Filed Pursuant to General Instruction
II.L of Form F-10
File No. 333-227024
PROSPECTUS SUPPLEMENT
(To Base Shelf Prospectus dated September 21, 2018)
ALEXCO RESOURCE CORP.
C$7,500,825
4,054,500 Common Shares at a price of
C$1.85 per Common Share
This prospectus supplement of Alexco Resource
Corp. (“Alexco” or the “Company”) hereby qualifies the distribution (the “Offering”)
of 4,054,500 common shares of the Company (the “Offered Shares”) at a price of C$1.85 per Offered Share (the
“Offering Price”). The Offering is being made pursuant to an underwriting agreement (the “Underwriting
Agreement”) dated March 25, 2020 among the Company, Cormark Securities Inc. (“Cormark”) and Cantor
Fitzgerald Canada Corporation (“Cantor” and together with Cormark, the “Co-Lead Underwriters”),
and including Canaccord Genuity Corp. (together with the Co-Lead Underwriters, the “Underwriters”). The Offering
Price was determined by arm’s length negotiation between the Company and the Co-Lead Underwriters, on behalf of the Underwriters.
See “Plan of Distribution”.
The outstanding common shares of the Company
(the “Common Shares”) are listed on the Toronto Stock Exchange (the “TSX”) and the NYSE American
(the “NYSE American”), both under the symbol “AXU”. On March 24, 2020, the closing price of the
Common Shares on the TSX and the NYSE American was C$2.06 and US$1.44 per Common Share, respectively. The Company has applied to
list the Offered Shares on the TSX and the NYSE American. The TSX and NYSE American have not conditionally approved the Company’s
listing applications and there is no assurance that the TSX or NYSE American will approve the listing applications. Listing will
be subject to the Company fulfilling all of the listing requirements of the TSX and the NYSE American.
This Offering is made by a Canadian
issuer that is permitted under a multi-jurisdictional disclosure system adopted by the United States and Canada to prepare this
prospectus supplement and the accompanying prospectus in accordance with Canadian disclosure requirements. Prospective investors
should be aware that such requirements are different from those applicable to issuers in the United States. Financial statements
incorporated herein by reference have been prepared in accordance with International Financial Reporting Standards as issued by
the International Accounting Standards Board (“IFRS”), and may not be comparable to financial statements of United
States companies.
Prospective investors should be aware
that the acquisition, holding or disposition of the Offered Shares may have tax consequences. This prospectus supplement does not
address the Canadian tax consequences in respect of an investment in Offered Shares, and Canadian resident and non-resident prospective
investors should consult their own tax advisors in this regard. The United States tax consequences for investors who are resident
in, or citizens of, the United States may also not be described fully herein. Prospective investors that are resident in, or citizens
of, the United States should read the tax discussion contained in this prospectus supplement under the heading “Certain U.S.
Federal Income Tax Considerations” and should consult their own tax advisor with respect to their own particular circumstances.
The enforcement by investors of civil
liabilities under the U.S. federal securities laws may be affected adversely by the fact that the Company is existing under
and governed by the laws of the province of British Columbia and the federal laws of Canada, that some or all of the Company’s
officers and directors are residents of Canada, and that a substantial portion of the Company’s assets and the assets of
the officers and directors of the Company are located outside the United States.
NEITHER THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION (THE “SEC”) NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THE SECURITIES
OFFERED HEREBY OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENCE.
Investing in the Offered Shares involves
significant risks. You should carefully read the “Risk Factors” in this prospectus supplement and the “Risk Factors”
section beginning on page 12 of the accompanying prospectus and in the documents incorporated by reference herein for a discussion
of certain risks that you should consider in connection with an investment in the Offered Shares.
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Public Offering
Price
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Underwriting
Commission(1)(2)
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Proceeds to the Company(2)
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Per Offered Share
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C$1.85
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C$0.11
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C$1.74
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Total
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C$7,500,825
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C$450,049.50
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C$7,050,775.50
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Notes:
(1)
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Pursuant to the Underwriting Agreement, the Company has agreed to pay the
Underwriters a cash fee (the “Underwriters’ Fee”) equal to 6.0% of the aggregate gross proceeds of the
Offering. See “Plan of Distribution”.
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(2)
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After deducting the Underwriters’ Fee, but before deducting expenses
of the Offering estimated to be an aggregate of C$225,000, which will be paid from the proceeds of the Offering.
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(3)
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If the Over-Allotment Option (as defined herein) is exercised in full, the
gross proceeds of the Offering, Underwriters’ Fee and net proceeds to the Company (before deducting expenses of the Offering)
will be C$8,625,948.75, C$517,556.93 and C$8,108,391.83, respectively. This prospectus supplement and accompanying prospectus also
qualify for distribution the Over-Allotment Option and the Over-Allotment Shares (as defined herein) issued pursuant to the exercise
of the Over-Allotment Option. See “Plan of Distribution”.
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The Company has also granted to the Underwriters an option (the “Over-Allotment Option”) exercisable, in whole
or in part and from time to time, at the sole discretion of the Underwriters, at any time up to 30 days following the closing of
the Offering, to purchase up to an additional 608,175 Common Shares (“Over-Allotment Shares”) at the Offering
Price to cover over-allotments, if any. A purchaser who acquires Over-Allotment Shares forming part of the Underwriters’
over-allocation position acquires those Over-Allotment Shares under this prospectus supplement, regardless of whether the over-allocation
position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. Unless the context
otherwise requires, references in this prospectus supplement and the accompanying prospectus to “Offered Shares”
include any Over-Allotment Shares issued pursuant to the Over-Allotment Option.
The following table sets out the number
of securities issuable under the Over-Allotment Option:
Underwriters’ Position
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Maximum size or number of securities available
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Exercise period
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Exercise price
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Over-Allotment Option
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608,175 Common Shares
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30 days following closing of the Offering
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C$1.85 per Common Share
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The Underwriters, as principals, conditionally
offer the Offered Shares, subject to prior sale, if, as and when issued by the Company and accepted by the Underwriters in accordance
with the conditions contained in the Underwriting Agreement and subject to the passing upon of certain legal matters relating to
the Offering on behalf of the Company by Miller Thomson LLP with respect to Canadian legal matters and by Dorsey & Whitney
LLP with respect to United States legal matters, and on behalf of the Underwriters by Cassels Brock & Blackwell LLP with respect
to certain Canadian legal matters, and Troutman Sanders LLP with respect to certain United States legal matters.
The Underwriters propose to offer the
Offered Shares to the public initially at the price specified on the cover page of this prospectus supplement. If all of the Offered
Shares are not sold at the price specified in this prospectus supplement, the Underwriters may decrease the offering price and
change the other selling terms. The compensation realized by the Underwriters will decrease by the amount that the aggregate offering
price paid by the purchasers for the Offered Shares is less than the gross proceeds paid by the Underwriters to the Company. The
decrease in the offering price will not decrease the amount of net proceeds of the Offering to the Company. See ‘‘Plan
of Distribution’’.
Subscriptions will be received subject
to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice.
Closing is expected to occur on or about March 27, 2020, or such other date as may be agreed upon by the Company and the Co-Lead
Underwriters (the “Closing Date”).
It is expected that the Company will arrange
for the electronic deposit of the Offered Shares distributed under the Offering under the book-based system of registration, to
be registered in the name of CDS Clearing and Depository Services Inc. (“CDS”) or its nominee and will be deposited
with CDS on the Closing Date. No certificates evidencing the Offered Shares will be issued to purchasers of the Offered Shares,
except in limited circumstances. Purchasers of Offered Shares will receive only a customer confirmation from the Underwriters or
other registered dealers from whom the Offered Shares are purchased. See “Plan of Distribution”.
The Underwriters may, in connection with
the Offering, effect transactions which stabilize or maintain the market price of the Common Shares at levels other than those
which might otherwise prevail in the open market in accordance with applicable market stabilization rules. Such transactions, if
commenced, may discontinue at any time. See “Plan of Distribution”.
The Company’s head office is at Suite
1225, Two Bentall Centre, 555 Burrard Street, Vancouver, British Columbia, V7X 1M9 and its registered office is at Suite 400, 725
Granville Street, Vancouver, British Columbia, Canada, V7Y 1G5.
Investors should rely only on current information
contained in or incorporated by reference into this prospectus supplement and the accompanying prospectus as such information is
accurate only as of the date of the applicable document. The Company has not authorized anyone to provide investors with different
information. Information contained on the Company’s website shall not be deemed to be a part of this prospectus supplement
or incorporated by reference and should not be relied upon by prospective investors for the purpose of determining whether to invest
in the securities. The Company will not make an offer of these securities in any jurisdiction where the offer or sale is not permitted.
Investors should not assume that the information contained in this prospectus supplement is accurate as of any date other than
the date on the face page of this prospectus supplement or the date of any documents incorporated by reference herein. The Company
will not make an offer of the Offered Shares in any jurisdiction where the offer or sale is not permitted.
TABLE OF CONTENTS
Prospectus Supplement
Prospectus dated September 21, 2018
GENERAL MATTERS
This document is in two parts. The first
part is this prospectus supplement, which describes the specific terms of the Offering and also adds to and updates certain information
contained in the accompanying prospectus and the documents incorporated by reference therein. The second part is the accompanying
prospectus, which gives more general information, some of which may not apply to the Offering. This prospectus supplement is deemed
to be incorporated by reference into the accompanying prospectus solely for the purposes of the Offering. If the description of
the Offered Shares varies between this prospectus supplement and the accompanying prospectus, you should rely on the information
in this prospectus supplement. Before investing, you should carefully read both this prospectus supplement and the accompanying
prospectus together with the additional information about the Company to which we refer you in the sections of this prospectus
supplement entitled “Documents Incorporated by Reference”.
You should rely only on the information
contained or incorporated by reference in this prospectus supplement or in the accompanying prospectus. The Company has not, and
the Underwriters have not, authorized any other person to provide you with different, additional or inconsistent information. If
anyone provides you with different, additional or inconsistent information, you should not rely on it. The Company and the Underwriters
are not making an offer of the Offered Shares in any jurisdiction where the offer is not permitted. You should assume that the
information appearing in this prospectus supplement and the accompanying prospectus is accurate only as of the date on the front
of those documents and that information contained in any document incorporated by reference in this prospectus supplement and the
accompanying prospectus is accurate only as of the date of that document. The Company’s business, financial condition, results
of operations and prospects may have changed since those dates.
Market data and certain industry forecasts
used in this prospectus supplement and the accompanying prospectus and the documents incorporated by reference herein and therein
were obtained from market research, publicly available information and industry publications. The Company believes that these sources
are generally reliable, but the accuracy and completeness of this information is not guaranteed. The Company has not independently
verified such information, and it does not make any representation as to the accuracy of such information.
Unless the context otherwise requires,
references in this prospectus supplement and the accompanying prospectus to “Alexco” or the “Company”
include Alexco Resource Corp. and each of its subsidiaries. All capitalized terms used but not otherwise defined herein have the
meanings provided in the accompanying prospectus.
CAUTIONARY NOTE TO UNITED STATES INVESTORS
CONCERNING
MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES
This prospectus supplement and the accompanying
prospectus and the documents incorporated by reference herein and therein have been prepared in accordance with the requirements
of Canadian provincial securities laws, which differ from the requirements of U.S. securities laws. Unless otherwise indicated,
all mineral reserve and mineral resource estimates included or incorporated by reference in this prospectus supplement and the
accompanying prospectus have been prepared in accordance with Canadian National Instrument 43-101— Standards of Disclosure
for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum
(the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council,
as amended. NI 43-101 is an instrument developed by the Canadian Securities Administrators that establishes standards for
all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These definitions differ
materially from the definitions in SEC Industry Guide 7 (“SEC Industry Guide 7”) under the United States Securities
Act of 1933, as amended (the “U.S. Securities Act”). For example, the terms “mineral reserve” and
“probable mineral reserve” as used herein are Canadian mining terms as defined in NI 43-101, and these definitions
differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7 standards, a “final” or “bankable”
feasibility study is required to report reserves and the primary environmental analysis or report must be filed with the appropriate
governmental authority. In addition, the terms “mineral resource”, “measured mineral resource”, “indicated
mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however,
these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration
statements filed with the SEC. Investors are cautioned not to assume that all or any part of a mineral deposit in these categories
will ever be converted into SEC Industry Guide 7 reserves. Under Canadian rules, inferred mineral resources can only be used in
economic studies as provided under NI 43-101. Under Canadian rules, estimates of inferred mineral resources may not form the basis
of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of
an inferred mineral resource exists or is economically or legally mineable. An “inferred mineral resource” is that
part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and
sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An inferred mineral
resource has a lower level of confidence than that applying to an indicated mineral resource and must not be converted to a mineral
reserve. It is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated mineral resources
with continued exploration. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC
Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in prospectus
supplement and the accompanying prospectus and the documents incorporated by reference herein and therein that contain descriptions
of the Corporation’s mineral deposits may not be comparable to similar information made public by U.S. companies subject
to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder,
including SEC Industry Guide 7.
The SEC has adopted amendments to its disclosure
rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC. These
amendments became effective February 25, 2019 (the “SEC Modernization Rules”) and, following a two-year transition
period, the SEC Modernization Rules will replace the historical property disclosure requirements for mining registrants that are
included in SEC Industry Guide 7. Following the transition period, as a foreign private issuer that files its annual report of
Form 40-F with the SEC pursuant to the multi-jurisdictional disclosure system, the Company is not required to provide disclosure
on its mineral properties under the SEC Modernization Rules and will continue to provide disclosure under NI 43-101 and the CIM
Definition Standards. If the Company ceases to be a foreign private issuer or lose its eligibility to file its annual report on
Form 40-F pursuant to the multi-jurisdictional disclosure system, then the Company will be subject to the SEC Modernization Rules
which differ from the requirements of NI 43-101 and the CIM Definition Standards.
NOTICE REGARDING PRESENTATION OF FINANCIAL
INFORMATION
The consolidated financial statements as
at December 31, 2019 and 2018 and for the years then ended, incorporated by reference in this prospectus supplement and the accompanying
prospectus have been prepared in accordance with IFRS. The selected consolidated financial data included herein has been derived
therefrom. IFRS differs in some material respects from United States Generally Accepted Accounting Principles (“U.S. GAAP”)
and so these financial statements may not be comparable to the financial statements of U.S. companies that report in accordance
with U.S. GAAP. As a result, financial information included or incorporated in this prospectus supplement and the accompanying
prospectus may not be comparable to financial information prepared by companies in the United States.
CURRENCY PRESENTATION AND EXCHANGE RATE
INFORMATION
The financial statements incorporated by
reference in this prospectus supplement and the accompanying prospectus, and the selected consolidated financial data derived therefrom
included herein and in the accompanying prospectus, are presented in Canadian dollars. In this prospectus supplement and the accompanying
prospectus, references to “C$” or “$” are to Canadian dollars and references to “US$” are to
United States dollars. On March 24, 2020, the daily rate as reported by the Bank of Canada for the conversion of one Canadian dollar
into United States dollars was C$1.00 equals US$0.6901.
The following table sets out, for each
period indicated, the high and low exchange rates for one Canadian dollar expressed in United States dollars, the average of such
exchange rates during such period, and the exchange rate at the end of such period based on the daily rate as reported by the Bank
of Canada:
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Year Ended
December 31
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2019
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2018
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Highest rate during period
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US$0.7699
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US$0.8138
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Lowest rate during period
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US$0.7353
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US$0.7330
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Average rate during period
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US$0.7537
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US$0.7721
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Rate at the end of period
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US$0.7699
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US$0.7330
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The average exchange rate is calculated
using the average of the daily rate on the last business day of each month during the applicable fiscal year or interim period.
The Canadian dollar/U.S. dollar exchange rate has varied significantly over the last several years and investors are cautioned
not to assume that the exchange rates presented here are necessarily indicative of future exchange rates.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus supplement, the accompanying
prospectus and the documents incorporated by reference in this prospectus supplement and in the accompanying prospectus contain
“forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995
and “forward-looking information” within the meaning of applicable Canadian securities laws (together, “forward-looking
statements”) concerning the Company’s business plans, including, but not limited to, anticipated results and developments
in Alexco’s operations in future periods, planned exploration and development of its mineral properties, plans related to
its business and other matters that may occur in the future.
Forward-looking statements may include,
but are not limited to, statements with respect to additional capital requirements to fund further exploration and development
work on the Company’s properties, 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, the amount of estimated revenues and
expenses, the success of exploration activities and permitting timelines. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often,
but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “estimates”,
“intends”, “strategy”, “goals”, “objectives” or stating that certain actions, events
or results “may”, “could”, “would”, “might” or “will” be taken, occur
or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be
“forward-looking statements”.
Forward-looking statements relate to analyses
and other information that are based on forecasts of future results, estimates of amounts not yet determinable and certain assumptions
that management believes are reasonable at the time they are made. In making the forward-looking statements in this prospectus
supplement, the accompanying prospectus and the documents incorporated by reference, the Company has applied several material assumptions,
including, but not limited to, the assumption that: (1) additional financing may be needed to fund certain contingent payment obligations
to Wheaton Precious Metals Corp. (“Wheaton”) (2) additional financing needed for the capacity related refund
under the silver purchase agreement, as amended, with Wheaton will be available on reasonable terms; (3) additional financing needed
for further exploration and development work on the Company’s properties will be available on reasonable terms; (4) the proposed
development of its mineral projects will be viable operationally and economically and proceed as planned; (5) market fundamentals
will result in sustained silver, gold, lead and zinc demand and prices, and such prices will not be materially lower than those
estimated by management in preparing the annual financial statements for the year ended December 31, 2019; (6) market fundamentals
will result in sustained silver, gold, lead and zinc demand and prices, and such prices will be materially consistent with or more
favourable than those anticipated in the PFS (as defined under the heading “Summary” below); (7) the actual nature,
size and grade of its mineral resources and mineral reserves are materially consistent with the mineral resource and mineral reserve
estimates reported in the supporting technical reports, including the PFS; (8) labor and other industry services will be available
to the Company at prices consistent with internal estimates; (9) the continuances of existing and, in certain circumstances,
proposed tax and royalty regimes; and (10) that other parties will continue to meet and satisfy their contractual obligations to
the Company. Statements concerning mineral reserve and mineral resource estimates may also be deemed to constitute forward-looking
information to the extent that they involve estimates of the mineralization that will be encountered if the property is developed.
Financial outlook information about potential
future cash flows contained in this prospectus supplement, the accompanying prospectus or in a document incorporated by reference
is based on assumptions about future events, including economic conditions and proposed courses of action, based on management’s
assessment of the relevant information currently available. Readers are cautioned that any such financial outlook information should
not be used for purposes other than for which it is disclosed.
Forward-looking statements are subject
to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from
those expressed or implied by the forward-looking statements, including, without limitation:
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negative cash flow from operating activities;
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forward-looking statements may prove inaccurate;
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exploration, evaluation and development;
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figures for the Company's resources are estimates based on interpretation and assumptions and may
yield less mineral production under actual conditions than is currently estimated;
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amendments to Share Purchase Agreement with Wheaton;
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employee recruitment and retention;
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dependence on management;
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permitting and environmental risks and other regulatory requirements;
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potential profitability of mineral properties depends upon factors beyond the control of the Company;
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First Nation rights and title;
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title to mineral properties;
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capitalization and commercial viability;
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critical accounting estimates and judgments;
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general economic conditions may adversely affect the Company’s growth and profitability;
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operating hazards and risks;
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certain of the Company’s directors and officers are involved with other natural resource
companies, which may create conflicts of interest from time to time;
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the Company may fail to maintain adequate internal control over financial reporting pursuant to
the requirements of the Sarbanes-Oxley Act;
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as a “foreign private issuer”, the Company is exempt from Section 14 proxy rules and
Section 16 of the Securities Exchange Act of 1934;
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it may be difficult to enforce judgments or bring actions outside the United States against the
Company and certain of the Company’s directors; and
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It may be difficult to anticipate the effects of the Coronavirus (COVID-19) on the Company.
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This list is not exhaustive of the factors
that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future
and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially
from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without
limitation, those referred to in this prospectus supplement and the Company’s annual information form dated March 11, 2020
for the year ended December 31, 2019 (the “2019 AIF”) and the Company’s Annual MD&A (as defined below
– see “Documents Incorporated by Reference”), each under the heading “Risk Factors”, the “Risk
Factors” section beginning on page 12 of the accompanying prospectus and elsewhere in the accompanying prospectus and in
the documents incorporated by reference herein. In addition, although the Company has attempted to identify important factors that
could cause actual achievements, events or conditions to differ materially from those identified in the forward-looking statements,
there may be other factors that cause achievements, events or conditions not to be as anticipated, estimated or intended. Many
of the foregoing factors are beyond the Company’s ability to control or predict.
These forward-looking statements are based
on the beliefs, expectations and opinions of management on the date the statements are made, and such beliefs, expectations and
opinions are subject to change after such date. The Company does not assume any obligation to update forward-looking statements,
except as required by applicable securities laws, if circumstances or management’s beliefs, expectations or opinions should
change. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.
