Alexis keeps busy with Lac Herbin and Snow Lake

This year will be busy one for Alexis Minerals (AMC-T) as it fixes the operating Lac Herbin gold mine in Val-d’Or, Que., and moves the Snow Lake gold mine in Manitoba closer to production.

Francois Perron, the company’s CEO and president, says that “2012 will be the year of consolidating the [Lac Herbin] operation.” He explains that he plans to take Lac Herbin from a struggling operation to a profitable mine.

To get there, Alexis is working through a $6-million plan devised last year to turn around the operation.

Since June 2011, the mine has seen a “development blitz” to reposition the underground development with more flexibility, Perron says.

“We’ve done extra development so we could have more production stopes open at all times. This will give us flexibility so we can have time to adjust to the mining conditions as we open new areas.”

By March 2012, two more stopes will bring total stopes to five. As part of the plan, Alexis will bump Aurbel mill’s recovery rate to 92%, up from 89.3%.

Work at Lac Herbin is “tracking nicely,” Perron says, adding that the mine should receive positive cash flow late in the year.

Last year, the company estimated Herbin would produce 15,000 oz. to 20,000 oz. gold in 2012. Perron says he will refresh guidance later this month.

“The biggest objective I have and the focus of the company is to complete the financing to get the Snow Lake mine project up and running,” he says.

Alexis completed a $10-million bridge loan to help it get through the next couple of months while it secures funding for Snow Lake.

The bridge loan will also be used to repay a $2.1-million convertible debenture. Alexis anticipates closing the loan by June.

Perron says he’s targeting first production at Snow Lake in 2013, given that he receives financing this quarter and construction goes as planned.

“The construction [at Snow Lake] is more of a development effort underground because the mill that was operating in 2005 is still there, and it’s in very good shape,” Perron says. “So there’s a refurbishment of surface infrastructure, but it’s not as extensive as building a whole new operation.”

Alexis estimates the upgrade will cost $40.7 million and could take up to 18 months.

Kinross Gold (K-T, KGC-N) and High River Gold (hrg-t) ran Snow Lake, formerly known as the New Britannia mine, as a joint operation that produced 822,550 oz. gold from 1995-2005.

Kinross gained its 50% stake through a 2003 merger with TVX Gold.

Snow Lake has 1.44 million oz. gold in historic production from 11 million tonnes grading 4.67 grams gold per tonne. The ounces were recovered from the main mine, No. 3 zone and Birch deposits.

Based on an October 2010 feasibility study on the Main mine and No. 3 zone, Alexis aims to harvest 83,000 oz. gold a year for five years.

Alexis expects the mine’s life will increase with the drilling it completed last year.

The company drilled 42,786 metres and spent $8 million in 2011 to explore “what opportunities arise from consolidation of Snow Lake properties.”

On Jan. 12, the company reported 13,700 metres in program results.

Perron says the drilling supports Alexis’ proposed mining plan in the Upper Main mine area, and has revealed extensions to the targeted mining areas.

“I still think there is a lot of potential in exploration. But the most value to be unlocked in the near-term is by fixing the Val-d’Or operation, which is underway and on schedule, and getting the Snow Lake mine off the ground,” Perron says.

The company will release resource updates for both projects soon.