VANCOUVER, May 8, 2019 /CNW/ - Alexco Resource Corp.
(NYSE‑American: AXU, TSX: AXR) ("Alexco" or the "Company")
today reports financial results for the quarter ended March 31, 2019. All figures are expressed in
Canadian dollars unless otherwise stated. For the first quarter of
2019 ("Q1 2019") Alexco recorded net income of $1.2 million ("M") or $0.01 per share. Alexco Environmental Group
("AEG"), a wholly owned subsidiary of Alexco, recognized revenues
of $7.2 M with a gross profit of
$1.5 M.
Q1 2019 Highlights
CORPORATE
- Overall, Alexco reported net income of $1.2 M ($0.01 per
share) for Q1 2019 and income before tax expense of $1.8 M including net non-cash adjustments of
$3.5 M. In the same period for 2018
the Company incurred a loss of $3.6 M
(including non-cash costs of $2.0 M)
before taxes. The increase in net income in the 2019 period
compared to the 2018 period was mainly attributed to non-cash fair
value gain of $5.5 M on the embedded
derivative related to the Wheaton Precious Metals Corp. ("Wheaton")
streaming agreement.
- The Company's cash and cash equivalents at March 31, 2019 totaled $6.4 M compared to $8.6
M at December 31, 2018, while
net working capital totaled $7.1 M
compared to $10.1 M at December 31, 2018.
- Subsequent to quarter end, Alexco completed a private
placement, on a bought deal basis, of 1,842,200 flow-through common
shares at a price of $1.90 per share
for gross proceeds of $3.5 M. The
flow-through common shares comprise: (i) 1,579,000 flow-through
shares with respect to "Canadian exploration expenses" (the "CEE
Shares") priced at $1.90 per CEE
Share; and (ii) 263,200 flow-through shares with respect to
"Canadian development expenses" (the "CDE Shares") priced at
$1.90 per CDE Share.
- On February 14, 2019 Alexco
extended the availability period of draw-down on its credit
facility (the "Credit Facility") with Sprott Private Resource
Lending (Collector), L.P. ("Sprott") to August 23, 2019 from February 23, 2019 by issuing to Sprott 171,480
common shares of Alexco.
MINE OPERATIONS AND EXPLORATION
- The Company announced the results of an independent
pre-feasibility study ("PFS") on its 100% owned Keno Hill Silver
project (see press release dated March 28,
2019 entitled "Alexco Announces Positive Pre-Feasibility
Study for Expanded Silver Production at Keno Hill Silver District")
and on May 8, 2019 the Company
released an independent technical report.
- Assay results were announced from the 2018 reconnaissance drill
program at Husky, No Cash, Townsite, Eagle, Bellekeno South and
Black Cap comprising 26 holes for 7,687 meters (see news release
dated January 21, 2019, entitled
"Alexco 2018 Reconnaissance Drilling Confirms Continuation of
Bermingham Mineralization at Depth and Identifies an Offset
Extension, Identifies New Gold Targets").
ALEXCO ENVIRONMENTAL GROUP
- AEG recognized revenues of $7.2 M
for Q1 2019 for a gross profit of $1.5
M achieving a gross margin of 20%, compared to revenues of
$2,764,000 for the three month period
ended March 31, 2018 for a gross
profit of $830,000 achieving a gross
margin of 30%. AEG incurred an operating loss before taxes for Q1
2019 of $52,000 excluding non-cash
costs of $136,000 (see Note 21 in the
financial statements for the three month period ended March 31, 2019).
- Subsequent to quarter end, AEG and JDS Energy and Mining Inc.
("JDS") formed a joint venture to enter into an agreement to
acquire the abandoned Mount Nansen Mine site ("Mount Nansen") from
the Federal Government of Canada
("Canada") whereby Canada will pay
AEG and JDS to remediate environmental contamination from previous
mining activities at Mount Nansen.
- Subsequent to quarter end, AEG entered into an agreement with
the Bank of Montreal ("BMO") for a
revolving line of credit ("LOC") for up to $4 M. The LOC has an interest rate of
approximately 5.7% on drawn funds, is secured against AEG assets,
and has customary covenants in place. AEG utilized the LOC capacity
to post a $1,000,000 letter of credit
for Mount Nansen.
