Alexco produces first concentrate at Keno Hill silver mine in Yukon

Vancouver-based Alexco Resource (TSX: AXU; NYSE-AM: AXU) has successfully commissioned the mill at its Keno Hill silver mine in the Yukon, with production of initial concentrates underway.

Keno Hill consists of four deposits, including the past-producing Bellekeno underground mine, which is the initial source of ore for mill commissioning and production.

“Initial commissioning of our mill is a significant milestone on our journey toward establishing Alexco as Canada’s only primary silver producer,” said Alexco CEO and chairman Clynton Nauman in a news release. “This achievement has only been possible with the hard work and determination of all our employees and contractors who have worked safely to deliver this milestone.”

Nauman added the company is still working on the rampup and development of its Bermingham and Flame and Moth deposits, which will sequentially replace Bellekeno as the source of mine feed over the first half of 2021.

Full production at the 400 tonne per day plant is expected in the first quarter.

The focus of current work at the Bermingham and Flame and Moth deposits is the advancement of primary ramps and haulage ways, establishing vent level access, and completing the installation of underground infrastructure.

The company reports that most of the surface infrastructure is nearly complete, including the recently commissioned Bermingham water treatment plant.

With more than 150 employees and contractors currently onsite at Keno Hill, about 350 km north of Whitehorse, contact raise crews are scheduled to join them in early December to start the installation of a surface raise at Bermingham.

The company has completed a 7,600-metre drill program to test for mineralization beneath defined resources at Bermingham. Results are expected over the next two months.

A prefeasibility study released in March 2019 projected that Keno Hill will have an eight-year mine life based on underground mining from the Bellekeno, Bermingham, Flame & Moth, and Lucky Queen deposits. Pre-production development costs were pegged at a low $23.2 million and the operation is expected to produce an average of 4 million oz. silver per year in concentrate. The existing 400 tonne per day mill will be expanded to 550 tonnes per day in year three.

The study projected an after-tax internal rate of return of 74.2% and a net present value of $101.3 million using a silver price of US$15.75 per oz. for the first two years, and US$18.25 for the remainder of the mine life.

The project contains total probable reserves of 1.2 million tonnes at a diluted grade of 804 grams silver per tonne, 2.98% lead, 4.13% zinc and 0.34 gram gold per tonne for 30.5 million contained oz. silver.

Alexco originally put the Bellekeno mine at Keno Hill in production in 2011, but suspended the low-tonnage operation after silver prices dropped in 2013.

This article first appeared in the Canadian Mining Journal, part of Glacier Resource Innovation Group.