MARKETING MATERIALS
In connection with the Offering, the Underwriters
used the Term Sheet (as defined herein) as “marketing materials” (as such terms are defined under applicable Canadian
securities laws). The Marketing Materials do not form part of this prospectus supplement and the accompanying prospectus to the
extent that the contents of the Marketing Materials have been modified or superseded by a statement contained in this prospectus
supplement. Any template version of any marketing materials that has been, or will be, filed on SEDAR (www.sedar.com) or with the
SEC (www.sec.gov) before the termination of the distribution under the Offering (including any amendments to, or an amended version
of, any template version of any marketing materials) is deemed to be incorporated by reference into this prospectus supplement
and the accompanying prospectus solely for the purposes of the Offering.
SUMMARY
The following summary contains basic
information about the Company and the Offering and is not intended to be complete. This description does not contain all of the
information about the Company and its properties and business that you should consider before investing in the Offered Shares.
You should carefully read the entire prospectus supplement, the accompanying prospectus and the documents incorporated by reference
in this prospectus supplement and in the accompanying prospectus before making an investment decision. See “Documents Incorporated
by Reference” and “Additional Information”. You should also carefully consider the matters discussed under “Risk
Factors” in this prospectus supplement; the “Risk Factors” section beginning on page 12 of the accompanying prospectus;
the “Risk Factors” section beginning on page 14 of the 2019 AIF and the “Risk Factors” section beginning
on page 23 of the Annual MD&A.
The Company
The Company’s business consists of
mineral exploration and mine development and operation in Canada, primarily in Yukon Territory. The Company’s principal mining
business activities are currently being carried out within the Keno Hill District (the “District”) in the Yukon
Territory. The District is a silver mining region in Canada, encompassing over 35 former mines that produced variously from approximately
1918 through 1988.
The Company’s mineral property holdings
within the District cover certain geological areas which host silver mineralization, including historic producing former mines
and most of the other mineral occurrences. In addition to the deposits described below that are within the District as detailed
in the independent technical report with an effective date of March 28, 2019, as amended and issued on February 13, 2020, prepared
by Mining Plus Canada Consulting Ltd. entitled “NI 43-101 Technical Report, Prefeasibility Study of the Keno Hill Silver
District Project, Yukon Territory, Canada” (the “PFS”) was filed and is available on SEDAR under the Company’s
profile at www.sedar.com.
The Company holds several other less advanced
property interests within the District, including but not limited to the Silver King, Elsa, Husky, Sadie Ladue and McQuesten properties,
which potentially could become material properties depending on the results of exploration programs the Company may carry out on
them in the future, as well as the separate Elsa Tailings Property. Other non-material mineral property interests of the Company
include Harlan properties in the Yukon, and certain net smelter return royalties in respect of the Brewery Creek, Ida-Oro (formerly
Klondike) and Sprogge properties in the Yukon and the Telegraph Creek, Iskut River, Kiniskan Lake and Manson Creek properties in
British Columbia.
The documents incorporated by reference
herein, including the 2019 AIF and the PFS, contain further details regarding the business of Alexco. See “Documents Incorporated
by Reference.”
The Offering
The following is a summary of the principal
features of the Offering and is subject to, and should be read together with the more detailed information, financial data and
statements contained elsewhere in, and incorporated by reference into, this prospectus supplement and the accompanying prospectus.
Securities Offered
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4,054,500 Offered Shares
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Offering Size
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C$7,500,825
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Option to purchase additional Offered Shares
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The Company has granted to the Underwriters an option to purchase up to an additional 608,175 Offered Shares at the Offering Price on the same terms and conditions as the Offering, exercisable in whole or in part and from time to time, for a period of up to 30 days following closing of the Offering to cover over-allotments, if any.
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Plan of Distribution
|
|
The Offering is made pursuant to the Underwriting Agreement dated March 25, 2020 between the Company and the Underwriters. See “Plan of Distribution” for details regarding the Underwriters’ Fee.
|
|
|
|
Use of Proceeds
|
|
The Company anticipates that the net proceeds from this Offering will be approximately C$6,825,775, after deducting the Underwriters’ Fee and other expenses related to the Offering. The Company intends to use the net proceeds of the Offering for preservation and measured advancement of mine development activity at the Keno Hill Silver Project, exploration and for general working capital purposes. Pending such uses, the Company intends to invest the net proceeds from the Offering in guaranteed investments offered by a Schedule I chartered bank under the Bank Act (Canada). See “Use of Proceeds”.
|
|
|
|
Risk Factors
|
|
Investing in the Offered Shares is speculative and involves a high degree of risk. Each prospective investor should carefully consider the risks described under the sections titled “Risk Factors” in this prospectus supplement and in the accompanying prospectus, and under similar headings in the documents incorporated by reference herein and therein before investing in the Offered Shares.
|
|
|
|
Listing
|
|
The Company will apply to list the Offered Shares qualified for distribution by this prospectus supplement on the TSX and NYSE American. Listing will be subject to the Company fulfilling all of the listing requirements of the TSX and NYSE American.
|
|
|
|
Closing
|
|
On or about March 27, 2020 or such other date as the Company and the Co-Lead Underwriters mutually agree (the “Closing Date”).
|
|
|
|
Trading symbol
|
|
TSX and NYSE American: AXU
|
RISK FACTORS
Investing in the Offered Shares is speculative
and involves a high degree of risk due to the nature of the Company’s business and the present stage of exploration and development
of its mineral properties. The following risk factors, as well as risks currently unknown to the Company, could materially adversely
affect Alexco’s future business, operations and financial condition and could cause them to differ materially from the estimates
described in forward-looking information relating to the Company, or its business, property or financial results, each of which
could cause purchasers of the Offered Shares to lose part or all of their investment. In addition to the other information contained
in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein, prospective
investors should carefully consider the factors set out under the “Risk Factors” section beginning on page 12 in the
accompanying prospectus, the factors set out under the “Risk Factors” section beginning on page 14 in the 2019
AIF, the factors set out under the “Risk Factors” section beginning on page 23 of the Annual MD&A and the factors
set out below in evaluating the Company and its business before making an investment in the Offered Shares.
Risks Relating to the Offered Shares
and the Offering
Loss of entire investment.
An investment in the Offered Shares is
speculative and may result in the loss of an investor’s entire investment. Only potential investors who are experienced in
high risk investments and who can afford to lose their entire investment should consider an investment in the Company.
COVID-19 Public Health Crisis
The Company’s business, operations
and financial condition could be materially and adversely affected by the outbreak of epidemics or pandemics or other health crises,
including the recent outbreak of COVID-19. To date, there have been a large number of temporary business closures, quarantines
and a general reduction in consumer activity in a number of countries including Canada, the United States, Europe and China. The
outbreak has caused companies and various international jurisdictions to impose travel, gathering and other public health restrictions.
While these effects are expected to be temporary, the duration of the various disruptions to businesses locally and internationally
and the related financial impact cannot be reasonably estimated at this time. Similarly, the Company cannot estimate whether or
to what extent this outbreak and the potential financial impact may extend to countries outside of those currently impacted. Such
public health crises can result in volatility and disruptions in the supply and demand for silver and other metals and minerals,
global supply chains and financial markets, as well as declining trade and market sentiment and reduced mobility of people, all
of which could affect commodity prices, interest rates, credit ratings, credit risk, share prices and inflation. The risks to the
Company of such public health crises also include risks to employee health and safety, a slowdown or temporary suspension of operations
in geographic locations impacted by an outbreak, increased labor and fuel costs, regulatory changes, political or economic instabilities
or civil unrest. At this point, the extent to which COVID-19 will or may impact the Company is uncertain and these factors are
beyond the Company’s control; however, it is possible that COVID-19 may have a material adverse effect on the Company’s
business, results of operations and financial condition.
The trading price for the Company’s
securities is volatile.
The market prices for the securities of
mining companies, including the Company, have historically been highly volatile. The market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of any particular company. In addition, because of
the nature of Alexco’s business, certain factors such as the Company’s announcements and the public’s reaction,
operating performance and the performance of competitors and other similar companies, fluctuations in the market prices of the
Company’s resources, government regulations, changes in earnings estimates or recommendations by research analysts who track
Alexco’s securities or securities of other companies in the resource sector, general market conditions, announcements relating
to litigation, the arrival or departure of key personnel and the factors listed under the heading “Cautionary Note Regarding
Forward-Looking Statements” can have an adverse impact on the market price of the Common Shares. For example, since January
1, 2020, the closing price of the Common Shares on the TSX has ranged from a low of C$1.32 to a high of C$2.95 and on the NYSE
American has ranged from a low of US$0.92 to a high of US$2.32.
Any negative change in the public’s
perception of the Company’s prospects could cause the price of the Company’s securities, including the price of the
Common Shares, to decrease dramatically. Furthermore, any negative change in the public’s perception of the prospects of
mining companies in general could depress the price of Alexco’s securities, including the price of the Common Shares, regardless
of the Company’s results. Following declines in the market price of a company’s securities, securities class-action
litigation is often instituted. Litigation of this type, if instituted, could result in substantial costs and a diversion of Alexco’s
management’s attention and resources.
Sales of a significant number of
Common Shares in the public markets, or the perception of such sales, could depress the market price of the Common Shares.
Sales of a substantial number of Common
Shares or other equity-related securities in the public markets by the Company or its significant shareholders could depress the
market price of the Common Shares and impair Alexco’s ability to raise capital through the sale of additional equity securities.
Alexco cannot predict the effect that future sales of the Common Shares or other equity-related securities would have on the market
price of the Common Shares. The price of the Common Shares could be affected by possible sales of the Common Shares by hedging
or arbitrage trading activity which the Company expects to occur involving the Common Shares.
The Company has discretion concerning
the use of cash resources, including the proceeds of the Offering, as well as the timing of expenditures.
The Company has discretion concerning the
application of its cash resources and the timing of expenditures (including in respect of the proceeds of the Offering) and shareholders
may not agree with the manner in which the Company elects to allocate and spend cash resources. The results and the effectiveness
of the application of cash resources are uncertain. The failure by the Company to apply cash resources effectively could have a
material adverse effect on the business of the Company. Management of the Company will have discretion with respect to the use
of the proceeds from the Offering and investors will be relying on the judgment of management regarding the application of these
proceeds. Management of the Company could spend most of the proceeds from the Offering in ways that the Company’s security
holders may not consider optimal or that do not yield a favourable return. Prospective investors will not have the opportunity,
as part of their investment in the Offered Shares, to influence the manner in which the proceeds of the Offering are used. At the
date of this prospectus supplement, the Company intends to use the proceeds from the Offering as indicated in the discussion under
“Use of Proceeds”. However, the Company’s needs may change as the business of the Company evolves and the Company
may have to allocate the proceeds differently than as indicated in the discussion under “Use of Proceeds”. As a result,
the proceeds that the Company receives in the Offering may be used in a manner significantly different from the Company’s
current expectations.
The Company does not intend to pay
dividends in the foreseeable future.
The Company has never declared or paid
any dividends on its Common Shares. The Company intends, for the foreseeable future, to retain its future earnings, if any, to
finance its exploration activities and further development and the expansion of the business. The payment of future dividends,
if any, will be reviewed periodically by the Board of Directors of the Company and will depend upon, among other things, conditions
then existing including our earnings, financial condition, cash on hand, financial requirements to fund our exploration activities,
development and growth, and other factors that the Board of Directors of the Company may consider appropriate in the circumstances.
DESCRIPTION OF SECURITIES BEING DISTRIBUTED
Common Shares
The authorized capital of the Company consists
of an unlimited number of Common Shares, without par value. As at the close of business on March 24, 2020, 119,994,664 Common Shares
of the Company were issued and outstanding.
The holders of the Common Shares are entitled
to vote at all meetings of holders of Common Shares, to receive dividends if, as and when declared by the directors and to participate
rateably in any distribution of property or assets upon the liquidation, winding-up or other dissolution of the Company. The Common
Shares carry no pre-emptive rights, conversion or exchange rights, or redemption, retraction, repurchase, sinking fund or purchase
fund provisions. There are no provisions requiring a holder of Common Shares to contribute additional capital and no restrictions
on the issuance of additional securities by the Company. There are no restrictions on the repurchase or redemption of Common Shares
by the Company except to the extent that any such repurchase or redemption would render the Company insolvent.
USE OF PROCEEDS
The Company estimates that the net proceeds
from the Offering will be approximately C$6,825,775.50 after deducting the Underwriters’ Fee of C$450,049.50 and expenses
in the aggregate amount of approximately C$225,000. If the Over-Allotment Option is exercised in full, the net proceeds from the
Offering are estimated to be approximately C$7,883,391.83 after deducting the Underwriters’ Fee of C$517,556.93 and the estimated
expenses relating to the Offering of approximately C$225,000. See “Plan of Distribution”.
The Company intends to use the net proceeds
from the Offering for preservation and measured advancement of mine development activity at the Keno Hill Silver Project, exploration
and for general working capital. Pending such uses, the Company intends to invest the net proceeds from the Offering in guaranteed
investments offered by a Schedule I chartered bank under the Bank Act (Canada).
The net proceeds of the Offering are intended
to be used as follows (assuming the Over-Allotment Option is not exercised):
Principal Purpose
|
|
Estimated
Amount to be Expended
(C$6.825
m)
|
Development and site expenditures at Keno Hill Silver Project
|
|
C$4,000,000
|
General corporate and working capital purposes(1)
|
|
C$2,825,000
|
Total
|
|
C$6,825,000
|
Note:
|
(1)
|
Funds included in general corporate purposes may be allocated to corporate expenses, business development
and potential future acquisitions.
|
The key business objective the Company
intends to meet with the proceeds from the sale of the Offered Shares is to increase Company’s cash position and to allow
the Company to continue development at the Keno Hill Silver Project.
If the Underwriters’ Over-Allotment
Option is exercised in whole or in part, the Company will use the additional net proceeds from such exercise for general corporate
purposes and working capital. While the Company intends to spend the net proceeds of the Offering as stated above, there may be
circumstances where, for sound business reasons, a re-allocation of funds may be necessary or advisable.
The actual amount that the Company spends
in connection with each of the intended uses of proceeds may vary significantly from the amounts specified above, and will depend
on a number of factors, including those listed under the heading “Risk Factors” in or incorporated by reference in
this prospectus supplement and the accompanying prospectus.
The Company has not yet achieved positive
operating cash flow, and there are no assurances that the Company will not experience negative cash flow from operations in the
future. To the extent that the Company has negative cash flow in any future period, certain of the proceeds from the sale of the
Offered Shares may be used to fund such negative cash flow from operating activities.
CONSOLIDATED CAPITALIZATION
There have been no material changes in
the share and loan capital of the Company on a consolidated basis from December 31, 2019 to the date of this Prospectus Supplement.
As of December 31, 2019, after giving effect to the Offering and an aggregate of 843,997 Common Shares pursuant to the exercise
of stock options and the vesting of restricted stock units, the share capital of the Company will increase by the amount of the
net proceeds of the Offering 843,997 Common Shares pursuant to the exercise of stock options and the vesting of restricted stock
units. Since December 31, 2019, the number of outstanding convertible securities of the Company have not changed other than a decrease
by an aggregate of 843,997 Common Shares issuable pursuant to the exercise of stock options and vesting of restricted stock units
previously noted.
PRIOR SALES
The following table sets forth for the
12 month period prior to the date of this prospectus supplement details of the price at which securities have been issued or are
to be issued by the Company, the number of securities issued at that price and the date on which the securities were issued:
Date of Issue
|
Type of Securities
|
No. of Securities
|
Issue or Exercise Price per Security
|
Reason for Issue
|
March 28, 2019
|
Stock Options
|
50,000
|
$1.76
|
Grant of Stock Options
|
April 23, 2019
|
“Flow-Through” Common Shares
|
1,842,200
|
$1.90
|
Private Placement
|
April 23, 2019
|
Underwriter’s Warrants
|
55,266
|
$1.70
|
Private Placement
|
May 10, 2019
|
Common Shares
|
5,333
|
$1.42
|
Vesting of Restricted Share Units
|
June 7, 2019
|
Common Shares
|
6,500,000
|
US$1.00
|
Shelf Prospectus Supplement Offering
|
June 7, 2019
|
Underwriter’s Warrants
|
260,000
|
US$1.00
|
Shelf Prospectus Supplement Offering
|
July 17, 2019
|
Common Shares
|
256,000
|
US$1.00
|
Exercise of Warrants
|
July 22, 2019
|
Common Shares
|
4,000
|
US$1.00
|
Exercise of Warrants
|
July 25, 2019
|
Common Shares
|
20,000
|
$0.60
|
Exercise of Stock Options
|
July 25, 2019
|
Common Shares
|
10,000
|
$0.84
|
Exercise of Stock Options
|
August 20, 2019
|
Common Shares
|
89,000
|
$0.60
|
Exercise of Stock Options
|
August 27, 2019
|
Common Shares
|
37,500
|
$0.84
|
Exercise of Stock Options
|
August 28, 2019
|
Common Shares
|
2,000
|
$1.75
|
Exercise of Stock Options
|
August 26, 2019
|
Common Shares
|
55,266
|
$1.70
|
Exercise of Warrants
|
August 29, 2019
|
Common Shares
|
666,667
|
$2.25
|
Exercise of Warrants
|
Date of Issue
|
Type of Securities
|
No. of Securities
|
Issue or Exercise Price per Security
|
Reason for Issue
|
September 3, 2019
|
Common Shares
|
90,000
|
$0.84
|
Exercise of Stock Options
|
September 6, 2019
|
Common Shares
|
5,000
|
$1.27
|
Exercise of Stock Options
|
September 9, 2019
|
Common Shares
|
333,333
|
$2.25
|
Exercise of Warrants
|
September 23, 2019
|
Common Shares
|
66,000
|
$0.60
|
Exercise of Stock Options
|
October 17, 2019
|
Common Shares
|
15,000
|
$0.60
|
Exercise of Stock Options
|
October 17, 2019
|
Common Shares
|
35,000
|
$0.84
|
Exercise of Stock Options
|
December 12, 2019
|
Common Shares
|
190,000
|
$0.60
|
Exercise of Stock Options
|
December 17, 2019
|
Stock Options
|
1,974,900
|
$2.61
|
Grant of Stock Options
|
December 17, 2019
|
Restricted Share Units
|
235,000
|
$2.61
|
Grant of Restricted Share Units
|
December 17, 2019
|
Restricted Share Units
|
78,331
|
$2.59
|
Vesting of Restricted Share Units
|
December 17, 2019
|
Deferred Share Units
|
280,000
|
$2.61
|
Grant of Deferred Share Units
|
December 23, 2019
|
Common Shares
|
53,000
|
$2.07
|
Exercise of Stock Options
|
December 23, 2019
|
Common Shares
|
100,000
|
$1.73
|
Exercise of Stock Options
|
December 30, 2019
|
Common Shares
|
50,000
|
$0.84
|
Exercise of Stock Options
|
January 8, 2020
|
Common Shares
|
208,334
|
$2.87
|
Vesting of Restricted Share Units
|
January 20, 2020
|
Common Shares
|
542,333
|
$0.60
|
Exercise of Stock Options
|
January 21, 2020
|
Common Shares
|
30,000
|
$2.07
|
Exercise of Stock Options
|
February 3, 2020
|
Common Shares
|
43,330
|
$2.29
|
Vesting of Restricted Share Units
|
February 6, 2020
|
Common Shares
|
12,000
|
$0.60
|
Exercise of Stock Options
|
February 6, 2020
|
Common Shares
|
5,000
|
$0.84
|
Exercise of Stock Options
|
February 24, 2020
|
Common Shares
|
3,000
|
$2.07
|
Exercise of Stock Options
|
PRICE RANGE AND TRADING VOLUME
The outstanding Common Shares are listed
on the TSX and the NYSE American, both under the symbol “AXU”. The following table sets forth, for the 12-month period
prior to the date of this prospectus supplement, details of the trading prices and volume (rounded up or down to the nearest one
hundredth) on a monthly basis of the Common Shares on the TSX and the NYSE American, respectively.
|
TSX
|
NYSE American
|
Period
|
High
(C$)
|
Low
(C$)
|
Volume
|
High
(US$)
|
Low
(US$)
|
Volume
|
2020
|
March 1 - 24
|
2.41
|
1.00
|
20,214,587
|
1.80
|
0.72
|
41,244,076
|
February
|
3.05
|
1.68
|
15,173,631
|
2.30
|
1.23
|
29,962,816
|
January
|
3.12
|
2.00
|
13,452,009
|
2.40
|
1.68
|
30,163,072
|
2019
|
December
|
3.19
|
2.29
|
5,772,990
|
2.46
|
1.72
|
35,585,473
|
November
|
2.53
|
2.01
|
4,645,080
|
1.93
|
1.53
|
20,395,977
|
October
|
2.73
|
2.14
|
4,639,227
|
2.08
|
1.62
|
21,029,102
|
September
|
3.73
|
2.2
|
9,195,616
|
2.81
|
1.66
|
43,010,521
|
August
|
3.45
|
2.09
|
8,457,795
|
2.60
|
1.57
|
38,449,986
|
July
|
2.45
|
1.37
|
5,142,117
|
1.87
|
1.04
|
19,731,516
|
June
|
1.62
|
1.26
|
2,482,756
|
1.24
|
0.95
|
10,212,529
|
May
|
1.47
|
1.31
|
904,631
|
1.1
|
0.95
|
4,145,785
|
April
|
1.60
|
1.265
|
2,022,902
|
1.22
|
0.93
|
7,848,470
|
March
|
1.86
|
1.53
|
1,389,235
|
1.41
|
1.15
|
6,574,805
|
On March 24, 2020 the closing price of
the Common Shares on the TSX and the NYSE American was C$2.06 and US$1.44 per Common Share, respectively.
