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BREWERY CREEK MINE
In addition to Alexco's flagship Keno Hill property, the Company maintains a strong portfolio of variable stage projects throughout the Yukon Territory, the most advanced of which is the Brewery Creek property. Located in northwestern Yukon, near Dawson City, the property was operated as an open-pit heap-leach mine by Viceroy Resource Corporation until 2002, when the mine was closed due to low gold prices. Alexco's senior management team completed reclamation of the mine in 2005, twice winning the DIAND Robert E. Leckie Award for outstanding reclamation. Long-term monitoring of the site is ongoing.
Exploration & Development Potential
The Brewery Creek mine produced approximately 280,000 ounces of gold from 9.5 million tonnes of ore in a run-of-mine oxide heap-leach operation. The site, comprising seven small open pits, has been reclaimed and exploration on the property has been rejuvenated in an effort to identify the sulfide facies or feeder zones to the oxide gold deposits.
Reinterpretation of the district conducted by a subsidiary of NovaGold during the summer of 2004 recognized significant similarities to NovaGold's world-class Donlin Creek deposit in Alaska. As at Donlin Creek, mineralization at Brewery Creek is related to a series of high-level porphyritic dikes and sills that intrude fine-grained sedimentary rocks, including carbonaceous shales, siltstones and sandstones. Mineralization seen as disseminated arsenopyrite and stibnite and alteration characterized by illite and clay is characteristic of both deposits.
At Brewery Creek, widespread mineralization occurs over 15 kilometers of strike length in a series of small, shallow, oxide gold deposits discovered and exploited by Viceroy. Exploration by Viceroy focused almost exclusively on identification of shallow oxidized deposits consistent with a heap-leach mining operation, and most of the exploration drilling was limited to depths of 50 meters or less. Viceroy did not test the potential for higher-grade sulfide resources deeper in the system.
In 2006, Alexco conducted an initial test of the Bohemian zone, a sulfide resource outlined by Viceroy during its tenure on the property. Drill assays from the program returned some excellent results, including 9.01 grams/tonne ("g/t") gold over 13.7 meters in drill hole BC06-126, and 8.5 g/t gold over 15.9 meters in drill hole BC06-127. These results confirm the presence of significant gold mineralization in a style and geologic setting analogous to Donlin Creek. Through September 2006, Alexco invested approximately C$700,000 at Brewery Creek for the 2006 work program.
NovaGold maintains a back-in and joint venture option on the property, which can be exercised after Alexco has spent a minimum of C$750,000. NovaGold's option requires an additional C$1.75 million in expenditures and a C$500,000 cash payment to Alexco to earn a 70% interest in any future sulfide facies gold resource and a 30% interest in any future oxide facies gold resource.
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