VANCOUVER,
May 8, 2017 /CNW/ - Alexco
Resource Corp. (NYSE‑MKT:AXU, TSX:AXR) ("Alexco") today reports
financial results for the first quarter ended March 31, 2017. All figures are expressed
in Canadian dollars unless otherwise stated. For the first
quarter of 2017 Alexco recorded a net loss of $932,000 or $0.01
per share, including $1.1 million
("M") in share-based compensation expense and $0.5 M in depreciation. Alexco Environmental
Group ("AEG"), a wholly owned subsidiary of Alexco, recognized
revenues of $1.9 M with a gross
profit of $0.5 M, achieving a gross
margin of 28%.
First Quarter Highlights
- March 31, 2017 unrestricted cash
and cash equivalent position of $20.8
M and net working capital of $23.5
M compared to $20.4 M and
$23.4 M, respectively, at
December 31, 2016.
- Alexco announced an updated mineral resource estimate for the
Bermingham deposit, expanding the indicated mineral resources from
5.2 million ounces to 17.3 million ounces while inferred mineral
resources increased from approximately 0.7 million ounces to 5.5
million ounces of contained silver.
- Alexco announced the release of an independent technical report
dated March 29, 2017 with an
effective date of January 3, 2017
entitled "Preliminary Economic Assessment of the Keno Hill Silver
District Project, Yukon, Canada"
(the "PEA") and announced an amended silver purchase agreement (the
"Amended SPA") with Silver Wheaton Corp. ("Silver Wheaton").
- Sold investments in marketable securities for proceeds of
$2 M and a pre-tax realized gain of
$1.2 M.
- AEG recognized revenues of $1.9 M
for a gross profit of $0.5M and a
gross margin of 28.4%.
- Alexco entered into a non-binding Letter Agreement with Banyan
Gold Corp. ("Banyan") to option up to 100% of Alexco's McQuesten
property located in the KHSD.
Alexco's Executive Chairman and Chief Executive Officer
Clynt Nauman said, "With the
publication of the updated PEA incorporating the amended SPA,
Alexco is launching into the balance of 2017 squarely focused on
moving forward with underground access to the high grade Bermingham
deposit in anticipation of extensive underground exploration
drilling, as well as getting started on a +12,000 meter surface
exploration program in areas proximal to the Bermingham discovery.
Equipment rebuilds, mill, camp and infrastructure upgrades will
also be completed alongside a prefeasibility level study, as we
move Keno Hill back toward a final production decision."
Summary Financial Results and Information
(expressed in
thousands of dollars,
except per share
amounts)
|
|
Three Months Ended
March 31
|
|
2017
|
2016
|
|
|
|
|
Revenue from
environmental services
|
|
1,935
|
2,348
|
|
|
|
|
Gross profit from
environmental services
|
|
549
|
565
|
|
|
|
|
Loss before
taxes
|
|
(1,061)
|
(2,018)
|
Net
loss
|
|
(932)
|
(2,110)
|
Total
comprehensive loss
|
|
(852)
|
(1,903)
|
Loss per share –
basic and diluted
|
|
($0.01)
|
($0.03)
|
Cash flows
consumed from operating activities
|
|
(1,215)
|
(1,083)
|
|
|
|
|
Keno Hill Silver District PEA
On March 29, 2017, Alexco
announced the release of an independent technical report with an
effective date of January 3, 2017
prepared by Roscoe Postle Associates Inc. ("RPA") entitled
"Preliminary Economic Assessment of the Keno Hill Silver District
Project, Yukon, Canada".
Highlights of the revised PEA include:
- Average annualized mill throughput is 143,000 tonnes per year
(400 tonnes per day) over an eight year period at an average mill
feed grade of 843 grams per tonne ("g/t") silver, 3.3% lead, 4.6%
zinc and 0.39 g/t gold. Average mill feed grades in production
years 1 – 3 are anticipated to be approximately 930 g/t silver with
payable silver production averaging 4.1 M ounces per year.
- Life of mine payable production is anticipated to be a total of
approximately 25.1 M ounces of silver, 77.3 M pounds ("lbs") of
zinc, 67 M lbs of lead and 4,870 ounces of gold over an eight (8)
year period. Average annualized payable silver production is 3.5 M
ounces per year, with the initial three years of annualized payable
silver production averaging 4.1 M ounces per year.
