UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 6-K
REPORT
OF FOREIGN PRIVATE ISSUER
PURSUANT
TO RULE 13a-16 OR 15d-16
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2017. |
Commission File
Number 001-33621 |
ALEXCO RESOURCE
CORPORATION
(Translation
of registrant's name into English)
Suite 1225,
Two Bentall Centre
555 Burrard
Street, Box 216
Vancouver,
BC V7X 1M9 Canada
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
SUBMITTED
HEREWITH
Exhibit |
|
|
|
|
|
99.1 |
|
News Release Dated March 29, 2017 –Alexco and Silver Wheaton Amend Silver Purchase Agreement and Alexco Announces Positive Preliminary Economic Assessment for
Expanded Silver Production at Keno Hill |
SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
|
ALEXCO RESOURCE CORP. |
|
|
|
(Registrant) |
|
|
|
|
|
|
By: |
/s/ Mike Clark |
|
Date: March 29,
2017 |
|
|
Mike Clark
Chief Financial Officer |
Exhibit 99.1
Alexco and Silver Wheaton Amend Silver Purchase Agreement and
Alexco Announces Positive Preliminary Economic Assessment for Expanded Silver Production at Keno Hill
VANCOUVER, March 29, 2017 /CNW/ - Alexco Resource
Corp. (NYSE-MKT:AXU, TSX:AXR) ("Alexco" or the "Corporation") is pleased to announce the amendment of the
silver purchase agreement (the "Amended SPA") with Silver Wheaton Corp. ("Silver Wheaton"). In addition, Alexco
announces the release of an independent technical report dated March 29, 2017 with an effective date of January 3, 2017 entitled
"Preliminary Economic Assessment of the Keno Hill Silver District Project, Yukon, Canada" (the "PEA"). Note
that all dollar amounts referenced herein are in Canadian ("Cdn") dollars unless indicated otherwise.
Highlights of the Amended SPA:
| · | The per ounce production payment on streamed silver
changes from US$3.90 per ounce ("/oz") of silver delivered to Silver Wheaton to a percentage of the spot silver price
that increases with lower mill silver head grades and lower silver prices, and decreases with higher mill silver head grades and
higher silver prices. |
| · | The increased production payments in lower silver
price and/or lower silver grade environments increases the flexibility of Alexco to process lower grade ore and sustain mining
operations during periods of lower silver prices and does so without limiting the upside opportunity of either Alexco or Silver
Wheaton in higher price and grade environments. |
| · | The variable production payment will increase overall
mining efficiency of the typically high grade silver deposits in the Keno Hill Silver District ("KHSD") while also accommodating
lower grade deposits or discoveries which might otherwise be uneconomic. |
| · | As consideration, Alexco has agreed, subject to TSX
and NYSE-MKT approval, to issue Silver Wheaton three million ("M") common shares of Alexco. |
Alexco President and CEO, Clynton Nauman, commented, "The
Amended SPA is an exceptional outcome for Alexco. Most importantly, it places the Keno Hill Silver District clearly on a path toward
redevelopment and ultimately a production decision. Furthermore, we appreciate the endorsement of Silver Wheaton through its strategic
shareholding in Alexco, an endorsement which we believe reflects confidence in a future of sustained silver production at Keno
Hill as well as recognition of the proven exploration upside and highly prospective nature of the district."
"We have long felt that Keno Hill is one of the most
prospective silver districts in the world, and the success Alexco has had with Flame & Moth and, more recently, Bermingham
confirms our view," said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. "We believe that the
amendments we have made today will be mutually beneficial to both Silver Wheaton and our partner Alexco and will result in silver
once again being mined from Keno Hill."
