NEW YORK, May 21 -- Teck Resources Ltd., Canada's largest base-metals producer, plans to proceed with excavation of a zinc deposit at its Red Dog mine in northwest Alaska after "constructive" talks with U.S. regulators.

Development of the Aqqaluk deposit will go forward while discussions continue with the U.S. Environmental Protection Agency on renewal of the site's main water-discharge permit, Vancouver-based Teck said today in a statement. The company in February said it may cease output unless an agreement on the permit was reached by the end of May.

"Teck is getting more confident they're going to get Aqqaluk into production," Orest Wowkodaw, a Toronto-based analyst at Canaccord Financial Inc., said in an interview.

Red Dog's economic lifespan depends on development of the Aqqaluk deposit because the main pit at the mine is almost depleted. Aqqaluk has 51.6 million tons of reserves, containing 16.7 percent zinc and 4.4 percent lead, or enough metal to extend the life of Red Dog by about 20 years, according to the company's website.

Teck's plans for the Aqqaluk deposit were stalled after environmental and Alaskan tribal groups appealed the EPA's decision to renew the discharge permit for the site.

"Red Dog could have been a game-changer for zinc if the permit had been denied," Daniel Major, a London-based analyst with Royal Bank of Scotland, said today by e-mail.

Teck fell 72 cents, or 2.2 percent, to C$31.96 at 4:10 p.m. in Toronto Stock Exchange trading. The shares have declined 13 percent this year.