Yukon North Of Ordinary

News archive for June 3, 2013

Layoffs cover a wide spectrum of professions

Alexco Resource Corp. has announced layoffs for its Keno Hill operation, citing the recent decline in silver prices as the driving factor.

By Chuck Tobin on June 3, 2013 at 3:20 pm

Alexco Resource Corp. has announced layoffs for its Keno Hill operation, citing the recent decline in silver prices as the driving factor.

The company said 30 positions or roughly one-quarter of the workforce are affected, approximately half of which are currently vacant.

The layoffs include some support staff in the Whitehorse and Vancouver offices.

As well, the company’s three most senior executives will also be taking a pay cut of 20 per cent, says a press release issued Friday afternoon.

Clynton Nauman, Alexco’s chief executive officer, said this morning from Vancouver the layoffs affect a wide spectrum of company employees.

“They range all the way from technical professionals, the geologist type positions, through to plant and equipment operators,” he said.

Nauman said Alexco is also reducing the requirement for underground contract miners employed by Procon Mining and Tunnelling by 33 positions.

Alexco is postponing plans to bring the Onek and Lucky Queen deposits into production until prices rebound, Nauman said.

Production will continue at the Bellekeno mine and mill in Keno City, he added.

He said the Onek deposit is also affected by the downturn in zinc prices, since the deposit is a mix of zinc and silver.

Some experts are forecasting a turnaround in prices in the short term, in six months or so.

Others say the lower prices are here for at least the rest of 2013 and maybe into 2014, Nauman said.

“I think the thing to keep in mind is that we were structured for eventually two mines and perhaps three mines to be in production this year.”

Nauman said Alexco is also looking carefully at staffing levels for its environmental assessment company, Access Consulting.

Access has between 25 and 27 staff members.

While there’s enough work to keep everybody through the summer field season, Alexco will have to see what the fall brings, he said.

Raising financing for exploration and development has become more difficult.

The level of exploration in the Yukon is expected to fall dramatically this year compared to recent years.

Victoria Gold announced recently it would not be proceeding this year as planned with the construction of its open pit gold mine at Dublin Gulch northeast of Mayo because of the cost of financing.

Alexco intends to carry through with this year’s exploration program, having already put together the financing of $3 million to $5 million, Nauman said.

He said Alexco’s target is to produce a couple million ounces of silver every year.

So a drop on the commodity market of just $1 per ounce equals $2 million in lost revenue, he said.

Nauman said from the time Alexco went into commercial production in January 2011 until last March 31, it sold its silver for an average price of $32.50 an ounce.

Today, he pointed out, silver is selling at about $22 per ounce, amounting to a $20-million-plus impact on the company.

Nauman said some companies are able to stockpile silver while waiting for the price to rebound.

“We are certainly not in that position,” he said. “We need to be selling our product on a regular basis, as most people do.”

In the press release, Nauman said: “While there are some that believe precious metals prices will rebound in the near term, we believe it is only prudent to do what we can to weather this period of lower prices.

“These measures are very painful to implement, as they will impact the lives of all our employees in one way or another, but hard as it is, I believe it is the only appropriate action to take given current conditions.”

The Keno Hill Silver District produced more than 217 million ounces between 1922 and 1988.

In 1988, the production stopped, with silver prices in the neighbourhood of $5 an ounce.

The community of Elsa eventually turned into a ghost town.

United Keno Hill Mines Ltd. continued water treatment over the years but went bankrupt. The federal government stepped in after it declared the operation abandoned in January 2001.

Alexco secured rights to the property through bankruptcy proceedings, partially in exchange to look after the site, and assist Ottawa with putting together and implementing a reclamation plan.

The company’s Bellekeno operation is Canada’s largest primary silver mine.

Following the 1989 closure of the United Keno Hill Mines, the price of silver remained relatively stagnant at $4 to $5 an ounce through the 1990s and into the early 2000s.

It began to climb in 2004, alongside the rising price of gold, according to commodity records.

By 2006, silver had broken through the price of $10 per ounce, and continued to climb. In mid-2010, it punched through $20 per ounce, and continued to climb.

In January 2011, silver was trading above $30, and in April of 2011, it peaked at around $49 per ounce.

If fell back to below $30 for a time last year, but in January of this year, it was back trading at $32, but began to fall slowly.

CommentsAdd a comment

Jackie Ward

Jun 4, 2013 at 1:55 pm

This is how dangerous mining is to our economy. One days its rainbows and puppy’s. The next is this. What happens if this occurred in the Peel? Oops, maybe next time eh? Betting the farm on mining in the Yukon is a huge gamble. And it usually ends up costing people their jobs. The short sighted vision of YTG and everything mining needs to change. What about the residents of Mayo? Look at what they went through. For what? A couple years of employment then metal prices drop and everyone leaves? I guess this has a silver lining for some of them living there. No pun intended.

Joel

Jun 4, 2013 at 4:20 pm

So, what you are saying is, it is a job like any other job…just higher paying.  15 people were laid off while roughly 70 are still employed.

I am missing where the government is short sighted based on a company’s payroll situation.

Just Say'in

Jun 4, 2013 at 11:04 pm

Come on Jackie…. None of this would be here, nor would any of the government jobs if it had not been for mining. The tent would be folded and we would be back to a population of three thousand. Value added jobs are where it is at. Always has been and always will be.

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