- Alexco's project pre-tax and after-tax net present value
("NPV") is $104.3 M and $79.4 M (at a 5% discount rate), respectively,
and pre-tax and after-tax internal rate of return ("IRR") is 89%
and 75%, respectively, at assumed silver prices of US$18.60/oz in 2018 and US$19.35/oz in 2019 through 2025.
- Initial capital costs of $27 M
are estimated to achieve production and positive cash flow with
less than one year payback.
Upon achieving commercial production, Alexco anticipates all-in
sustaining costs ("AISC") (contained silver, by-product basis) over
LOM to be US$13.51/oz of silver
(including direct operating costs, sustaining capital, the Silver
Wheaton stream, corporate general and administrative and ongoing
surface exploration costs), and AISC over the first full three (3)
years of production to be US$12.18/oz
of silver.
Amended Silver Purchase Agreement with Silver Wheaton
On March 29, 2017 Alexco and
certain of its subsidiaries and Silver Wheaton executed the Amended
SPA pursuant to which, among other things, the following amendments
were made to the silver streaming agreement:
- Silver Wheaton will continue to receive 25% of the life of mine
payable silver from the KHSD. The production payment (originally
US$3.90 per ounce) will be based on
monthly silver head grade and monthly silver price.
- The actual monthly production payment will fall within a
defined grade and pricing range governed by upper and lower numeric
criteria comprising a ceiling grade and price of 1,400 g/t silver
and US$25/ounce silver respectively,
and a floor grade and price of 600 g/t silver and US$13/ounce silver.
- The date for completion of the 400 tonne per day mine and mill
completion test date was extended to December 31, 2019;
- The Silver Wheaton area of interest remains one (1) km around
existing Alexco holdings in the KHSD.
In consideration of the foregoing amendments, and as recorded in
the second quarter of 2017, Alexco issued to Silver Wheaton
3,000,000 shares with a fair value of US$4.9
million which is a reduction in the original $50,000,000 deposit.
Keno Hill Exploration and Development
Alexco has planned a surface exploration program of
approximately 12,000 m of surface diamond drilling budgeted to cost
$3.2 M. This program will further
explore potentially mineralized structural targets in the immediate
vicinity of the Bermingham deposit. The bulk of the surface
exploration will be conducted in the summer with results expected
to be released no later than the fourth quarter of 2017.
Alexco is also planning an underground exploration program at
the Bermingham prospect. Subject to permitting, an exploration
decline will be driven 600m with approximately 5,000m of infill and
confirmation drilling for a total estimated cost of $8.7 M, including underground equipment rebuilds
and purchase.
Permitting
To drive a 600m underground exploration decline at the
Bermingham deposit followed by approximately 5,000m of underground
exploration definition drilling, will require an amendment to
Alexco's Class IV mining land use authorization. Alexco is well
advanced in this process and expects the amendment no later than
the third quarter of 2017. Upon completion of this amendment
of the Class IV permit, a further amendment to Alexco's Quartz
Mining Licence ("QML") and Water Use Licence ("WUL") will be
required for future production and processing of ore from
Bermingham. The environmental assessment for the mine
operations phase of permitting is expected to begin concurrent with
the delivery of the initial amendment and be complete in the last
half of 2018.
The Flame & Moth deposit is permitted to be developed under
the QML. Prior to processing ore or discharging water from
the Flame and Moth mine, an amendment to the WUL is required, which
is granted through the Yukon Water Board. A public hearing for the
WUL amendment is currently scheduled for late May, 2017 and an
amended WUL is expected to be granted in the third quarter of
2017. The guidance above on permitting is consistent with the
schedules and timing disclosed in the KHSD PEA, which targets
production to commence in the fourth quarter of 2018.
Financial
Alexco's cash and cash equivalents at March 31, 2017 totaled $20.8 M compared to $20.4
M at December 31, 2016, while
net working capital totaled $23.5 M
compared to $23.4 M for the same
dates. With its cash resources and net working capital on
hand at March 31, 2017, Alexco
anticipates it will have sufficient capital resources to carry out
all of its currently-anticipated exploration programs and service
the working capital requirements of its exploration activity,
environmental services business and corporate offices and
administration as planned for 2017 and into 2018.