PLAN OF DISTRIBUTION
Subject to and pursuant to the Underwriting
Agreement, the Company has agreed to sell and the Underwriters have severally, and not jointly nor jointly and severally, agreed
to purchase on the Closing Date, a total of 4,054,500 Offered Shares at the Offering Price of C$1.85 per Offered Share, payable
in cash to the Company against delivery of such Offered Shares, on the Closing Date. The Company and the Underwriters expect the
size of the Offering will be for an anticipated minimum of C$5,000,000. The Offering Price was determined by arm’s length
negotiation between the Company and the Co-Lead Underwriters, on behalf of the Underwriters. Closing is expected to occur on or
about March 27, 2020, or such other date as may be agreed upon by the Company and the Co-Lead Underwriters.
In consideration for their services in
connection with the Offering, the Underwriters will be paid the Underwriters’ Fee equal to 6.0% of the gross proceeds of
the Offering (C$1.85 per Offered Share, for an aggregate fee payable by the Company of C$450,049.50, exclusive of the Over-Allotment
Shares). The Company has agreed in the Underwriting Agreement to reimburse the Underwriters for their legal fees and certain other
expenses in connection with the Offering.
The obligations of the Underwriters under
the Underwriting Agreement may be terminated at their discretion upon the occurrence of certain events specified in the Underwriting
Agreement including standard “litigation out”, “disaster out” “regulatory out”, “material
adverse change out”, “market out”, and “breach out” rights of termination. The Underwriters are,
however, obligated to take up and pay for all of the Offered Shares if any of the Offered Shares are purchased under the Underwriting
Agreement. The Underwriters, as principals, are conditionally offering the Offered Shares, subject to prior sale, if, as and when
issued to and accepted by them, subject to certain conditions contained in the Underwriting Agreement, such as receipt by the Underwriters
of officers’ certificates and legal opinions.
Pursuant to the Underwriting Agreement,
the Company has granted to the Underwriters the Over-Allotment Option, exercisable in whole or in part at any time up to 30 days
after the Closing Date, to purchase up to an additional 608,175 Over-Allotment Shares at the Offering Price to cover over-allocations,
if any, and for market stabilization purposes, on the same terms and conditions as apply to the purchase of Offered Shares thereunder.
This prospectus supplement qualifies for distribution the Offered Shares as well as the grant of the Over-Allotment Option and
the issuance of the Over-Allotment Shares pursuant to the exercise of the Over-Allotment Option. A purchaser who acquires Over-Allotment
Shares forming part of the Underwriters’ over-allocation position acquires those Over-Allotment Shares under this prospectus
supplement, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment
Option or secondary market purchases.
The Offered Shares will be offered in the
provinces of British Columbia, Alberta, Ontario, Saskatchewan and Manitoba, and in the United States pursuant to the MJDS and,
subject to applicable law and the Underwriting Agreement, certain jurisdictions outside of Canada and the United States.
The Company has applied to list the Offered
Shares on the TSX and the NYSE American. The TSX and NYSE American have not conditionally approved the Company’s listing
applications and there is no assurance that the TSX or NYSE American will approve the listing applications. Listing will be subject
to the Company fulfilling all of the listing requirements of the TSX and the NYSE American.
Pursuant to policies of certain Canadian
securities regulatory authorities, the Underwriters may not, throughout the period of distribution under the Offering, bid for
or purchase Common Shares for their own accounts or for accounts over which they exercise control or direction. The foregoing restriction
is subject to certain exceptions, on the condition that the bid or purchase not be engaged in for the purpose of creating actual
or apparent active trading in or raising the price of the Common Shares. These exceptions include a bid or purchase permitted under
Universal Market Integrity Rules for Canadian marketplaces administered by the Investment Industry Regulatory Organization of Canada
relating to market stabilization and passive market making activities, and a bid or purchase made for or on behalf of a customer
where the order was not solicited during the period of distribution. Subject to the foregoing, the Underwriters may effect transactions
which stabilize or maintain the market price of the Common Shares at levels other than those which otherwise might prevail on the
open market. These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of preventing
or mitigating a decline in the market price of the Common Shares, and may cause the price of the Offered Shares to be higher than
would otherwise exist in the open market absent such stabilizing activities. As a result, the price of the Offered Shares may be
higher than the price that might otherwise exist in the open market. Such transactions, if commenced, may be discontinued at any
time. The Underwriters may carry out these transactions on the TSX and NYSE American, in the over-the-counter market or otherwise.
The Underwriters propose to offer the Offered
Shares to the public initially at the price specified on the cover page of this prospectus supplement. If all of the Offered Shares
are not sold at the price specified in this prospectus supplement, the Underwriters may decrease the offering price and change
the other selling terms. The compensation realized by the Underwriters will decrease by the amount that the aggregate offering
price paid by the purchasers for the Offered Shares is less than the gross proceeds paid by the Underwriters to the Company. The
decrease in the offering price will not decrease the amount of net proceeds of the Offering to the Company.
The Company has agreed, pursuant to the
Underwriting Agreement, to indemnify the Underwriters and their affiliates and their directors, officers, employees, shareholders
and agents and each other person, if any, controlling the Underwriters or their affiliates and against certain liabilities, including
liabilities under Canadian and U.S. securities legislation in certain circumstances or to contribute to payments the Underwriters
may have to make because of such liabilities.
Except as contemplated by the Underwriting
Agreement, the Company has agreed that it will not, without the prior written consent of Cormark (not to be unreasonably withheld),
directly or indirectly issue, offer, pledge, sell, contract to sell, contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase or otherwise transfer, lend or dispose of directly or indirectly, any Common Shares
or securities or other financial instruments convertible into or having the right to acquire Common Shares or enter into any agreement
or arrangement under which the Company would acquire or transfer to another, in whole or in part, any of the economic consequences
of ownership of Common Shares, whether that agreement or arrangement may be settled by the delivery of Common Shares or other securities
or cash, or agree to become bound to do so, or disclose to the public any intention to do so, during the period from the date hereof
and ending 90 days following the Closing Date; provided that, notwithstanding the foregoing, the Company may: (i) grant of options
or other securities (including restricted share units and deferred share units) in the normal course pursuant to the Company’s
stock option plan or other stock-based compensation plans, and issue Common Shares in accordance with the terms thereof; and (ii)
issue equity securities pursuant to the exercise or conversion, as the case may be, of any warrants, special warrants or other
convertible securities of the Company outstanding on the date hereof.
The Company has agreed to use its reasonable
efforts to cause each director and officer of the Company to enter into lock-up agreements in favour of the Underwriters evidencing
their agreement not to, for a period of 90 days following the Closing Date, directly or indirectly offer, sell or enter into any
other agreement to transfer the economic consequences of, or otherwise dispose of or deal with, or publicly announce any intention
to do any of the foregoing, any Common Shares or other securities of the Company held by them, directly or indirectly or under
their control or direction, other than as permitted under the terms of the lock-up agreements.
This prospectus supplement and accompanying
prospectus in electronic format may be made available on the website maintained by the Underwriters or their U.S. affiliates participating
in the Offering. The Underwriters and their U.S. affiliates may agree to allocate a number of Offered Shares for sale to their
online brokerage account holders. Internet distributions will be allocated by the representative to the Underwriters and their
U.S. affiliates that may make Internet distributions on the same basis as other allocations. Other than the accompanying prospectus
and prospectus supplement in electronic format, the information on these websites is not part of this prospectus supplement or
the registration statement of which this prospectus supplement forms a part, has not been approved or endorsed by the Company or
the Underwriters in their capacity as underwriters, and should not be relied upon by investors.
The Underwriters and their affiliates have
provided in the past to the Company and its affiliates, and may provide from time to time in the future, certain commercial banking,
financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business,
for which they have received and may continue to receive customary fees and commissions. In addition, from time to time, the Underwriters
and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves
or their customers, long or short positions in the Company’s debt or equity securities or loans, and may do so in the future.
Subscriptions for the Offered Shares will
be received by the Underwriters subject to rejection or allotment in whole or in part and the right is reserved to close the subscription
book at any time without notice. An electronic deposit evidencing the Offered Shares is expected to be registered to CDS and will
be deposited with CDS on the Closing Date or such other date as may be agreed upon between the Company and the Underwriters. Except
in limited circumstances, a purchaser of such Offered Shares will receive only a customer confirmation from the registered dealer
through which such Offered Shares are purchased.
LEGAL MATTERS
Certain legal matters related to the Common
Shares offered pursuant to this prospectus supplement will be passed upon on behalf of the Company by Miller Thomson LLP with respect
to Canadian legal matters and by Dorsey & Whitney LLP with respect to United States legal matters, and on behalf of the Underwriters
by Cassels Brock & Blackwell LLP with respect to Canadian legal matters and Troutman Sanders LLP with respect to United States
legal matters. At the date of this prospectus supplement, the partners and associates of Miller Thomson LLP as a group beneficially
own less than 1% of the Company’s outstanding securities. At the date of this prospectus supplement, the partners and associates
of Cassels Brock & Blackwell LLP as a group beneficially own less than 1% of the Company’s outstanding securities.
DOCUMENTS INCORPORATED BY REFERENCE
This prospectus supplement is deemed
to be incorporated by reference into the accompanying prospectus solely for the purposes of the Offering. Other documents are also
incorporated, or are deemed to be incorporated by reference, into the accompanying prospectus and reference should be made to the
accompanying prospectus for full particulars thereof.
Information has been incorporated
by reference in this prospectus supplement from documents filed with the securities commissions or similar regulatory authorities
in each of the provinces British Columbia, Alberta, Ontario, Manitoba and Saskatchewan. Copies of the documents incorporated
herein by reference may be obtained on request without charge from the Corporate Secretary of Alexco at Suite 1225, Two Bentall
Centre, 555 Burrard Street, Box 216, Vancouver, British Columbia, V7X 1M9, Telephone (604) 633-4888. These documents are also available
on SEDAR, which can be accessed online at www.sedar.com. Information contained or featured on the Company’s website shall
not be deemed to be part of this prospectus supplement or the accompanying prospectus.
This prospectus supplement is deemed, as
of the date hereof, to be incorporated by reference into the accompanying prospectus solely for the purposes of the Offering.
The following documents, which have been
filed by the Company with the securities commissions or similar authorities in British Columbia, Alberta, Ontario, Manitoba and
Saskatchewan (the “Commissions”) and filed with or furnished to the SEC, are specifically incorporated by reference
into, and form an integral part of, the accompanying prospectus, as supplemented by this prospectus supplement:
(a)
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the 2019 AIF, filed on SEDAR on March 11, 2020;
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(b)
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the management information circular of Alexco dated April 26, 2019 prepared in connection with
Alexco’s annual general meeting of shareholders held on June 6, 2019, filed on SEDAR on May 2, 2019;
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(c)
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the audited consolidated financial statements of Alexco for the year ended December 31, 2019, together
with the notes thereto and the auditors’ report thereon and related management’s discussion and analysis (the “Annual
MD&A”), filed on SEDAR on March 11, 2020;
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(d)
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the material change report dated February 24, 2020 in respect of the sale of shares of the Company’s
subsidiary, Alexco Environmental Group Holdings Inc., filed on SEDAR on February 25, 2020; and
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(e)
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the template version of the term sheet (the “Term Sheet”) dated March 24, 2020
in connection with the Offering.
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Any document of the type referred to
in section 11.1 of Form 44-101F1 of National Instrument 44-101 – Short Form Prospectus Distributions and required to be filed
by the Company with the securities commissions or similar regulatory authorities in Canada after the date of this prospectus supplement
and before the termination of the distribution under the Offering shall be deemed to be incorporated by reference in this prospectus
supplement for the purposes of the Offering.
In addition, to the extent that any document
or information incorporated by reference into this prospectus supplement is included in any report that is filed with or furnished
to the SEC after the date of this prospectus supplement and prior to the date that all Offered Shares offered hereunder are sold
or the Offering is otherwise terminated, such document or information shall be deemed to be incorporated by reference as an exhibit
to the registration statement of which this prospectus supplement forms a part (in the case of documents or information deemed
furnished on Form 6-K, only to the extent specifically stated therein).
Any statement contained in this prospectus
supplement, the accompanying prospectus or in a document incorporated or deemed to be incorporated by reference in the accompanying
prospectus shall be deemed to be modified or superseded for purposes of the Offering to the extent that a statement contained in
this prospectus supplement or in any other subsequently filed document which also is or is deemed to be incorporated by reference
in the accompanying prospectus modifies or supersedes such statement. The modifying or superseding statement need not state that
it has modified or superseded a prior statement or include any other information set forth in the document it modifies or supersedes.
The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material
fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which
it was made. Any statement so modified or superseded shall not constitute a part of this prospectus supplement or the accompanying
prospectus, except as so modified or superseded.
References to the Company’s website
in any documents that are incorporated by reference into this prospectus supplement and the accompanying prospectus do not incorporate
by reference the information on such website into this prospectus supplement or the accompanying prospectus, and the Company disclaims
any such incorporation by reference.
DOCUMENTS FILED AS PART OF THE REGISTRATION
STATEMENT
In addition to the documents specified
in this prospectus supplement and in the accompanying prospectus under “Documents Incorporated by Reference”, the Underwriting
Agreement described in this prospectus supplement and the consents of PricewaterhouseCoopers LLP and the experts referred to and
listed under “Experts” in this prospectus supplement have been or will be filed with the SEC and do or will form part
of the registration statement of which this prospectus supplement forms a part.
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain
material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to
the acquisition, ownership, and disposition of Offered Shares acquired pursuant to this Offering.
This summary is for general information
purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations
that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of Offered Shares. In
addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may
affect the U.S. federal income tax consequences to such U.S. Holder, including, without limitation, specific tax consequences to
a U.S. Holder under an applicable income tax treaty. Accordingly, this summary is not intended to be, and should not be construed
as, legal or U.S. federal income tax advice with respect to any U.S. Holder. This summary does not address the U.S. federal net
investment income, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, or non-U.S. tax consequences
to U.S. Holders of the acquisition, ownership, and disposition of Offered Shares. In addition, except as specifically set forth
below, this summary does not discuss applicable tax reporting requirements. Each prospective U.S. Holder should consult its own
tax advisor regarding the U.S. federal income, U.S. federal net investment income, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership, and disposition of
Offered Shares.
No ruling from the Internal Revenue Service
(the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the
acquisition, ownership, and disposition of Offered Shares. This summary is not binding on the IRS, and the IRS is not precluded
from taking a position that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities
on which this summary are based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or
more of the conclusions described in this summary.
Scope of this Summary
Authorities
This summary is based on the Internal Revenue
Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published
rulings of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States of America
with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”),
and U.S. court decisions that are applicable, and, in each case, as in effect and available, as of the date of this document. Any
of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change
could be applied retroactively. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed
legislation.
U.S. Holders
For purposes of this summary, the term
“U.S. Holder” means a beneficial owner of Offered Shares acquired pursuant to this Offering that is for U.S.
federal income tax purposes:
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an individual who is a citizen or resident
of the United States;
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a corporation (or other entity treated
as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the
District of Columbia;
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an estate whose income is subject to U.S.
federal income taxation regardless of its source; or
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a trust that (1) is subject to the primary
supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2)
has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
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U.S. Holders Subject to Special U.S.
Federal Income Tax Rules Not Addressed
This summary does not address the U.S.
federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including,
but not limited to, U.S. Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual retirement accounts,
or other tax-deferred accounts; (b) are financial institutions, underwriters, insurance companies, real estate investment trusts,
or regulated investment companies; (c) are broker-dealers, dealers, or traders in securities or currencies that elect to apply
a mark-to-market accounting method; (d) have a “functional currency” other than the U.S. dollar; (e) own Offered Shares
as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other integrated transaction; (f) acquire
Offered Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) hold Offered
Shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes);
(h) are required to accelerate the recognition of any item of gross income with respect to Offered Shares as a result of such income
being recognized on an applicable financial statement; or (i) own, have owned or will own (directly, indirectly, or by attribution)
10% or more of the total combined voting power or value of the outstanding shares of the Company. This summary also does not address
the U.S. federal income tax considerations applicable to U.S. Holders who are: (a) U.S. expatriates or former long-term residents
of the United States; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes
of the Income Tax Act (Canada) (the “Tax Act”); (c) persons that use or hold, will use or hold, or that are
or will be deemed to use or hold Offered Shares in connection with carrying on a business in Canada; (d) persons whose Offered
Shares constitute “taxable Canadian property” under the Tax Act; or (e) persons that have a permanent establishment
in Canada for the purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions under the Code,
including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisor regarding the U.S.
federal income, U.S. federal net investment income, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state
and local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition of Offered Shares.
If an entity or arrangement that is classified
as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds Offered Shares, the U.S.
federal income tax consequences to such entity and the partners (or other owners) of such entity generally will depend on the activities
of the entity and the status of such partners (or owners). This summary does not address the tax consequences to any such partner
(or owner). Partners (or other owners) of entities or arrangements that are classified as partnerships or as “pass-through”
entities for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences
arising from and relating to the acquisition, ownership, and disposition of Offered Shares.
Ownership and Disposition of Offered
Shares
The following discussion is subject in
its entirety to the rules described below under the heading “Passive Foreign Investment Company Rules.”
Taxation of Distributions
A U.S. Holder that receives a distribution,
including a constructive distribution, with respect to an Offered Share will be required to include the amount of such distribution
in gross income as a dividend (without reduction for any foreign income tax withheld from such distribution) to the extent of the
current or accumulated “earnings and profits” of the Company, as computed for U.S. federal income tax purposes. To
the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution
will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the Offered Shares and
thereafter as gain from the sale or exchange of the Offered Shares (see “Sale or Other Taxable Disposition of Offered
Shares” below). However, the Company may not maintain the calculations of its earnings and profits in accordance
with U.S. federal income tax principles, and each U.S. Holder may have to assume that any distribution by the Company with respect
to the Offered Shares will constitute dividend income. Dividends received on Offered Shares by corporate U.S. Holders generally
will not be eligible for the “dividends received deduction”. Subject to applicable limitations and provided the Company
is eligible for the benefits of the Canada-U.S. Tax Convention or the Offered Shares are readily tradable on a United States securities
market, dividends paid by the Company to non-corporate U.S. Holders, including individuals, generally will be eligible for the
preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions
are satisfied, including that the Company not be classified as a PFIC (as defined below) in the tax year of distribution or in
the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application
of such rules.
Sale or Other Taxable Disposition
of Offered Shares
A U.S. Holder generally will recognize
gain or loss on the sale or other taxable disposition of Offered Shares in an amount equal to the difference, if any, between (a)
the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in the Offered
Shares sold or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which will be long-term capital
gain or loss if, at the time of the sale or other disposition, such Offered Shares are held for more than one year.
Preferential tax rates apply to long-term
capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term
capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under
the Code.
Passive Foreign Investment Company Rules
If the Company were to constitute a “passive
foreign investment company” (“PFIC”) for any year during a U.S. Holder’s holding period, then
certain potentially adverse rules would affect the U.S. federal income tax consequences to a U.S. Holder resulting from the acquisition,
ownership and disposition of Offered Shares. The Company believes that it was not a PFIC for the prior tax year, and based on current
business plans and financial expectations, the Company expects that it will not be a PFIC for the current tax year and expects
that it will not be a PFIC for the foreseeable future. No opinion of legal counsel or ruling from the IRS concerning the status
of the Company as a PFIC has been obtained or is currently planned to be requested. However, PFIC classification is fundamentally
factual in nature, generally cannot be determined until the close of the tax year in question, and is determined annually. In addition,
the analysis depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations.
Consequently, there can be no assurance that the Company has never been and will not become a PFIC for any tax year during which
U.S. Holders hold Offered Shares.
The Company generally will be a PFIC if,
after the application of certain “look-through” rules with respect to subsidiaries in which the Company holds at least
25% of the value of such subsidiary, for a tax year, (a) 75% or more of the gross income of the Company for such tax year is passive
income (the “income test”) or (b) 50% or more of the value of the Company’s assets either produce passive income
or are held for the production of passive income (the “asset test”), based on the quarterly average of the fair market
value of such assets. “Gross income” generally includes all sales revenues less the cost of goods sold, plus income
from investments and from incidental or outside operations or sources, and “passive income” generally includes, for
example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains
from commodities transactions. Active business gains arising from the sale of commodities generally are excluded from passive income
if substantially all of a foreign corporation’s commodities are stock in trade or inventory, depreciable property used in
a trade or business or supplies regularly used or consumed in the ordinary course of its trade or business, and certain other requirements
are satisfied.
