VANCOUVER, Aug. 13, 2018 /PRNewswire/ - Alexco Resource
Corp. (NYSE American:AXU) (TSX:AXR) ("Alexco" or the "Company")
today reports financial results for the second quarter ended
June 30, 2018. All figures are
expressed in Canadian dollars unless otherwise stated. For the
second quarter of 2018 Alexco recorded a net loss of $1.9 million ("M") or $0.02 per share, including a net non-cash
component of $440,000 comprising
depreciation, share-based compensation expense and mark-to-market
adjustments of investments and derivative investments. For the
second quarter of 2018 Alexco's environmental consulting business,
Alexco Environmental Group ("AEG"), recognized revenues of
$3.5 M with a gross profit of
$1.4 M.
Second Quarter Highlights
Corporate
- The Company's cash and cash equivalents at June 30, 2018 totaled $22.4 M compared to $17.9
M at December 31, 2017, while
net working capital totaled $21 M
compared to $18.4 M at December 31, 2017. The Corporation's restricted
cash and deposits at June 30, 2018
totalled $2.6 M compared to
$7.1 M at December 31, 2017.
- Overall, Alexco reported a net loss of $1.9 M ($0.02 per
share) for the three month period ended June
30, 2018 and a loss before tax expense of $1.8 M including net non-cash costs of
$440,000 comprising $424,000 for depreciation and amortization,
$632,000 for share-based compensation
expense, $73,000 for mark-to-market
adjustments on warrants offset by a non-cash mark-to-market gain of
$689,000 related to an embedded
derivative on Alexco's streaming agreement.
- On June 13, 2018, the Corporation
completed a bought deal public offering and issued 4,703,000
flow-through common shares at a blended price of $1.92 per share for aggregate gross proceeds of
$9 M.
- During the quarter, 1,153,151 warrants were exercised for
proceeds to the Company of $2 M.
- On April 30, 2018 Alexco replaced
$6.3 M of cash placed as security for
its Keno Hill property with a surety bond. The surety instrument is
collateralized with $2.4 M of cash
with the resulting $3.9 M plus
accrued interest being reclassified to unrestricted cash. In
addition, on April 25, 2018 security
posted in cash in the amount of $513,000 (US$398,000) was released to AEG on the 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.
- On April 12, 2018 Alexco
announced the appointment of Karen
McMaster to the Board of Directors. Ms. McMaster's extensive
history in the mining industry has been primarily focused on legal
counsel for environmental matters as well as exploration and mine
development. In addition to law, Ms. McMaster has a MBA in
Sustainability and has occupied a number of roles including legal
counsel & investor relations advisor for Caledonia Mining
Corporation, legal counsel for Rio Algom Limited and internal
auditor for BHP Billiton PLC.
Mine Operations and Exploration
- On May 2, 2018 Alexco announced
completion of the Bermingham underground advanced exploration
decline and commencement of a 5,000 meter ("m") underground drill
program of infill and exploration drilling in and around the upper
portion of the Bermingham high grade silver deposit. In addition,
in May 2018 Alexco commenced a
15,000 m surface exploration program
to test a number of relatively shallow silver deposit targets in
the vicinity of the Bermingham deposit as well as to conduct a
deeper exploration program to test structural zones with the
potential to host large "Hector-Calumet" style silver deposits.
- Available exploration results from these programs to date
include true width intercepts at the Bear Vein ranging up to
12.28 m grading 1,019 grams per tonne ("g/t") (32.8
ounces per tonne ("oz/t")) silver in hole BMUG18-012 and
2.28 m grading 9,723 g/t (312.6 oz/t) silver in drill
hole BMUG18-015. Other significant intersections from the
associated Bermingham and Bermingham Footwall veins include true
width intercepts of 4.17 m grading 5,373 g/t (172.8 oz/t)
silver in hole BMUG18-015 and 4.26 m grading 1,958 g/t
(63.0 oz/t) silver in hole BMUG18-008 (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; Provide updates on Permitting and Underground
Development").
- In May, Alexco commenced ramp development at the Flame &
Moth deposit. As of June 30, 2018,
152 m of underground development had
been driven at the Flame and Moth deposit and as of the date of
this release, a total of 301 m had
been driven.
Alexco Environmental Group
- AEG recognized revenues of $3.5 M
in the second quarter of 2018 for a gross profit of $1.4 M achieving a gross margin of 39.0% compared
to revenues of $2.5 M for the second
quarter of 2017 for a gross profit of $913,000 achieving a gross margin of 36.5%. The
increase in gross profit during the 2018 period was mainly due to
larger US contracts in the 2018 period that utilized a higher
portion of internal labour. In addition, AEG experienced increased
project efficiencies across the business.
