Similarly, the district mill saw improved throughput and metallurgical performance. In May, the milled approximately 5,750 tonnes of ore, representing an approximate 19% increase over the previous month. The mill operated for 16 days, nine of which operating at throughput above the nameplate capacity of 400 t/d. The metallurgical performance continued to be robust, with over 93% total silver recoveries to concentrate and in excess of 16,300 g/t silver in the lead concentrate.
Still, while the underground performance improvements are notable, and the demonstrated supply of 150-250 t/d of ore to the mill has been important, Alexco notes that results to date suggest the rate of improvement in the advance of underground development remains insufficient to achieve the necessary number of production headings to sustain 400 t/d feed to the mill before the end of 2022.
To rectify this imbalance, the company has decided to temporarily suspend milling operations for 5-6 months and to focus all efforts on advancing underground development. After this development period is complete, it anticipates accessing, cross-cuttin, and having available a total of approximately 120,000 tonnes of ore inventory grading 1,050 g/t silver at the Bermingham and Flame & Moth mines by the end of 2022.
Ore extraction and milling operations will restart in January 2023, and with its anticipated production, cash self-sufficiency should be achieved within the first quarter of 2023, Alexco said. The company estimates that more than 4 million oz. of silver will be delivered as ore feed to the district mill in 2023.
“As previously indicated in May, our operations ramp-up plan is running well behind schedule,” said Clynton Nauman, chairman and CEO of Alexco. “At this juncture we have enough information to determine that the rate of improvement in underground performance is not sufficient to reach a sustainable 400 t/d and cash self sufficiency in 2022.
“This refocusing of operations is the right decision and it is unquestionably in the best interest of the mine and the company as a whole. The alternative of continuing to operate under the status quo with slowly improving ore deliveries to the mill for the balance of 2022, only serves to diminish the benefit of extremely high-grade ore,” Nauman explained.
Given the transition of operations activities to an interim development focused plan, additional financing will be required. As June 22, 2022, the cash position of Alexco is approximately C$14 million with negative working capital of approximately C$4.5 million. In April, the company announced a C$13.1 million financing to support the ramp-up of mining operations at Keno Hill.
The final scope, cost and timing of the interim development-only plan, and the subsequent transition back to full mill operations with concentrate shipments in January 2023 remains under review. Additionally, the company will continue to evaluate all financing and strategic options available to enhance the value of Keno Hill.
Located 350 km north of Whitehorse, Keno Hill is considered one of the largest silver districts in the world, comprising numerous mineral deposits and more than 35 historical past-producing mine sites. Between 1913 and 1989, the district produced over 200 million oz. of silver with average grades of 1,368.55 g/t, making it the second-largest historical silver producer in Canada.
Alexco made the decision to restart development and production at Keno Hill in 2020, beginning with ore extraction from the Bellekeno mine and recommissioning of the district mill it previously built. Concentrate production and shipments have already begun.
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