Alexco Defines More High-Grade Silver At Keno

VANCOUVER — Underground definition drilling at Alexco Resource’s (AXR-T, 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 Bellekeno.

Many of the intercepts cut more than 1,000 grams silver per tonne over widths between about 0.5 metre 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 metres of 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 0.3 metre grading 1,695 grams silver, 0.62 gram gold, 0.84% lead and 2.56% zinc.

The goal of the drill 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. Operating at a capacity of between 250 and 400 tonnes per day, the study pegged Bellekeno’s life span at five years. 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 pretax internal rate of return of 55.5% and a net present value of US$87 million, based on three-year trailing metal prices at the time, which were: US$11.69 per oz. silver, US81¢ per lb. lead, US$1.24 per lb. zinc and US$625.60 per oz. 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 buy 25% of Keno Hill’s life-of-mine silver production at US$3.90 per oz. silver (or less, if the price of silver falls below US$3.90) and an additional US$50-million payment.

Alexco has received US$15 million of that payment and gets the rest in stages after it makes a production decision, which it expects to make during the second or third quarter. Since October 2008, Alexco has also raised $13 million through private placements.

With definition drilling complete at the East zone, Alexco says it has begun infill drilling the Southwest and 99 zones; in June, it plans to start a 10,000-metre exploration drill program aimed at testing additional targets within the Keno Hill property.

Keno Hill, 330 km north of Whitehorse, comprises more than 230 sq. km 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.