In any year in which the Company is classified
as a PFIC, a U.S. Holder will be required to file an annual report with the IRS containing such information as Treasury Regulations
and/or other IRS guidance may require. In addition to penalties, a failure to satisfy such reporting requirements may result in
an extension of the time period during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding
the requirements of filing such information returns under these rules, including the requirement to file an IRS Form 8621 annually.
If the Company were a PFIC in any tax year
during which a U.S. Holder held Offered Shares, such holder generally would be subject to special rules with respect to “excess
distributions” made by the Company on the Offered Shares and with respect to gain from the disposition of Offered Shares.
An “excess distribution” generally is defined as the excess of distributions with respect to the Offered Shares received
by a U.S Holder in any tax year over 125% of the average annual distributions such U.S. Holder has received from the Company during
the shorter of the three preceding tax years, or such U.S. Holder’s holding period for the Offered Shares. Generally, a U.S.
Holder would be required to allocate any excess distribution or gain from the disposition of the Offered Shares ratably over its
holding period for the Offered Shares. Such amounts allocated to the year of the disposition or excess distribution would be taxed
as ordinary income, and amounts allocated to prior tax years would be taxed as ordinary income at the highest tax rate in effect
for each such year and an interest charge at a rate applicable to underpayments of tax would apply.
While there are U.S. federal income tax
elections that sometimes can be made to mitigate these adverse tax consequences (including the “QEF Election” under
Section 1295 of the Code and the “Mark-to-Market Election” under Section 1296 of the Code), such elections are available
in limited circumstances and must be made in a timely manner.
U.S. Holders should be aware that, for
each tax year, if any, that the Company is a PFIC, the Company can provide no assurances that it will satisfy the record keeping
requirements or make available to U.S. Holders the information such U.S. Holders require to make a QEF Election with respect to
the Company or any subsidiary that also is classified as a PFIC.
Certain additional adverse rules may apply
with respect to a U.S. Holder if the Company is a PFIC, regardless of whether the U.S. Holder makes a QEF Election. These rules
include special rules that apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC.
Subject to these special rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally
eligible for the foreign tax credit. U.S. Holders should consult their own tax advisors regarding the potential application of
the PFIC rules to the ownership and disposition of Offered Shares, and the availability of certain U.S. tax elections under the
PFIC rules.
Additional Considerations
Receipt of Foreign Currency
The amount of any distribution paid to
a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of Offered Shares, generally will be equal
to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether
such foreign currency is converted into U.S. dollars at that time). A U.S. Holder will have a basis in the foreign currency equal
to its U.S. dollar value on the date of receipt. Any U.S. Holder who converts or otherwise disposes of the foreign currency after
the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally
will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method
of tax accounting. Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences
of receiving, owning, and disposing of foreign currency.
Foreign Tax Credit
Subject to the PFIC rules discussed above,
a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the Offered
Shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian
income tax. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis,
whereas a deduction will reduce a U.S. Holder’s income that is subject to U.S. federal income tax. This election is made
on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during
a year.
The foreign tax credit rules are complex
and involve the application of rules that depend on a U.S. Holder’s particular circumstances. Accordingly, each U.S. Holder
should consult its own U.S. tax advisor regarding the foreign tax credit rules.
Backup Withholding and Information
Reporting
Under U.S. federal income tax law and Treasury
Regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement
in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals
who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition
of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also,
unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial
instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign
entity. U. S. Holders may be subject to these reporting requirements unless their Offered Shares are held in an account at certain
financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should
consult their own tax advisors regarding the requirements of filing information returns, including the requirement to file an IRS
Form 8938.
Payments made within the U.S. or by a U.S.
payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, Offered Shares will
generally be subject to information reporting and backup withholding tax, at the rate of 24%, if a U.S. Holder (a) fails to furnish
such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer
identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject
to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer
identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However,
certain exempt persons, such as corporations, generally are excluded from these information reporting and backup withholding rules.
Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding tax rules generally will
be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S.
Holder furnishes required information to the IRS in a timely manner.
THE ABOVE SUMMARY IS NOT INTENDED TO
CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP,
AND DISPOSITION OF OFFERED SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO
THEM IN THEIR OWN PARTICULAR CIRCUMSTANCES.
AUDITORS, TRANSFER AGENT AND REGISTRAR
The Company’s auditors are PricewaterhouseCoopers
LLP, Chartered Professional Accountants, of Suite 1400, 250 Howe Street, Vancouver, British Columbia, V6C 3S7. PricewaterhouseCoopers
LLP, Chartered Professional Accountants, as auditors of the Company, report that they are independent with respect to the Company
within the meaning of the Chartered Professional Accountants of British Columbia Code of Professional Conduct and within the meaning
of Public Company Accounting Oversight Board Rule 3520, Auditor Independence.
The registrar and transfer agent for the
Common Shares is Computershare Investor Services Inc. at its principal offices in Vancouver, British Columbia and Toronto, Ontario.
EXPERTS
The following are the named persons responsible
for the preparation of the PFS, and at the date of that report were “qualified persons”, and all were independent,
as then defined in NI 43-101:
Adrian Churcher, P.Eng. of Mining
Plus Canada Consulting Ltd.
Zach Allwright P.Eng. of Mining
Plus Canada Consulting Ltd.
Paul Hughes, Ph.D., P.Eng. of Mining
Plus Canada Consulting Ltd.
Gilles Arseneau, Ph.D., P.Geo.
of SRK Consulting (Canada) Inc.
Cliff Revering, PEng, CPAG, BE
of SRK Consulting (Canada) Inc.
Hassan Ghaffari, M.A. Sc., P.Eng.
of Tetra Tech Canada Inc.
Ting Lu, M. Sc., P.Eng. of Tetra
Tech Canada Inc.
David Farrow, Pr.Sci.Nat, P.Geo.
of Geostrat Consulting Inc.
Except where specifically indicated otherwise,
during its most recently completed financial year and through the date hereof, disclosures by the Company of scientific and technical
information regarding exploration projects on Alexco’s mineral properties have been approved by Alan McOnie, FAusIMM, Vice
President, Exploration of Alexco, while those regarding mine development and operations have been approved by Neil Chambers, P.
Eng., an employee of Alexco.
Based on information provided by the other
experts named above, other than with respect to Alan McOnie and Neil Chambers as described below, none of the experts above, when
or after they prepared the statement, report or valuation, has received any registered or beneficial interests, direct or indirect,
in any securities or other property of the Company or of one of the Company’s associates or affiliates (based on information
provided to the Company by the experts) or is or is expected to be elected, appointed or employed as a director, officer or employee
of the Company or of any associate or affiliate of the Company.
Both Alan McOnie and Neil Chambers have
been granted stock options of the Company through the course of their respective employments; however, the individual interests
held by each of them throughout their respective employment terms at all times represented less than one percent of the issued
and outstanding Common Shares.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The Company has filed with the SEC a registration
statement on Form F-10 relating to certain of its securities, including the Offered Shares. This prospectus supplement and
the accompanying prospectus, which constitute a part of the registration statement, do not contain all of the information contained
in the registration statement, certain items of which are contained in the exhibits to the registration statement as permitted
by the rules and regulations of the SEC. Statements included or incorporated by reference in this prospectus supplement and the
accompanying prospectus about the contents of any contract, agreement or other documents referred to are not necessarily complete,
and in each instance you should refer to the exhibits for a more complete description of the matter involved. Each such statement
is qualified in its entirety by such reference.
The Company is subject to the information
requirements of the U.S. Exchange Act and applicable Canadian securities legislation and, in accordance therewith, files reports
and other information with the SEC and with the securities regulators in Canada. Under the MJDS adopted by the United States and
Canada, documents and other information that the Company files with the SEC may be prepared in accordance with the disclosure requirements
of Canada, which are different from those of the United States. As a foreign private issuer within the meaning of rules under the
U.S. Exchange Act, the Company is exempt from the rules under the U.S. Exchange Act prescribing the furnishing and content
of proxy statements, and the Company’s officers, directors and principal shareholders are exempt from the reporting and short-swing
profit recovery provisions contained in Section 16 of the U.S. Exchange Act. In addition, the Company is not required
to publish financial statements as promptly as United States companies.
You may read and download any document
that the Company has filed with the SEC on the SEC’s EDGAR system at www.sec.gov. You may read and download any public document
that the Company has filed with the Canadian securities regulatory authorities under the Company’s profile on the SEDAR website
at www.sedar.com.
SHORT FORM PROSPECTUS
New Issue
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September 21, 2018
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ALEXCO RESOURCE CORP.
Suite 1225, Two Bentall Centre, 555 Burrard Street,
Vancouver, British Columbia, V7X 1M9
CDN$50,000,000
COMMON SHARES
WARRANTS
SUBSCRIPTION RECEIPTS
UNITS
Alexco Resource Corp. (the "Company"
or "Alexco") may offer and issue from time to time, the securities listed above or any combination thereof with
the aggregate initial offering price not to exceed Cdn$50,000,000 during the 25 month period that this short form base shelf prospectus
(this "Prospectus"), including any amendments thereto, remains effective. The Company's securities may be offered
separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of sale and
set forth in an accompanying shelf prospectus supplement ("Prospectus Supplement").
The specific terms of the securities offered
in a particular offering will be set out in the applicable Prospectus Supplement and may include, where applicable (i) in the case
of common shares, the number of common shares offered, the offering price and any other specific terms; (ii) in the case of warrants,
the designation, number and terms of the securities issuable upon exercise of the warrants, any procedures that will result in
the adjustment of these numbers, the exercise price, dates and periods of exercise, the currency in which the warrants are issued
and any other specific terms; (iii) in the case of subscription receipts, the designation, number and terms of the securities issuable
upon satisfaction of certain release conditions, any procedures that will result in the adjustment of these numbers, any additional
payments to be made to holders of subscription receipts upon satisfaction of the release conditions, the terms of the release conditions,
the terms governing the escrow of all or a portion of the gross proceeds from the sale of the subscription receipts, terms for
the refund of all or a portion of the purchase price for the subscription receipts in the event that the release conditions are
not met or any other specific terms; and (iv) in the case of units, the designation, number and terms of the common shares, warrants
or subscription receipts comprising the units. A Prospectus Supplement may include specific variable terms pertaining to the above-described
securities that are not within the alternatives or parameters set forth in this Prospectus.
All shelf information permitted under applicable
securities laws to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be delivered
to purchasers together with this Prospectus to the extent required by applicable securities laws. Each Prospectus Supplement will
be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of the Prospectus Supplement
and only for the purposes of the distribution of the securities to which the Prospectus Supplement pertains.
This offering is made by a Canadian
issuer that is permitted under a multijurisdictional disclosure system adopted by the United States and Canada ("MJDS")
to prepare this Prospectus in accordance with Canadian disclosure requirements. Prospective investors in the United States should
be aware that such requirements are different from those of the United States. Financial statements included or incorporated by
reference herein have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued
by the International Accounting Standards Board ("IASB") and may not be comparable to financial statements of United
States companies. Such financial statements are subject to the standards of the Public Company Accounting Oversight Board (United
States) and the United States Securities and Exchange Commission ("SEC") independence standards.
Prospective investors should be aware
that the acquisition and disposition of the securities described herein may have tax consequences both in the United States and
in Canada. Such consequences for investors who are resident in, or citizens of, the United States may not be described fully herein.
Prospective Investors should read the tax discussion contained in any applicable Prospectus Supplement with respect to a particular
offering of the securities. See "Certain Income Tax Considerations" in this Prospectus.
The enforcement of civil liabilities
under the United States federal securities laws may be affected adversely by the fact that the Company is existing under the laws
of British Columbia, Canada, most of its officers and directors are residents of Canada, that some or all of the experts named
in this Prospectus are residents of Canada, and most of the assets of the Company and the assets of said persons are located outside
the United States. See "Enforcement of Civil Liabilities" in this Prospectus.
NEITHER THE SEC, NOR ANY STATE SECURITIES
REGULATOR, HAS APPROVED OR DISAPPROVED THE SECURITIES OFFERED HEREBY OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
An investment in our securities involves
a high degree of risk. You should carefully read the "Risk Factors" section detailed in this Prospectus.
This Prospectus constitutes a public offering
of the securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted
to sell such securities. Alexco may offer and sell securities to, or through, underwriters or dealers and also may offer and sell
certain securities directly to other purchasers or through agents pursuant to exemptions from registration or qualification under
applicable securities laws. The Prospectus Supplement relating to each issue of securities offered thereby will set forth the names
of any underwriters, dealers, or agents involved in the offering and sale of such securities and will set forth the terms of the
offering of such securities, the method of distribution of such securities, including, to the extent applicable, the proceeds to
the Company and any fees, discounts or any other compensation payable to underwriters, dealers or agents, and any other material
terms of the plan of distribution. No underwriter has been involved in the preparation of, or has performed a review of, the contents
of this Prospectus.
Securities may be sold from time to time
in one or more transactions at a fixed price or prices or at non-fixed prices. If offered on a non-fixed price basis, securities
may be offered at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at prices
to be negotiated with purchasers at the time of sale, which prices may vary as between purchasers and during the period of distribution
of the securities.
In connection with any offering of securities
(unless otherwise specified in a Prospectus Supplement), other than an "at-the-market distribution", the underwriters
may over-allot or effect transactions which stabilize or maintain the market price of the securities offered at a level above that
which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time. See "Plan
of Distribution".
The Company's common shares are listed
on the Toronto Stock Exchange (the "TSX") under the symbol "AXR" and the NYSE American Stock Exchange
(the "NYSE American") under the symbol "AXU". Unless otherwise specified in a Prospectus Supplement,
there is no market through which the Company's warrants or subscription receipts may be sold and you may not be able to resell
any of such securities, purchased under this Prospectus or any Prospectus Supplement. This may affect the pricing of such securities
on the secondary market, the transparency and availability of trading prices, the liquidity of the securities, and the extent of
issuer regulation. See "Risk Factors".
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
You should rely only on the information
contained in or incorporated by reference into this Prospectus. Alexco has not authorized anyone to provide you with different
information. Alexco is not making an offer of these securities in any jurisdiction where the offer is not permitted. You should
bear in mind that although the information contained in this Prospectus and any Prospectus Supplement is accurate as of any date
on the front of such documents, such information may also be amended, supplemented or updated by the subsequent filing of additional
documents deemed by law to be or otherwise incorporated by reference into this Prospectus and by any subsequently filed prospectus
amendments.
This Prospectus provides a general description
of the securities that the Company may offer. Each time the Company sells securities under this Prospectus, it will provide you
with a Prospectus Supplement that will contain specific information about the terms of that offering. The Prospectus Supplement
may also add, update or change information contained in this Prospectus. Before investing in any securities, you should read both
this Prospectus and any applicable Prospectus Supplement together with additional information described below under "Documents
Incorporated by Reference" and "Available Information".
Unless stated otherwise or the context
otherwise requires, all references to dollar amounts in this Prospectus and any Prospectus Supplement are references to Canadian
dollars. References to "$" or "Cdn$" are to Canadian dollars and references to "US$" are to U.S.
dollars. See "Currency Presentation and Exchange Rate Information". The Company's financial statements that are incorporated
by reference into this Prospectus and any Prospectus Supplement have been prepared in accordance with IFRS.
Unless
the context otherwise requires, references in this Prospectus and any Prospectus Supplement to "Alexco", the "Company",
"we", "us" or "our" includes Alexco Resource Corp. and each of its material subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Prospectus and the documents incorporated
by reference into this Prospectus contain "forward-looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian
securities laws (together, "forward-looking statements") concerning the Company's business plans, including, but
not limited to, anticipated results and developments in Alexco's operations in future periods, planned exploration and development
of its mineral properties, plans related to its business and other matters that may occur in the future.
Forward-looking statements may include,
but are not limited to, statements with respect to additional capital requirements to fund further exploration and development
work on the Company's properties, 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, the amount of estimated revenues and
expenses, the success of exploration activities and permitting time lines. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often,
but not always, using words or phrases such as "expects", "anticipates", "plans", "estimates",
"intends", "strategy", "goals", "objectives" or stating that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur or be achieved,
or the negative of any of these terms and similar expressions) are not statements of historical fact and may be "forward-looking
statements".
Forward-looking statements relate to analyses
and other information that are based on forecasts of future results, estimates of amounts not yet determinable and certain assumptions
that management believes are reasonable at the time they are made. In making the forward-looking statements in this Prospectus,
the Company has applied several material assumptions, including, but not limited to, the assumption that: (1) additional financing
needed for further exploration and development work on the Company's properties will be available on reasonable terms; (2) the
proposed development of its mineral projects will be viable operationally and economically and proceed as planned; (3) market fundamentals
will result in sustained silver, gold, lead and zinc demand and prices, and such prices will be materially consistent with or more
favorable than those anticipated in the PEA (as defined under "Summary Description of Business – Mining Business");
(4) the actual nature, size and grade of its mineral resources are materially consistent with the resource estimates reported in
the supporting technical reports; (5) labor and other industry services will be available to the Company at prices consistent with
internal estimates; (6) the continuances of existing and, in certain circumstances, proposed tax and royalty regimes; and (7) that
other parties will continue to meet and satisfy their contractual obligations to the Company. Statements concerning mineral reserve
and resource estimates may also be deemed to constitute forward-looking information to the extent that they involve estimates of
the mineralization that will be encountered if the property is developed.
Financial outlook information about potential
future cash flows contained in this Prospectus or in a document incorporated by reference is based on assumptions about future
events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information
currently available. Readers are cautioned that any such financial outlook information should not be used for purposes other than
for which it is disclosed.
Forward-looking statements are subject
to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from
those expressed or implied by the forward-looking statements, including, without limitation:
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commodity price fluctuations including future prices of silver, gold, lead and zinc;
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risks related to the Company's ability to finance the development of its mineral properties;
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risks related to the Company's ability to commence production and generate material revenues or
obtain adequate financing for its planned exploration and development activities;
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the risk that permits and governmental approvals necessary to develop and operate mines on the
Company's properties will not be available on a timely basis or at all;
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uncertainty of capital costs, operating costs, production and economic returns;
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the Company's need to attract and retain qualified management and technical personnel;
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uncertainty of production at the Company's mineral exploration properties;
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risks and uncertainties relating to the interpretation of drill results, the geology, grade and
continuity of the Company's mineral deposits;
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mining and development risks, including risks related to accidents,
equipment breakdowns, labour disputes or other unanticipated difficulties with or interruptions in development, construction or
production;
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risks related to governmental regulation, including environmental regulation;
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risks related to reclamation activities on the Company's properties;
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uncertainty related to title to the Company's mineral properties;
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uncertainty related to unsettled aboriginal rights and title in the Yukon Territory;
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the Company's history of losses and expectation of future losses;
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uncertainty as to the Company's ability to acquire additional commercially mineable mineral rights;
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variations in interest rates and foreign exchange rates; and
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increased competition in the mining industry.
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This list is not exhaustive of the factors
that may affect any of the Company's forward-looking statements and new risk factors may emerge from time to time. Forward-looking
statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future
events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties
and other factors, including, without limitation, those referred to in this Prospectus under the heading "Risk Factors"
and elsewhere in this Prospectus. Readers should also carefully consider the matters discussed in the documents incorporated by
reference into this Prospectus, including the Annual Information Form, Annual MD&A and Interim MD&A, as defined below.
In addition, although the Company has attempted to identify important factors that could cause actual achievements, events or conditions
to differ materially from those identified in the forward-looking statements, there may be other factors that cause achievements,
events or conditions not to be as anticipated, estimated or intended. Many of the foregoing factors are beyond the Company's ability
to control or predict.
These forward-looking statements are based
on the beliefs, expectations and opinions of management on the date the statements are made, and such beliefs, expectations and
opinions are subject to change after such date. The Company does not assume any obligation to update forward-looking statements,
except as required by applicable securities laws, if circumstances or management's beliefs, expectations or opinions should change.
For the reasons set forth above, investors should not place undue reliance on forward-looking statements.
CAUTIONARY NOTE TO UNITED STATES INVESTORS
CONCERNING MINERAL RESERVE AND RESOURCE ESTIMATES
This Prospectus and the documents incorporated
by reference herein have been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ
from the requirements of United States securities laws. As used herein, the terms "mineral reserve", "proven mineral
reserve" and "probable mineral reserve" are Canadian mining terms as defined in accordance with Canadian National
Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian
Institute of Mining, Metallurgy and Petroleum (the "CIM") – CIM Definition Standards on Mineral Resources
and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the United
States Securities and Exchange Commission's Industry Guide 7 ("SEC Industry Guide 7") under the United States
Securities Act of 1933, as amended. Under SEC Industry Guide 7 standards, mineralization cannot be classified as a "reserve"
unless the determination has been made that the mineralization could be economically and legally extracted at the time the reserve
determination is made. As applied under SEC Industry Guide 7, a "final" or "bankable" feasibility study is
required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate
reserves, and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms "mineral
resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource"
are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide
7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned
not to assume that all or any part of a mineral deposit in these categories will ever be converted into reserves. "Inferred
mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and
legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility
studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists
or is economically or legally mineable. It is reasonably expected that the majority of inferred mineral resources could be upgraded
to indicated mineral resources with continued exploration. Disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute
"reserves" by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.
