VANCOUVER, May 11, 2018 /CNW/ - Alexco Resource
Corp. (NYSE American: AXU, TSX: AXR) ("Alexco" or the
"Company") today reports financial results for the first quarter
ended March 31, 2018. All
figures are expressed in Canadian dollars unless otherwise
stated. For the first quarter of 2018 Alexco recorded a net
loss of $3.3 million ("M") or
$0.03 per share, which included
$2 M in depreciation, share-based
compensation expense and other non-cash costs. Alexco Environmental
Group ("AEG"), Alexco's environmental consulting business,
recognized revenues of $2.8 M with a
gross profit of $830,000. Alexco's
working capital position as of March 31,
2018 was $18.4 M.
First Quarter Highlights
- The Company's cash and cash equivalents at March 31, 2018 totaled $13.2 M compared to $17.9
M at December 31, 2017, while
net working capital totaled $18.4 M
compared to $18.4 M at December 31, 2017. In addition, the Company's
restricted cash and deposits at March 31,
2018 totalled $7.1 M compared
to $7.1 M at December 31, 2017. $6.3 M of the restricted cash was related to Keno
Hill reclamation security, subsequently restructured (see
below).
- Alexco Environmental Group ("AEG"), recognized revenues of
$2.8 M in the first quarter of 2018
and a gross profit of $830,000
achieving a gross margin of 30% compared to revenues of
$1.9 M in the 2017 period for a gross
profit of $549,000 achieving a gross
margin of 28%.
- On February 23, 2018, the Company
established a credit facility (the "Credit Facility") for up to
US$15 M with Sprott Private Resource
Lending (Collector), L.P. ("Sprott"). As of the date of this press
release, no amounts have been drawn down on the Credit
Facility.
Highlights Subsequent to the First Quarter
- Alexco announced completion of the Bermingham underground
exploration decline and the commencement of 5,000 meters ("m") of
infill and exploration drilling in and around the upper portion of
the Bermingham high grade silver deposit.
- $6.3 M of cash posted as security
for its Keno Hill property was replaced with a surety bond. The
surety instrument is collateralized with $2.3 M of cash, the balance of $4 M being reclassified to unrestricted
cash. In addition, security posted in cash in the amount of
$513,000 (US$398,000) has also been released to the
Company on issuance of a State of
Colorado "No Further Active Remediation" filing which
represents the final step in the successful completion of the
Globeville Smelter Project.
- Alexco's wholly owned US subsidiary, Alexco Water and
Environment Inc. ("AWE"), entered into a Master Services Agreement
with Colorado Legacy Land LLC to become the Operator of Responsible
Charge for the Schwartzwalder Mine and the former Cañon City
Uranium Mill reclamation and cleanup projects. These long-term
arrangements are expected to take more than ten years to complete
and are expected to generate revenue in excess of US$20,000,000 for AWE.
Alexco's Chairman and Chief Executive Officer Clynt Nauman said, "As we move through Q2 of
2018, the pace of our Keno Hill work has intensified with
accelerated work to complete the Bermingham decline, initiation of
a pre-feasibility study and continued mill refurbishment and
modifications in addition to planning the upcoming field season.
With the Bermingham decline completed, we are positioning two
underground drills to complete 5,000
m of infill and extension drilling of the high grade
Bermingham silver deposit. Concurrently our mining crews will
relocate to Flame & Moth where an additional 530 m of decline ultimately needs to be driven to
access the Flame & Moth deposit. As we move through Q2 we will
be very focused on market conditions, prevailing commercial terms
and final permitting progress as part of our disciplined approach
toward a final production decision."
Keno Hill Exploration and Development
Alexco's current focus is to re-start mining operations at Keno
Hill, subject to several considerations including commodity prices,
commercial arrangements and market conditions. Alexco has the
requisite permits and authorizations for future ore production from
the Bellekeno, Flame & Moth, Lucky Queen, and Onek deposits. In November
2017 a project proposal for environmental assessment was
submitted to Yukon Environmental and Socio-economic Assessment
Board ("YESAB") for future production and processing of ore from
the Bermingham deposit. With respect to the required Bermingham
authorizations, Alexco is seeing materially increasing timelines
for environmental assessment and authorization processes in the
Yukon and therefore anticipates a
delay in the issuance of the required amendments to Alexco's Water
Use License ("WUL") into Q1 of 2019.
