VANCOUVER, Nov. 9, 2016 /PRNewswire/ - Alexco
Resource Corp. (NYSE‑MKT:AXU, TSX:AXR) today reports financial
results for the quarter ended September
30, 2016. All figures are expressed in Canadian
dollars unless otherwise stated. For the third quarter of
2016 Alexco recorded a net loss of $640,000 or $0.01
per share, including $0.9 million in
depreciation expense, share-based compensation expense and an
unrealized loss on warrants held offset by a realized gain of
$1.3 million on the disposal of
shares held as an investment. Alexco Environmental Group ("AEG"), a
wholly owned subsidiary of Alexco, recognized revenues of
$3.2 million during the third quarter
of 2016 with a gross profit of $0.7
million, achieving a gross margin of 22%.
Third Quarter Highlights
- Improving and strong unrestricted cash position with cash and
cash equivalents at September 30,
2016 of $23.0 million and net
working capital of $25.0 million
compared to $8.2 million and
$12.6 million, respectively, at
December 31, 2015.
- At the end of October the Company completed its 2016 Bermingham
diamond drill program with 50 holes for a total of 17,300 meters
("m"). Interim drill results released on September 13, 2016 outlined a zone of high grade
mineralization beginning approximately 150m from surface and
extending down plunge approximately 250m including an intercept of
7.5m true width of 2,715 grams per tonne ("g/t") (87.3 ounces per
tonne ("oz/t")) silver (including 2.4m (true width) of 6,391 g/t
(205.5 oz/t) silver within the zone of down-plunge extension. Final
results from the Bermingham program are expected to be available in
the fourth quarter.
- 3,267,075 warrants were exercised for proceeds of $4.6 million.
- The Company sold investments in marketable securities for
proceeds of $1.5 million for a gain
of $1.3 million.
- A performance bond was released to Alexco in the amount of
$3.8 million (US$2.9 million) related to the AEG's Globeville
Smelter Project in Denver
Colorado.
- As of September 30, 2016 the
Company has spent all of the $3,001,125 flow-through funds raised.
Alexco's President and Chief Executive Officer Clynt Nauman said, "In the third quarter,
following the release of encouraging interim results in September,
we expanded our Bermingham surface drill program from 8,000 to
17,000 meters. Elsewhere at Keno Hill we continued with a mill
assessment and maintenance program and installation of the Flame
& Moth underground portal and drove the first 20 meters of the
production ramp. Pending the final results of the Bermingham drill
program, release of an updated Preliminary Economic Assessment and
continued strength in the silver market, we will be well positioned
by year end to consider redevelopment at Keno Hill."
Summary Financial Results and Information
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|
|
|
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|
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(expressed in
thousands of dollars, except per share amounts)
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Three Months
Ended
September
30
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Nine Months
Ended
September
30
|
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
|
|
Environmental
services revenue
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3,243
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3,408
|
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8,422
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10,534
|
|
|
|
|
|
|
Gross profit from
environmental services
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710
|
869
|
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1,985
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2,640
|
|
|
|
|
|
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Loss before
taxes
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(246)
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(1,986)
|
|
(2,388)
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(4,851)
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Net
loss
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(640)
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(1,649)
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|
(2,598)
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(4,007)
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Total
comprehensive loss
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(1,819)
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(1,834)
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(2,218)
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(4,498)
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Loss per share –
basic and diluted
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($0.01)
|
($0.02)
|
|
($0.03)
|
($0.06)
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Cash flows
consumed from operating activities
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(492)
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(1,483)
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(3,452)
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(3,486)
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Keno Hill Exploration
The Company has completed an exploration program of 50 drill
holes totalling 17,300m of surface diamond drilling to follow up on
prior identification of high grade silver results at the Bermingham
prospect. Approximately $3.3 million
was invested in the expanded exploration program, the majority
funded by way of a $3 million
flow-through financing in December
2015. The surface drilling program, initiated with two
drills and later expanded to three diamond drills, commenced in
June and completed in late October. The Company is expending
additional funds to gather important geotechnical and
hydrogeological information, as well as undertaking a preliminary
metallurgical program to test the Bermingham mineralization.
Interim drill results on 18 drill holes were released on
September 13, 2016 (see September 13, 2016 press release entitled "Alexco
Confirms, Expands High Grade Silver Zone at Bermingham Deposit;
Drilling Continues") and final results are expected to be available
in the fourth quarter.
Initial assay results confirmed and expanded the Bermingham high
grade zone (the "Bear Zone"), including a recent intercept of 7.5m
true width of 2,715 g/t (87.3 oz/t) silver (including 2.4m (true
width) of 6,391 g/t (205.5 oz/t) silver) from hole K-16-0608
drilled approximately 100m down plunge from the deepest intercept
reported in 2015. Overall, all other composite intercepts in the
high grade Bear Zone now range between 504 g/t to 7,462 g/t silver
over composited true thicknesses ranging from 1.3m to 6.4m.