Highlights of the PEA:
| · | Alexco's project pre-tax and after-tax net present
value ("NPV") is $104.3 M and $79.4 M (5% discount rate), respectively, and pre-tax and after-tax internal rate of return
("IRR") is 89% and 75%, respectively, at assumed silver prices of US$18.60/oz in 2018 and US$19.35/oz in 2019 through
2025. |
| · | At current spot metal prices and US/Cdn foreign exchange
rate (March 29, 2017), the project has a pre-tax and after-tax NPV of $121.1 M and $90.5 M (5% discount rate), respectively, and
a pre-tax and after-tax IRR of 92% and 78%, respectively. |
| · | Average annualized mill throughput is 143,000 tonnes
per year over an eight year period at an average feed grade of 843 grams per tonne ("g/t") silver ("Ag"), 3.3%
lead ("Pb"), 4.6% zinc ("Zn") and 0.39 g/t gold ("Au"). |
| · | Payable production is anticipated to be a total of
approximately 25.1 M ounces of silver, 77.3 M pounds ("lbs") of zinc, 67 M lbs of lead and 4,870 ounces of Au over an
eight (8) year mine life. Average annualized payable silver production is 3.5 M ounces per year, with the initial three years of
annualized payable silver production averaging 4.1 M ounces per year. |
| · | Initial capital costs of $27 M are estimated to achieve
production and positive cash flow with less than one year payback. |
In addition, upon achieving commercial production, Alexco
has calculated all-in sustaining costs ("AISC") (contained silver, by-product basis) over LOM to be US$13.51/oz of silver
(including direct operating costs, sustaining capital, the Silver Wheaton stream, corporate general and administrative and ongoing
surface exploration costs), and AISC over the first full three (3) years of production to be US$12.18/oz of silver.
Mr. Nauman commented, "The results reflected in this
PEA are the culmination of three years of work conducted during a period of low silver prices and suspended operations, a period
during which we continued systematic exploration and in-fill drilling to add approximately 900,000 tonnes of potentially mineable
material at the Flame & Moth and Bermingham deposits containing more than 23 M ounces of silver at an indicated resource grade
of approximately 800 g/t silver. It goes without saying that we intend to continue our exploration efforts in 2017 alongside increased
surface and underground activity as we prepare the district for a production decision."
Preliminary Economic Assessment
The updated PEA includes current Mineral Resource statements
for the Bermingham, Flame & Moth, Bellekeno, Lucky Queen and Onek deposits. The PEA also reflects the Amended SPA variable
production payment imputed on the basis of the assumed pricing model. The PEA was compiled by Roscoe Postle Associates Inc. ("RPA")
with contributions from a team of qualified persons, and assesses expanded operations for production of silver, lead, zinc and
gold in the KHSD.
Key PEA metrics (and assumptions) are as follows:
Consolidated mine production |
1,021,000 tonnes |
Consolidated production grade |
843 g/t Ag, 0.4 g/t Au, 3.3% Pb, 4.6% Zn |
Mill throughput LOM (tonnes per day ("tpd") |
Average annual 390 tpd |
Mill recoveries LOM |
Average Ag 97%, Au 70%, Pb 94.7%, Zn 88% |
Concentrate produced (Dry Metric Tonnes ("DMT")) |
49,243 DMT Pb con, 83,453 DMT Zn con |
Total payable metal production |
Ag 25.1M oz, Au 4,870 oz, Pb 67.0 M lbs, Zn 77.3 M lbs |
Production cost (mining, milling and G&A) |
$325 per tonne of ore |
Net Smelter Return per tonne of ore (after
incorporation of Amended SPA) |
$565 per tonne of ore |
Total capital (life of mine) |
$102.5 M, including $55.4 M underground development |
Initial capital to achieve positive cash flow |
$27 M |
Net Cash Contribution Pre-Tax |
$139.7 M |
IRR Pre-tax |
89% |
NPV Pre-tax (5%) |
$104.3 M |
Net Cash Contribution After Tax |
$107.7 M |
IRR After Tax |
75% |
NPV After Tax (5%) |
$79.4 M |
Prices (2018 – 2025) Used in PEA |
Ag US$18.60/oz initially then $19.35/oz long-term, SLW Ag
average US$6.16/oz, Pb US$1.00/lb initially then $0.94/lb
long-term, Zn US$1.20/lb initially then $1.00/lb long-term,
Au US$1,300/oz, USD/CDN 0.76 initially then 0.79 long-term |
The 1,021,053 tonnes of the consolidated mine production includes
2% from inferred mineral resources. Readers are cautioned that mineral resources are not mineral reserves and do not have
demonstrated economic viability. Furthermore, the PEA is preliminary in nature; it 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.