Alexco's Chairman and Chief Executive Officer Clynt Nauman said, "With the release of the
positive PFS for Keno Hill we have
reached an important milestone on our way to becoming Canada's only primary silver producer. We have
focused on a plan which has very low capital intensity, high
returns and can generate cash in today's silver pricing environment
while retaining significant optionality for the future. Going
forward, we will take a disciplined approach to surface related
capital construction work while we wait for clarity on the
amendment/renewal of the water use licence for Bermingham before
making a final production decision. We are also focused on our
exploration strategy, which remains unchanged this year as we look
to continue expanding Bermingham at depth and explore other high
target areas in the Keno Hill Silver District. On the environmental
consulting side of the business, AEG continues to generate strong
revenues and future value by expanding its client base and
contractual pipeline".
Keno Hill Development and Exploration
Development Strategy
The Company is moving towards production in a two (2) phased
approach while also mitigating risk of further delay for the
renewal of the water use licence ("WUL") for Bermingham. Phase 1
work will commence in May 2019 and
will focus on surface and mill capital improvements, while Phase 2
will commence only when the timing and certainty of the Bermingham
WUL is established. Phase 2 work will focus on underground
development in preparation for production from the Bellekeno and
Flame & Moth deposits, mill commissioning and final underground
development of the Bermingham 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 licence renewal
application to the Yukon Water Board for processing and milling ore
and discharging treated water from the Bermingham mine. Completion
of the amendments to Alexco's Quartz Mining Licence is expected in
Q2 2019, and a renewal of the WUL is expected in Q3
2019.
2019 Surface Drilling Program
For 2019, the Company has planned a 7,500
m, $3 M surface exploration
diamond drilling program that will focus on potential
reserve/resource expansion, deeper targets in the vicinity of the
Bermingham deposit and following up on reconnaissance drilling from
the 2018 program. The surface exploration program will commence in
June and operate through September
2019 with results expected to be finalized in the fourth
quarter of 2019.
Alexco Environmental Group
AEG recognized revenues of $7.2 M
in Q1 2019 for a gross profit of $1.5
M achieving a gross margin of 20% compared to revenues of
$2.8 M for a gross profit of
$830 K achieving a gross margin of
30% in the first quarter of 2018. AEG incurred an operating loss
before taxes for Q1 2019 of $52 K
excluding non-cash costs of $136 K.
The increase in gross profit during the 2019 period was primarily
due to worked performed on the Schwartzwalder Mine and the former
Canon City Uranium Mill reclamation and cleanup projects as well as
construction work continuing on a water treatment plant in
Ontario, Canada. The gross margin
percentage reduced during the quarter as the Company increased the
use of third party services, most notably relating to projects with
significant construction work during the quarter.
On May 6, 2019 AEG and a joint
venture partner, JDS, entered into agreement to acquire the
abandoned Mount Nansen Mine site from Canada. AEG and JDS formed a limited
partnership called Mount Nansen Remediation Limited Partnership
("MNR") to enter into the agreement with Canada whereby Canada will pay MNR to remediate contamination
from previous mining activities at Mount Nansen. AEG and JDS each
own 50% in MNR as well as a newly formed general partnership and
will be jointly responsible for Mount Nansen project remediation
work and will share equally in the project's profitability. Working
alongside Canada, the Yukon
Government and Little Salmon/Carmacks First Nations, AEG will be
primarily responsible for permitting, design and care and
maintenance while JDS will be responsible for the construction
aspect of the Mount Nansen project. This long-term project is
expected to take up to 10 years to complete.
Financial
At March 31, 2019 the Company had
cash and cash equivalents of $6.4 M,
and net working capital of $7.1 M
compared to cash and cash equivalents of $8.6 M and net working capital of $10.1 M at December 31,
2018. The Company faces no known liquidity issues or is
aware of any significant credit risks in any of its financial
assets. In addition, the Company's restricted cash and deposits at
March 31, 2019 totaled $2.7 M compared to $2.7
M at December 31, 2018.
Subsequent to quarter end, the Company completed a private
placement of 1,842,200 flow-through common shares for gross
proceeds of $3.5 M.
Financial Report and Conference Call for First Quarter 2019
Results
Full details of the financial and operating results for the
first quarter of 2019 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
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 12:30 a.m. Eastern
(9:30 a.m. Pacific) on Thursday, May 9, 2019. 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:
|
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
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 of whom are
Qualified Persons as defined by National Instrument 43-101 –
Standards of Disclosure for Mineral Projects ("NI 43-101").
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.
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.