Gains ownership of historic Keno Hill Silver Mine in Canada's Yukon

With the Sept. 7 purchase of Alexco Resource Corp., Hecla Mining Company is poised to become Canada's largest silver producer by unlocking the enormous high-grade potential of its new Keno Hill Silver District project in the Yukon.

The 242-square-kilometer (93 square miles) Keno Hill property covers one of the highest-grade silver districts in the world. Between 1913 and 1989, more than 200 million ounces of silver was mined from Keno Hill ore averaging 44 oz of silver per ton, making this district the second-largest historical silver producer in Canada.

With its Greens Creek Mine in Alaska and Lucky Friday Mine in Idaho producing a combined 12.9 million oz of silver during 2021, Hecla is already the largest silver-producing company in the United States. The adept underground silver miner is now looking to also be the biggest in Canada.

"With the additional production from Alexco's Keno Hill, and the continued production growth from Greens Creek and Lucky Friday, we expect Hecla to produce 17-20 million ounces per year in the next few years, which is 30 to 55% more than 2021," said Hecla Mining President and CEO Phillips Baker, Jr. "Hecla's silver production is in the United States where it already produces 40% of all the silver mined and, with Keno Hill, Hecla is on the path of being Canada's largest silver producer as well."

This increased silver product comes at a time when clean energy applications, especially photovoltaic solar panels, are increasing the demand for the highly conductive metal.

"With the world's increasing demand for silver for clean energy, Hecla is helping meet that demand as the world's fastest growing established silver miner," said Baker.

Learn more about the renewable energy and technology demand for silver at Silver evolves from money to techno metal in the 2021 edition of Data Mine North's Critical Minerals Alliances magazine.

Silver production in 2023

According to a calculation completed for Alexco, Hecla's newly acquired Keno Hill property hosts 1.44 million metric tons of probable reserves averaging 804 grams per metric ton (37.19 million ounces) silver, 3.84% (122 million pounds) zinc, and 2.64% (84 million lb) lead in four deposits – Bellekeno, Lucky Queen, Flame & Moth, and Bermingham.

At the end of 2020, Alexco began to ramp up to commercial production at Keno Hill, but COVID-related staffing issues slowed the restart of operations in the historic district and in June of this year the company announced that it was shutting down the mill in order to focus on underground development and to ensure the availability of ore.

"There is no doubt that we have fallen well behind the development and production plan at Keno Hill – and our original estimate of achieving commercial production in early 2022," said Alexco Resource Chairman and CEO Clynton Nauman. "There are myriad reasons for those challenges, but fundamentally, they all led to an increasing level of stress across our business, which was having a negative impact on the share price, our finances, our employees, and other stakeholders."

Hecla's acquisition alleviates that stress.

With its financial wherewithal and underground silver mining expertise, Hecla plans to carry out the exploration and development to get Keno back into production.

"With the fully operational mill and development that is in place we don't anticipate a large capital program to bring the mine into production," said Baker. "Over the coming months Hecla plans to invest in development, infrastructure, and equipment so there are adequate mining faces and good working conditions to bring Keno Hill to full and consistent production by the end of 2023."

Moving into the Yukon

Alexco Resource Corp.

High-grade silver mineralization encountered during drilling at Keno Hill, which hosts 1.56 million metric tons of indicated resource averaging 939 g/t (47.2 million oz) silver.

To complete the acquisition of Alexco and its Keno Hill Silver District mine project, Hecla issued 18 million shares worth C$69 million to Alexco shareholders, which received 0.116 of a Hecla share for every Alexco share held.

Concurrent with the acquisition, the silver streaming interest Wheaton Precious Metals Corp. held on Alexco's Keno Hill property was terminated in exchange for 34.8 million Hecla shares worth roughly US$135 million.

As part of the transaction, Hecla also provided Alexco with a US$30 million secured loan facility, of which US$25 million was drawn when the transaction closed.

With the acquisition of Alexco complete, Hecla looks forward to mining in a historic silver district in the Yukon.

"The Keno Hill property is in a premier mining jurisdiction where the First Nation of the Na-Cho Nyak Dun and Yukon governments are supportive of mining," said Baker. "Like our other operations where we have had decades of mining and have become an integral part of the communities, we look forward to doing the same in the Yukon."

Author Bio

Shane Lasley, Publisher

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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