VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 3, 2008) - AlexcoResource Corp. (TSX:AXR)(AMEX:AXU) ("Alexco" or the "Company") ispleased to announce that it has entered into a silver purchaseagreement with Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) ("SilverWheaton") under which Silver Wheaton will purchase 25% of the life ofmine silver produced by Alexco from its Keno Hill Silver District inCanada's Yukon Territory. The agreement anticipates that the initialsilver deliveries will come from the Bellekeno property at Keno Hill.Alexco is currently undertaking mine development work at the Bellekenoproperty, which is also the subject of a recent preliminary economicassessment report (see the Alexco news release dated July 9, 2008entitled "Alexco Releases Positive Preliminary Economic Assessment onBellekeno Deposit").
Alexco will receive an up-front deposit payment from Silver Wheatonof US$50 million, plus a further payment of the lesser of US $3.90(increasing by 1% per annum after the third year of full production)and the prevailing market price for each ounce of silver delivered.US$15 million of the up-front payment will be made in two trancheswithin the next 30 to 90 days as certain conditions are completed. TheUS$15 million will fund ongoing underground development, definitiondrilling and continued exploration of the Bellekeno resource as well asother work required to refine and complete engineering studies. Theremaining US$35 million will be paid on a monthly draw-down basis tobuild out the Bellekeno mine infrastructure and processing facility,commencing once Alexco has made a positive development decision andsubject to certain other conditions including Alexco having sufficientcommitted funds available to complete construction and achieveproduction within specified time frames.
As announced in the July 9, 2008 news release, therecently-completed preliminary economic assessment of the Bellekenodeposit estimated the total capital required to achieve production,including initial working capital and a 25% contingency, to be CAD$61.2million, including CAD$10 million of underground development work thatAlexco has now already partially completed. The base case pre-taxassessment indicated a net present value of US$87 million at 8%, aninternal rate of return of 55.5% and a pay-back period of 1.6 years,based on metal prices of US$11.69 per ounce for silver, US$1.24 perpound for zinc and US$0.81 per pound for lead. The assessmentanticipates a project with average annual mine production of 3.3million ounces of silver, 30.1 million pounds of lead and 24.5 millionpounds of zinc over an initial 5 year mine life.
"Alexco is excited to have Silver Wheaton as a partner in theresumption of mine development activity in the historic Keno HillSilver District," said Clynt Nauman, President and CEO of Alexco. "Thisagreement provides Alexco the capital to develop the Bellekeno depositwhile continuing district wide exploration, and to do so withoutdiluting shareholder equity. The silver stream delivered to SilverWheaton under this agreement represents less than 15% of the potentialrevenue stream from the Bellekeno deposit, which we believe will be thefirst of several silver rich deposits to be explored and developed inthis district. To have completed this agreement with Silver Wheaton ina time of unprecedented turbulence in the financial markets isespecially important to the continued growth and development of Alexco."
Keno Hill Silver District History
Between 1921 and 1988, the Keno Hill district produced more than 217million ounces of silver with average grades of 40.5 ounces per tonsilver, 5.6% lead and 3.1% zinc (Yukon Government's Minfile database).The historical production grades would rank Keno Hill in the top 3% bygrade of today's global silver producers. The Keno Hill district is thesecond-largest historical silver producer in Canada.
About Alexco
Alexco's business is to unlock value and manage risk at mature,closed or abandoned mine sites through integration and implementationof the Company's core competencies which include management ofenvironmental services, execution of mine reclamation and closureoperations and if appropriate, rejuvenation of exploration anddevelopment activity.
Some statements in this press release contain forward-lookinginformation. These statements include, but are not limited to,statements with respect to the entering into of agreements, the closingof transactions and the expenditure of funds. These statements addressfuture events and conditions and, as such, involve known and unknownrisks, uncertainties and other factors which may cause the actualresults, performance or achievements of to be materially different fromany future results, performance or achievements expressed or implied bythe statements. Such factors include, among others, the timing oftransactions, the ability to fulfill certain conditions, the ability toraise funds and the timing and amount of expenditures.
FOR FURTHER INFORMATION PLEASE CONTACT:
Alexco Resource Corp.
Clynton R. Nauman
President and Chief Executive Officer
(604) 633-4888
(604) 633-4887 (FAX)
Email: info@alexcoresource.com
Website: www.alexcoresource.com
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