2018 Surface Exploration Program
On May 7, 2018 the Company
commenced an expanded 15,000 m, $4
million surface exploration diamond drilling program that
will comprise at least 45 holes and start with two drills with a
third to be added mid-summer.
Following very successful exploration achievements in the 2013 –
2017 period, the Company in 2018 is slightly changing its
exploration strategy to identify new areas likely to host apparent
higher level silver-rich deposits (typified by the Bermingham
discovery), as well as initiating a new program targeting apparent
deeper level silver and base metal rich deposits (typified by the
historic Hector-Calumet deposit) containing upward of 50 million
ounces of silver. The historic Hector-Calumet mine located
approximately 1 km northeast of Bermingham produced
approximately 96 million ounces of silver at a reported grade of
1,090 g/t silver. The surface exploration program will
extend through to October 2018 with
results expected to be finalized in the fourth quarter of 2018.
2018 Underground Exploration Program
On May 1, 2018 the Company
commenced installation of two diamond drill stations and
mobilization of underground drilling equipment and crews to
complete an initial 5,000 m of infill
and exploration drilling at approximate 10
m centers for anticipated mining blocks in and around the
upper portion of the high grade Bermingham silver deposit. The
targeted in-fill area contains an estimated 110,000 tonnes of
potentially mineable ore with an estimated head grade of 1,560 g/t
silver, 4.2% lead and 2.2% zinc comprising the anticipated first
two years of production.
The majority of the targeted zone is in the newly discovered
Bear Vein, a steeply plunging approximately 3 m thick and
50 m wide zone of high grade silver mineralization which
"tops-out" approximately 160 m below surface and extends
230 m down dip where it remains open to depth. Some holes will
extend through the Bear Vein into the Bermingham Footwall Vein
which is similarly mineralized.
The proposed drilling program is scheduled to be completed in
July. Results from the 2018 underground drilling and the 2017
surface exploration drilling will be incorporated in a new
Bermingham resource calculation to be included in the
pre-feasibility study targeted for completion late in the third
quarter of 2018.
Financial
Alexco's cash and cash equivalents at March 31, 2018 totaled $13.2 M compared to $17.9
M at December 31, 2017, while
net working capital totaled $18.4 M
compared to $18.4 M at December 31, 2017. Included in working capital is
$4.5 million which was reclassified
to unrestricted cash subsequent to quarter end.
During the quarter, the Company established a credit facility
for US$15 M with Sprott. The key
terms include:
- Term of 3 years, Maturity Date – February 23, 2021
- Interest rate on funds drawn down: the greater of
-
- 7% plus US Dollar 3 month LIBOR
and
- 8% per annum, payable monthly
- Repayable in quarterly installments from October 31, 2019 through to the Maturity
Date
- Upon draw down of funds a 3% charge of the draw down is
charged
- 1,000,000 share purchase warrants were issued to Sprott with a
five-year term, an exercise price of $2.25 per share and a right by the Company to
accelerate the expiry date to 30 days following the closing price
of the shares exceeding $5.63 for
more than 20 consecutive trading days
- Repayable in whole or in part, without penalty, provided not
less than twelve (12) months of interest has been paid on any
outstanding amount
- The Company has the option to extend the availability period of
draw down from twelve (12) to eighteen (18) months by issuing to
Sprott 171,480 Alexco common shares.
With its cash resources and net working capital on hand at
March 31, 2018, Alexco anticipates it
will have sufficient capital resources to carry out all of its
currently-anticipated exploration programs and service the working
capital requirements of its exploration activity, environmental
services business and corporate offices and administration as
planned for the next twelve months.
Alexco Environmental Group and ERDC
In the first quarter of 2018 AEG recorded revenues of
$2.8 M and a gross profit of
$830,000 for a gross margin of 30%,
compared to revenue of $1.9 M and a
gross profit of $549,000 for a gross
margin of 28% in the first quarter of 2017. The increase in 2018
revenue was mainly attributed to the AEG initiating transition work
at the Schwartzwalder Mine and the former Cañon City Uranium
Mill.
Under the contract with the Government of Canada on the historical cleanup at Keno Hill,
Elsa Reclamation and Development Company Ltd. ("ERDC") completed
the Keno Hill Reclamation and Closure Plan and is preparing to
submit the document for environmental assessment as the first step
in the regulatory process leading to the final cleanup.
