(All amounts in CDN$ unless otherwise
indicated)
VANCOUVER, March 11, 2020 /PRNewswire/ - Alexco Resource
Corp. (NYSE American: AXU) (TSX: AXU) ("Alexco" or the
"Company") today reports financial results for the quarter and year
ended December 31, 2019 ("Q4 2019"
and "FY 2019", respectively). For Q4 2019 Alexco reported a net
loss of $6.3 million ("M"), or
($0.06) per share. For FY 2019 Alexco
recorded a net loss of $8.9 M or
($0.08) per share. The Company's net
cash position and working capital at December 31, 2019 were $6.8 M and $10.1 M,
respectively. Alexco Environmental Group ("AEG"), a wholly owned
subsidiary of Alexco, recorded revenues of $29.2 M and a gross profit of $6.1 M during FY 2019.
On February 14, 2020 AEG was
subsequently sold to AEG management for consideration of
$13.35 M (see press release dated
February 18, 2020 entitled "Alexco
Divests Subsidiary Environmental Business AEG"). All amounts below
include results from AEG operations.
FY 2019 Highlights
CORPORATE
- Overall, Alexco reported a net loss of $8.9 M, or $(0.08)
per share for the year ended December 31,
2019 including non-cash cost adjustments of $2.3 M compared to a loss of $8.5 M, including non-cash cost adjustments of
$2.6 in 2018. The difference in
operating loss was due to non-cash adjustments resulting from the
treatment of the embedded derivative on the Wheaton Precious Metals
streaming agreement, share-based compensation expense, deferred
income tax expense and a reduction in Alexco Environmental Group
("AEG") profitability in 2019.
- The Corporation's cash and cash equivalents at December 31, 2019 totaled $6.8 M compared to $8.6
M at December 31, 2018, while
net working capital totaled $10.1 M
compared to $10.2 M at December 31, 2018. The Corporation's restricted
cash and deposits at December 31,
2019 totaled $2.8 M compared
to $2.7 M at December 31, 2018.
- On February 14, 2020 the
Corporation entered into a share purchase agreement (the "Share
Purchase Agreement") for the sale of AEG, to AEG's executive
management ("AEG Management") led by AEG's President (a related
party due to the AEG President being a key member of management of
Alexco). Under the terms of the Share Purchase Agreement, AEG
Management purchased all of the shares of AEG in consideration for
payment to Alexco of $13.35 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 retained 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 the
Federal Government of Canada.
- On June 7, 2019, the Corporation
completed a bought deal public offering and issued 6.5 M common shares at a price of US$1.00 (C$1.33)
per share for aggregate gross proceeds of US$6.5 M (C$8.6 M)
for net cash proceeds of US$5.8 M
(C$7.7 M).
- On April 23, 2019 the Corporation
completed a private placement, on a bought deal basis, of 1,842,200
flow-through common shares at a price of $1.90 per share for gross proceeds of
$3.5 M.
MINE OPERATIONS AND EXPLORATION
- The Corporation announced the results of an independent
pre-feasibility study on its 100% owned Keno Hill Silver project
(see press release dated March 28,
2019 entitled "Alexco Announces Positive Pre-Feasibility
Study for Expanded Silver Production at Keno Hill Silver District")
and on May 8, 2019, and as amended
February 13, 2020, the Corporation
released an independent technical report, effective as of
March 28, 2019, entitled "NI 43-101
Technical Report Prefeasibility Study of the Keno Hill Silver
District Project Yukon Territory, Canada" (the "PFS").
- The Corporation completed the planned surface capital
construction activities at the Bermingham deposit consistent with
work outlined in the PFS, including installation of the underground
production-related portal, construction of a lined treatment pond,
initial construction of a coarse ore storage pad and upgrading of
existing haul roads.
- During FY, 2019, Alexco completed an 8,333 meter ("m") surface
exploration diamond drilling program focused on potential resource
expansion and deeper targets in the vicinity of the Bermingham
deposit "Bermingham Deep", as well as following up on
reconnaissance drilling from the 2018 program. Initial results from
exploration at Bermingham Deep were announced in September 2019, with the remainder of the results
released in December 2019.