Alexco Environmental Group
AEG recorded revenues of $1.9 M
and a gross profit of $0.5 M for a
gross margin of 28%, compared to revenue of $2.4 M and a gross profit of $0.6 M for a gross margin of 24% in the first
quarter of 2016. The reduction in revenue and gross profit is
primarily related to the anticipated near-term completion of the
Keno Hill Reclamation Plan and permitting submission, as well as
completion of plant construction project work in the US along with
transition to plant operating activities.
AEG is successfully operating two major water treatment
facilities in the US, the Gold King and Schwartzwalder plants, as
well as four smaller water treatment facilities at Keno Hill in
Canada.
Financial Report and Conference Call for First Quarter
2017
Full details of the financial and operating results for the
first quarter ended March 31, 2017
are described in Alexco's interim condensed consolidated financial
statements with accompanying notes and related Management's
Discussion and Analysis. These documents and additional
information on Alexco, including its annual information form, are
available on Alexco's website at www.alexcoresource.com and on
SEDAR at www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml.
Alexco is holding an audio webcast conference call to discuss
these results at 11:00a.m. Eastern
(8:00 a.m. Pacific) on Thursday, May 11, 2017. To participate in
the live call, please use one of the following methods:
Dial toll free from
Canada or the US:
|
1-888-504-7961
|
Dial from outside
Canada or the US:
|
1-647-792-1278
|
Conference
ID#:
|
7717619
|
Live audio
webcast:
|
www.alexcoresource.com
|
Participants should connect five to ten minutes before the call.
The conference call will be recorded and an archived audio webcast
will be available at www.alexcoresource.com.
Qualified Persons
The disclosure in this news release of scientific and technical
information regarding exploration projects on Alexco's mineral
properties has been reviewed and approved by Alan McOnie, FAusIMM, Vice President,
Exploration, while that regarding mine development and operations
has been reviewed and approved by Scott
Smith, P.Eng., former Bellekeno Mine Manager, both of whom
are Qualified Persons as defined by National Instrument 43-101 ‑
Standards of Disclosure for Mineral Projects.
About Alexco
Alexco Resource Corp. holds the historical high grade Keno Hill
Silver District located in Canada's Yukon Territory. Employing a
unique business model, Alexco also provides mine-related
environmental services, remediation technologies and reclamation
and mine closure services to both government and industry clients
through the Alexco Environmental Group, its wholly-owned
environmental services division
Please visit the Alexco website at www.alexcoresource.com
Some statements ("forward-looking statements")
in this news release contain forward-looking information concerning
Alexco's anticipated results and developments in Alexco's
operations in future periods, planned exploration and development
of its properties, plans related to its business and other matters
that may occur in the future, made as of the date of this news
release. Forward-looking statements may include, but are not
limited to, statements with respect to the future remediation and
reclamation activities, future mineral exploration, the estimation
of mineral reserves and mineral resources, the realization of
mineral reserve and mineral resource estimates, future mine
construction and development activities, future mine operation and
production, the timing of activities and reports, the amount
of estimated revenues and expenses, the success of exploration
activities, permitting time lines, requirements for additional
capital and sources and uses of funds. Forward-looking
statements are subject to a variety of known and unknown risks,
uncertainties and other factors which could cause actual events or
results to differ from those expressed or implied by the
forward-looking statements. Such factors include, among
others, risks related to actual results and timing of exploration
and development activities; actual results and timing of mining
activities; actual results and timing of environmental services
activities; actual results and timing of remediation and
reclamation activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined;
future prices of silver, gold, lead, zinc and other commodities;
possible variations in mineable resources, grade or recovery rates;
failure of plant, equipment or processes to operate as anticipated;
accidents, labour disputes and other risks of the mining industry;
First Nation rights and title; continued capitalization and
commercial viability; global economic conditions; competition; and
delays in obtaining governmental approvals or financing or in the
completion of development activities. Forward-looking
statements are based on certain assumptions that management
believes are reasonable at the time they are made. In making
the forward-looking statements included in this news release,
Alexco has applied several material assumptions, including, but not
limited to, the assumption that Alexco will be able to raise
additional capital as necessary, that the proposed exploration and
development will proceed as planned, and that market fundamentals
will result in sustained silver, gold, lead and zinc demand and
prices. There can be no assurance that forward-looking
statements will prove to be accurate and actual results and future
events could differ materially from those anticipated in such
statements. Alexco expressly disclaims any intention or obligation
to update or revise any forward-looking statements whether as a
result of new information, future events or otherwise, except as
otherwise required by applicable securities legislation.
SOURCE Alexco Resource Corp.