Accordingly, information concerning mineral
deposits contained in this Prospectus and the documents incorporated by reference herein may not be comparable to similar information
made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws
and the rules and regulations thereunder.
CURRENCY PRESENTATION AND EXCHANGE
RATE INFORMATION
All dollar amounts set forth in this Prospectus
are expressed in Canadian dollars, except where otherwise indicated. References to Canadian dollars, CDN$ or $ are to the currency
of Canada. References to US dollars or US$ are to the currency of the United States.
The following table sets out, for each
period indicated, the high and low exchange rates for one Canadian dollar expressed in US dollars, the average of such exchange
rates during such period, and the exchange rate at the end of such period based on the daily rate as reported by the Bank of Canada:
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Period from January 1, 2018 to
June 30, 2018
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Year Ended
December 31
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2017
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2016
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Highest rate during period
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US$
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0.7513
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US$
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0.7276
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US$
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0.6854
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Lowest rate during period
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US$
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0.8138
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US$
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0.8245
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US$
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0.7972
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Average rate during period
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US$
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0.7827
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US$
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0.7701
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US$
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0.7548
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Rate at the end of period
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US$
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0.7594
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US$
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0.7971
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US$
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0.7448
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The average exchange rate is calculated
using the average of the daily rate on the last business day of each month during the applicable fiscal year or interim period.
The Canadian dollar/U.S. dollar exchange rate has varied significantly over the last several years and investors are cautioned
not to assume that the exchange rates presented here are necessarily indicative of future exchange rates.
DOCUMENTS INCORPORATED BY REFERENCE
Information has been incorporated by reference
in this Prospectus from documents filed with securities commissions or similar authorities in British Columbia, Alberta, Ontario,
Saskatchewan and Manitoba (the "Commissions"). Copies of the documents incorporated herein by reference may be
obtained on request without charge from the Corporate Secretary of Alexco at Suite 1225, Two Bentall Centre, 555 Burrard Street,
Box 216, Vancouver, British Columbia, V7X 1M9, Canada, Telephone: (604) 633-4888 and are also available electronically on SEDAR
which can be accessed electronically at www.sedar.com.
The following documents of the Company,
which have been filed with the Commissions, are specifically incorporated by reference into, and form an integral part of, this
Prospectus:
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a.
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the management information circular of Alexco dated April 25, 2018 prepared in connection with
Alexco's annual general meeting of shareholders held on June 7, 2018 (the "Information Circular"), filed on SEDAR
on April 30, 2018;
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b.
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the unaudited interim condensed consolidated financial statements of Alexco for the six months
ended June 30, 2018 and 2017 (the "Interim Financial Statements"), together with the notes thereto and related
management's discussion and analysis (the "Interim MD&A"), filed on SEDAR on August 13, 2018;
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c.
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the amended and restated annual
information form of Alexco (the "Annual Information Form") for the year
ended December 31, 2017, filed on SEDAR on September 21, 2018;
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d.
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the audited consolidated financial statements of Alexco for the year ended December 31, 2017, together
with the notes thereto and the auditors' report thereon and related management's discussion and analysis (the "Annual MD&A"),
filed on SEDAR on March 14, 2018;
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e.
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material change report dated March 5, 2018 in respect of the Company entering into a definitive
credit agreement with Sprott Private Resource Lending (Collector), LP to provide a US$15 million credit facility, filed on SEDAR
on March 5, 2018 (the "March 5, 2018 Material Change Report");
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f.
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material change report dated June 14, 2018 in respect of the bought deal offering of 4,703,000
flow-through common shares of the Company (the "June 2018 Offering") announced on June 4, 2018 and completed on
June 13, 2018, filed on SEDAR on June 14, 2018 (the "June 14, 2018 Material Change Report"); and
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g.
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material change report dated June 20, 2018 in respect of the acquisition of Contango Strategies
Ltd. ("Contango") by a wholly-owned subsidiary of the Company, filed on SEDAR on June 20, 2018 (the
"June 20, 2018 Material Change Report").
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Any annual information form, material change reports (excluding
confidential material change reports), any interim and annual consolidated financial statements and related management discussion
and analysis, information circulars (excluding those portions that, pursuant to National Instrument 44-101 of the Canadian Securities
Administrators, are not required to be incorporated by reference herein), any business acquisition reports, any news releases or
public communications containing financial information about the Company for a financial period more recent than the periods for
which financial statements are incorporated herein by reference, and any other disclosure documents required to be filed pursuant
to an undertaking to a provincial or territorial securities regulatory authority that are filed by the Company with various securities
commissions or similar authorities in Canada after the date of this Prospectus and prior to the termination of this offering under
any Prospectus Supplement, shall be deemed to be incorporated by reference in this Prospectus.
In addition, to the extent that any
document or information incorporated by reference into this Prospectus is included in any report filed with or furnished to the
SEC pursuant to the United States Securities Exchange Act of 1934, as amended (the "U.S. Exchange Act"), after the date
of this Prospectus, such document or information shall be deemed to be incorporated by reference as an exhibit to the registration
statement of which this Prospectus forms a part (in the case of documents or information deemed furnished on Form 6-K or Form 8-K,
only to the extent specifically stated therein)
Any statement contained in this Prospectus
or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement
need not state that it has modified or superseded a prior statement or include any other information set forth in the document
it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes
that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or
an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light
of the circumstances in which it was made. Any statement so modified or superseded shall not constitute a part of this Prospectus,
except as so modified or superseded.
A Prospectus Supplement containing the
specific terms of an offering of securities, updated disclosure of earnings coverage ratios, if applicable, and other information
relating to the securities, will be delivered to prospective purchasers of such securities together with this Prospectus and the
applicable Prospectus Supplement and will be deemed to be incorporated into this Prospectus as of the date of such Prospectus Supplement
only for the purpose of the offering of the securities covered by that Prospectus Supplement.
Upon a new annual information form and
the related annual financial statements being filed by the Company with, and, where required, accepted by, the applicable securities
commissions or similar regulatory authorities during the currency of this Prospectus, the previous annual information form, the
previous annual financial statements and all quarterly financial statements, material change reports and information circulars
filed prior to the commencement of the Company's financial year in which the new annual information form is filed shall be deemed
no longer to be incorporated into this Prospectus for purposes of further offers and sales of securities hereunder.
SUMMARY DESCRIPTION OF BUSINESS
As used in this Prospectus, the terms
"we", "us", "our", "Alexco" and "the Company" refer to Alexco Resource Corp.
and its subsidiaries unless the context otherwise requires.
The Company was incorporated under the
Business Corporations Act (Yukon) on December 3, 2004 under the name "Alexco Resource Corp.", and on December
28, 2007, the Company was continued into British Columbia under the Business Corporations Act (British Columbia).
The Company's head office is located at
Suite 1225, Two Bentall Centre, 555 Burrard Street, Box 216, Vancouver, British Columbia, V7X 1M9, and its registered and records
office is located at 10th Floor, 595 Howe Street, Vancouver, British Columbia, V6C 2T5. The Company's common shares are listed
for trading on the TSX under the symbol "AXR" and the NYSE American under the symbol "AXU".
The following chart depicts the Company's
corporate structure together with the jurisdiction of incorporation of each of the Company's subsidiaries. All ownership of each
subsidiary is 100%.
General
The Company operates
two principal businesses: a mining business, comprised of mineral exploration and mine development and operation in Canada, primarily
in the Yukon Territory; and an environmental services business, providing consulting, remediation solutions and project management
services in respect of environmental permitting and compliance and site remediation, in Canada, the United States and elsewhere.
Mining Business
The Company's principal mining business
activities are currently being carried out within the Keno Hill District in the Yukon Territory. The Keno Hill District (the "District")
is a silver mining region in Canada, encompassing over 35 former mines that produced variously from approximately 1918 through
1988.
The Company's mineral property holdings
within the District cover certain geological areas which host silver mineralization, including historic producing former mines
and most of the other mineral occurrences. In addition to the deposits described below that are within the District as detailed
in the independent technical report dated March 29, 2017 with an effective date of January 3, 2017, as amended September 14, 2018,
prepared by Roscoe Postle Associates Inc. entitled "Technical Report, Preliminary Economic Assessment of the Keno Hill Silver
District Project, Yukon Territory, Canada" (the "PEA") was filed and is available on SEDAR under the Company's
profile at www.sedar.com, the Company holds several other less advanced property interests within the District, including but
not limited to the Silver King, Elsa, Husky, Sadie Ladue and McQuesten properties, as well as the separate Elsa Tailings Property,
which potentially could become material properties depending on the results of exploration programs the Company may carry out
on them in the future. Other non-material mineral property interests of the Company include Harlan properties in the Yukon, and
certain net smelter return royalties in respect of the Brewery Creek, Ida-Oro (formerly Klondike) and Sprogge properties in the
Yukon and the Telegraph Creek, Iskut River, Kiniskan Lake and Manson Creek properties in British Columbia.
The documents incorporated by reference
herein, including the Annual Information Form, contain further details regarding the business of Alexco. See "Documents Incorporated
by Reference".
Environmental Services
The Company's environmental services division,
Alexco Environmental Group ("AEG"), is in the business of managing risk and unlocking value at mature, closed
or abandoned sites through integration and implementation of the Company's core competencies, which include management of environmental
services, implementation of innovative treatment technologies, execution of site reclamation and closure operations, and, if appropriate,
rejuvenation of exploration and development activity. The Company's principal markets for these services are in Canada, the United
States and the Americas, with the Canadian market serviced primarily through the Company's wholly-owned subsidiaries, Alexco Environmental
Group Inc. ("AEG Canada"), Elsa Reclamation & Development Company Ltd. ("ERDC") and Contango,
the U.S. market through Alexco Water and Environment Inc. ("AWE"), and the balance of the Americas through either
AEG Canada, AWE or Contango. The Company provides its services to a range of industrial sectors, but with a particular focus on
current and former mine sites.
The Company offers its clients a combination
of environmental remediation expertise in the area of site reclamation and closure, an ability to manage complex permitting and
regulatory programs on a turnkey basis, and strong operations management. In addition, the Company seeks to strategically leverage
off its environmental services group, accessing opportunities to enhance asset value through effective liability risk management
and efficient site operations. This is accomplished through unlocking potential exploration and development opportunities at contaminated
or abandoned sites through cost effective and responsible environmental remediation and liability transfer.
The Company executes its environmental
services business plan by using and applying the intellectual property assets, including its patents, and the specialized skill
sets and knowledge it maintains in-house. While there are a significant number of firms providing environmental services in North
America, these assets, skill sets and knowledge provide Alexco with a competitive advantage. Consolidated revenue from environmental
services for the year ended December 31, 2017 totaled $10,732,000, compared to $11,361,000 in 2016, all of which was derived from
services provided to external unrelated parties. During the year ended December 31, 2017, the Company recorded revenues from three
customers representing 10% or more of total environmental services revenue, in the amounts of $3,419,000, $1,702,000 and $1,473,000.
During 2016, AEG had three customers representing 10% or more of total revenue, in the amounts of $3,220,000, $3,044,000 and $1,746,000.
AEG's largest single customer is the Government of Canada, with a substantial component of Government revenues earned from the
Government of Canada's Indian and Northern Affairs Canada. Consolidated revenue from environmental services for the six month period
ended June 30, 2018 totaled $6,309,000 which was derived from sales to external unrelated parties. During the six month period
ended June 30, 2018, the Company recorded revenues from two customers representing 10% or more of total environmental services
revenue, in the combined amount of $3,724,000.
The documents incorporated
by reference herein, including the Annual Information Form, contain further details regarding the business of Alexco. See "Documents
Incorporated by Reference."
Recent Developments
Appointment of
New Director
Subsequent to the filing
of the Annual Information Form, Alexco appointed Karen McMaster as an additional director of the Company. Information regarding
Ms. McMaster's occupation and security holdings as at the date of this Prospectus are set out below:
Name and
Jurisdiction of
Residence
|
|
Office or
Position
Held
|
|
Principal Occupation During the Past Five
Years
|
|
Previous Service as
a Director
|
|
Securities
Beneficially Owned,
Controlled or
Directed, Directly or
Indirectly
|
Karen McMaster
British Columbia, Canada
|
|
Director
|
|
Since 2003, Ms. McMaster,
BA, LLB, MBA has worked as an independent consultant focusing on strategic and economic development of organizations including
risk assessment, contract management, environmental, health and safety excellence, governance and capacity building at the community
level.
Ms. McMaster's positions
have included in-house legal counsel and investor relations advisor for Caledonia Mining Corporation, in-house legal counsel for
Rio Algom Limited, senior internal auditor for BHP Billiton PLC and operations leader for the Alaska Highway Aboriginal Pipeline
Coalition in the Yukon.
|
|
Since April 11, 2018
|
|
2,308 common shares
|
Change in accounting
policies January 1, 2018
The Company has adopted
IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers as at January 1, 2018. In light of the changes to
the revenue standard to IFRS 15, management has changed their accounting policy under IFRS 6 Exploration for and Evaluation of
Mineral Properties for the partial distribution of a mineral interest. For the impact of the retrospective application of these
changes in accounting policies see note 4 of the Interim Financial Statements (as defined above under the heading "Documents
Incorporated by Reference").
Offering of Flow-Through
common shares
On June 14, 2018, the
Company completed an offering, on a bought deal basis, of 4,703,000 flow-through common shares at a blended price of approximately
$1.92 per share for gross proceeds of $9,041,150. The securities issued under the offering were comprised of (i) 966,500 flow-through
shares with respect to "Canadian exploration expenses" issued at $2.05 per share; (ii) 1,736,500 flow-through shares
with respect to "Canadian exploration expenses" that also qualify as "flow-through mining expenditures" issued
at $2.05 per share; and (iii) 2,000,000 flow-through shares with respect to "Canadian development expenses" issued at
$1.75 per share, as described in the June 14, 2018 Material Change Report (see "Documents Incorporated by Reference").
Acquisition of Contango Strategies Ltd.
On June 15, 2018 the Company's wholly owned
subsidiary, Alexco Environmental Group Holdings Inc. ("AEG Holdings"), completed the acquisition of Contango,
a private company based in Saskatoon, Saskatchewan. AEG Holdings acquired 100% of the outstanding common shares of Contango in
exchange for consideration of $1,388,000 comprising $971,600 in cash and 237,999 common shares of Alexco at a value of $416,400.
The common shares were valued at $1.75 per share using the market price on the date of issuance. Settlement of the consideration
is in two tranches with $1,018,000 (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.
Updated Mineral Resource Estimate
for the Bermingham Deposit
On September 20, 2018, the Company
announced an updated mineral resource estimate for the Bermingham deposit, located within the District. A detailed mineral resource
estimate by vein and zone was prepared by SRK Consulting (Canada) Inc. ("SRK") and is summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Average
|
|
|
Average
|
|
|
|
|
|
Volume
|
|
|
|
|
|
Total Ag
|
|
|
Total
Au
|
|
|
Total
Pb
|
|
|
Total
Zn
|
|
|
Grade
Ag
|
|
|
Grade
Au
|
|
|
Grade
Pb
|
|
|
Grade
Zn
|
|
Mineral
Resource Category
|
|
(m3)
|
|
|
Tonnes
|
|
|
(oz)
|
|
|
(oz)
|
|
|
(lbs)
|
|
|
(lbs)
|
|
|
(g/t)
|
|
|
(g/t)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDICATED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bear
|
|
|
19,000
|
|
|
|
54,750
|
|
|
|
592,400
|
|
|
|
100
|
|
|
|
800,500
|
|
|
|
559,700
|
|
|
|
336
|
|
|
|
0.05
|
|
|
|
0.7
|
|
|
|
0.5
|
|
Arctic
|
|
Bermingham Main
|
|
|
142,600
|
|
|
|
428,400
|
|
|
|
7,656,300
|
|
|
|
1,500
|
|
|
|
9,484,400
|
|
|
|
13,045,700
|
|
|
|
556
|
|
|
|
0.11
|
|
|
|
1
|
|
|
|
1.4
|
|
|
|
Footwall
|
|
|
87,500
|
|
|
|
277,700
|
|
|
|
6,046,100
|
|
|
|
1,200
|
|
|
|
11,543,900
|
|
|
|
7,210,600
|
|
|
|
677
|
|
|
|
0.14
|
|
|
|
1.9
|
|
|
|
1.2
|
|
|
|
West Dipper
|
|
|
8,000
|
|
|
|
24,600
|
|
|
|
666,600
|
|
|
|
90
|
|
|
|
769,800
|
|
|
|
653,800
|
|
|
|
843
|
|
|
|
0.11
|
|
|
|
1.4
|
|
|
|
1.2
|
|
|
|
Bear
|
|
|
59,100
|
|
|
|
189,450
|
|
|
|
8,442,200
|
|
|
|
1,130
|
|
|
|
15,665,400
|
|
|
|
5,352,350
|
|
|
|
1,386
|
|
|
|
0.18
|
|
|
|
3.8
|
|
|
|
1.3
|
|
Bear
|
|
Bermingham Main
|
|
|
22,500
|
|
|
|
70,200
|
|
|
|
1,186,500
|
|
|
|
280
|
|
|
|
1,206,400
|
|
|
|
1,888,400
|
|
|
|
525
|
|
|
|
0.12
|
|
|
|
0.8
|
|
|
|
1.2
|
|
|
|
Footwall
|
|
|
71,700
|
|
|
|
217,400
|
|
|
|
3,835,800
|
|
|
|
900
|
|
|
|
6,136,300
|
|
|
|
5,884,300
|
|
|
|
549
|
|
|
|
0.13
|
|
|
|
1.3
|
|
|
|
1.2
|
|
Etta
|
|
Bermingham Main
|
|
|
43,000
|
|
|
|
133,600
|
|
|
|
2,065,800
|
|
|
|
300
|
|
|
|
6,054,700
|
|
|
|
5,143,000
|
|
|
|
481
|
|
|
|
0.07
|
|
|
|
2.1
|
|
|
|
1.7
|
|
|
|
Footwall
|
|
|
57,100
|
|
|
|
168,600
|
|
|
|
1,713,700
|
|
|
|
350
|
|
|
|
4,508,800
|
|
|
|
6,588,300
|
|
|
|
316
|
|
|
|
0.06
|
|
|
|
1.2
|
|
|
|
1.8
|
|
North East
|
|
Bear
|
|
|
9,900
|
|
|
|
29,700
|
|
|
|
601,000
|
|
|
|
120
|
|
|
|
947,550
|
|
|
|
1,666,750
|
|
|
|
629
|
|
|
|
0.12
|
|
|
|
1.4
|
|
|
|
2.5
|
|
|
|
Bermingham Main
|
|
|
19,850
|
|
|
|
57,100
|
|
|
|
543,900
|
|
|
|
150
|
|
|
|
773,650
|
|
|
|
697,300
|
|
|
|
297
|
|
|
|
0.08
|
|
|
|
0.6
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
INDICATED
|
|
|
540,250
|
|
|
|
1,651,500
|
|
|
|
33,350,300
|
|
|
|
6,120
|
|
|
|
57,891,400
|
|
|
|
48,690,200
|
|
|
|
628
|
|
|
|
0.12
|
|
|
|
1.6
|
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFERRED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bear
|
|
|
19,800
|
|
|
|
59,000
|
|
|
|
676,450
|
|
|
|
130
|
|
|
|
1,413,750
|
|
|
|
805,900
|
|
|
|
357
|
|
|
|
0.07
|
|
|
|
1.1
|
|
|
|
0.6
|
|
Arctic
|
|
Bermingham Main
|
|
|
20,360
|
|
|
|
62,000
|
|
|
|
1,117,200
|
|
|
|
300
|
|
|
|
1,012,900
|
|
|
|
2,267,800
|
|
|
|
560
|
|
|
|
0.15
|
|
|
|
0.7
|
|
|
|
1.7
|
|
|
|
Footwall
|
|
|
60,400
|
|
|
|
190,900
|
|
|
|
2,827,400
|
|
|
|
800
|
|
|
|
4,240,300
|
|
|
|
1,324,200
|
|
|
|
461
|
|
|
|
0.13
|
|
|
|
1
|
|
|
|
0.3
|
|
|
|
West Dipper
|
|
|
800
|
|
|
|
2,350
|
|
|
|
33,250
|
|
|
|
5
|
|
|
|
26,900
|
|
|
|
22,800
|
|
|
|
441
|
|
|
|
0.07
|
|
|
|
0.5
|
|
|
|
0.4
|
|
|
|
Bear
|
|
|
38,050
|
|
|
|
120,900
|
|
|
|
3,167,000
|
|
|
|
500
|
|
|
|
4,179,950
|
|
|
|
1,582,200
|
|
|
|
815
|
|
|
|
0.13
|
|
|
|
1.6
|
|
|
|
0.6
|
|
Bear
|
|
Bermingham Main
|
|
|
950
|
|
|
|
3,000
|
|
|
|
19,100
|
|
|
|
5
|
|
|
|
15,600
|
|
|
|
107,600
|
|
|
|
197
|
|
|
|
0.06
|
|
|
|
0.2
|
|
|
|
1.6
|
|
|
|
Footwall
|
|
|
7,100
|
|
|
|
22,100
|
|
|
|
195,850
|
|
|
|
75
|
|
|
|
484,850
|
|
|
|
254,550
|
|
|
|
276
|
|
|
|
0.11
|
|
|
|
1
|
|
|
|
0.5
|
|
Etta
|
|
Bermingham Main
|
|
|
290
|
|
|
|
850
|
|
|
|
6,100
|
|
|
|
0
|
|
|
|
7,400
|
|
|
|
15,700
|
|
|
|
221
|
|
|
|
0.05
|
|
|
|
0.4
|
|
|
|
0.8
|
|
|
|
Footwall
|
|
|
27,100
|
|
|
|
78,000
|
|
|
|
686,900
|
|
|
|
175
|
|
|
|
792,850
|
|
|
|
2,741,100
|
|
|
|
274
|
|
|
|
0.07
|
|
|
|
0.5
|
|
|
|
1.6
|
|
North East
|
|
Bear
|
|
|
23,750
|
|
|
|
72,350
|
|
|
|
1,673,750
|
|
|
|
300
|
|
|
|
2,178,350
|
|
|
|
2,428,200
|
|
|
|
720
|
|
|
|
0.13
|
|
|
|
1.4
|
|
|
|
1.5
|
|
|
|
Bermingham Main
|
|
|
1,800
|
|
|
|
5,100
|
|
|
|
35,700
|
|
|
|
10
|
|
|
|
61,050
|
|
|
|
67,950
|
|
|
|
217
|
|
|
|
0.07
|
|
|
|
0.5
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
INFERRED
|
|
200,400
|
|
|
|
616,550
|
|
|
|
10,438,700
|
|
|
|
2,300
|
|
|
|
14,413,900
|
|
|
|
11,618,000
|
|
|
|
526
|
|
|
|
0.12
|
|
|
|
1.1
|
|
|
|
0.9
|
|
Notes:
|
1.
