Keno’s pure silver lining

The Keno Hill silver mine may re open by 2010, providing about 120 jobs for five years, if Alexco Resource Corp. has its way.

The Keno Hill silver mine may re open by 2010, providing about 120 jobs for five years, if Alexco Resource Corp. has its way.

The company struck a deal last week with Silver Wheaton Corp. that ought to provide most of the money needed to bring the mothballed mine back into production.

The deal, which gives Alexco $50 million, should help shelter the company from turmoil in the financial markets, said president and CEO Clynton Nauman.

The falling cost of commodities, such as steel and oil, may also benefit the junior mining company if it decides to re open the mine, he said.

Silver prices may plunge, but that is less of a concern due to the purity of the metal at the site, he said.

Alexco bought the mine from the Yukon government in 2006, on the condition it spend about $10 million to clean up the site.

According to the company’s current projections, the mine could produce 93,500 kilograms of silver, 13.6-million kilograms of lead and 11-million kilograms of zinc over its estimated five-year life.

The company hopes to firm up its resource estimates by early 2009, at which point it will decide whether or not to move forward with reopening the mine.

The deal with Silver Wheaton gives Alexco $15 million over the next three months. The remaining $35 million is to be paid in monthly installments once the company decides to develop the mine.

In return, Silver Wheaton has rights to one-quarter of the silver produced by the mine.

The total cost of starting up the mine is expected to be $61.2 million. That includes about $10 million already spent by Alexco.