- Alexco has the requisite permits and authorizations for
development and future ore production from the Bellekeno, Flame
& Moth, Lucky Queen, and Onek
deposits. Amendment of the Corporation's Quartz Mining Licence
("QML") was completed in the fourth quarter of 2019, which
incorporates the Bermingham deposit into the mine plan. Alexco is
in the final steps of renewing the Water Use Licence ("WUL") having
completed the public hearing in mid-February
2020 and expects the granting of WUL renewal late in the
first quarter of 2020. Once renewed the WUL will authorize the use
of water and deposition of waste from mining and milling operations
at the Bermingham, Flame & Moth, Bellekeno and Lucky Queen (and
Onek) deposits for a period of 15
years.
ALEXCO ENVIRONMENTAL GROUP ("AEG")
- AEG recognized revenues of $29.2
M for the year ended December 31,
2019 for a gross profit of $6.1
M achieving a gross margin of 21%, compared to revenues of
$19.9 M for 2018 for a gross profit
of $6.1 M achieving a gross margin of
30%. AEG recognized an operating loss before taxes for the year
ended December 31, 2019 of
$1.4 M. The gross profit margin
percentage declined in 2019 primarily due to a scale-up of the
overall business as well as the use of third party contractors to
complete construction of a larger water treatment system complex in
Ontario and two new longer-term
projects coming online, which incurred higher than normal up-front
costs.
Financial Results
SELECTED ANNUAL
CONSOLIDATED INFORMATION
|
|
|
|
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As at and for the
year ended December 31
|
(expressed in
thousands of Canadian
dollars, except per share amounts)
|
2019
|
2018
|
2017
|
|
|
|
|
Revenue
|
29,206
|
19,880
|
10,732
|
Gross
profit
|
6,076
|
6,052
|
4,000
|
|
|
|
|
Net loss
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(8,915)
|
(8,501)
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(7,813)
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Loss per
share:
|
|
|
|
Basic
|
($0.08)
|
($0.08)
|
($0.08)
|
Diluted
|
($0.08)
|
($0.08)
|
($0.08)
|
Total
assets
|
145,353
|
133,018
|
122,324
|
Total long-term
liabilities
|
11,967
|
8,384
|
5,669
|
|
|
|
|
|
|
|
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2020 Outlook
KENO HILL DEVELOPMENT
The Flame & Moth production decline is completed to
452 m and requires an additional
336 m of ramp and infrastructure
development to reach the first ore level access at the Lightning
Zone. In addition, a 100 m
ventilation raise to surface will be required before commercial ore
production can be achieved. Completion of the remaining ramp
development, raise, and infrastructure will commence in Phase II of
the development strategy once a positive production decision is
made.
The Bermingham deposit has underground development totaling
550 m of decline and supporting
development completed. Approximately 210
m of ramp and infrastructure development remains to be
driven to reach the first ore level access. In addition, a
170 m ventilation raise to surface
will be required before commercial ore production can be achieved.
Completion of the remaining ramp development, raise and
infrastructure will commence in Phase II of the development
strategy once a positive production decision is made.
PERMITTING UPDATE
As of December 31, 2019, Alexco
had the requisite permits and authorizations for development and
future ore production from the Flame & Moth, Bermingham,
Bellekeno, Lucky Queen, and Onek
deposits.
Alexco is in the final steps of amending and renewing the
primary WUL for mine-related activity in the District. Apublic
hearing was held in mid-February 2020
and the Company expects the granting of the WUL renewal late in the
first quarter of 2020. Once renewed, the WUL will authorize the use
of water and deposition of waste from mining and milling operations
at the Bermingham, Flame & Moth, Bellekeno and Lucky Queen (and
Onek) deposits for a period of 15
years.
