(All amounts in CDN$ unless otherwise
indicated)
VANCOUVER, Aug. 13, 2019 /CNW/ - Alexco Resource
Corp. (NYSE‑American: AXU) (TSX: AXU) ("Alexco" or the
"Company") today reports financial results for the quarter ended
June 30, 2019. For the second
quarter of 2019 ("Q2 2019") Alexco recorded a net loss of
$1.5 million ("M") or ($0.01) per share. Alexco Environmental Group
("AEG"), a wholly owned subsidiary of Alexco, recognized revenues
of $8.7 M with a gross profit of
$2.0 M.
Q2 2019 Highlights
CORPORATE
- Overall, Alexco reported net loss of $1.5 M or $(0.01)
per share for Q2 2019 and a loss before tax expense of $1.4 M including net non-cash income adjustments
of $227,000. In the same period for
2018 the Company incurred a loss before taxes of $1.8 M or $(0.02)
per share, including non-cash costs of $440,000. The decrease in net loss in the 2019
period compared to the 2018 period was mainly attributed to an
increase in the non-cash fair value gain of $1.0 M on the embedded derivative related to the
Wheaton Precious Metals Corp. ("Wheaton") streaming agreement
offset by less profits from the environmental consulting business
("AEG").
- The Company's cash and cash equivalents at June 30, 2019 totaled $11.8 M compared to $8.6
M at December 31, 2018, while
net working capital totaled $15.5 M
compared to $10.2 M at December 31, 2018.
- On June 7, 2019, the Company
completed a bought deal public offering and issued 6,500,000 common
shares at a price of US$1.00
($1.33) per share for aggregate gross
proceeds of US$6.5 M ($8.6 M) and net cash proceeds for US$5.8 M ($7.7
M).
- On April 23, 2019 the Company
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.
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 filed
an independent technical report. The results are discussed in
detail under 2019 Developments on page 6 of the
MD&A.
- In June 2019, the Company
initiated a minimum 7,500 meter ("m"), $2.2
M surface exploration diamond drilling program in the Keno
Hill Silver District.
- The Company commenced surface capital construction activities
consistent with work outlined in the recently published PFS,
focusing installation of the underground production-related portal
infrastructure at the Bermingham decline, as well as civil
preparation work for installation of surface facilities and
infrastructure to support future production including upgrading of
existing haul roads and construction of a coarse ore storage
facility.
- The water use licence ("WUL") application completed the
Technical Adequacy phase in July 2019
and a 30-day public comment period was subsequently advertised.
Management anticipates receipt of the WUL in the fourth quarter of
2019. The Company is awaiting this permit before making a
production decision.
ALEXCO ENVIRONMENTAL GROUP
- AEG recognized revenues of $8.7 M
for Q2 2019 for a gross profit of $2.0
M achieving a gross margin of 23%, compared to revenues of
$3.5 M for a gross profit of
$1.4 M and a gross margin of 39% for
Q2 2018. In Q2 2019, AEG incurred an operating loss before taxes of
$161,000 excluding non-cash costs of
$138,000 (see Note 22 in the
financial statements for the three and six month period ended
June 30, 2019).
- AEG and joint venture partner, JDS Energy and Mining Inc.
("JDS"), entered into an agreement to acquire the abandoned Mount
Nansen Mine site ("Mount Nansen") from the Federal Government of
Canada ("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 environmental
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
costs and profits. 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 project is expected to take up to 10 years to
complete.
- AEG entered into an agreement with the Bank of Montreal ("BMO") for a revolving line of
credit ("LOC") for up to $4,000,000.
The LOC has an interest rate of approximately 5.7% on drawn funds,
is secured against all of 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. No
amounts have been drawn on the LOC.
Alexco's Chairman and Chief Executive Officer, Clynt Nauman, commented, "Our annual surface
exploration campaign, which aims to test deeper targets in the
vicinity of the Bermingham deposit and test other targets
identified in 2018, is progressing as planned. Initial results will
be available in the fourth quarter, 2019. Concurrently, we are
advancing construction of key surface infrastructure required to
restart mining operations. The key to a production decision
at Keno Hill is an amended Water Use License, which we now expect
to be granted in the fourth quarter. Our environmental business,
AEG performed as expected in the second quarter generating strong
revenues and gross margins while also growing its business support
and management team toward our primary objective of a standalone
business."
Keno Hill Development and Exploration
Exploration
For 2019, the Company has commenced a 7,500 m, $2.2 M
surface exploration diamond drilling program whereby:
- The program commenced in June
2019 and will comprise approximately 20 drill holes with two
drills on the Bermingham deposit, where up to ten holes will target
local extensions of the shallower Northeast Zone, as well as
systematically testing the continuity and tenor of the high grade
mineralization at depth;
- The remaining holes will target structural anomalies identified
on Galena Hill in the 2018 aerial geophysical survey to further
trace mineralization near the Bermingham deposit and will also
include some preliminary work to better understand the newly
discovered continuation of the trend of Hector-Calumet-Bermingham
mineralization southwest of the Brefalt fault; and
- The drilling program is scheduled to be completed in
September 2019, but can be extended
if warranted, with results expected to be finalized in the fourth
quarter of 2019.
As of the date of this news release, the Company has completed
eight holes for a total of 4,937 m.
The Company is also focused on other surface exploration,
shallow RAB drilling and trenching to follow up on testing of
blind mineralized structures, with signatures similar to that of
Bermingham that extend under shallow cover also as identified by
the detailed aerial geophysical survey conducted in late 2018.
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, as well as renewing all other permitted deposits
in the District for a further 17 years.
Completion of the amendments to Alexco's quartz mining licence
("QML") is expected in Q3 2019, and a renewal of the WUL is
expected in Q4 2019. The WUL application completed the Technical
Adequacy phase in July 2019 and a
30-day public comment period was subsequently advertised.
Alexco Environmental Group
AEG recognized revenues of $8.7 M
in Q2 2019 for a gross profit of $2.0
M, achieving a gross margin of 23% compared to revenues of
$3.5 M for a gross profit of
$1.4 M, achieving a gross margin of
39% in Q2 2018. The increase in gross profit during the 2019 period
was primarily due to the completion of the water treatment plant at
a project in Ontario, Canada and
commencement of plant operations. Furthermore, continued work was
performed on the Schwartzwalder Mine and the former Cañon City
Uranium Mill reclamation and cleanup projects in Colorado. The operating earnings decreased
during the quarter as AEG continued to invest into its senior
executive team, while also incurring significant up-front costs on
the Mount Nansen project, which will not commence receiving
revenues until the first quarter of 2020.
Financial
At June 30, 2019 the Company had
cash and cash equivalents of $11.8 M,
and net working capital of $15.5 M
and 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 June 30, 2019 totaled $2.8
M.
Financial Report and Conference Call for Second Quarter 2019
Results
Full details of the financial and operating results for the
second 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 p.m. Eastern
(9:30 a.m. Pacific) on Wednesday, August 14, 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 owns the majority of the historic high-grade Keno Hill
Silver District in Canada's
Yukon Territory. 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.
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.