The drill objectives at Bermingham were firstly to increase
confidence, most notably to infill and expand the previously
identified zone of high grade silver intercepts on the Bear Vein
with sufficient density to permit resource estimation; and
secondly, to explore up and down plunge of the high grade zone for
possible extensions to other favourable structural and
stratigraphic positions in which additional mineral deposition may
have occurred.
Keno Hill Silver District PEA
The Company plans to provide an updated National Instrument
43-101 compliant Preliminary Economic Assessment ("PEA") for its
100% owned KHSD in the fourth quarter of 2016 which will
incorporate the re-engineering and optimization of the mine plan
along with an updated mineral resource estimate for the Bermingham
deposit.
The Company expects a Water Use Licence amendment hearing to
occur in the first quarter of 2017, which is the final remaining
permit required to commence mining operations at the Flame &
Moth deposit.
Keno Hill Development Update
The Company continued with mill assessment and maintenance
programs during the quarter. Mechanical assessment and maintenance
of equipment is part of the routine process of maintaining the
crushing and milling equipment assets in a condition where
resumption of processing operations can be initiated if
warranted.
In October the Company completed installation of the underground
portal and infrastructure at the Flame & Moth deposit and drove
the first 20 meters of the production ramp. This will allow
resumption of development activities to begin at full scale in the
future. This ramp will ultimately be driven to the upper production
levels of the Flame & Moth silver deposit.
As a result of the Company filing an updated Reclamation and
Closure Plan for its current operations and the future development
of the Flame & Moth deposit, the Quartz Mining License ("QML")
required that Alexco increase its posted security from $4.2 million to $6.3
million. On July 26, 2016 the
Corporation posted the additional $2.1
million in cash for security and are currently working with
the Yukon Government to substitute a portion of the cash posted in
exchange for a pledge of assets.
Alexco Environmental Group
AEG recorded revenues of $3.2
million and a gross profit of $0.7
million, compared to revenue of $3.4
million and a gross profit of $0.9
million in the third quarter of 2016. The decrease in
gross profit from the prior period is mainly attributed to
unanticipated project related costs in the US as well as costs
associated with obtaining the release of the Globeville Smelter
Project performance bond.
At the Gold King Project in southern Colorado, the US
Environmental Protection Agency authorized an expansion of the
plant to approximately double the treatment capacity of the Interim
Water Treatment Plant. Construction related to this and further
upgrades are currently underway.
On the Globeville Smelter Project, a Completion Report, which
documents the work completed at the site and the monitoring
results, was submitted to the State of
Colorado in July. The Completion Report triggered the
release of $3.8 million to AEG with
the remaining $0.5 million to stay in
the performance bond for approximately 2 years.
Financial
Alexco's cash and cash equivalents at September 30, 2016 totaled $23.0 million compared to $8.2 million at December
31, 2015, while net working capital totaled $25.0 million compared to $12.6 million for the same dates. With its
cash resources and net working capital on hand at September 30, 2016, Alexco anticipates it will
have sufficient capital resources to carry out all of its
currently-anticipated exploration programs, environmental services
business and corporate offices and administration as planned for
2016 and 2017.
Financial Report and Conference Call for Third Quarter
2016
Full details of the financial and operating results for the
second quarter ended September 30,
2016 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 the Company's website at
www.alexcoresource.com 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 11:00a.m. Eastern
(8:00 a.m. Pacific) on Thursday, November 10, 2016. 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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1-866-233-4606
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Dial from outside
Canada or the US:
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1-416-640-5946
|
Conference
ID#:
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1253898
|
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. Through
November 24, 2016, a replay of the
call will be available by telephone at the following:
Dial toll free from
Canada or the US:
|
1-888-203-1112
|
Dial from outside
Canada or the US:
|
1-647-436-0148
|
Replay
Passcodes:
|
Conference ID #
1253898
|
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., former Bellekeno Mine Manager, both of whom
are Qualified Persons as defined by National Instrument 43-101 ‑
Standards of Disclosure for Mineral Projects.
About Alexco
Alexco Resource Corp. owns substantially all of the historical
Keno Hill Silver District located in Canada's Yukon
Territory, including the Bellekeno silver mine, the Flame
& Moth, Lucky Queen, Bermingham and Onek deposits, and other
historic and surface resources within the district. Bellekeno,
which commenced commercial production at the beginning of calendar
year 2011, was Canada's only
operating primary silver mine from 2011 to 2013. Alexco is
currently undergoing an interim suspension of operations at Keno
Hill in order to decrease costs and reposition the district for
long-term, sustainable operations. Between 1921 and 1988, the Keno
Hill Silver District was a world-class silver producer, with more
than 217 million ounces of silver produced at average grades of
40.5 ounces per ton silver, 5.6% lead and 3.1% zinc (Yukon
Government's Minfile database). These historical production grades
would rank Keno Hill in the top 3% by grade of today's global
silver producers. 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
Certain statements ("forward-looking statements") in this
news release contain forward-looking information concerning the
Company's anticipated results and developments in the Company'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, the
Company has applied several material assumptions, including, but
not limited to, the assumption that the Company 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. The Company 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.
SOURCE Alexco Resource Corp.