The PFS details an operation to process 430 tonnes per day (154,000 tonnes per year) from probable reserves of 1.2Mt grading 804 grams per tonne of silver, 2.98% lead, 4.13% zinc and 0.34g/t of gold for 30.5Moz of contained silver, with recoveries of 95.6% silver, 88.6% lead and 73.6% zinc. Over its mine life, Keno Hill will produce about 27.2Moz of silver, 67.2Mlb of zinc, 65.4Mlb of lead.

"This is a high-grade plan. There is a significant resource that isn't in the mine plan that will convert into reserves as we go forward," said chairman and CEO Clynton Nauman during a PFS conference call, indicating the company sees much more than the eight-year mine life in the PFS.

The initial capital cost is estimated to be C$23.2 million including $17.9 million of surface and underground development costs to reach mill commissioning plus $5.3 million of net working capital for two months of mill operations ramp-up prior to positive cash flow.

The project will yield an estimated after-tax net present value of $101.3 million at a 5% discount rate and after-tax internal rate of return of 74% based on an average silver price of US$17.90 per ounce. At current spot metal prices, it yields an after-tax NPV of $79.9 million and an after-tax IRR of 57% with payback in 27 months.

"The results of the PFS reflect the exceptional asset we have in Keno Hill and demonstrate a robust high-margin primary silver operation that can produce about four million ounces of silver per year. The operational and economic metrics of the PFS show an improvement over the September 2018 preliminary economic assessment in nearly all categories.

"With the results of the PFS now in hand, we are now on a clear path to production at Keno Hill," said Nauman in a statement.

The PFS includes existing mineral resource estimates for the Flame & Moth, Bellekeno, Lucky Queen and Onek deposits, and an updated resource estimate for the Bermingham deposit. The mine plan is based on the Flame & Moth and Bermingham deposits with production contributions of 60% and 30%, respectively, with supplemental production sourced from Bellekeno and Lucky Queen.

Compared to the PEA, the PFS features increased tonnes and reduced development under an optimised mine plan for Flame & Moth. At Bermingham, it includes a 65% or 142,000t increase to the mine plan following 2018 exploration success.

The Bermingham mineral reserve only incorporates one-third of its current indicated mineral resource, providing scope for upside at the deposit, which will be a focus of ongoing mine optimisation and expansion studies. Alexco plans to drill up to 8,000m at Bermingham this year focusing underneath and along strike of the Northeast Zone.

"Exploration has been tremendously successful for us with a discovery cost of about 50 cents per ounce. We will focus exploration at Bermingham as we see greater short-term opportunity there than elsewhere," said Nauman in the PFS conference call.

Development plan

With over 1,000m of development at Flame & Moth and Bermingham, Alexco is in a position to initiate mill operations and achieve concentrate production within five to seven months after making a production decision.

"We will begin the ramp-up with surface work and mill upgrades. Our strategy is to just develop and operate two mines at the same time. BelleKeno is under care and maintenance and so we will start at Flame and Moth first. We won't make a final decision to pull the trigger on underground development until we have a high level of confidence on the timing of receiving the water license," said president Brad Thrall during the conference call.

The Keno district mill facility has a nameplate capacity of 408tpd and employs conventional crushing, grinding, differential flotation and dewatering processes to produce a lead-silver concentrate, a zinc concentrate and a filtered tailings product. The mill was previously commissioned in 2011 and operated for three years and has been under care and maintenance since 2014.

Prior to resumption of mill operations, an additional 1.8m-by-3m, 150kW ball mill would be installed to provide expanded grinding capacity ahead of the flotation circuit. Additional tailings filtering capacity and concentrate regrind mills will also be installed prior to mill commissioning.

All of the regulatory approvals required for mining and processing activities associated with the Bellekeno, Lucky Queen and Flame & Moth deposits are in place. An amendment to the Quartz Mining License and Water Use Licence are required for mining and processing activities associated with the Bermingham deposit, both of which are underway and expected later this year.

Shares in Alexco (TSX:AXR) opened down almost 5% at C$1.61 valuing the company at $183 million. Its share price has increased about 24% so far this year.