|
The effective date of this
mineral resource estimate is September 17, 2018.
|
|
2.
|
Mineral resources are not mineral
reserves and do not have demonstrated economic viability. All numbers have been rounded
to reflect the relative accuracy of the estimates.
|
|
3.
|
Reported at a contained metal
value cut-off grade of CAD $185.00/t (US$0.80=C$1) using consensus long term metal prices
(US$) and recoveries (Ag US$20.80/oz, recovery 96%; Pb US$1.10/lb, recovery 97%;
Zn US$1.20/lb, recovery 88%; Au US$1,450/oz, recovery 72%).
|
|
4.
|
Ag grades capped at 4,200 g/t;
Zn capped at 6.5%; Pb capped at 6.0% for the Bermingham vein.
|
|
5.
|
Ag grades capped at 13,000
g/t, Zn capped at 12% and Pb capped at 33% for the Bear vein.
|
|
6.
|
Ag grades capped at 3,500 g/t,
Zn capped at 8.5% and Pb capped at 13% for the Bermingham Footwall vein.
|
|
7.
|
Ag grades capped at 3,600 g/t,
Zn capped at 5.0% and Pb capped at 7.5% for the West Dipper vein.
|
|
8.
|
Table numbers
may not add up due to rounding.
|
As a result of exploration work conducted
in 2017 and 2018, the Bermingham indicated mineral resources have expanded from 17.3 million ("M") ounces to
33.3 M ounces of contained silver at an average silver grade of 628 grams per tonne ("g/t"), while inferred mineral
resources have increased from 5.5 M ounces to 10.4 M ounces of contained silver at an average silver grade of 526 g/t. The updated
mineral resource estimate was prepared by SRK and a comparison to the prior mineral resource estimate is outlined below:
|
|
Resource Estimates
|
|
Category
|
|
|
|
September 17, 2018
|
|
|
January 3, 2017
|
|
INDICATED
|
|
|
|
|
|
|
|
|
|
|
Tonnes
|
|
(t)
|
|
|
1,651,500
|
|
|
|
858,000
|
|
Silver Grade
|
|
(g/t)
|
|
|
628 g/t
|
|
|
|
628 g/t
|
|
Total Silver
|
|
(ounces)
|
|
|
33,350,300
|
|
|
|
17,324,000
|
|
Lead
|
|
(%)
|
|
|
1.6
|
%
|
|
|
2.4
|
%
|
Zinc
|
|
(%)
|
|
|
1.3
|
%
|
|
|
1.7
|
%
|
Gold
|
|
g/t
|
|
|
0.12 g/t
|
|
|
|
0.10 g/t
|
|
INFERRED
|
|
|
|
|
|
|
|
|
|
|
Tonnes
|
|
(t)
|
|
|
616,550
|
|
|
|
220,000
|
|
Silver Grade
|
|
(g/t)
|
|
|
526 g/t
|
|
|
|
770 g/t
|
|
Total Silver
|
|
(ounces)
|
|
|
10,438,700 ounces
|
|
|
|
5,446,000 ounces
|
|
Lead
|
|
(%)
|
|
|
1.1
|
%
|
|
|
2.1
|
%
|
Zinc
|
|
(%)
|
|
|
0.9
|
%
|
|
|
2.2
|
%
|
Gold
|
|
g/t
|
|
|
0.12 g/t
|
|
|
|
0.20 g/t
|
|
With the addition to the silver mineral
resource at Bermingham, Alexco's District-wide indicated mineral resources at Keno Hill increased by approximately 24% from 67.9
M ounces to 84.0 M ounces of contained silver. Similarly, district-wide inferred mineral resources increased by 28% to 23.0 M
ounces of contained silver. Although the Company has determined that the updated mineral resource above is not a material change,
the Company has included this mineral resource update to ensure that this Prospectus is current and complete.
RISK FACTORS
An investment in any securities of the
Company is speculative and involves a high degree of risk due to the nature of Alexco's business and the present stage of development
of its mineral properties. The following risk factors, as well as risks not currently known to the Company, could materially adversely
affect the Company's future business, financial condition, results of operations and prospects and could cause them to differ materially
from the forward-looking statements relating to the Company. Before deciding to invest in any securities, investors should consider
carefully the risk factors set tout below, those contained in the section entitled "Cautionary Note Regarding Forward-Looking
Statements" above, those contained in the documents incorporated by reference in this Prospectus and those described in any
Prospectus Supplement, including those described in the Company's historical consolidated financial statements, the related notes
thereto and the Company's Annual Information Form.
The following risk factors, as well
as risks not currently known to the Company or that the Company currently deems to be immaterial, could materially adversely affect
the Company's future business, financial condition, results of operations earnings and prospects and could cause them to differ
materially from the forward-looking statements relating to the Company. While the significant risk factors which the Company believes
it faces are discussed below, they do not comprise a definitive list of all risk factors related to the Company's business and
operations.
Loss of Investment
An investment in the offered securities
is suitable only for those investors who are willing to risk a loss of some or all of their investment and who can afford to lose
some or all of their investment.
Negative Cash Flow From Operating
Activities
The Company has not yet consistently achieved
positive operating cash flow, and there are no assurances that the Company will not experience negative cash flow from operations
in the future. The Company has incurred net losses in the past and may incur losses in the future and will continue to incur losses
until and unless it can derive sufficient revenues from its mineral projects. Such future losses could have an adverse effect on
the market price of the Company's common shares, which could cause investors to lose part or all of their investment.
Forward-Looking Statements May Prove
Inaccurate
Investors are cautioned not to place undue
reliance on forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, known and unknown
risks and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those
suggested by the forward-looking statements or contribute to the possibility that predictions, assumptions and uncertainties are
found in the Prospectus under the heading "Cautionary Note Regarding Forward-Looking Statements".
Dilution
The Company expects to require additional
funds to finance its growth and development strategy. If the Company elects to raise additional funds by issuing additional equity
securities, such financing may substantially dilute the interests of the Company's shareholders. The Company may also issue additional
common shares in the future pursuant to existing and new agreements in respect of its projects or other acquisitions and pursuant
to existing securities of the Company.
Exploration, Evaluation and Development
Mineral exploration, evaluation and development
involves a high degree of risk and few properties which are explored are ultimately developed into producing mines. With respect
to Alexco's properties, should any ore reserves exist, substantial expenditures will be required to confirm ore reserves which
are sufficient to commercially mine, and to obtain the required environmental approvals and permitting required to commence commercial
operations. Should any mineral resource be defined on such properties there can be no assurance that the mineral resource on such
properties can be commercially mined or that the metallurgical processing will produce economically viable and saleable products.
The decision as to whether a property contains a commercial mineral deposit and should be brought into production will depend upon
the results of exploration programs and/or technical studies, and the recommendations of duly qualified engineers and/or geologists,
all of which involves significant expense. This decision will involve consideration and evaluation of several significant factors,
including but not limited to: (1) costs of bringing a property into production, including exploration and development work, preparation
of appropriate technical studies and construction of production facilities; (2) availability and costs of financing; (3) ongoing
costs of production; (4) market prices for the minerals to be produced; (5) environmental compliance regulations and restraints
(including potential environmental liabilities associated with historical exploration activities); and (6) political climate and/or
governmental regulation and control.
The ability of Alexco to sell, and profit
from the sale of any eventual production from any of Alexco's properties will be subject to the prevailing conditions in the marketplace
at the time of sale. Many of these factors are beyond the control of Alexco and therefore represent a market risk which could impact
the long term viability of Alexco and its operations.
Figures for Alexco's Resources are
Estimates Based on Interpretation and Assumptions and May Yield Less Mineral Production Under Actual Conditions than is Currently
Estimated
In making determinations about whether
to advance any of its projects to development, Alexco must rely upon estimated calculations as to the mineral resources and grades
of mineralization on its properties. Until ore is actually mined and processed, mineral resources and grades of mineralization
must be considered as estimates only. Mineral resource estimates are imprecise and depend upon geological interpretation and statistical
inferences drawn from drilling and sampling which may prove to be unreliable. Alexco cannot be certain that:
|
•
|
reserve, resource or other mineralization estimates will be accurate; or
|
|
•
|
mineralization can be mined or processed profitably.
|
Any material changes in mineral resource
estimates and grades of mineralization will affect the economic viability of placing a property into production and a property's
return on capital. Alexco's resource estimates have been determined and valued based on assumed future prices, cut-off grades and
operating costs that may prove to be inaccurate. Extended declines in market prices for silver, gold, lead, zinc and other commodities
may render portions of Alexco's mineralization uneconomic and result in reduced reported mineral resources.
Amendments to Silver Purchase Agreement
with Wheaton
The March 29, 2017 amendments to the Silver
Purchase Agreement (the "Amended SPA") with Wheaton Precious Metals Corp. ("Wheaton") require
that, to satisfy the completion test under the Amended SPA, the Company will need to recommence operations on the KHSD Property
and operate the mine and mill at 400 tonnes per day on or before December 31, 2019. If the completion test is not satisfied by
December 31, 2019, the outcome could materially adversely affect the Company as it would be required to pay a capacity
related refund to Wheaton in the maximum amount of US$8.8 million. The Company would need to raise additional capital to finance
the capacity related refund and there is no guarantee that the Company will be able to raise such additional capital. In the event
that the Company cannot raise such additional capital, the Company will default under the terms of the Amended SPA.
Keno Hill District
While Alexco has conducted exploration
activities in the Keno Hill District, further review of historical records and additional exploration and geological testing will
be required to determine whether any of the mineral deposits it contains are economically recoverable. There is no assurance that
such exploration and testing will result in favourable results. The history of the Keno Hill District has been one of fluctuating
fortunes, with new technologies and concepts reviving the District numerous times from probable closure until 1989, when it did
ultimately close down for a variety of economic and technical reasons. Many or all of these economic and technical issues will
need to be addressed prior to the commencement of any future production on the Keno Hill properties.
Mining Operations
Decisions by Alexco to proceed with the
construction and development of mines are based on development plans which include estimates for metal production and capital and
operating costs. Until completely mined and processed, no assurance can be given that such estimates will be achieved. Failure
to achieve such production and capital and operating cost estimates or material increases in costs could have an adverse impact
on Alexco's future cash flows, profitability, results of operations and financial condition. Alexco's actual production and capital
and operating costs may vary from estimates for a variety of reasons, including: actual resources mined varying from estimates
of grade, tonnage, dilution and metallurgical and other characteristics; short-term operating factors relating to the mineable
resources, such as the need for sequential development of resource bodies and the processing of new or different resource grades;
revisions to mine plans; risks and hazards associated with mining; natural phenomena, such as inclement weather conditions, water
availability, floods and earthquakes; and unexpected labour shortages or strikes. Costs of production may also be affected by a
variety of factors, including changing waste ratios, metallurgical recoveries, labour costs, commodity costs, general inflationary
pressures and currency rates. In addition, the risks arising from these factors are further increased while any such mine is progressing
through the ramp-up phase of its operations and has not yet established a consistent production track record.
Furthermore, mining operations at the Bellekeno
mine project were suspended as of early September 2013 as a result of sharp and significant declines in precious metals prices
during the second quarter of 2013. Re-start of mining operations is dependent on a number of factors, including sufficient improvement
in silver markets and the effectiveness of cost structure reduction measures, and the uncertainties around the achievement of these
factors are significant.
Employee Recruitment and Retention
Recruitment and retention of skilled and
experienced employees is a challenge facing the mining sector as a whole. During the late 1990s and early 2000s, with unprecedented
growth in the technology sector and an extended cyclical downturn in the mining sector, the number of new workers entering the
mining sector was depressed and a significant number of existing workers departed, leading to a so-called "generational gap"
within the industry. Since the mid-2000s, this factor was exacerbated by competitive pressures as the mining sector experienced
an extended cyclical upturn. Additional exacerbating factors specific to Alexco include competitive pressures in labour force demand
from the oil sands sector in northern Alberta and the mining and oil & gas sectors in British Columbia, and the fact that Alexco's
Keno Hill District is a fly-in/fly-out operation. Alexco has experienced employee recruitment and retention challenges, particularly
with respect to mill operators in 2011 and through the first three quarters of 2012. There can be no assurance that such challenges
won't continue or resurface, not only with respect to the mill but in other District operational areas as well including mining
and exploration. Furthermore, any restart of mining operations will necessitate the re-hiring of mine and mill personnel.
Permitting and Environmental Risks
and Other Regulatory Requirements
The current or future operations of Alexco,
including development activities, commencement of production on its properties and activities associated with Alexco's mine reclamation
and remediation business, require permits or licenses from various federal, territorial and other governmental authorities, and
such operations are and will be governed by laws, regulations and agreements governing prospecting, development, mining, production,
taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety
and other matters. Companies engaged in the development and operation of mines and related facilities and in mine reclamation and
remediation activities generally experience increased costs and delays as a result of the need to comply with the applicable laws,
regulations and permits. There can be no assurance that all permits and permit modifications which Alexco may require for the conduct
of its operations will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on
any project which Alexco might undertake.
Any failure to comply with applicable laws,
regulations and permitting requirements may result in enforcement actions including orders issued by regulatory or judicial authorities
causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of
additional equipment or remedial actions against the Company. The Company may be required to compensate those suffering loss or
damage by reason of the Company's mining operations or mine reclamation and remediation activities and may have civil or criminal
fines or penalties imposed upon it for violation of applicable laws or regulations.
Amendments to current laws, regulations
and permits governing operations and activities of mining companies and mine reclamation and remediation activities could have
a material adverse impact on Alexco. As well, policy changes and political pressures within and on federal, territorial and First
Nation governments having jurisdiction over or dealings with Alexco could change the implementation and interpretation of such
laws, regulations and permits, also having a material adverse impact on Alexco. Such impacts could result in one or more of increases
in capital expenditures or production costs, reductions in levels of production at producing properties or abandonment or delays
in the development of new mining properties.
Environmental Services
A material decline in the level of activity
or reduction in industry willingness to spend capital on mine reclamation, remediation or environmental services could adversely
affect demand for AEG's environmental services. Likewise, a material change in mining product commodity prices, the ability of
mining companies to raise capital or changes in domestic or international political, regulatory and economic conditions could adversely
affect demand for AEG's services.
One of AEG's customers accounted for 32%
of environmental services revenues in the 2017 fiscal year. The loss of, or a significant reduction in, the volume of business
conducted with this customer could have a significant detrimental effect on AEG's environmental services business and the Company.
The patents which Alexco owns or has access
to or other proprietary technology may not prevent AEG's competitors from developing substantially similar technology, which may
reduce AEG's competitive advantage. Similarly, the loss of access to any of such patents or other proprietary technology or claims
from third parties that such patents or other proprietary technology infringe upon proprietary rights which they may claim or hold
would be detrimental to AEG's reclamation and remediation business and have a material adverse impact on the Company.
AEG may not be able to keep pace with continual
and rapid technological developments that characterize the market for AEG's environmental services, and AEG's failure to do so
may result in a loss of its market share. Similarly, changes in existing regulations relating to mine reclamation and remediation
activities could require AEG to change the way it conducts its business.
AEG is dependent on the professional skill
sets of its employees, some of whom would be difficult to replace. The loss of any such employees could significantly affect AEG's
ability to service existing clients, its profitability and its ability to grow its business.
Potential Profitability Of Mineral
Properties Depends Upon Factors Beyond the Control of Alexco
The potential profitability of mineral
properties is dependent upon many factors beyond Alexco's control. For instance, world prices of and markets for gold, silver,
lead and zinc are unpredictable, highly volatile, potentially subject to governmental fixing, pegging and/or controls and respond
to changes in domestic, international, political, social and economic environments. Another factor is that rates of recovery may
vary from the rate experienced in tests and a reduction in the recovery rate will adversely affect profitability and, possibly,
the economic viability of a property. Profitability also depends on the costs of operations, including costs of labour, materials,
equipment, electricity, environmental compliance or other production inputs. Such costs will fluctuate in ways Alexco cannot predict
and are beyond Alexco's control, and such fluctuations will impact on profitability and may eliminate profitability altogether.
Additionally, due to worldwide economic uncertainty, the availability and cost of funds for development and other costs have become
increasingly difficult, if not impossible, to project. These changes and events may materially affect the financial performance
of Alexco.
First Nation Rights and Title
The nature and extent of First Nation rights
and title remains the subject of active debate, claims and litigation in Canada, including in the Yukon and including with respect
to intergovernmental relations between First Nation authorities and federal, provincial and territorial authorities. There can
be no guarantee that such claims will not cause permitting delays, unexpected interruptions or additional costs for Alexco's projects.
These risks may have increased after the Supreme Court of Canada decision of June 26, 2014 in Tsilhqot'in Nation v. British
Columbia.
Title to Mineral Properties
The acquisition of title to mineral properties
is a complicated and uncertain process. The properties may be subject to prior unregistered agreements of transfer or land claims,
and title may be affected by undetected defects. Although Alexco has made efforts to ensure that legal title to its properties
is properly recorded in the name of Alexco, there can be no assurance that such title will ultimately be secured. As a result,
Alexco may be constrained in its ability to operate its mineral properties or unable to enforce its rights with respect to its
mineral properties. An impairment to or defect in Alexco's title to its mineral properties would adversely affect Alexco's business
and financial condition.
Capitalization and Commercial Viability
Alexco will require additional funds to
further explore, develop and mine its properties. Alexco has limited financial resources, and there is no assurance that additional
funding will be available to Alexco to carry out the completion of all proposed activities, for additional exploration or for the
substantial capital that is typically required in order to place a property into commercial production. Although Alexco has been
successful in the past in obtaining financing through the sale of equity securities, there can be no assurance that Alexco will
be able to obtain adequate financing in the future or that the terms of such financing will be favourable. Failure to obtain such
additional financing could result in the delay or indefinite postponement of further exploration and development of its properties.
General Economic Conditions May Adversely
Affect Alexco's Growth and Profitability
The unprecedented events in global financial
markets since 2008 have had a profound impact on the global economy and led to increased levels of volatility. Many industries,
including the mining industry, are impacted by these market conditions. Some of the impacts of the current financial market turmoil
include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity,
commodity, foreign currency exchange and precious metal markets, and a lack of market liquidity. If the current turmoil and volatility
levels continue they may adversely affect Alexco's growth and profitability. Specifically:
|
•
|
a global credit/liquidity or foreign currency exchange crisis could impact the cost and availability
of financing and Alexco's overall liquidity;
|
|
•
|
the volatility of silver and other commodity prices would impact Alexco's revenues, profits, losses
and cash flow;
|
|
•
|
volatile energy prices, commodity and consumables prices and currency exchange rates would impact
Alexco's operating costs; and
|
|
•
|
the devaluation and volatility of global stock markets could impact the valuation of Alexco's equity
and other securities.
|
These factors could have a material adverse
effect on Alexco's financial condition and results of operations.
