Race heats up for territory's next mine

The race to become the next operating mine in Yukon Territory is heating up as two projects, Alexco Resource Corp.'s Bellekeno silver project and Yukon Zinc Corp.'s Wolverine volcanic massive sulphide project, appear to be running neck and neck as they enter the home stretch.

Currently, Yukon Territory has only one operating mine, the high-grade Minto copper-gold mine, which began commercial production in October 2007. Owned by Minto Explorations Ltd., a subsidiary of Capstone Mining Corp, the open pit mining operation is located 240 kilometers north of Whitehorse near the Yukon River.

Minto produces copper concentrates with significant gold and silver credits. The concentrates are exported via the Port of Skagway to smelters in Asia.

Both Alexco and Yukon Zinc have targeted the third quarter of 2010 to bring on line their respective mining operations, putting themselves in a dead heat to become Yukon's second operating mine.

"It's still a tight race," said Mike Burke, a senior geologist at the Yukon Geological Survey. "Alexco and Yukon Zinc have about the same timeline. The way it looks, by the end of 2010, we're going to have three operating mines in Yukon Territory."

Alexco eyes 400 t/d operation

At Bellekeno, Alexco recently completed a positive development plan for the silver-lead-zinc Bellekeno mine in east-central Yukon Territory and gained approval from all stakeholders to move forward with the project's development. Yukon government regulators gave the project a preliminary green light in July after a socioeconomic and environmental review, and issued a quartz mining license for the project to Alexco Nov. 18.

Bellekeno is located in the prolific Keno Hill Silver District where numerous small deposits produced more than 217 million ounces of silver between 1921 and 1988 with average historical production grades that would rank Keno Hill in the top 3 percent by grade of modern global silver producers.

The plan outlines a project with a pre-tax net present value to Alexco of C$31.9 million over an initial mine life of about four years. Based entirely on indicated resources, Alexco has estimated life-of-mine metal production to total about 8.6 million ounces silver, 65.2 million pounds lead and 35.2 million pounds zinc.

Processing will use a standard lead and zinc differential flotation process, incorporating dry stack tailings technology, with the processing plant carrying a design capacity of 408 metric tons per day. Average LOM recoveries are estimated to be 95.8 percent silver, 96.9 percent lead and 88.4 percent zinc to produce about 42,043 dry metric tons of lead-silver concentrate and 29,293dt of zinc-silver concentrate over the life of the mine.

Mining and milling operations will be year-round at a base-plan production rate of 250 t/d, increasing to 400 t/d. A mining contractor will use predominantly cut-and-fill mining methods augmented with some minor shrink stoping to optimize high-grade mineralization extraction and reduce dilution, according to Alexco.

In early 2009 Alexco completed a decline that accesses the historic Bellekeno workings for an extensive underground resource drilling program as well as to rehabilitate the historic infrastructure, re-establish mine ventilation and provide a secondary escape. The access also has allowed direct geotechnical study and assessment of ground conditions in the resource body, enabling development of a robust strategy for ground control management.

Total construction and development capital to achieve commercial production is estimated to be C$41.6 million, including a contingency factor of about 16 percent. Of this, US$35 million (C$38.0 million at an estimated exchange rate of US$0.92) will be funded by Silver Wheaton Corp. under its silver purchase agreement with Alexco.

Alexco said its construction and development schedule in the development plan anticipates initial mine and mill production beginning in June 2010.

About 83,000 metric tons of zinc-rich inferred resources in the lower East zone not included in the mine plan represent potential to expand the minable resource base along with a number of resource expansion and exploration targets already identified near the existing minable resource. The highest priority of these targets will be tested in the first half of 2010, during the mine development period.

Yukon Zinc plans underground mine

At Wolverine, meanwhile, Yukon Zinc is targeting startup in mid-2010 of a mining operation roughly four times the size of Bellekeno. Two Chinese companies, Jinduicheng Molybdenum Group Ltd. and Northwest Nonferrous International Investment Co. Ltd., purchased the Vancouver, B.C.-based miner in 2008. Since then, Yukon Zinc has quietly advanced development of the Wolverine Project as an underground mine that will produce 1,700 metric tons per day of run-of-mine feed. Current reserves provide for a 9.5 year mine life that could be extended by an additional 3 years with fill-in drilling of inferred resources.

In tests, the fine- to medium-grained Wolverine ores responded well to standard flotation processing and readily produced zinc, copper and lead concentrates with moderate to high recoveries of both base and precious metals. The copper and lead concentrates are particularly enriched in gold and silver.

From the Wolverine site, three concentrates will be produced for shipment to Asia and will be trucked to Skagway or to Stewart, BC for ocean transport to smelters in Asia or to the rail head at Fort Nelson for smelters in eastern Canada.

The Wolverine Project also has received all of its major permits and construction is ongoing in 2009. The Yukon government approved a detailed design for a tailings storage facility for the proposed underground zinc-silver-copper-lead-gold mine in April, and a new 205-person camp was installed near the mine site in May.

In October, Yukon Zinc said the steel framing and cladding for the mill buildings has been underway since early August and the last sections of the mill roof have been completed. Mine staff and contractors will work through this fall and into spring 2010 to install electrical, piping and mill equipment inside the buildings.

Underground, Yukon Zinc completed work on opening up a fresh air vent raise and contractor Procon Mining's crews have tunneled into ore and continue to prepare the underground for mine start up in mid-2010.

Yukon Zinc also said the tailings dam geomembrane liner installation has been completed ahead of schedule, marking a significant step towards completion of the tailings facility.

A Procon worker died Oct. 19 from internal injuries sustained while working underground at Wolverine after a vehicle that he had parked on an incline rolled over him. Yukon Zinc shut down the project temporarily while the company and the Yukon government investigated the incident.

Others will come online after 2010

Of Yukon's other mine projects, the centrally located Carmacks Copper Project is the most advanced. Developer Western Copper Corp. has a secured quartz mining license from Yukon regulators and anticipates receiving a water license in early 2010. After a projected 20-month construction period, the open pit Carmacks Copper Mine would produce 14,500 metric tons (32 million pounds) per year of cathode copper for six years.

"We could see them make a production decision in 2010 and be in production in 2011," Burke said. "And a number of others could pop up quickly."

The other advanced project currently making progress is North American Tungsten Corp. Ltd.'s Mactung Project located 160 kilometers, or 96 miles, north of its Cantung Mine on Yukon Territory's eastern border with Northwest Territories. The miner asked the Yukon Environmental and Socio-Economic Assessment Board in October to approve a plan to build and operate an underground tungsten mine with an 11-year lifespan at Mactung, which is estimated to contain 33 million metric tons of ore averaging 0.88 percent tungsten oxide. If approved, construction would begin in 2010, and mining could begin by 2013.

Both mine projects would employ about 150 workers each.