VANCOUVER, Nov. 13, 2018 /CNW/ - Alexco Resource
Corp. (NYSE American:AXU) (TSX:AXR) ("Alexco" or the "Company")
today reports financial results for the third quarter ended
September 30, 2018. All figures
are expressed in Canadian dollars unless otherwise stated.
For the third quarter of 2018 Alexco recorded a net loss of
$1.5 million ("M") or $0.01 per share.
Third Quarter Highlights
Corporate
- Overall, Alexco reported a net loss of $1.5 M ($0.01 per
share) for the three month period ended September 30, 2018 and a loss before tax expense
of $370,000 including non-cash income
adjustments totalling $714,000.
- The Company's cash and cash equivalents at September 30, 2018 totaled $14.1 M compared to $17.9
M at December 31, 2017, while
net working capital totaled $14.1 M
compared to $18.7 M at December 31, 2017. The Company's restricted cash
and deposits at September 30, 2018
totalled $2.6 M compared to
$7.1 M at December 31, 2017.
Mine Operations and Exploration
- During the quarter Alexco continued advancing the underground
ramping system at the Flame & Moth deposit. By October 31st, the Company had
completed the targeted Flame & Moth underground development
program for 2018 with 452 meters ("m") driven in total, comprising
371 m of linear decline advance and
81 m included in supporting
infrastructure.
- During the quarter, Alexco completed the underground and
surface infill and extension drilling campaign at the Bermingham
deposit. The 2018 program was a combination of 4,213 m in 24 holes completed underground from
the Bermingham exploration decline and 4,369
m in 12 holes completed from surface for a total of
8,582 m of HQ diamond core drilling.
Results were released on August 9,
2018 and September 17, 2018,
and included true width intercepts of the Bear and Bermingham Veins
ranging up to 12.28 m grading 1,019
g/t (32.8 ounces per tonne ("oz/t")) silver in hole BMUG18-012 and
4.17 m grading 5,373 g/t (172.8 oz/t)
silver in drill hole BMUG18-015.
- On September 20, 2018 Alexco
announced an updated and expanded mineral resource estimate for the
Bermingham deposit. The indicated mineral resources expanded from
17.3 M ounces to 33.3 M ounces of contained silver at an average
silver grade of 628 grams per tonne ("g/t"), while inferred mineral
resources increased from 5.4 M ounces
to 10.4 M ounces of contained silver
at an average silver grade of 526 g/t.
- The Company has been advised that the likely timeline to
complete the currently active Water Use Licence ("WUL") process
(which includes authorization for water use and waste deposition
from the Bermingham deposit) will be later in the second quarter of
2019. This is a delay of approximately five months in the
originally targeted timeline for receipt of the renewed WUL.
Accordingly, the Company has elected to extend the timeline to
complete a pre-feasibility study ("PFS") into Q1 2019, allowing
additional time for the Company to work with its independent
consultants to optimize mine design and district mining strategies
including strategies related to extraction of the expanded silver
resource in the Bermingham deposit.
- During the quarter, the Corporation completed a total of
15,390 m of surface exploration
diamond drilling (including the 4,369
m in 12 holes at Bermingham noted above) focused on testing
further extensions of known silver resources and deeper structural
zones in the vicinity of the Bermingham deposit along with
preliminary testing of other mineralized structures in the historic
No Cash – Townsite mine areas adjacent to the Hector-Calumet Mine,
as well as fault offsets of the mineralized structure(s) on the
western side of the major post-mineral Brefalt Fault. Other
drilling was completed at the Black Cap prospect on Keno Hill, as
well as on two other property areas subject to third party option
agreements. Comprehensive results from the balance of the 2018
surface drilling campaign are expected to be available in late
Q4-2018.
Alexco Environmental Group
- Alexco Environmental Group ("AEG"), recognized revenues of
$4,669,000 in the third quarter of
2018 for a gross profit of $1,780,000
achieving a gross margin of 38% compared to revenues of
$3,786,000 for the third quarter of
2017 for a gross profit of $1,545,000
achieving a gross margin of 41%.
Alexco's Chairman and Chief Executive Officer Clynt Nauman said, "I am very pleased with the
progress we have made internally to advance Keno Hill back towards
production. Factors beyond our control have slowed our schedule but
we remain steadfast in our target of re-establishing silver
production in 2019, market conditions considered. Earlier this year
we set aggressive goals for our summer underground development and
surface exploration programs, all of which have been achieved. Most
importantly our recent exploration successes at the Bermingham
deposit, essentially doubling the size of the indicated resource at
unchanged silver grade, will provide an opportunity to revisit the
overall silver mining strategy for the district. It is also
pleasing to see the growth in our AEG business, which I expect will
continue to add value alongside our Keno Hill district development
strategy."
