Geotech_Earlug_2015_VTEM_Colour3.pdf 1 2015-09-25 9:59:47 AM
VTEM™ ZTEM™ Gravity Magnetics Radiometrics Data Processing Interpretation
Short Road to Silver Production/Earning TSX.V: GRG www.goldenarrowresources.com
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ALMADEN MINERALS
TERRAX MINERALS
New milling strategy for Ixtaca / 3
DIAMOND FORECAST
Takes aim at Yukon City Gold targets / 11
Relief in the long term? / 16
JANUARY 4-10, 2016 / VOL. 101 ISSUE 47 / GLOBAL MINING NEWS · SINCE 1915 / $3.99 / WWW.NORTHERNMINER.COM
Alexco finds silver lining at Keno with Flame & Moth SITE VISIT
| New discoveries in iconic mining district
Mining the unexpected RESOURCE MODELS |
‘Poor geology’ to blame for production shortcomings
BY MATTHEW KEEVIL mkeevil@northernminer.com KENO CITY, YUKON
BY LESLEY STOKES lstokes@northernminer.com VANCOUVER
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here’s a wealth of history in the Yukon’s Keno Hill mining district, and Alexco Resource (TSX: AXR; NYSE-MKT: AXU) is out to prove there’s a lot of silver left to discover across its large land package, 330 km north of Whitehorse. The company shuttered underground operations at its Bellekeno mine two years ago, but new discoveries just might inject life into the famous region in the southern Klondike. Driving through the abandoned mining town of Elsa on the way to Alexco’s site offices, it’s evident just how prolific the historic United Keno Hill mine must have been at its peak. The dilapidated cottages and apartment buildings observe the old township through blank windows, as a mud-stained tour van takes a sharp turn past a crumbling elementary school and community centre. In the 1950s, Elsa hosted the second-largest silver producer in Canada and the fourth-largest in the world. According to the Yukon government, between 1913 and 1989 Keno Hill produced more than 217 million oz. silver and hosted 35 mine sites. The history of the district plays a role in Alexco’s story, since it acquired a 235 sq. km land position surrounding Keno under an agreement with the government, which requires it clean up largescale environmental liabilities left behind by previous operators. The company is a bit of an anomaly in the mining industry, since it isn’t strictly focused on exploration, development and production. Alexco also operates an environmental consulting division that services
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Alan McOnie, Alexco Resource’s vice-president of exploration, at the Keno Hill polymetallic project in the Yukon.
clients across a number of sectors, including: mining, oil and gas, transportation, government and First Nations. President and CEO Clynton Nauman explains during an interview that the environmental side of Alexco’s business developed from management’s previous experience working with major companies like Rio Tinto (NYSE: RIO), which led to expertise and connections for remediation, permitting and social licence. “We’re a mining company in one regard, but we’re also operating a profitable environmental division with a large — and growing — group of professionals who give us a real strategic advantage,” Nauman says. “We have technologies we’ve applied, and as a result we’re recog-
nized by all levels of government on the environmental side. Keno Hill is a great example of how building those relationships can result in great opportunities in the mining business.” In fact, Alexco’s environmental group has shouldered most of its cash generation during the downturn in the mining sector. The company reported revenue from environmental remediation totalling $15 million in 2014 — with a 33% profit margin — and estimates it has $100 million in backlog environmental contracts, including work at Keno Hill. Alexco recently completed a contract with the U.S. Environmental Protection Agency involving an interim water-treatment facility at the Gold King mine
PHOTO BY MATTHEW KEEVIL
near Silverton, Colo. The abandoned operation was the site of a high-profile spill in August that impacted the Animas River. “Few people are buying our stock based on this profitable environmental business that is, in essence, subsidizing our investment in highgrade silver mining,” Nauman says. “The plan is two build up both businesses alongside each other, but eventually ... we’ll be forced to split things up. It will advance to a point where we’ll be forced to capitalize each unit separately, because our investors will be involved for different reasons,” he adds. But the cash made from the environmental division has helped Alexco stay capitalized in tough
hen the “geological complexity” of their orebodies forced Rubicon Minerals’ (TSX: RMX; NYSE-MKT: RBY) to suspend development production at its Phoenix gold mine in Red Lake, Ont., and Goldcorp (TSX: G; NYSE: GG) to lower production at its Éléonore gold mine in Quebec, it brings to question whether miners today are fully prepared to handle the unexpected when it comes to mine geology. Jean-François Couture, a corporate consultant from SRK Consulting, says the ability of mining companies to predict the nature of their orebody has “evolved tremendously” over the past decade — but a poor geological understanding can weaken or even break any resource model. “We now have tools that are far GEOLOGY / 13 PM40069240
See ALEXCO / 2
MINERAL EXPLORATION ROUNDUP 2016 JANUARY 25 – 28 • CANADA PLACE, VANCOUVER, BC REGISTER TODAY AT amebc.ca/roundup
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