Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Alexco Resource has tabled a prefeasibility study (PFS) for its wholly owned Keno Hills silver project, in Yukon, that assigns the project a $101.3-million after-tax net present value at a 5% discount-rate, and a 74% after-tax internal rate of return (IRR).
It assumes a life-of-mine $17.90 per oz. silver price.
Alexco expects the underground operation would process 154,000 tonnes per year over an eight-year life at 804 grams silver, 2.98% lead, 4.13% zinc and 0.34-gram gold. The project would produce 27.2 million oz. silver, 67.2 million lb. zinc and 65.4 million lb. lead.
Keno Hills would cost an initial $23.2 million: $17.9 million for surface and underground development, including mill commissioning, and $5.3 million for net working capital during the two-month mill ramp up.
Alexco expects the underground operation would process 154,000 tonnes per year over an eight-year life at 804 grams silver, 2.98% lead, 4.13% zinc and 0.34-gram gold
The project would require $76.5 million in sustaining capital, with $321 per tonne direct operating costs. It would operate at $11.98 per oz. silver all-in sustaining costs.
According to the study, the project’s Flame and Moth and Berminham deposits would contribute primarily to the mine’s production, on a 60% and 30% basis. Supplementary production would come from the Bellekeno deposit early in the mine’s life and from the Lucky Queen deposit later in the mine’s life.
Flame and Moth contains 704,211 probable tonnes grading 672 grams silver, 2.71% lead, 5.73% zinc and 0.49-gram gold for 15.2 million oz. silver.
Bermingham contains 362,343 probable tonnes at 972 grams silver, 2.59% lead, 1.32% zinc and 0.13 gram gold for 11.3 million oz. silver.
Bellekeno contains 40,109 probable tonnes at 843 grams silver, 11.9% lead and 6.31% zinc for 1.08 million oz. silver, while Lucky Queen contains 70,717 probable tonnes at 1,244 grams silver, 2.63% lead and 1.38% zinc and 0.12 gram gold for 2.8 million oz. silver.
In total, the project contains more than 30 million probable oz. silver.
Alexco shares are trading at $1.63 in a 52-week range of 92¢ to $2.14. The company has a $177-million market capitalization.
“With the results of the PFS now in hand, we are now on a clear path to production at Keno Hill,” company CEO Clynton Nauman said in a prepared statement.
(This article originally appeared in The Northern Miner)
