Alexco defines more high-grade silver at Keno

Vancouver – Underground definition drilling at Alexco Resources‘ (AXR-V, AXU-X) Bellekeno project on its Keno Hill property in the Yukon has further delineated a high-grade silver area within the upper reaches of the East zone.

Alexco drilled 710 metres in the East zone as part of a broader and ongoing definition drilling program aimed at upgrading resources and further developing its mine plan for the Bellekeno project.

Many of the intercepts cut more than 1,000 grams silver per tonne over widths between about 0.5 and 4 metres.

Because of a splayed vein structure in the East zone, several of the drill-holes hit two mineralized intervals. For example hole 41 returned 3.87 metres grading 2,585 grams silver, 2.04% lead and 29.21% zinc and then an additional 3.22 metre grading 1,073 grams silver, 0.797 grams gold, 5.52% lead and 11.81% zinc.

Likewise hole 46 first cut 2.25 metres grading 2,686 grams silver, 1.037 grams gold, 18.45% lead and 8.21% zinc and then a further 0.3 metres grading 1,695 grams silver, 0.620 grams gold, 0.84% lead and 2.56% zinc.

The goal of the definition drilling program is to upgrade resources that Alexco has so far defined in three areas: The East, Southwest and 99 zones. Southwest makes up the bulk of the resource estimate which stands at 537,400 inferred tonnes grading 1,016 grams silver, 13.5% lead, 10.7% zinc and 0.4 gram gold.

The resource estimate, completed in January 2008, formed the backbone of a June 2008 scoping study. As planned therein the Bellekeno project has a five year mine-life and between a 250 and 400-tonne-per-day capacity. Mining would begin in the Southwest and 99 zones, which have higher silver grades, and grow to include the East zone in year three.

The scoping study estimated a pre-tax internal rate of return of 55.5% and a net present value of US$87 million based on the then three-year trailing metal prices which were: US$11.69-per-oz. silver, US81¢-per-lb. lead, US$1.24-per-lb. zinc and US$625.60 gold. Alexco pegged capital costs at $61.2 million.

That plan quickly caught the attention of Silver Wheaton (SLW-T, SLW-N) which agreed to purchase 25% of Keno Hill’s life-of-mine silver production at a price of US$3.90-per-oz. silver (or less, if the price of silver falls below US$3.90-per-oz.) and an additional US$50 million payment.

Alexco has received US$15 million of the US$50 million payment and gets the rest in stages after it makes a production decision – a decision Alexco says it plans on making during the second or third quarter of 2009. Since October, 2008, Alexco has also raised $13 million through private placements.

Now with definition drilling complete at the East zone, Alexco says it has begun infill-drilling the Southwest and 99 zones and that in June it should initiate a 10,000 metre exploration drill program aimed at testing additional targets within the Keno Hill property.

The Keno Hill property, 330 km north of Whitehorse, comprises over 23,000 ha. of mining leases.

On news of the drill results Alexco’s share price gained 3¢ to close at $1.44. The company has about 43 million shares outstanding.