(All amounts in CDN$ unless otherwise
indicated)
VANCOUVER, BC, Aug. 12, 2020 /CNW/ - Alexco Resource
Corp. (NYSE American: AXU) (TSX: AXU) ("Alexco" or the
"Company") today reports financial results for the three and six
month periods ended June 30, 2020
("Q2 2020" and "YTD 2020") and provides interim comments on capital
development progress at Keno Hill in anticipation of silver
production in Q4 2020. For Q2 2020 Alexco reported a net loss of
$12.2 million ("M"), or $0.10 per share related primarily to non-cash
items and other adjustments. At June 30,
2020, the Company had $17.8 M
in cash and cash equivalents, and net working capital of
$24.4 M. Subsequent to quarter end
the Company completed an equity financing with aggregate gross
proceeds of $30 M.
Q2 2020 Highlights
Consolidated Financial Results
- Overall, Alexco reported net loss of $12.2 M or $0.10
per share for Q2 2020 compared to net loss of $1.5 M for Q2 2019. The net loss for Q2 2020 is
primarily a result of a non-cash fair value loss of $11.6 M related to the embedded derivative
associated with the Wheaton Precious Metals Corp. ("Wheaton")
streaming agreement, as well as non-cash costs of $0.5 M related to share-based compensation and
$0.4 M of depreciation expense.
- The Company's cash and cash equivalents at June 30, 2020 totaled $17.8 M compared to $6.8
M as at December 31, 2019,
while net working capital totaled $24.4
M compared to $10.1 M at
December 31, 2019. The Corporation's
restricted cash and deposits at June 30,
2020 totaled $2.9 M compared
to $2.8 M at December 31, 2019.
- On July 7, 2020, subsequent to
quarter end, the Corporation completed an equity financing and
issued 10,994,000 common shares at a price of $2.73 per share for aggregate gross proceeds of
$30 M. In connection with this equity
financing, the Corporation paid the Underwriters a cash commission
equal to 4.5% of gross proceeds.
Mine Operations – Production Decision, Related
Matters
- On June 24, 2020, in anticipation
of receipt of the final water use license ("WUL") and final amended
and restated Wheaton streaming agreement, Alexco announced that it
is moving forward to finalize development of its mining operations
at the Keno Hill Silver District ("Keno Hill" or the "District").
Initial concentrate production and silver sales are expected to
occur in Q4 2020.
- On July 23, 2020, subsequent to
quarter end, the Company received the final amended and renewed
water use license ("WUL") for Keno Hill from the Yukon Water Board.
The WUL authorizes Alexco to source and use water, as well as
deposit designated waste streams into approved facilities in and
around planned production centers at the Bellekeno, Flame &
Moth and Bermingham mines, and the mill facility.
- On August 5, 2020, subsequent to
quarter end, Alexco entered into an agreement with Wheaton to amend
and restate its streaming agreement whereby the silver production
payment made by Wheaton will continue to be based on 25% of the
silver production but will be based on a new payment formula which
is described in Note 20 of the Q2 2020 financial statements.
- In Q2 Elsa Reclamation and Development Company ("ERDC"),
continued to advance reclamation and engineering activities related
to the historic liabilities in the Keno Hill Silver District.
During the quarter ERDC completed the environmental assessment for
the Reclamation Plan. A final Evaluation Report by YESAB was issued
in February 2020 and a final Decision
Document was issued on July 20,
2020.
Interim Operations Update
COVID-19
With an increasing workforce and expanding capital development
activity on site, Alexco's primary focus continues to be the health
and safety of our employees, contractors and the communities in
which we operate. Our COVID-19 management plan continues with
strict prevention measures in place, consistent with the guidelines
of the Yukon Government and health officials.
Keno Hill Development Update
On June 24, 2020 the Company
announced that it is moving forward to finalize development of its
mines at Keno Hill, with a goal of mill commissioning and
silver concentrate production in Q4 2020. Generally the Company is
making steady progress towards its production goal with mine site
development activities, recruitment of key personnel, securing and
delivery of mine equipment and advancing capital infrastructure
projects at the mill and across the surface operations footprint
including camp expansion and mine surface support facilities – all
proceeding as scheduled.
Underground activities are currently focused on rehabilitation
of the primary access ramp and services installation at the
Bellekeno mine, which will be the first mine to deliver ore to the
mill in Q4 2020. Initial underground work at Flame & Moth also
began in August with minor rehabilitation followed by resumption of
ramp development, and similar work will begin at Bermingham later
in September. Related to the underground work, new equipment
comprising two 3.5 yard Load, Haul, Dump loaders (LHD's), two 20
tonne haul trucks and two twin boom jumbos have arrived on site,
and additional equipment will be delivered consistent with the
underground development schedule.
Major mill modifications and improvements underway include the
installation of a second ball mill (7' x 10'), a second tailings
filter press, two new concentrate regrind mills for both the lead
and zinc concentrate, an improved fine ore feed system, and a
crusher ventilation system including a new building enclosure
around the existing crusher. All major process equipment has been
delivered to site and completion of key mill improvement projects
is anticipated with mill commissioning in Q4 2020.