Keno Hill Exploration and Development
2018 Flame & Moth Development
During the quarter the Company continued advancing the
underground ramping system at the Flame & Moth deposit. On
October 31st, the
Corporation completed the targeted Flame & Moth underground
development program for 2018 with 452
m driven including supporting remuck bays and sumps.
Approximately 336 m of ramp and
infrastructure development remains to reach the first ore level
access at the Lightning Zone. In addition, a 100 m ventilation raise to surface will be
required before commercial ore production can be achieved.
Completion of the remaining ramp development, raise and
infrastructure is pending completion of an optimized mine plan as
part of the PFS.
The Flame & Moth decline is being constructed at a design of
15% grade and sized 3.7 m wide x
4.0 m high and will accommodate new
underground drilling headings as well as haulage up to 250 to 400
tonnes of ore per day to the primary crusher which is located
within 200 m of the mine portal.
Exploration
i. 2018 Advanced Exploration Program -
Bermingham
In May 2018 the Company completed
the 550 m advanced exploration
decline at the Bermingham deposit and from established underground
drilling stations, completed an underground drilling program
designed to provide 10 – 15 m spaced
intercepts in the upper portion of the high grade Bear Vein.
The underground drilling program was completed with 4,213 m in 24 holes in late August, with most
holes being extended beyond the Bear Vein to also intersect the
adjacent mineralized Bermingham and Bermingham Footwall
veins.
At the same time, surface drilling continued to infill and
extend mineralization in areas peripheral to the resources with a
total of 4,369 m completed in 12
holes.
Initial 2018 results from this underground drilling campaign
were announced on August 9, 2018 (see
news release dated August 9, 2018,
entitled "Alexco Drills up to 12 Meters (true width) of 1,019 grams
per tonne Silver at Bermingham Deposit, Provides Update on
Permitting and Underground Development") and further results were
announced on September 17, 2018 (see
news release dated September 17,
2018, entitled "Alexco Drills Intersects 4.3 Meters (Tue
Width) of 3,605 Grams per Tonne Silver at Bermingham, Completes
Underground Infill/Exploration Drill Program").
The drill results confirm the previously anticipated silver
grades and vein thickness with significant intercepts reported such
as the Bear Vein over a 4.29 m true
width grading 3,605 g/t (115.91 oz/t) silver in hole BMUG18-018 and
12.28 m grading 1,019 g/t (32.8 oz/t)
silver in hole BMUG18-012. Other significant intercepts were
reported from the associated Bermingham and Bermingham Footwall
veins including 4.17 m true width
grading 5,373 g/t (172.8 oz/t) Ag in hole BMUG18-015.
ii. Updated Mineral Resource Estimate -
Bermingham
The results from the 2017 and 2018 exploration drilling programs
were incorporated into the updated and expanded mineral resource
estimate for the Bermingham deposit prepared by SRK Consulting
(Canada) Inc. ("SRK") and
announced on September 20, 2018 (see
news release dated September 20, 2018
entitled, "Alexco Updates Bermingham Mineral Resource").
The indicated mineral resources expanded from 17.3 million
ounces to 33.3 million ounces of contained silver at an average
grade of 628 g/t silver, while inferred mineral resources have
increased from 5.4 million ounces to 10.4 million ounces of
contained silver at an average grade of 526 g/t silver. This
updated and expanded mineral resource estimate will be used as the
basis for the PFS currently being prepared.
iii. 2018 Other Exploration Areas
In October 2018 the Company
completed its 2018 surface exploration program as planned, drilling
a total of 15,390 m in 55 drill holes
(including the 4,369 m in 12 surface
holes at Bermingham noted above).
In addition to the exploration drilling that was focused on the
Bermingham prospect, other generative programs were undertaken on
historically mined sites at the Husky, No Cash, Townsite, Eagle,
Bellekeno South and Black Cap occurrences with 24 holes completed
in 7,865 m. The assay results from
these holes are pending and are expected in December 2018.
A new exploration initiative was undertaken to explore the
western side of the major post-mineral Brefalt Fault to locate
indication of the offset part of the Bermingham vein, with
1,986 m completed in five drill
holes, and the results are pending.
At the Flame & Moth deposit, an additional 11 drill holes
for 1,170 m were completed for
metallurgical sampling and geotechnical purposes.