The PEA contemplates the sequential development and production
from four (4) mines over a nine (9) year period, beginning with an advanced underground exploration program at Bermingham and followed
in late 2017 by underground development of the Flame & Moth deposit. Commencement of development and construction remains dependent
on a number of factors, including receiving all appropriate permits and regulatory authorizations, Alexco's expectations regarding
market prices for Ag, Pb and Zn as well as the US-Canadian dollar exchange rate, and the availability of development capital. Additionally,
a production decision, which is made without a feasibility study of mineral reserves demonstrating economic and technical viability,
carries additional potential risks which include, but are not limited to, the risk that additional detailed work may be necessary
with respect to mine design and mining schedules, metallurgical flow sheets and process plant designs, and the inherent risks pertaining
to the inclusion of approximately 2% inferred mineral resources in the mine plan.
Mining
The PEA lays out a mine plan centered on Flame & Moth
production which provides 67% of total LOM mill feed. Supplemental mine production is sourced from the Bellekeno deposit early
in the production period followed by the Bermingham mine and Lucky Queen mine production later in the period. The LOM production
schedule includes an annualized average of 390 tpd over an eight year period. Nominal production rates are 250 tpd for Bellekeno,
130 tpd for Lucky Queen, 140 tpd for Bermingham and 260 tpd for Flame & Moth. Mining methods are predominantly mechanized cut
and fill with a trend toward long hole and drift and fill mining methods in areas of increased deposit thickness.
Processing and Infrastructure
The Keno District Mill Facility has a nameplate capacity of
408 tpd and employs conventional crushing, grinding, differential flotation and dewatering processes to produce a Pb concentrate,
a Zn concentrate and a filtered tailings product for storage in an established Dry Stacked Tailings Facility or used underground
as backfill. Ag and Pb minerals are recovered together in the Ag-Pb bulk concentrate and Zn minerals in a separate Zn concentrate.
Prior to resumption of plant operations an additional 1.8m
x 3m, 130 kW ball mill (purchased, on site) will be installed to provide expanded grinding capacity ahead of the flotation circuit.
Locked and open cycle flotation tests on all deposits plus prior operating performance results indicate that average lead concentrate
grades during commercial production will be in the order of 65% Pb and 17,000 g/t Ag.
Capital Costs
Initial capital costs of $27 M are estimated to achieve production
and positive cash flow. The primary components of this include approximately $12 M of the initial capital to establish access and
underground infrastructure at the Flame & Moth deposit and $8.7 M to complete the advanced exploration program at Bermingham,
including underground equipment rebuilds and purchase.
Other
All of the regulatory approvals required for mining and processing
activities associated with the Bellekeno and Lucky Queen deposits are currently in place. With the exception of the Water-Use License,
all of the regulatory approvals required for mining and processing activities associated with the Flame & Moth deposit are
currently in place. Preliminary mine planning has been completed for the Bermingham deposit, and permitting for the
advanced underground exploration phase of the project is underway.