The current focus of surface construction activities is the
completion of camp expansion facilities including two new bunkhouse
units, an upgraded administration complex, employee dry and wash
facilities and maintenance and support facilities. Similar to the
mill modification and construction activity, surface construction
projects will be complete in Q4 2020.
The Company continues to advance with recruitment and onboarding
of the Keno Hill operations workforce. The senior management team
at Keno Hill is in place and key supervisors, operators, miners and
certified maintenance trades continue to be recruited, with a
current count of 68 employees on board at Keno Hill. In addition,
18 contract personnel are providing services with the majority of
the vendors having partnership or joint venture arrangements in
place with the First Nation of Na-Cho Nyak
Dun. Alexco's recruiting efforts continue to prioritize
residents of the Yukon first along
with British Columbia. To date,
over 90% of Keno Hill employees are from the Yukon and British
Columbia.
Finally, the Company's 2020 surface exploration program
commenced on July 17, 2020 and
is expected to include a minimum of 4,200 meters ("m") of surface
drilling focused on the Bermingham "deep target", where exploration
drilling in 2019 successfully confirmed the presence of wide,
high-grade mineralization at depth below the Bermingham high grade
silver mineral resource. To date approximately 930 m of drilling is complete utilizing a single
drill with a second drill to be added in the near future. Results
from this drilling will be released when available.
Clynt Nauman, Alexco's Chairman
and Chief Executive Officer, commented, "The second quarter of 2020
saw us finally receiving our draft (subsequently finalized) renewed
and expanded Water Use License for Keno Hill, clearing the way for
our positive production decision. Quickly following, we
successfully completed a final equity financing, which now
positions us with a short runway to production in a rapidly
improving silver pricing environment. We look forward to delivering
the first ore to the mill and concentrate sales in Q4 of this year.
Frankly, with vastly improved silver prices there could be no
better time, coincidence or not, to be putting Canada's only primary silver producing
operation on-line. Finally, with production now clearly in sight we
are standing at the threshold of a new chapter in Alexco's journey,
focused even more acutely on generating enhanced value for our
shareholders."
Financial Report
Full details of the financial and operating results for Q2 2020
are described in Alexco's interim condensed consolidated financial
statements for the three and six month periods ended June 30, 2020 with accompanying notes and related
management's discussion and analysis. These documents and
additional information about 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 Q2 2020 Results
Alexco is holding an audio webcast conference call to discuss
these results at 3:00 p.m. Eastern
(Noon Pacific) on Thursday, August 13,
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
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Dial from outside
Canada or the US:
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1-604-638-5340
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Conference
ID#:
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Ask to join the
Alexco conference call
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Live audio
webcast:
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https://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
https://www.alexcoresource.com/
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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., Chief Mine Engineer, 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 and
operates the majority of the historic Keno Hill Silver District, in
Canada's Yukon Territory, one of the highest-grade
silver deposits in the world. Alexco is currently advancing Keno
Hill to production and expects to start concentrate production and
shipments in Q4 2020. As per Alexco's 2020 pre-feasibility study,
Keno Hill is expected to produce an average of approximately 4
million ounces of silver per year contained in high quality
lead/silver and zinc concentrates. Total production over an 8-year
mine life is estimated at 1.18 million tonnes of ore at an average
rate of 430 tonnes per day at an average grade of 805 grams per
tonne. Keno Hill retains significant potential to grow and Alexco
has a long history of expanding the operation's Mineral Resources
through successful exploration.
Some statements ("forward-looking statements") in this news
release contain forward-looking information plans related to
Alexco's business and other matters that may occur in the future,
made as of the date of this news release. 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 risks and uncertainties relating to the COVID-19
pandemic including but not limited to business closures,
quarantines and a general reduction in consumer activity; actual
results and timing of exploration and development, mining,
environmental services and remediation and reclamation
activities; future prices of silver, gold, lead, zinc and other
commodities; possible variations in mineral resources, grade or
recovery rates; failure of plant, equipment or processes to operate
as anticipated; accidents, labour disputes and other risks of the
mining industry; First Nation rights and title; continued
capitalization and commercial viability; global economic
conditions; competition; and delays in obtaining governmental
approvals or financing or in the completion of development
activities. Forward-looking statements are based on certain
assumptions that management believes are reasonable at the time
they are made. In making the forward-looking statements included in
this news release, Alexco has applied several material assumptions,
including, but not limited to the circumstances surrounding the
COVID-19 pandemic, although evolving, will stabilize or at least
not worsen; that the extent to which COVID-19 may impact the
Company, including without limitation disruptions to the mobility
of Company personnel, costs associated with implementation of
health and safety protocols, increased labour and transportation
costs, and other related impacts, will not change in a materially
adverse manner; Alexco will be able to raise additional capital as
necessary, that the proposed exploration and development activities
will proceed as planned, and that market fundamentals will result
in sustained silver, gold, lead and zinc demand and prices. There
can be no assurance that forward-looking statements will prove to
be accurate and actual results and future events could differ
materially from those anticipated in such statements. Alexco
expressly disclaims any intention or obligation to update or revise
any forward-looking statements whether as a result of new
information, future events or otherwise, except as otherwise
required by applicable securities legislation.
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SOURCE Alexco Resource Corp.