Alexco Announces Positive Pre-Feasibility Study for Expanded Silver Production at Keno Hill Silver District
Press Release
March 28, 2019 – Alexco Resource Corp. (NYSE American: AXU, TSX: AXR)(“Alexco” or the “Corporation”) is pleased to announce the results of an independent pre-feasibility study (“PFS”) on its 100% owned Keno Hill Silver project (“Keno Hill” or the “Project”) in Yukon, Canada.
Highlights of the PFS:
Note that all dollar amounts referenced herein are in Canadian dollars (“CAD”) unless indicated otherwise.
- Project pre-tax and after-tax net present value (“NPV”) is $136.4 million (“M”) and $101.3 M (5% discount rate), respectively, and pre-tax and after-tax internal rate of return (“IRR”) is 84% and 74%, respectively, at an assumed average life of mine (“LOM”) silver (”Ag”) price of US$17.90 per ounce (“oz”).
- At current spot metal prices1 and USD/CAD foreign exchange rate, the project has a pre-tax and after-tax NPV of $101.7 M and $79.9 M (5% discount rate), respectively, and a pre-tax and after-tax IRR of 63% and 57%, respectively.
- LOM average annualized mine production is projected to be 154,000 tonnes (“t”) per year over an approximately eight (8) year project life at an average feed grade of 804 grams per tonne (“g/t”) Ag, 2.98% lead (“Pb”), 4.13% zinc (“Zn”) and 0.34 g/t gold (“Au”).
- Total payable metals in concentrate are approximately 27.2 M oz of Ag, 67.2 M pounds (“lbs”) of Zn, 65.4 M lbs of Pb over an eight (8) year mine life. Average annualized contained silver in concentrate is 4.0 M oz per year, based on full production years.
- Initial capital costs are estimated to be $23.2 M comprised of $17.9 M of surface and underground development costs to reach mill commissioning plus an additional $5.3 M of net working capital for two (2) months of mill operations ramp-up prior to positive cash flow.
- Total sustaining capital (including underground development and property, plant and equipment (“PP&E”)) is estimated to be $76.5 M, which excludes the initial capital of $23.2 M. Direct operating costs of $321/t of ore are estimated over the LOM.
- Upon achieving commercial production, Alexco has calculated all-in sustaining costs (“AISC”) (contained Ag, by-product basis) over the LOM to be US$11.98/oz of Ag. At current spot prices1> over the LOM, the calculated AISC is US$10.86/oz of Ag.
Footnote:
- Current spot prices are calculated as of March 22, 2019 using the following assumptions: Ag US$15.46/oz, Au US$1311.30/oz, Pb US$0.9187/lb, Zn US$ 1.2961/lb and USD/CAD exchange rate of $0.75.
Alexco Chairman and CEO, Clynton Nauman, commented, “The results of the PFS reflect the exceptional asset we have in Keno Hill and demonstrate a robust high margin primary silver operation that can produce approximately four million ounces of silver per year. The operational and economic metrics of the PFS show an improvement over the previous preliminary economic assessment (“PEA”) in nearly all categories including a higher NPV, increased annual silver production, reduced capital requirements, improved operating costs and productivities, increased mine tonnage and throughput, lower LOM AISC and an impressive IRR. With the results of the PFS now in hand, we are now on a clear path to production at Keno Hill.”
Pre-Feasibility Study
The PFS includes existing mineral resource estimates for the Flame & Moth, Bellekeno, Lucky Queen and Onek deposits, and an updated resource estimate for the Bermingham deposit. In addition, mineral reserve estimates are provided for assessment of underground mining operations for all of the deposits with the exception of the Onek deposit. The PFS was compiled by Mining Plus Canada Consulting Ltd. (“Mining Plus”) with contributions from a team of qualified persons and firms. The PFS assesses underground mining operations in all four (4) deposits, with two deposits in concurrent production at all times, feeding an existing conventional flotation mill to produce mineral concentrates containing silver, lead, zinc and gold.
IBF4
