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Description

CANADA'S ONLY PRIMARY SILVER MINE

Long Section
Long Section
MINING

Bellekeno began commercial production at the beginning of 2011 and produced about 2 million ounces of silver during its startup year. Mine production was approximately 1.4 million ounces of silver in the first three quarters of 2013. Alexco recently announced an interim suspension of operations at Bellekeno in order to decrease costs and reposition the District for long-term, sustainable operations. Significant amounts of lead and zinc are also mined at Bellekeno.

Successful exploration in 2012 and 2013 has indicated good potential to replace some of the resource already mined and extend the mine plan, once operations are re-initiated. An updated recalculation of the resource at Bellekeno is anticipated during 2013.

It took just three years from initial exploration, through permitting, construction and development for Alexco to put Bellekeno into operation, a feat rarely seen in the mining industry. As a result, the Company's founders, Chief Executive Officer Clynt Nauman and Chief Operating Officer Brad Thrall, were named the recipients of the 2011 E.A. Scholz Award for Excellence in Mine Development. This prestigious AME BC award recognized them for their technical skills, environmental control expertise and cooperative relationship with the local Na-Cho Nyak Dun First Nation.

Bellekeno's initial mine plan was to utilize the cut-and-fill method of mining, however, the mine began to transition over to long-hole mining once enough field experience with the ground conditions was obtained. Bellekeno began producing ore from long-hole stopes in 2011, which was the first time this mining method was attempted in the history of the District.

In places where large blocks of ore are identified and the adjoining rock is relatively competent, then a long-hole mining method is generally the lowest-cost mining technique. Alexco was able to begin using this method with a targeted approach in some areas of the mine, successfully lowering costs and increasing production output at Bellekeno in the latter part of 2012.

MILLING

The processing mill at Keno Hill has been ramping up toward full capacity over the past two and a half years of operations, and in the third quarter of 2013 hit a record average throughput of 321 tonnes per day. The nameplate capacity of the mill is 400 tonnes per day, with the Bellekeno mine expected to provide around 200 to 250 tonnes per day of feed, when in operation.

The mill, located approximately 4.5 kilometers from the Bellekeno mine, uses conventional crushing, grinding and flotation processes, followed by concentrate and tailings dewatering. The tailings are filtered and either used as backfill for the mine or stored in a dry stack tailings facility, ensuring the highest environmental integrity at the site. The mill produces both lead and zinc concentrates, which are transported by truck in specially designed, environmentally protective metal pods to Alaska, shipped by barge to Seattle and then taken by truck to a smelter in southern British Columbia for treatment and refining.

FLOW CHART ILLUSTRATING MINERAL EXTRACTION AND MILLING PROCESS
FLOW CHART ILLUSTRATING MINERAL EXTRACTION AND MILLING PROCESS

SILVER PURCHASE AGREEMENT
The Bellekeno mine and mill were built at a cost of C$61 million, including US$50 million provided by Silver Wheaton Corp. as part of its 2008 silver purchase agreement with Alexco. In return, Alexco is selling Silver Wheaton 25% of the payable silver produced from the Keno Hill District at a price of $3.90 per ounce. The agreement does not include any of the lead, zinc or other by-product production.