VANCOUVER, Feb. 18, 2020 /PRNewswire/ - Alexco Resource
Corp. (NYSE American: AXU) (TSX: AXU) ("Alexco" or the
"Company") today announced that it has entered into a Share
Purchase Agreement (the "Agreement") for the sale of Alexco
Environmental Group ("AEG"), to AEG's Executive Management ("AEG
Management") led by Jim Harrington,
AEG President. Under the terms of the Agreement, AEG Management
purchased all of the shares of AEG in consideration for payment to
Alexco of $13.35 million ("M"). On
closing of the transaction, AEG Management paid $12.1 M in cash, with the balance of $1.25 M payable pursuant to a promissory note
that matures on February 14,
2021.
Alexco's 100% owned AEG subsidiary was established as a private
company (ALM Group Inc.) in 2004 and since its incorporation into
Alexco, AEG has focused its business on all aspects of mine
reclamation, including deployment of innovative remediation
technologies. It was the combination of environmental and
exploration/mining attributes at Alexco that led to the
Company being chosen as the Preferred Purchaser of the assets and
liabilities of the Keno Hill Silver District (the "District") from
the Government of Canada
("Canada") in 2006. Since then the profitable environmental
consulting practice has grown steadily and now employs 90
professionals in six offices across North
America and is well established as a leader in environmental
management, water treatment, remediation technologies, and facility
operations. Alexco will retain ownership of Elsa Reclamation &
Development Company ("ERDC") and will execute the clean-up of
historical mines in the District under its existing contractual
arrangement with Canada. As part
of the sale of AEG, Alexco will also enter into a Master Services
Agreement with AEG whereby AEG will continue to provide
professional and technical expertise and support to Alexco and ERDC
for work in the District.
Alexco's Chairman and Chief Executive Officer, Clynt Nauman, commented, "The sale of AEG to AEG
Management, while retaining the benefits of the ERDC work at Keno
Hill, is an important strategic step for Alexco, streamlining our
business and allowing us to focus wholly on our mining and
exploration endeavors. With AEG's 2019 projected revenue of
more than $30 million, and a rapidly
growing professional workforce, AEG has clearly outgrown its Alexco
home. The transaction is accretive for our shareholders with a post
divestiture stand-alone inception-to-date annualized return on
invested capital of approximately 11%. I want to thank all the
professional employees and especially Jim
Harrington, who are the real architects of the success of
the AEG business over the years, and I look forward to continuing
work with them in the future."
The Agreement is considered a "related party transaction" under
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101") because one of the
principals of the purchaser is an officer of Alexco and a portion
of the financing for the purchaser is being provided by a company
who has a director in common with Alexco. Pursuant to Section
5.5(a) and 5.7(1)(a) of MI 61-101, the Company is exempt from
obtaining a formal valuation and approval of the Company's minority
shareholders because the fair market value of the consideration
payable to Alexco is less than 25% of the Company's market
capitalization for purposes of MI 61-101.
Alexco formed a special committee of independent directors who
supervised the negotiation of the definitive agreements,
investigated alternatives to the transaction and provided a
recommendation to the board of directors to approve the
transaction. The special committee unanimously recommended approval
of the transaction, which was then approved by the board. The
Company will file a material change report in respect of the
Agreement. However, the material change report will be filed less
than 21 days prior to the completion of the Agreement, which is
consistent with market practice and the Company deems reasonable in
the circumstances.
Filing of Amended Technical Report
The Company has also filed the independent technical report
dated May 8, 2019 with an effective
date of March 28, 2019, as amended
February 13, 2020, prepared by Mining
Plus Canada titled "NI 43-101 Technical Report, Prefeasibility
Study of the Keno Hill Silver District Project, Yukon Territory, Canada" (the "PFS") in order
to update certain disclosure issues in the text. These changes have
not affected any of the numbers contained in the original PFS, nor
were there any changes to the mineral reserves or mineral resource
categories previously reported.
The PFS can be found under Alexco's profile on SEDAR at
www.sedar.com and may also be obtained by request to 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.
About Alexco
Alexco is a Canadian primary silver company that owns the
majority of the historic high-grade Keno Hill Silver District in
Canada's Yukon Territory. Alexco has a long history of
expanding Keno Hill's mineral resources through successful
exploration and is currently advancing a development plan for the
District. In 2019, the Company published a positive pre-feasibility
study that estimates production of 1.12 million tonnes of ore at an
average rate of 430 tonnes per day at an average grade of 805 grams
per tonne silver over an 8-year mine life from the Flame &
Moth, Bermingham, Bellekeno and Lucky Queen deposits. Alexco is in
the final phase of the permitting process and is currently
advancing key surface infrastructure while it awaits the final
permit to make a positive construction decision.
www.alexcoresource.com
Some statements ("forward-looking statements")
in this news release contain forward-looking information concerning
Alexco. Forward-looking statements include, but are not
limited to, statements with respect to payment to Alexco of future
consideration for the sale, future mine construction and
development activities. Forward-looking statements are subject to a
variety of known and unknown risks, uncertainties and other
factors, which could cause actual events or results to differ from
those expressed or implied by the forward-looking statements. Such
factors include, among others, risks related to delays in obtaining
governmental approvals or financing or in the completion of
development activities. Forward-looking statements are based on
certain assumptions that management believes are reasonable at the
time they are made. In making the forward-looking statements
included in this news release, Alexco has applied several material
assumptions, including, but not limited to, those matters
identified in is continuous disclosure filings. There can be no
assurance that forward-looking statements will prove to be accurate
and actual results and future events could differ materially from
those anticipated in such statements. Alexco expressly disclaims
any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as otherwise required by applicable securities
legislation.
View original
content:http://www.prnewswire.com/news-releases/alexco-divests-subsidiary-environmental-business-aeg-301006320.html
SOURCE Alexco Resource Corp.