Silver Wheaton Amended Silver Purchase Agreement
On March 29, 2017 the Corporation and Silver Wheaton entered
into an amendment agreement to the Silver Purchase Agreement, originally dated October 2, 2008 (the "Original SPA") as
follows:
| · | Silver Wheaton will continue to receive 25% of the
life of mine payable silver from the KHSD. The production payment (originally US$3.90 per ounce) will be based on monthly silver
head grade and monthly silver price; |
| · | The actual monthly production payment will fall within
a defined grade and pricing range governed by upper and lower numeric criteria (ceiling grade/price and floor grade/price) pursuant
to the following formula: |
(Ceiling Grade – Deemed
Shipment Head Grade) |
X |
(Ceiling Price – Deemed
Shipment Silver Price) |
X |
Market
Price |
(Ceiling Grade – Floor
Grade) |
(Ceiling Price – Floor Price) |
|
|
|
|
|
|
Floor Grade |
= |
|
600 g/t Ag |
|
Floor Price |
= |
|
US$13/oz Ag |
|
Ceiling Grade |
= |
|
1,400 g/t Ag |
|
Ceiling Price |
= |
|
US$25/oz Ag |
|
Deemed Shipment Head Grade |
= |
|
Calculated monthly mill silver head grade |
|
Deemed Shipment Silver Price |
= |
|
Average monthly silver price |
|
Market Price |
= |
|
Spot silver price prior to day of sale |
|
For clarification, using the PEA's average feed grade of 843 g/t and today's approximate silver spot price of $18 would result in the following production payment from Silver Wheaton: |
|
(1,400g/t – 843g/t) |
X |
(US$25 –US$18) |
= |
0.406 X US$18.00 = US$7.31/oz Ag |
(1,400g/t – 600g/t) |
(US$25 – US$13) |
|
|
|
|
(Cdn equivalent - $9.78/oz Ag) |
| · | The 400 tpd mine and mill completion test date is
extended to December 31, 2019; and |
| · | The Silver Wheaton area of interest remains one (1)
km around existing Alexco holdings in the KHSD. |
As consideration of the foregoing amendments, the Corporation
has agreed, subject to TSX and NYSE-MKT approval, to issue 3,000,000 shares to Silver Wheaton with a fair value of US$4,934,948.
The volume weighted average trading price of the Corporation's common shares for the five days prior to March 29, 2017 was $2.20
on the TSX.
Fort Capital Partners has acted as a financial advisor to
Alexco in connection with the restructuring of the SPA.
National Instrument 43-101 and Qualified Persons
The technical information in this news release has been reviewed
and approved by Torben Jensen, P. Eng. of RPA, an independent Qualified Person as defined in National Instrument 43-101 –
Standards of Disclosure for Mineral Projects ("NI 43-101").
The PEA was compiled by RPA with contributions from a team
of Qualified Persons as defined by NI 43-101as follows:
| · | Torben Jensen, P.Eng. and R. Dennis Bergen, P.Eng.
of RPA |
| · | Jeff Austin, P. Eng of International Metallurgical
and Environmental Inc. |
| · | Gilles Arseneau Ph.D., P.Geo. of SRK Canada Inc. |
| · | David Farrow, Pr.Sci.Nat, P.Geo. of Geostrat Consulting
Inc. |
All Mineral Resources are classified following the CIM Definition
Standards for Mineral Resources and Mineral Reserves (May 2014), in accordance with the CIM Estimation of Mineral Resources and
Mineral Reserves Best Practice Guidelines and with NI 43-101 guidelines. The PEA is available under Alexco's profile on SEDAR
at www.sedar.com.
About Alexco
Alexco owns the Bellekeno silver mine, one of several mineral
properties held by Alexco which encompass substantially all of the historical KHSD 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
Statements in this news release that are not historical
facts are "forward-looking statements" or "forward-looking information" within the meaning of applicable Canadian
securities laws and the United States private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements").Forward-looking
statements include, but are not limited, statements 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 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 and the proposed issuances of securities to Silver Wheaton and Fort. 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 or regulatory
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 market fundamentals
will result in sustained silver, gold, lead and zinc demand and prices; that all necessary approvals and consents, including regulatory
approval of the proposed share issuances will be obtained in a timely manner and on acceptable terms. 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.
To view the original version on PR Newswire, visit: http://www.newswire.ca/en/releases/archive/March2017/29/c5769.html
%CIK: 0001364128
For further information: Clynton R. Nauman, President and
Chief Executive Office; Mike Clark, Chief Financial Officer, Phone: (604) 633-4888, Email: info@alexcoresource.com
CO: Alexco Resource Corp.
CNW 22:30e 29-MAR-17
This regulatory filing also includes additional resources:
ex991.pdf
Alexco Resource (AMEX:AXU)
Historical Stock Chart
From Mar 2024 to Apr 2024
Alexco Resource (AMEX:AXU)
Historical Stock Chart
From Apr 2023 to Apr 2024