2020 EXPLORATION PROGRAM
In 2020, Alexco is planning a $3.5
M, 11,500 m surface
exploration drilling program incorporating both diamond and rotary
air blast drilling as follows:
- The program will primarily focus on the Bermingham Deep target
area, where exploration drilling in 2019 successfully confirmed the
presence of wide, high-grade mineralization at depth below the
Bermingham resource. The 2020 drilling program at the Bermingham
Deep target will focus on previously proven targeting criteria and
testing of a gently east-plunging stratigraphic-structural
intersection that is thought to strongly influence the distribution
of mineralization. The objective of the initial deep drilling
program is to test for any significant expansion of the Bermingham
resource. A successful program may provide the basis to launch a
large-scale infill program either later in 2020 or in 2021.
- Further drilling is also planned at the Inca prospect, a 2019
discovery with significant silver grades at relatively shallow
depths (see news release dated December 4,
2019 "Alexco Discovers New Zone of Silver Mineralization,
3.7 Kilometers Northeast of Bermingham Deposit, Composite Assays to
832 Grams Per Tonne Silver over 7.4 Meters True Width"). The focus
will be to define and extend the mineralized zone, which is
untested over a total strike length of 800
m and is open at depth.
- In addition to core drilling at the Bermingham deposit and the
Inca prospect, the 2020 program will continue with generative drill
exploration initially using a low impact rotary air blast drill, as
there are numerous shallow drill targets in the District identified
from aerial geophysics surveys. Additional airborne geophysics will
also be completed over other areas of the District, as this has
become an important component in targeting mineralized structures,
especially for generative work in areas of cover.
Alexco's Chairman and Chief Executive Officer, Clynt Nauman, commented, "2019 was a pivotal
year for Alexco. The sale of AEG to AEG Management was consistent
with our continued goal to increase shareholder value and to focus
on mining activities, while retaining our interest in ERDC. In our
mining business, during the year we completed construction of
surface infrastructure activities, advanced permitting and carried
out a successful exploration program. In 2020 we continue to
advance the project by making key hires on our mining team,
ordering long lead-time mining equipment in order to position
Alexco for a positive production decision and maintain our schedule
for production in 2020, subject to the granting of the WUL and
market conditions. In the meantime, we prepare to launch our 2020
exploration program to follow on last year's success at the
Bermingham 'deep target' and the newly discovered Inca Vein. I look
forward to continued delivery of results as we move toward becoming
Canada's only primary silver mine
in 2020."
Financial Report
Full details of the financial and operating results for the Q4
2019 and FY 2019 are described in Alexco's consolidated financial
statements for the years ended December 31,
2019 and 2018 with accompanying notes and related
management's discussion and analysis. These documents and
additional information Alexco, including its annual information
form, are available on Alexco's website at www.alexcoresource.com
and on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml.
Conference Call for FY 2019 Results
Alexco is holding an audio webcast conference call to discuss
these results at 11:30 a.m. Eastern
(8:30 a.m. Pacific) on Thursday, March 12, 2020. To participate in the
live call, please use one of the following methods:
Dial toll free from
Canada or the US:
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1-800-319-4610
|
Dial from outside
Canada or the US:
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1-604-638-5340
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|
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Conference
ID#:
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Ask to join the
Alexco conference call
|
Live audio
webcast:
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www.alexcoresource.com
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Participants should connect five to ten minutes before the call.
The conference call will be recorded and an archived audio webcast
will be available at www.alexcoresource.com.
Qualified Persons
The disclosure in this news release of scientific and technical
information regarding exploration projects on Alexco's mineral
properties has been reviewed and approved by Alan McOnie, FAusIMM, Vice President,
Exploration, while that regarding mine development and operations
has been reviewed and approved by Neil
Chambers, P.Eng., Mine Superintendent, both of whom are
Qualified Persons as defined by National Instrument 43-101 –
Standards of Disclosure for Mineral Projects ("NI 43-101").
About
Alexco
Alexco 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.
Further information about the project, including the effective
date of the estimates and summary of assumptions, parameters and
risks relating to mineral resources, mineral reserves and the
pre-feasibility study, can be found in Alexco's technical report
entitled ""NI 43-101 Technical Report on Preliminary Feasibility
Study of the Keno Hill Silver District Project, Yukon Territory, Canada" filed on May 8, 2019 as amended February 14, 2020 that is available on Alexco's
profile on Sedar at www.sedar.com.
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.
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SOURCE Alexco Resource Corp.