping up to full capacity production of 400 tonnes (metric tons) per day in the first half of 2021."
While ramping up mine production, Alexco is also mobilizing personnel and equipment to begin deep surface exploration drilling at Bermingham, a deposit that hosts 1.1 million metric tons of indicated resource averaging 930 g/t (32.9 million oz) silver.
This program, expected to include at least 4,000 meters of drilling, will test for offsets and extensions of the previously discovered silver mineralization at the NE Zone of Bermingham, where 2019 drilling cut 8.15 meters averaging 1,414 g/t silver in the Bermingham Footwall vein structure.
This zone could add to the high-grade ore to this newest chapter in the century-long history of Yukon's Keno Hill Silver District.
"I would like to thank our employees, the First Nation of Na-Cho Nyak Dun, the Yukon Government, and our long-time shareholders for their dedication and support during the past couple of years," said Thrall. "We look forward to updating you on our progress as Alexco becomes Canada's only primary silver producer."