Keno City spokesman Bob Wagner says he'll keep an open mind when it comes to future discussions with Alexco Resource Corp.

But as far as he is concerned, the company has already burned its bridge to good relations with residents of the historic mining town.

In an interview last week following his meeting with Alexco chief Clynton Nauman, Wagner said he and Nauman agreed to explore options to resolve their differences.

"What he (Nauman) said is Alexco is open to discuss any issues with us and what we have decided is we will sit down and talk until we agree to disagree or come to a resolution," said the spokesman for the Keno City residents opposed to the companies mining plan.

"There is the possibility of negotiation."

Wagner and Nauman were having a second meeting today in Keno City, Alexco vice-president Rob McIntyre confirmed Tuesday.

Alexco is advancing plans to restart mining at the Bellekeno deposit for the first time in three decades. The proposal involves building a mill facility at Christal Lake, some five kilometres from the mine site, but closer than a kilometre from Keno City and the 25 or so residents who live there.

It's currently seeking the required water and mining licences. The application is under review by the Mayo office of the Yukon Environmental and Socio-economic Assessment Board.

The Bellekeno project currently has an estimated mine life of five years, at 250 tonnes a day for the first two years, and 400 tonnes per day for years three, four and five.

There's been no final decision by the board of directors, though the financing is in place and all indications point to the project proceeding in a mineral market where silver prices are still very much favourable.

Today, for instance, silver is selling for $12.82 per ounce. Alexco maintains it can produce an ounce of silver at Bellekeno at $1.96 per ounce.

The company currently employs about 75; one third of which are working at the Bellekeno mine site.

"It will go up to about 130 this summer if we are building, and we assume we are."

Under the current time table, he said, the company wants to be in production a year after the decision is made to proceed.

"If it is July this year that we make our decision to proceed, then July next year we are in production, is the plan.

McIntyre pointed out while the current period for public comment is scheduled to end April 22, as a result of recent meetings with assessment officials, Alexco fully expects an extension to the public review period will be issued.

The project has generated a number of comments, from both sides of the fence.

Wagner and the Keno City Advisory Council remain adamantly opposed to certain aspects of the project proposal, particularly the site selected for the mill. Residents, the community spokesman suggested, are ready to go the distance with the opposition - even into court if need be.

McIntyre, on the hand, insisted in a recent interview that the company wants to work closely with residents to address their concerns, and is confident they can get back to constructive dialogue.

But there are economic and environmental realities in play which cannot be ignored, the company spokesman said.

Wagner, as a longtime miner who moved to the Keno silver district in 1972 to work underground, is not opposed to mining at Bellekeno. In fact, he pointed out, he was coming on dayshift at Bellekeno back in the mid-1980s when they first struck the ore body.

Insa Schuttenkotter, his wife and business partner in their Keno tourist cabins, is not against mining. Nor are the community members, Wagner insisted.

For a number of reasons, however, they remain intensely opposed to having a processing mill virtually next door, as they see it.

It's same distance from the train station on Main Street to the Gold Rush Inn, he said.

"I paced it."

Wagner said up until his meeting with Nauman last week, there was only one way to address the concerns: move the proposed mill to the site of the old mill in Elsa, just another 11 kilometres down the road.

The Keno spokesman said he still sees Elsa as the solution, though his commitment to Alexco is to keep an open mind, which means the willingness to look at other options.

On the other hand, he pulls no punches with his insistence that Alexco has fallen far short of the mark as a solid corporate citizen attempting to identify and address local concerns.

Nowhere in its 450-page submission to the environmental assessment board is there mention of Keno City and its residents.

Keno City, Wagner emphasized, stands right between the mine site and proposed mill location.

How, Wagner wondered, can a company do a comprehensive assessment and not even make mention of a community they practically have to walk through every day to do business.

"Over and over again, there is no recognition Keno City is even there."

Residents have several health and safety concerns related to the proposal for a new dry tailings area next to Christal Lake, some 800 metres away, he said.

Wagner said there's no question dust from the tailings will blow through town, though there is no mention in the project proposal of the toxicity the tailings will have.

Another pile of tailings means another contaminated site for the environment, in a mining district already full of contaminated sites, he said.

Wagner cited several primary concerns that are simply not addressed in the Alexco proposal.

Keno residents, he said, accept that whatever happens - even under their best case scenario - they'll lose a significant portion of the tourism business they've built up since United Keno Hill Mines shut down 20 years ago.

The community's history, they acknowledge, is mining.

He insisted, however, that residents shouldn't have to give up everything - their quality of life - just because Alexco wants to minimize its ore haul and maximize its profits.

The situation, said the Alexco vice-president, is not that cut and dried.

McIntyre said shortening the distance from the mine to the to mill reduces costs, and makes Bellekeno more resistant to blimps in the commodity market.

The additional cost of trucking the ore to Elsa could move it to the marginal category, where the production decision would be much more susceptible to fluctuations in the price of silver, he said.

McIntyre said on a more complicated note is the issue of liability for past environmental sins.

If Alexco uses an existing tailings site, it essentially inherits the financial liability to care for that site, he explained.

Otherwise, McIntyre noted, the liability stays with Ottawa.

A handful of companies - before Alexco came along - tried for several years to get control of the United Keno Hill assets after the company went bankrupt in 2001, when Ottawa declared the properties abandoned and took over care and maintenance of water treatment facilities.

The federal government insisted that if any company wanted the remaining silver resources, it would have to take on the financial responsibility for 80 years of environmental

liability.

There have been 42 large and small mining projects in the district over the decades, and three distinct areas for tailings.

Ottawa finally gave in, and allowed Alexco to take over the silver properties in 2006 without assuming full responsibility for the liabilities. The company was required to contribute $14 million toward the cost of reclamation and clean-up, which was estimated several years ago at $65 million. It's expected a closure and cleanup plan will be finalized by the end of this year.

McIntyre said if Alexco chooses to use a former tailings site, or if it chooses to try and reprocess tailings to recover metals left behind by old technology, it then assumes full financial responsibility for caring for the tailings.

More plainly, if Alexco uses a former tailings area, it could be assuming millions of dollars in liability that current Bellekeno economics could not support, he said.

McIntyre said the company will obviously take take full responsibility for what it does, but it's just not practical or economical to assume financial responsibility for the primary tailings area at Elsa. Cleaning up the Elsa tailings has been estimated by an independent company at $21 million, he said.

McIntyre explained last week that Alexco wants to re-establish a trusting relationship with the residents of Keno.

He recognizes the Yukon has had its share of big players who've come and gone with a whole lot of benefit in their pocket while leaving behind a whole lot of grief for Yukoners.

Alexco's United Keno project, McIntyre emphasized, has a management team which includes longtime Yukoners who are here to stay, like himself, like his business partner, Dan Cornett.

Nauman has been involved with Yukon projects for years, including the Brewery Creek gold project that has been held out as a model example of responsible reclamation, he said.

McIntyre said the Alexco team is here for the long haul, not only to oversee reclamation of the Keno silver district, but to identify and mine more ore bodies in addition to Bellekeno. He wants to assure Keno City residents and Yukoners in general the company is a team player.

Alexco wants to establish a level of trust in which local residents can believe the company will strive to do what it says, McIntyre said.

When Alexco says it will build a mill that won't be heard in the community 800 metres away, he wants locals to accept the company will do everything it can to do just that.

Alexco, he pointed out, is committed to building a bypass road around the townsite, and to anything else that would put local concerns to rest.

McIntyre noted Alexco looked at nine different sites for a mill, and finally settled on Christal Lake, on the exact same site as the Mackeno mill site back in the 1950s.