The mood at the Bellekeno mine this week is “heartbreaking,” according to the president of Alexco Resource Corp.
Clynt Nauman was on site Wednesday to announce a winter shutdown for the Keno silver mine.
“It’s a very somber and sobering thing to have to do,” said Nauman. “I think it’s a prudent decision, however.”
The shutdown will result in layoffs for 72 Alexco employees and a similar number of people employed by subcontractors, he said.
Among the Alexco employees, 41 are Yukon residents, said Nauman.
Activity will be phased down beginning in September, and the mine should be shut completely some time in October, he said.
The move was in response to silver prices that have fallen sharply over the past several months.
The cost per ounce has fallen to under $20 U.S. this month, compared with around $32 U.S. six months ago.
The company plans to spend the winter looking at ways to save money on the underlying costs of production and preparing for a re-opening in spring 2014.
Alexco will also begin the environmental assessment for the Flame & Moth deposit.
“We’re not walking away from the property, obviously. There’s a tremendous asset there, and I’m just hoping that we can engineer and restructure all of these components and issues and get this thing back in production in 2014.”
However, if the economics don’t improve, the mine won’t start up again.
“If we’re not able to engineer our costs to be below the price of silver then if we went back into production it wouldn’t be sustainable,” said Nauman. “So it would be a bad decision, we wouldn’t do it.”
The shutdown will hit business owners in Keno, the tiny community less than a kilometre from the mill site.
The town has about 20 permanent residents.
“There has been a lot of talk about shutting down,” said Mike Mancini, owner of the Keno Snack Bar.
“The reality of it was definitely a bit of a shock.”
The town and his business have seen economic benefits from Alexco’s presence over the last few years, he said.
“They’ve been building up for a long time,” said Mancini.
In the longer term, the shutdown will mean slower growth for the community, he said.
But James Milley, who co-owns the Sourdough Cafe, is ambivalent about the shutdown.
He supports mining in the area, but thinks industrial activity needs to be kept away from the community, he said.
“Nobody wanted to see the mines not going into operation, we just didn’t want an industrial park in our townsite, and it didn’t need to be here.”
He first moved to Keno in 1974, when there was no mining activity, and has therefore never been dependent on mines, he said.
But with all the companies that have come and gone over the years, Alexco’s presence marks the first time that mining has overruled community interests so thoroughly, he said.
“This is, as far as I’m concerned, the most bizarre political decisions I’ve ever seen in my life being made here.
“The government is the one I hold fully to blame for this. They took no stance to even consider the people that lived here. They were too busy selling out to the mining industry.
“I’ve been here a long time - mining is always a flash in the pan. It’s considered gravy. When it’s here, you make a little extra money, but if you start breaking down the infrastructure and driving people away from the region that live here in the first place, you’re going backwards, you’re not moving forward.”
He wants the government to force industrial activity out of the townsite, or agree to buy out residents for their homes and businesses, he said.
The Sourdough Cafe has been on the market for less than the cost of renovations for a year with no takers, said Milley.
“It really upsets me knowing that every time I invest more money in my business that I’ll probably never ever see it again.”
Contact Jacqueline Ronson at
jronson@yukon-news.com