Securities of Alexco and Dilution
To further the activities of Alexco to
acquire additional properties, Alexco will require additional funds and it is likely that, to obtain the necessary funds, Alexco
will have to sell additional securities including, but not limited to, its common stock and/or warrants or other form of convertible
securities, the effect of which would result in a substantial dilution of the present equity interests of Alexco's shareholders.
Operating Hazards and Risks
In the course of exploration, development
and production of mineral properties, certain risks, including but not limited to unexpected or unusual geological operating conditions
including rock bursts, cave-ins, fires, flooding and earthquakes, may occur. It is not always possible to fully insure against
such risks and Alexco may decide not to insure against such risks as a result of high premiums or other reasons. Should such liabilities
arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the
securities of Alexco.
Adverse weather conditions could also disrupt
Alexco's environmental services business and/or reduce demand for Alexco's services.
Competition
Significant and increasing competition
exists for mining opportunities internationally. There are a number of large established mining companies with substantial capabilities
and far greater financial and technical resources than Alexco. Alexco may be unable to acquire additional attractive mining properties
on terms it considers acceptable and there can be no assurance that Alexco's exploration and acquisition programs will yield any
reserves or result in any commercial mining operation.
Certain of Alexco's Directors and
Officers are Involved with Other Natural Resource Companies, Which May Create Conflicts of Interest from Time to Time
Some of Alexco's directors and officers
are directors or officers of other natural resource or mining-related companies. These associations may give rise to conflicts
of interest from time to time. As a result of these conflicts of interest, Alexco may miss the opportunity to participate in certain
transactions.
Alexco May Fail to Maintain Adequate
Internal Control Over Financial Reporting Pursuant to the Requirements of the Sarbanes-Oxley Act.
Section 404 of the Sarbanes-Oxley Act ("SOX")
requires an annual assessment by management of the effectiveness of Alexco's internal control over financial reporting. Alexco
may fail to maintain the adequacy of its internal control over financial reporting as such standards are modified, supplemented
or amended from time to time, and Alexco may not be able to ensure that it can conclude, on an ongoing basis, that it has effective
internal control over financial reporting in accordance with Section 404 of SOX. Alexco's failure to satisfy the requirements of
Section 404 of SOX on an ongoing, timely basis could result in the loss of investor confidence in the reliability of its financial
statements, which in turn could harm Alexco's business and negatively impact the trading price or the market value of its securities.
In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could
harm Alexco's operating results or cause it to fail to meet its reporting obligations. Future acquisitions of companies, if any,
may provide Alexco with challenges in implementing the required processes, procedures and controls in its acquired operations.
No evaluation can provide complete assurance that Alexco's internal control over financial reporting will detect or uncover all
failures of persons within Alexco to disclose material information otherwise required to be reported. The effectiveness of Alexco's
processes, procedures and controls could also be limited by simple errors or faulty judgments. Although Alexco intends to expend
substantial time and incur substantial costs, as necessary, to ensure ongoing compliance, there is no certainty that it will be
successful in complying with Section 404 of SOX.
As a "foreign private issuer",
the Company is exempt from Section 14 proxy rules and Section 16 of the Securities Exchange Act of 1934
Alexco is a "foreign private issuer"
as defined in Rule 3b-4 under the United States Securities Exchange Act of 1934, as amended (the "U.S. Exchange Act").
Equity securities of Alexco are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the U.S. Exchange Act pursuant
to Rule 3a12-3 of the U.S. Exchange Act. Therefore, Alexco is not required to file a Schedule 14A proxy statement in relation to
the annual meeting of shareholders. The submission of proxy and annual meeting of shareholder information on Form 6-K may result
in shareholders having less complete and timely information in connection with shareholder actions. The exemption from Section
16 rules regarding reports of beneficial ownership and purchases and sales of common shares by insiders and restrictions on insider
trading in our securities may result in shareholders having less data and there being fewer restrictions on insiders' activities
in our securities.
It may be difficult to enforce judgements
or bring actions outside the United States against the Company and certain of its directors
Alexco is a Canadian corporation and certain
of its directors, officers and experts are neither citizens nor residents of the United States. A substantial part of the assets
of Alexco and of certain of these persons are located outside the United States. As a result, it may be difficult or impossible
for an investor:
|
·
|
to enforce in courts outside the United States judgements obtained in United States courts based
upon the civil liability provisions of United States federal securities laws against these persons and Alexco; or
|
|
·
|
to bring in courts outside the United States an original action to enforce liabilities based upon
United States federal securities laws against these persons and Alexco.
|
USE OF PROCEEDS
Unless otherwise specified in a Prospectus
Supplement, the net proceeds of any offering of securities under a Prospectus Supplement will be used for general corporate purposes,
including funding potential future acquisitions and capital expenditures. More detailed information regarding the use of proceeds
from a sale of securities will be included in the applicable Prospectus Supplement.
All expenses relating to an offering of
securities and any compensation paid to underwriters, dealers or agents, as the case may be, will be paid out of the Company's
general funds, unless otherwise stated in the applicable Prospectus Supplement.
The Company has incurred negative cash
flow from operating activities for its financial year ended December 31, 2017 and the six months ended June 30, 2018. Accordingly,
the majority or all of the net proceeds of any offering of securities under a Prospectus Supplement will be used to fund the proposed
expenditures set out above or in the applicable Prospectus Supplement as well as other general working capital and administrative
expenses which may cause the Company to continue to experience negative cash flow from its operating activities. See also "Risk
Factors – Negative Cash Flow from Operating Activities".
PRIOR SALES
The following table sets forth for the
12 month period prior to the date of this Prospectus details of the price at which securities have been issued or are to be issued
by the Company, the number of securities issued at that price and the date on which the securities were issued:
Date of Issue
|
|
Type of
Securities
|
|
No. of
Common
Shares
|
|
|
Issue or
Exercise Price
per Security
|
|
|
Reason for Issue
|
August 16, 2017
|
|
Stock Options
|
|
|
42,000
|
|
|
$
|
1.75
|
|
|
Grant of Stock Options
|
September 22, 2017
|
|
Stock Options
|
|
|
10,000
|
|
|
$
|
0.60
|
|
|
Exercise of Stock Options
|
October 9, 2017
|
|
Restricted Share Units
|
|
|
53,332
|
|
|
$
|
1.89
|
|
|
Vesting of Restricted Share Units
|
November 10, 2017
|
|
Restricted Share Units
|
|
|
14,620
|
|
|
$
|
1.61
|
|
|
Vesting of Restricted Share Units
|
November 23, 2017
|
|
Stock Options
|
|
|
333
|
|
|
$
|
0.60
|
|
|
Exercise of Stock Options
|
December 8, 2017
|
|
Common Shares
|
|
|
36,810
|
|
|
$
|
0.53
|
|
|
Exercise of Warrants
|
January 8, 2018
|
|
Common Shares
|
|
|
10,000
|
|
|
$
|
1.75
|
|
|
Exercise of Warrants
|
January 24, 2018
|
|
Common Shares
|
|
|
4,200
|
|
|
$
|
1.75
|
|
|
Exercise of Warrants
|
January 26, 2018
|
|
Stock Options
|
|
|
2,464,000
|
|
|
$
|
2.07
|
|
|
Grant of Stock Options
|
January 29, 2018
|
|
Restricted Share Units
|
|
|
177,700
|
|
|
$
|
2.07
|
|
|
Grant of Restricted Share Units
|
January 29, 2018
|
|
Restricted Share Units
|
|
|
91,035
|
|
|
$
|
1.90
|
|
|
Vesting of Restricted Share Units
|
February 1, 2018
|
|
Restricted Share Units
|
|
|
78,336
|
|
|
$
|
1.85
|
|
|
Vesting of Restricted Share Units
|
February 11, 2018
|
|
Restricted Share Units
|
|
|
44,998
|
|
|
$
|
1.68
|
|
|
Vesting of Restricted Share Units
|
February 12, 2018
|
|
Restricted Share Units
|
|
|
98,333
|
|
|
$
|
1.68
|
|
|
Vesting of Restricted Share Units
|
February 13, 2018
|
|
Stock Options
|
|
|
10,000
|
|
|
$
|
0.84
|
|
|
Exercise of Stock Options
|
February 23, 2018
|
|
Warrants
|
|
|
1,000,000
|
|
|
$
|
2.25
|
|
|
Credit Facility(1)
|
February 23, 2018
|
|
Stock Options
|
|
|
25,000
|
|
|
$
|
0.84
|
|
|
Exercise of Stock Options
|
April 1 to 30, 2018
|
|
Common Shares
|
|
|
112,650
|
|
|
$
|
1.75
|
|
|
Exercise of Warrants
|
Date of Issue
|
|
Type of
Securities
|
|
No. of
Common
Shares
|
|
|
Issue or
Exercise Price
per Security
|
|
|
Reason for Issue
|
April 16, 2018
|
|
Stock Options
|
|
|
30,000
|
|
|
$
|
0.60
|
|
|
Exercise of Stock Options
|
April 20, 2018
|
|
Stock Options
|
|
|
50,000
|
|
|
$
|
0.60
|
|
|
Exercise of Stock Options
|
April 20, 2018
|
|
Stock Options
|
|
|
166,666
|
|
|
$
|
0.84
|
|
|
Exercise of Stock Options
|
May 1 to 31, 2018
|
|
Common Shares
|
|
|
979,601
|
|
|
$
|
1.75
|
|
|
Exercise of Warrants
|
May 7, 2018
|
|
Common Shares
|
|
|
60,900
|
|
|
$
|
1.49
|
|
|
Exercise of Warrants
|
May 10, 2018
|
|
Restricted Share Units
|
|
|
16,000
|
|
|
$
|
1.93
|
|
|
Grant of Restricted Share Units
|
May 10, 2018
|
|
Restricted Share Units
|
|
|
5,334
|
|
|
$
|
1.93
|
|
|
Vesting of Restricted Share Units
|
May 10, 2018
|
|
Stock Options
|
|
|
60,000
|
|
|
$
|
1.93
|
|
|
Grant of Stock Options
|
June 14, 2018
|
|
Common Shares
|
|
|
966,500
|
|
|
$
|
2.05
|
|
|
Offering of Flow-Through Shares
|
June 14, 2018
|
|
Common Shares
|
|
|
1,736,500
|
|
|
$
|
2.05
|
|
|
Offering of Flow-Through Shares
|
June 14, 2018
|
|
Common Shares
|
|
|
2,000,000
|
|
|
$
|
1.75
|
|
|
Offering of Flow-Through Shares
|
June 20, 2018
|
|
Common Shares
|
|
|
237,999
|
|
|
$
|
1.7495
|
|
|
Acquisition of Contango(2)
|
July 30, 2018
|
|
Common Shares
|
|
|
10,000
|
|
|
$
|
1.35
|
|
|
Mineral property option agreement
|
Notes:
|
(1)
|
Issued to Sprott Private Resource Lending (Collector), LP in consideration for providing a US$15
million credit facility (see the March 5, 2018 Material Change Report (as defined above under the heading "Documents Incorporated
by Reference").
|
|
(2)
|
The total purchase price was $1,388,000, of which $971,600 was paid in cash and $416,400 was paid
through the issuance of 237,999 common shares of Alexco.
|
TRADING PRICE AND VOLUME
The common shares of Alexco are listed
and posted for trading on the TSX under the symbol "AXR", and on the NYSE American under the symbol "AXU".
The following tables set forth the market price range and trading volumes of Alexco's common shares on each of the TSX and NYSE
American for the 12 month period prior to the date of this Prospectus:
|
|
TSX
|
|
|
NYSE
American
|
|
Period
|
|
High
(Cdn$)
|
|
|
Low
(Cdn$)
|
|
|
Volume
|
|
|
High
(US$)
|
|
|
Low
(US$)
|
|
|
Volume
|
|
2018
|
September 1 - 20
|
|
|
1.49
|
|
|
|
1.34
|
|
|
|
791,923
|
|
|
|
1.15
|
|
|
|
1.02
|
|
|
|
2,349,099
|
|
August
|
|
|
1.65
|
|
|
|
1.37
|
|
|
|
1,179,700
|
|
|
|
1.24
|
|
|
|
1.03
|
|
|
|
4,551,900
|
|
July
|
|
|
1.94
|
|
|
|
1.52
|
|
|
|
906,500
|
|
|
|
1.46
|
|
|
|
1.19
|
|
|
|
4,943,900
|
|
June
|
|
|
1.81
|
|
|
|
1.69
|
|
|
|
1,285,300
|
|
|
|
1.39
|
|
|
|
1.28
|
|
|
|
6,175,000
|
|
May
|
|
|
2.00
|
|
|
|
1.71
|
|
|
|
1,656,100
|
|
|
|
1.59
|
|
|
|
1.31
|
|
|
|
4,663,000
|
|
April
|
|
|
2.14
|
|
|
|
1.68
|
|
|
|
1,695,600
|
|
|
|
1.70
|
|
|
|
1.32
|
|
|
|
5,894,400
|
|
March
|
|
|
1.90
|
|
|
|
1.63
|
|
|
|
1,327,300
|
|
|
|
1.48
|
|
|
|
1.27
|
|
|
|
5,464,400
|
|
February
|
|
|
1.89
|
|
|
|
1.56
|
|
|
|
1,307,000
|
|
|
|
1.53
|
|
|
|
1.24
|
|
|
|
5,669,000
|
|
January
|
|
|
2.18
|
|
|
|
1.78
|
|
|
|
2,359,800
|
|
|
|
1.79
|
|
|
|
1.43
|
|
|
|
7,604,900
|
|
2017
|
December
|
|
|
2.08
|
|
|
|
1.59
|
|
|
|
1,360,300
|
|
|
|
1.64
|
|
|
|
1.25
|
|
|
|
5,264,000
|
|
November
|
|
|
1.86
|
|
|
|
1.52
|
|
|
|
2,056,400
|
|
|
|
1.48
|
|
|
|
1.17
|
|
|
|
6,283,800
|
|
October
|
|
|
1.95
|
|
|
|
1.41
|
|
|
|
1,921,000
|
|
|
|
1.57
|
|
|
|
1.10
|
|
|
|
5,726,500
|
|
September
|
|
|
2.28
|
|
|
|
1.81
|
|
|
|
1,580,900
|
|
|
|
1.85
|
|
|
|
1.45
|
|
|
|
6,701,000
|
|
August
|
|
|
2.19
|
|
|
|
1.66
|
|
|
|
1,139,500
|
|
|
|
1.75
|
|
|
|
1.30
|
|
|
|
5,691,200
|
|
DIVIDEND POLICY
Alexco has not declared or paid any dividends
on its common shares since the date of formation. Any decision to pay dividends on common shares in the future will be made by
the board of directors on the basis of the earnings, financial requirements and other conditions existing at such time.
CONSOLIDATED CAPITALIZATION
The following table sets forth the Company's
consolidated capitalization as of the dates indicated, adjusted to give effect to the material changes in the share capital of
the Company since June 30, 2018, the date of the Company's financial statements most recently filed in accordance with NI
51-102. The table should be read in conjunction with the unaudited interim condensed consolidated financial statements of the Company
as at and for the three and six month periods ended June 30, 2018, including the notes thereto and management's discussion
and analysis thereof.
|
|
As at June 30, 2018
$
|
|
|
As
at June 30, 2018 After Giving Effect
on a Pro Forma Basis to the Other
Issuances (1)
$
|
|
Common Shares
|
|
$
|
213,128,000
(107,988,902 shares)
|
|
|
$
|
213,141,500
(107,998,902 shares)
|
|
Warrants
|
|
$
|
2,360,000
|
|
|
$
|
2,360,000
|
|
Share Options and RSU's
|
|
$
|
5,038,000
|
|
|
$
|
5,038,000
|
|
Contributed Surplus
|
|
$
|
18,807,000
|
|
|
$
|
18,807,000
|
|
Accumulated Deficit
|
|
$
|
(118,454,000
|
)
|
|
$
|
(118,454,000
|
)
|
Accumulated Other Comprehensive
Loss
|
|
$
|
(1,482,000
|
)
|
|
$
|
(1,482,000
|
)
|
Shareholders' Equity
|
|
$
|
119,397,000
|
(2)
|
|
$
|
119,410,500
|
(2)
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
$
|
8,362,000
|
|
|
$
|
8,362,000
|
|
Non-Current Liabilities
|
|
$
|
5,769,000
|
|
|
$
|
5,769,000
|
|
Total Liabilities
|
|
$
|
14,131,000
|
|
|
$
|
14,131,000
|
|
Notes:
|
(1)
|
Subsequent to June 30, 2018, an additional 10,000 common shares were issued pursuant to a mineral
property option agreement. See "Prior Sales".
|
|
(2)
|
Shareholders' Equity is determined by combining common shares, warrants, share options and restricted
share units, contributed surplus, accumulated deficit and accumulated other comprehensive income or loss.
|
DESCRIPTION OF SHARE CAPITAL
Authorized Capital
The Company's authorized capital consists
of an unlimited number of common shares without par value.
Common Shares
All of the Company's common shares have
equal voting rights, and none of the common shares are subject to any further call or assessment. There are no special rights or
restrictions of any nature attaching to any of the common shares and they all rank pari passu each with the other as to all benefits
which might accrue to the holders of the common shares. The common shares are not convertible into shares of any other class and
are not redeemable or retractable. As at the date of this Prospectus, 107,998,902 common shares were issued and outstanding.
Options
As of the date of this Prospectus, there
were options outstanding to purchase 7,850,500 common shares of the Company at exercise prices ranging from $0.60 to $2.32 with
expiry dates ranging from February 12, 2019 to May 10, 2023.
Warrants
As of the date of this Prospectus, there
were warrants outstanding to purchase 1,126,174 common shares of the Company at exercise prices ranging from $2.15 to $2.25 with
expiry dates ranging from May 30, 2019 to February 23, 2023.
Restricted Share Units
As of the
date of this Prospectus, there were restricted share units issued and outstanding in respect of which up to 273,989 common
shares of the Company may be issued in settlement thereof.
DESCRIPTION OF SECURITIES OFFERED UNDER
THIS PROSPECTUS
The Company may offer common shares, warrants,
subscription receipts or units with a total value of up to Cdn$50,000,000 from time to time under this Prospectus, together with
any applicable Prospectus Supplement, at prices and on terms to be determined by market conditions at the time of offering. This
Prospectus provides you with a general description of the securities the Company may offer. Each time the Company offers securities,
it will provide a Prospectus Supplement that will describe the specific amounts, prices and other important terms of the securities,
including, to the extent applicable:
|
·
|
designation or classification;
|
|
·
|
aggregate offering price;
|
|
·
|
original issue discount, if any;
|
|
·
|
rates and times of payment of dividends, if any;
|
|
·
|
redemption, conversion or exchange terms, if any;
|
|
·
|
conversion or exchange prices, if any, and, if applicable, any provisions for changes to or adjustments
in the conversion or exchange prices and in the securities or other property receivable upon conversion or exchange;
|
|
·
|
restrictive covenants, if any;
|
|
·
|
voting or other rights, if any; and
|
|
·
|
important United States and Canadian federal income tax considerations.
|
A Prospectus Supplement may also add, update
or change information contained in this Prospectus or in documents the Company has incorporated by reference. However, no Prospectus
Supplement will offer a security that is not described in this Prospectus.
Description of Common Shares
The Company may offer common shares, which
the Company may issue independently or together with warrants or subscription receipts, and the common shares may be separate from
or attached to such securities. All of the Company's common shares have equal voting rights, and none of the common shares are
subject to any further call or assessment. There are no special rights or restrictions of any nature attaching to any of the common
shares and they all rank pari passu each with the other as to all benefits which might accrue to the holders of the common shares.
The common shares are not convertible into shares of any other class and are not redeemable or retractable.
Description of Warrants
Warrants may be offered separately or together
with other securities, as the case may be. Each series of warrants will be issued under a separate warrant indenture to be entered
into between the Company and one or more banks or trust companies acting as warrant agent. The applicable Prospectus Supplement
will include details of the terms and conditions of the warrants being offered. The warrant agent will act solely as the Company's
agent and will not assume a relationship of agency with any holders of warrant certificates or beneficial owners of warrants. The
following sets forth certain general terms and provisions of the warrants offered under this Prospectus. The specific terms of
the warrants, and the extent to which the general terms described in this section apply to those warrants, will be set forth in
the applicable Prospectus Supplement. If applicable, the Company will file with the SEC as exhibits to the registration statement
of which this Prospectus is a part, or will incorporate by reference from a Report of Foreign Private Issuer on Form 6-K that the
Company files with the SEC, any warrant indenture or form of warrant describing the terms and conditions of such Warrants that
the Company is offering before the issuance of such Warrants.