Alexco continues to pursue opportunities to expand its
environmental services business while ensuring that it limits
Alexco's balance sheet exposure to this actively growing
business.
Financial Report and Conference Call for First Quarter 2018
Results
Full details of the financial and operating results for the
first quarter ended March 31, 2018
are described in Alexco's interim condensed consolidated financial
statements with accompanying notes and related Management's
Discussion and Analysis. These documents and additional
information on Alexco, including its annual information form, are
available on Alexco's website at and on SEDAR at www.sedar.com and
on EDGAR at www.sec.gov/edgar.shtml.
Alexco is holding an audio webcast conference call to discuss
these results at 12:30 p.m. Eastern
(9:30 a.m. Pacific) on Monday, May 14, 2018. To participate in the
live call, please use one of the following methods:
Dial toll free from
Canada or the US:
|
1-800-319-4610
|
Dial from outside
Canada or the US:
|
1-604-638-5340
|
Conference
ID#:
|
Ask to join the
Alexco conference call
|
Live audio
webcast:
|
http://services.choruscall.ca/links/alexcoq120180514.html
|
Participants should connect five to ten minutes before the call.
The conference call will be recorded and an archived audio webcast
will be available at www.alexcoresource.com.
Qualified Persons
The disclosure in this news release of scientific and technical
information regarding exploration projects on Alexco's mineral
properties has been reviewed and approved by Alan McOnie, FAusIMM, Vice President,
Exploration, while that regarding mine development and operations
has been reviewed and approved by Scott
Smith, P.Eng., Mine Manager, both who of who are Qualified
Persons as defined by National Instrument 43-101 ‑ Standards of
Disclosure for Mineral Projects.
About Alexco
Alexco Resource Corp. holds the historical high grade Keno Hill
Silver District located in Canada's Yukon Territory. Employing a
unique business model, Alexco also provides mine-related
environmental services, remediation technologies and reclamation
and mine closure services to both government and industry clients
through the Alexco Environmental Group, its wholly-owned
environmental services division.
Please visit the Alexco website at www.alexcoresource.com
Some statements ("forward-looking statements")
in this news release contain forward-looking information concerning
Alexco's anticipated results and developments in Alexco's
operations in future periods, planned exploration and development
of its properties, plans related to its business and other matters
that may occur in the future, made as of the date of this news
release. Forward-looking statements may include, but are not
limited to, statements with respect to the future remediation and
reclamation activities, future mineral exploration, the estimation
of mineral reserves and mineral resources, the realization of
mineral reserve and mineral resource estimates, future mine
construction and development activities, future mine operation and
production, the timing of activities and reports, the amount
of estimated revenues and expenses, the success of exploration
activities, permitting time lines, requirements for additional
capital and sources and uses of funds. Forward-looking
statements are subject to a variety of known and unknown risks,
uncertainties and other factors which could cause actual events or
results to differ from those expressed or implied by the
forward-looking statements. Such factors include, among
others, risks related to actual results and timing of exploration
and development activities; actual results and timing of mining
activities; actual results and timing of environmental services
activities; actual results and timing of remediation and
reclamation activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined;
future prices of silver, gold, lead, zinc and other commodities;
possible variations in mineable resources, grade or recovery rates;
failure of plant, equipment or processes to operate as anticipated;
accidents, labour disputes and other risks of the mining industry;
First Nation rights and title; continued capitalization and
commercial viability; global economic conditions; competition; and
delays in obtaining governmental approvals or financing or in the
completion of development activities. Forward-looking
statements are based on certain assumptions that management
believes are reasonable at the time they are made. In making
the forward-looking statements included in this news release,
Alexco has applied several material assumptions, including, but not
limited to, the assumption that Alexco will be able to raise
additional capital as necessary, that the proposed exploration and
development will proceed as planned, and that market fundamentals
will result in sustained silver, gold, lead and zinc demand and
prices. There can be no assurance that forward-looking
statements will prove to be accurate and actual results and future
events could differ materially from those anticipated in such
statements. Alexco expressly disclaims any intention or obligation
to update or revise any forward-looking statements whether as a
result of new information, future events or otherwise, except as
otherwise required by applicable securities legislation.
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SOURCE Alexco Resource Corp.