In addition, during the quarter the Company completed a high
resolution helicopter EM-Magnetic geophysical survey totalling
1,100 line kilometers over the Galena Hill area. The data is
currently being processed and when available will assist with
geological interpretation and correlation of known mineralized
structures and to identify new prospective zones.
Permitting Update:
Alexco has the requisite permits and authorizations for future
ore production from the Bellekeno, Flame & Moth, Lucky Queen,
and Onek deposits. Permitting for ore
production from the Bermingham deposit is ongoing with a positive
Decision Document issued by the Yukon Government on July 27, 2018. The Decision Document outlines a
number of standard terms and conditions for development and mine
production from the Bermingham deposit.
With the issuance of the Decision Document, Alexco submitted a
water license amendment and renewal application to the Yukon Water
Board for processing and milling ore and discharging treated water
from the Bermingham mine.
The Company had originally expected the final permits for
operations at the Bermingham deposit to be awarded in Q1 2019.
Subsequent delays in the Yukon
permitting process have extended the time expected for award of
final permits to the end of the second quarter of 2019.
Pre-feasibility Study
During the quarter the Company continued to work with
independent consultants on the PFS. As a result of delayed
permitting timelines in the Yukon,
Alexco has chosen to take further time completing the PFS which is
now anticipated in the first quarter of 2019. The PFS will address
optimization of underground development and mining strategies for
the restart of commercial mining operations in the KHSD, including
strategies related to extraction of the recently expanded
Bermingham resource.
Financial
Alexco's cash and cash equivalents at September 30, 2018 totaled $14.1 M compared to $17.9
M at December 31, 2017, while
net working capital totaled $14.1 M
compared to $18.7 M at December 31, 2017.
With its cash resources and net working capital on hand at
September 30, 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 third quarter of 2018 AEG recorded revenues of
$4.7 M and a gross profit of
$1.8 M for a gross margin of 38%,
compared to revenue of $3.8 M and a
gross profit of $1.5 M for a gross
margin of 41% in the third quarter of 2017. The increase in gross
profit during the 2018 period was primarily due to services
provided to US customers that utilized a higher portion of internal
labour.
Under the contract with the Government of Canada on the historical cleanup at Keno Hill,
Alexco's wholly owned subsidiary, Elsa Reclamation and Development
Company Ltd. ("ERDC"), submitted the Existing State of Mine
Reclamation Plan for environmental assessment application by the
Yukon Environmental and Socio-economic Assessment Board. In
addition, ERDC continued with detailed engineering related to the
closure plan.
Financial Report and Conference Call for Third Quarter 2018
Results
Full details of the financial and operating results for the
third quarter ended September 30,
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 Wednesday, November 14, 2018. To
participate in the live call, please use one of the following
methods:
|
Dial toll free from
Canada or the US:
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1-800-319-4610
|
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Dial from outside
Canada or the US:
|
1-604-638-5340
|
|
Conference
ID#:
|
Ask to join the
Alexco conference call
|
|
Live audio
webcast:
|
www.alexcoresource.com
|
|
|
|
|
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.
|
To receive, free of charge, printed copies of Alexco's financial
statements, management's discussion and analysis, annual
information form and Form 40-F for any reporting period,
shareholders may contact Alexco's Corporate Office directly.
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 Neil
Chambers, P.Eng., Mine Superintendent, both who of who are
Qualified Persons as defined by National Instrument 43-101 ‑
Standards of Disclosure for Mineral Projects.
About Alexco
Alexco owns the majority of the historic high-grade Keno Hill
Silver District in Canada's
Yukon Territory as detailed in its
preliminary economic assessment (the "PEA") entitled "Preliminary
Economic Assessment of the Keno Hill Silver District Project,
Yukon, Canada", which is dated
March 29, 2017, with an effective
date of January 3, 2017, and anticipates the sequential
development of four high grade silver deposits over an eight year
mine life producing more than one million tonnes with an average
grade of 843 grams per tonne silver, 3.3% lead and 4.6% zinc.
Silver production is anticipated to be approximately 3.5 million
ounces per year. The PEA is preliminary in nature and includes
inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves, and
there is no certainty that the PEA will be realized. Mineral
resources that are not mineral reserves do not have demonstrated
economic viability.
Alexco also operates a wholly-owned subsidiary business, Alexco
Environmental Group, that provides mine-related environmental
services, remediation technologies and reclamation and mine closure
services to both government and industry clients in North America and elsewhere.
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.