The particular terms of each issue of warrants
will be described in the related Prospectus Supplement. This description will include, where applicable:
|
·
|
the designation and aggregate number of warrants;
|
|
·
|
the price at which the warrants will be offered;
|
|
·
|
the currency or currencies in which the warrants will be offered;
|
|
·
|
the designation and terms of the common shares purchasable upon exercise of the warrants;
|
|
·
|
the date on which the right to exercise the warrants will commence and the date on which the right
will expire;
|
|
·
|
the number of common shares that may be purchased upon exercise of each warrant and the price at
which and currency or currencies in which the common shares may be purchased upon exercise of each warrant;
|
|
·
|
the designation and terms of any securities with which the warrants will be offered, if any, and
the number of the warrants that will be offered with each security;
|
|
·
|
the date or dates, if any, on or after which the warrants and the related securities will be transferable
separately;
|
|
·
|
whether the warrants will be subject to redemption or call and, if so, the terms of such redemption
or call provisions;
|
|
·
|
material United States and Canadian tax consequences of owning the warrants; and
|
|
·
|
any other material terms or conditions of the warrants.
|
Prior to the exercise of their warrants,
holders of warrants will not have any of the rights of holders of common shares issuable upon exercise of the warrants.
The Company reserves the right to set forth
in a Prospectus Supplement specific terms of the warrants that are not within the options and parameters set forth in this Prospectus.
In addition, to the extent that any particular terms of the warrants described in a Prospectus Supplement differ from any of the
terms described in this Prospectus, the description of such terms set forth in this Prospectus shall be deemed to have been superseded
by the description of such differing terms set forth in such Prospectus Supplement with respect to such warrants.
Description of Subscription Receipts
The Company may issue subscription receipts,
which will entitle holders to receive upon satisfaction of certain release conditions and for no additional consideration, common
shares, warrants or a combination thereof. Subscription receipts will be issued pursuant to one or more subscription receipt agreements
(each, a "Subscription Receipt Agreement"), each to be entered into between the Company and an escrow agent (the
"Escrow Agent"), which will establish the terms and conditions of the subscription receipts. Each Escrow Agent
will be a financial institution organized under the laws of Canada or a province thereof and authorized to carry on business as
a trustee. In the United States, the Company will file as exhibits to the registration statement of which this Prospectus is a
part, or will incorporate by reference from Report of Foreign Private Issuer on Form 6-K that the Company files with the SEC, any
Subscription Receipt Agreement describing the terms and conditions of subscription receipts the Company is offering before the
issuance of such subscription receipts. In Canada, the Company will file on SEDAR a copy of any Subscription Receipt Agreement
after the Company has entered into it.
The following description sets forth certain
general terms and provisions of subscription receipts and is not intended to be complete. The statements made in this Prospectus
relating to any Subscription Receipt Agreement and subscription receipts to be issued thereunder are summaries of certain anticipated
provisions thereof and are subject to, and are qualified in their entirety by reference to, all provisions of the applicable Subscription
Receipt Agreement and the Prospectus Supplement describing such Subscription Receipt Agreement. The Company urges you to read the
applicable Prospectus Supplement related to the particular subscription receipts that the Company sells under this Prospectus,
as well as the complete Subscription Receipt Agreement.
The Prospectus Supplement and the Subscription
Receipt Agreement for any subscription receipts the Company offers will describe the specific terms of the subscription receipts
and may include, but are not limited to, any of the following:
|
·
|
the designation and aggregate number of subscription receipts offered;
|
|
·
|
the price at which the subscription receipts will be offered;
|
|
·
|
the currency or currencies in which the subscription receipts will be offered;
|
|
·
|
the designation, number and terms of the common shares, warrants or combination thereof to be received
by holders of subscription receipts upon satisfaction of the release conditions, and the procedures that will result in the adjustment
of those numbers;
|
|
·
|
the conditions (the "Release Conditions") that must be met in order for holders
of subscription receipts to receive for no additional consideration common shares, warrants or a combination thereof;
|
|
·
|
the procedures for the issuance and delivery of common shares, warrants or a combination thereof
to holders of subscription receipts upon satisfaction of the Release Conditions;
|
|
·
|
whether any payments will be made to holders of subscription receipts upon delivery of the common
shares, warrants or a combination thereof upon satisfaction of the Release Conditions (e.g., an amount equal to dividends declared
on common shares by the Company to holders of record during the period from the date of issuance of the subscription receipts to
the date of issuance of any common shares pursuant to the terms of the Subscription Receipt Agreement);
|
|
·
|
the terms and conditions under which the Escrow Agent will hold all or a portion of the gross proceeds
from the sale of subscription receipts, together with interest and income earned thereon (collectively, the "Escrowed Funds"),
pending satisfaction of the Release Conditions;
|
|
·
|
the terms and conditions pursuant to which the Escrow Agent will hold common shares, warrants or
a combination thereof pending satisfaction of the Release Conditions;
|
|
·
|
the terms and conditions under which the Escrow Agent will release all or a portion of the Escrowed
Funds to the Company upon satisfaction of the Release Conditions;
|
|
·
|
if the subscription receipts are sold to or through underwriters or agents, the terms and conditions
under which the Escrow Agent will release a portion of the Escrowed Funds to such underwriters or agents in payment of all or a
portion of their fees or commission in connection with the sale of the subscription receipts;
|
|
·
|
procedures for the refund by the Escrow Agent to holders of subscription receipts of all or a portion
of the subscription price for their subscription receipts, plus any pro rata entitlement to interest earned or income generated
on such amount, if the Release Conditions are not satisfied;
|
|
·
|
any contractual right of rescission to be granted to initial purchasers of subscription receipts
in the event this Prospectus, the Prospectus Supplement under which subscription receipts are issued or any amendment hereto or
thereto contains a misrepresentation;
|
|
·
|
any entitlement of the Company to purchase the subscription receipts in the open market by private
agreement or otherwise;
|
|
·
|
whether the Company will issue the subscription receipts as global securities and, if so, the identity
of the depositary for the global securities;
|
|
·
|
whether the Company will issue the subscription receipts as bearer securities, registered securities
or both;
|
|
·
|
provisions as to modification, amendment or variation of the Subscription Receipt Agreement or
any rights or terms attaching to the subscription receipts;
|
|
·
|
the identity of the Escrow Agent;
|
|
·
|
whether the subscription receipts will be listed on any exchange;
|
|
·
|
material United States and Canadian federal tax consequences of owning the subscription receipts;
and
|
|
·
|
any other terms of the subscription receipts.
|
The holders of subscription receipts will
not be shareholders of the Company. Holders of subscription receipts are entitled only to receive common shares, warrants or a
combination thereof on exchange of their subscription receipts, plus any cash payments provided for under the Subscription Receipt
Agreement, if the Release Conditions are satisfied. If the Release Conditions are not satisfied, the holders of subscription receipts
shall be entitled to a refund of all or a portion of the subscription price therefor and all or a portion of the pro rata share
of interest earned or income generated thereon, as provided in the Subscription Receipt Agreement.
The Company reserves the right to set forth
in a Prospectus Supplement specific terms of the subscription receipts that are not within the options and parameters set forth
in this Prospectus. In addition, to the extent that any particular terms of the subscription receipts described in a Prospectus
Supplement differ from any of the terms described in this Prospectus, the description of such terms set forth in this Prospectus
shall be deemed to have been superseded by the description of such differing terms set forth in such Prospectus Supplement with
respect to such subscription receipts.
Description of Units
The Company may issue units comprised of
one or more of the other securities described in this Prospectus in any combination. Each unit will be issued so that the holder
of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations
of a holder of each included Security. The unit agreement, if any, under which a unit is issued may provide that the securities
comprising the unit may not be held or transferred separately, at any time or at any time before a specified date. If applicable,
the Company will file with the SEC as exhibits to the registration statement of which this Prospectus is a part, or will incorporate
by reference from a Report of Foreign Private Issuer on Form 6-K that the Company files with the SEC, any unit agreement describing
the terms and conditions of such units that Alexco is offering before the issuance of such units.
The particular terms and provisions of
units offered by any Prospectus Supplement, and the extent to which the general terms and provisions described below may apply
thereto, will be described in the Prospectus Supplement filed in respect of such units.
|
·
|
The particular terms of each issue of units will be described in the related Prospectus Supplement.
This description will include, where applicable:
|
|
·
|
the designation and aggregate number of units offered;
|
|
·
|
the price at which the units will be offered;
|
|
·
|
if other than Canadian dollars, the currency or currency unit in which the units are denominated;
|
|
·
|
the terms of the units and of the securities comprising the units, including whether and under
what circumstances those securities may be held or transferred separately;
|
|
·
|
the number of securities that may be purchased upon exercise of each unit and the price at which
and currency or currency unit in which that amount of securities may be purchased upon exercise of each unit;
|
|
·
|
any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the
securities comprising the units; and
|
|
·
|
any other material terms, conditions and rights (or limitations on such rights) of the units.
|
The Company reserves the right to set forth
in a Prospectus Supplement specific terms of the units that are not within the options and parameters set forth in this Prospectus.
In addition, to the extent that any particular terms of the units described in a Prospectus Supplement differ from any of the terms
described in this Prospectus, the description of such terms set forth in this Prospectus shall be deemed to have been superseded
by the description of such differing terms set forth in such Prospectus Supplement with respect to such units.
DENOMINATIONS, REGISTRATION AND TRANSFER
The securities will be issued in fully
registered form without coupons attached in either global or definitive form and in denominations and integral multiples as set
out in the applicable Prospectus Supplement (unless otherwise provided with respect to a particular series of debt securities pursuant
to the provisions of the applicable indenture, as supplemented by a supplemental indenture). Other than in the case of book-entry
only securities, securities may be presented for registration of transfer (with the form of transfer endorsed thereon duly executed)
in the city specified for such purpose at the office of the registrar or transfer agent designated by the Company for such purpose
with respect to any issue of securities referred to in the Prospectus Supplement. No service charge will be made for any transfer,
conversion or exchange of the securities, but we may require payment of a sum to cover any transfer tax or other governmental charge
payable in connection therewith. Such transfer, conversion or exchange will be effected upon such registrar or transfer agent being
satisfied with the documents of title and the identity of the person making the request. If a Prospectus Supplement refers to any
registrar or transfer agent designated by the Company with respect to any issue of securities, we may at any time rescind the designation
of any such registrar or transfer agent and appoint another in its place or approve any change in the location through which such
registrar or transfer agent acts.
In the case of book-entry only securities,
a global certificate or certificates representing the securities will be held by a designated depository for its participants.
The securities must be purchased or transferred through such participants, which includes securities brokers and dealers, banks
and trust companies. The depository will establish and maintain book-entry accounts for its participants acting on behalf of holders
of the securities. The interests of such holders of securities will be represented by entries in the records maintained by the
participants. Holders of securities issued in book-entry only form will not be entitled to receive a certificate or other instrument
evidencing their ownership thereof, except in limited circumstances. Each holder will receive a customer confirmation of purchase
from the participants from which the securities are purchased in accordance with the practices and procedures of that participant.
PLAN OF DISTRIBUTION
Alexco may sell the securities to or through
underwriters or dealers, and also may sell securities to one or more other purchasers directly or through agents. Each Prospectus
Supplement will set forth the terms of the offering, including the name or names of any underwriters or agents, the purchase price
or prices of the securities and the proceeds to the Company from the sale of the securities. Only those underwriters, dealers or
agents named in a Prospectus Supplement will be the underwriters, dealers or agents in connection with the securities offered thereby.
The securities may be sold, from time to
time, in one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated prices, including sales in transactions deemed to be
"at the market distributions" as defined in Canadian National Instrument 44-102 – Shelf Distributions, including
sales made directly on the TSX, the NYSE American or other existing markets for the securities. Additionally, this Prospectus and
any Prospectus Supplement may also cover the initial resale of the securities purchased pursuant thereto. The prices at which the
securities may be offered may vary as between purchasers and during the period of distribution. If, in connection with the offering
of Securities at a fixed price or prices, the underwriters have made a bona fide effort to sell all of the Securities at the initial
offering price fixed in the applicable Prospectus Supplement, the public offering price may be decreased and thereafter further
changed, from time to time, to an amount not greater than the initial public offering price fixed in such Prospectus Supplement,
in which case the compensation realized by the underwriters will be decreased by the amount that the aggregate price paid by purchasers
for the Securities is less than the gross proceeds paid by the underwriters to the Company.
In connection with any offering of securities,
other than an "at-the-market distribution", the underwriters may over-allot or effect transactions which stabilize or
maintain the market price of the securities offered at a level above that which might otherwise prevail in the open market. Such
transactions, if commenced, may be discontinued at any time.
Unless otherwise specified in a Prospectus
Supplement, there is no market through which the Company's warrants may be sold and you may not be able to resell any such securities
purchased under this Prospectus or any Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement,
the securities (excluding any common shares) will not be listed on any securities exchange. This may affect the pricing
of such securities on the secondary market, the transparency and availability of trading prices, the liquidity of the securities,
and the extent of issuer regulation. See "Risk Factors".
In connection with the sale of securities,
underwriters, dealers and agents may receive compensation from the Company or from purchasers of the securities from whom they
may act as agents in the form of discounts, concessions or commissions. Any such commissions will be paid out of the Company's
general funds. Underwriters, dealers and agents that participate in the distribution of securities may be deemed to be underwriters
and any discounts or commissions received by them from the Company and any profit on the resale of securities by them may be deemed
to be underwriting discounts and commissions under applicable securities legislation.
Underwriters, dealers and agents who participate
in the distribution of the securities may be entitled under agreements to be entered into with the Company to indemnification by
the Company against certain liabilities, including liabilities under the U.S. Securities Act of 1933 and Canadian securities legislation,
or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof.
Those underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for, the Company in
the ordinary course of business.
CERTAIN INCOME TAX CONSIDERATIONS
Owning any of the Company's securities
may subject you to tax consequences both in the United States and Canada.
Although the applicable Prospectus Supplement
may describe certain Canadian and United States federal income tax consequences of the acquisition, ownership and disposition of
any securities offered under this Prospectus by an initial investor, the Prospectus Supplement may not describe these tax consequences
fully. You should consult your own tax advisor with respect to your particular circumstances.
AUDITORS, TRANSFER AGENT AND REGISTRAR
The Company's auditors are PricewaterhouseCoopers
LLP, Chartered Professional Accountants ("PwC"), of Suite 1400, 250 Howe Street, Vancouver, British
Columbia, V6C 3R8. PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditors of the Company, report that they
are independent with respect to the Company within the meaning of the Chartered Professional Accountants of British Columbia Code
of Professional Conduct and within the meaning of independence under the standards of the PCAOB and SEC.
The registrar and transfer agent for the
Company's common shares is Computershare Investor Services Inc. at its principal offices in Vancouver, British Columbia and Toronto,
Ontario.
EXPERTS
Names of Experts
The following persons prepared or certified
a report, valuation, statement or opinion described or included in this Prospectus or a document incorporated by reference herein:
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Torben Jensen, P.Eng. and R. Dennis Bergen, P.Eng. of Roscoe Postle Associates Inc., Jeff Austin,
P. Eng of International Metallurgical and Environmental Inc., Gilles Arseneau, Ph.D., P.Geo of SRK Consulting (Canada) Inc. and
David Farrow, Pr.Sci.Nat, P.Geo of Geostrat Consulting Inc. prepared the PEA described under "Summary Description of Business
– Mining Business"
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Cliff
Revering, P. Eng., Principal Consultant (Geological Engineering) of SRK Consulting (Canada)
Inc., completed the mineral resource estimate on the Bermingham deposit described under
"Summary Description of Business – Recent Developments - Updated Mineral Resource
Estimate for the Bermingham Deposit"
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Alan McOnie, FAusIMM, Vice President, Exploration of Alexco, and Neil Chambers, P.Eng., an employee
of Alexco, are responsible for certain information of a scientific or technical nature relating to Alexco's properties in this
Prospectus
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Interests of Experts
Based on information provided by the
experts named above, other than with respect to Alan McOnie and Neil Chambers as described below, none of the experts named under
"Names of Experts", when or after they prepared the statement, report or valuation, has received any registered or beneficial
interests, direct or indirect, in any securities or other property of Alexco or of one of the Alexco's associates or affiliates
(based on information provided to Alexco by the experts) or is or is expected to be elected, appointed or employed as a director,
officer or employee of Alexco or of any associate or affiliate of Alexco.
Alan McOnie is currently an executive officer
and Neil Chambers is currently an employee of Alexco, as described above. Both Alan McOnie and Neil Chambers have been granted
stock options of Alexco through the course of their respective employments; however, the individual interests held by each of them
throughout their respective employment terms at all times represented less than one percent of the issued and outstanding common
shares of Alexco.
enforcement
of judgments against foreign persons OR COMPANIES
The following persons reside outside of
Canada or, in the case of companies, are incorporated, continued or otherwise organized under the laws of a foreign jurisdiction
and each has appointed an agent listed below for service of process in Canada:
Name of Person
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Name and Address of Agent
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Clynton R. Nauman
Chairman CEO & Director
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Alexco Resource Corp., Suite 1225, Two Bentall Centre, 555 Burrard Street, Vancouver, British Columbia, V7X 1M9
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Michael Winn
Director
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Alexco Resource Corp., Suite 1225, Two Bentall Centre, 555 Burrard Street, Vancouver, British Columbia, V7X 1M9
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Purchasers are advised that it may
not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued
or otherwise organized under the laws of a foreign jurisdiction, or resides outside of Canada, even if the party has appointed
an agent for service of process.
DOCUMENTS FILED AS PART OF THE REGISTRATION
STATEMENT
The following documents have been or will
be filed with the SEC as part of the registration statement of which this Prospectus forms a part: (i) the documents referred to
under the heading "Documents Incorporated by Reference"; (ii) consent of the Company's auditors, PricewaterhouseCoopers
LLP; (iii) consents of Torben Jensen, R. Dennis Bergen, Jeff Austin, Giles Arseneau, David Farrow, Alan McOnie and Neil Chambers;
and (iv) powers of attorney from the Company's directors and officers (included on the signature pages of the registration
statement).
ADDITIONAL INFORMATION
Alexco has filed with the SEC a registration
statement on Form F-10 relating to the securities. This Prospectus, which constitutes a part of the registration statement, does
not contain all of the information contained in the registration statement, certain items of which are contained in the exhibits
to the registration statement as permitted by the rules and regulations of the SEC. See "Documents Filed as Part of the Registration
Statement". Statements included or incorporated by reference in this Prospectus about the contents of any contract, agreement
or other documents referred to are not necessarily complete, and in each instance you should refer to the exhibits for a more complete
description of the matter involved. Each such statement is qualified in its entirety by such reference. Each time the Company sells
securities under the registration statement, it will provide a Prospectus Supplement that will contain specific information about
the terms of that offering. The Prospectus Supplement may also add to, update or change information contained in this Prospectus.
Alexco is subject to the information requirements
of the U.S. Securities Exchange Act of 1934, as amended (the "U.S. Exchange Act"), and applicable Canadian securities
legislation, and in accordance therewith files reports and other information with the SEC and with the securities regulators in
Canada. Under a multijurisdictional disclosure system adopted by the United States and Canada, documents and other information
that we file with the SEC may be prepared in accordance with the disclosure requirements of Canada, which are different from those
of the United States. As a foreign private issuer within the meanings of rules made under the U.S. Exchange Act, Alexco is exempt
from the rules under the U.S. Exchange Act prescribing the furnishing and content of proxy statements, and the Company's officers,
directors and principal shareholders are exempt from the reporting and shortswing profit recovery provisions contained in Section
16 of the U.S. Exchange Act. In addition, Alexco is not required to publish financial statements as promptly as U.S. companies.
You may
read any document that we have filed with the SEC at the SEC's public reference room in Washington, D.C. You may also obtain copies
of those documents from the public reference room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 by paying a fee. You
should call the SEC at 1-800-SEC-0330 or access their website at www.sec.gov for further
information about the public reference room. You may read and download some of the documents we have filed with the SEC's Electronic
Data Gathering and Retrieval system at www.sec.gov. You may read and download any
public document that we have filed with the Canadian securities regulatory authorities at www.sedar.com.
ENFORCEABILITY OF CIVIL LIABILITIES
The Company is a corporation existing under
the Business Corporations Act (British Columbia). Most of the Company's directors and officers, and most of the experts
named in this Prospectus, are residents of Canada or otherwise reside outside the United States, and all or a substantial portion
of their assets, and a substantial portion of the Company's assets, are located outside the United States. As a result, it may
be difficult for United States investors to effect service of process within the United States upon the Company or its directors,
officers and experts who are not residents of the United States or to enforce judgments of courts of the United States predicated
upon the Company's civil liability and the civil liability of its directors, officers and experts under the United States federal
securities laws.
The Company filed with the SEC, concurrently
with its registration statement on Form F-10 of which this Prospectus is a part, an appointment of agent for service of process
on Form F-X. Under the Form F-X, the Company has appointed DL Services Inc. as its agent for service of process in the United States
in connection suit or proceeding brought against or involving the Company in a United States court arising out of or related to
or concerning the offering of the securities under this Prospectus and any Prospectus Supplement.
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