- On June 15, 2018 AEG acquired
Contango Strategies Ltd. ("Contango"), a private company based in
Saskatoon, Saskatchewan, for
consideration of $1.4 M comprising
$971,600 in cash and 237,999 common
shares of Alexco with a value of $416,400. Settlement of the consideration is in
two tranches with $1 M (comprising
$601,600 in cash and $416,400 in Alexco common shares) paid on closing
with the remaining $370,000 cash
payment to be made on the first anniversary of the closing of the
transaction. The acquisition includes all of Contango's operations
including $450,000 in working
capital, and property, plant and equipment.
- On April 3, 2018 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
M for AWE
Alexco's Chairman and Chief Executive Officer Clynt Nauman said, "With 2018 beyond its halfway
point I am very pleased with the progress in both businesses and
especially the pace at which we move closer to our near term goal
of Keno Hill being back in production. We set aggressive goals for
our summer mining and exploration programs and thanks to continued
hard work by our team, we remain on track to achieve those goals.
Recent and ongoing exploration success is providing us with
increased confidence in the tenor, shape and size of the high grade
Bermingham silver deposit."
Keno Hill Exploration and Development
2018 Flame & Moth Development
In May 2018, Alexco relocated its
underground mine development team and equipment to the Flame and
Moth deposit to resume decline and ramp development. As of the date
of this release, 301 m of primary
development has been completed including supporting remuck bays and
sumps. The Flame and 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 of
a planned 260 tonnes of ore per day to the primary crusher which is
located within 200 m of the mine
portal. Approximately 292 m of ramp
development remains to reach the first ore level access at the
Lightning Zone within the Flame and Moth deposit.
Permitting
Alexco has the requisite permits and authorizations for future
ore production from the Bellekeno, Flame & Moth, Lucky Queen,
and Onek deposits. Permitting for
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 from the Bermingham mine. The Company
anticipates the issuance of the completed permits in Q1 of
2019.
2018 Surface Exploration Program
In May 2018 the Company commenced
a 15,000 m, $4 M surface
exploration diamond drilling program that will comprise at least 45
drill holes on a number of exploration targets. The project was
initiated with two drills in early June with a third added in early
August. As of the date of this release, approximately 7,300 m of surface drilling had been completed in
27 holes.
The surface exploration program will test a number of relatively
shallow silver deposit targets in the vicinity of the Bermingham
deposit as well as to conduct a deeper exploration program to test
structural zones with the potential to host large "Hector-Calumet"
style silver deposits. 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
In May 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 - 15 m
centers for anticipated mining blocks in and around the upper
portion of the high grade Bermingham silver deposit. As of the date
of this release, 4,028 m of
underground drilling had been completed in 24 holes.
The underground drilling program is scheduled to be completed in
late August. Initial results from the 2018 underground drilling
program 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, Provides
Update on Permitting and Underground Development"). Results from
the 2018 underground drilling and the 2017 surface exploration
drilling will be incorporated into a new Bermingham resource
calculation to be included in the pre-feasibility study targeted
for completion late in the third quarter or early fourth quarter of
2018.
Financial
Alexco's cash and cash equivalents at June 30, 2018 totaled $22.4 M compared to $17.9
M at December 31, 2017, while
net working capital totaled $21 M
compared to $18.4 M at December 31, 2017.
During the quarter, the Company completed a bought deal public
offering with a syndicate of underwriters for aggregate gross
proceeds of $9,041,150. The proceeds
are being used to fund surface exploration programs, underground
exploration drilling at the Bermingham deposit and development of
the Flame and Moth decline. The key terms included:
- 966,500 flow-through shares 'Canadian Exploration Expense'
priced at $2.05 per share
- 1,736,500 flow-through shares 'Canadian Exploration Expense'
that also qualify as a 'flow-through mining expenditure' priced at
$2.05 per share
- 2,000,000 flow-through shares 'Canadian Development Expense'
priced at $1.75 per share
- The underwriters received a cash commission of 6% of the gross
proceeds raised.
With its cash resources and net working capital on hand at
June 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 second quarter of 2018 AEG recorded revenues of
$3.5 M and a gross profit of
$1.4 M for a gross margin of 39%,
compared to revenue of $2.5 M and a
gross profit of $913,000 for a gross
margin of 36% in the second quarter of 2017. The increase in gross
profit during the 2018 period was mainly due to larger US contracts
in the 2018 period that utilized a higher portion of internal
labour. In addition, AEG experienced increased project efficiencies
across the business.
Under the contract with the Government of Canada on the historical cleanup at Keno Hill,
Elsa Reclamation and Development Company Ltd. ("ERDC") continued to
advance the consultation on the environmental assessment
application for submission to Yukon Government, which is expected
to occur in August 2018. ERDC also
focused on engineering for the closure plan.
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 Second Quarter 2018
Results
Full details of the financial and operating results for the
second quarter ended June 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 10:30 p.m. Eastern
(7:30 a.m. Pacific) on Tuesday, August 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/alexcoq220180814.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.
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 Resource Corp. owns the high-grade Keno Hill Silver
District in Canada's Yukon Territory. Alexco published an updated
Preliminary Economic Assessment in March
2017, which 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.
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.